Sun Life Rainbow MPF Scheme · Sun Life Rainbow MPF Scheme Year ended 31 December 2019 1 Scheme...

Sun Life Rainbow MPF Scheme

31 December 2019

Sun Life Rainbow MPF Scheme Year ended 31 December 2019

Contents Page(s) Scheme report 1 - 4 Investment report 5 - 100 Independent auditor’s report 101 - 104 Independent auditor’s assurance report 105 - 107 Statement of assets and liabilities attributable to members 108 - 110 Statement of comprehensive income 111 - 113 Statement of changes in net assets attributable to members 114 - 116 Cash flow statement 117 Notes to the financial statements 118 - 164


1

Scheme report for the year ended 31 December 2019 The Trustee is pleased to present the reports and financial statements of Sun Life Rainbow MPF Scheme (the “Scheme”) for the year ended 31 December 2019. The Scheme is a master trust scheme established by a Trust Deed dated 31 January 2000, as amended from time to time. It consists of fourteen constituent funds, each of which has two classes of units: Class A and Class B, except for Sun Life MPF Core Accumulation Fund and Sun Life MPF Age 65 Plus Fund which only have one class of units each. Class B units are generally available to personal account members and employee members of those employers who, at the participation commencement date to the Scheme or at 1 December 2000, whichever is the later, have: (i) no less than 100 employee members participating in the Scheme; (ii) assets transferred to the Scheme from other occupational retirement schemes; or (iii) their occupational retirement schemes administered by Sun Life Hong Kong

Limited. Class A units are available to other members of the Scheme not falling into any of the above categories. In 2019, the Trust Deed has been amended to (1) allow trustee to reject any application for participation/membership and payment of contribution due to any statutory and/or regulatory requirements; and (2) to facilitate the launch of Tax Deductible Voluntary Contributions (“TVC”). Information about the rules, operation and structure of the Scheme is available in the MPF Scheme Brochure, Employer Information Guide and Member Information Guide. Members may also contact the service hotline of the Scheme at 3183 1888 or through fax at 3183 1889 for further information. Financial development of the Scheme As at 31 December 2019, the net asset value of the Scheme was HK$80,945.3 million (2018: HK$60,759.5 million). During the year ended 31 December 2019, total contributions and transfers in received and receivable amounted to HK$16,855.7 million (2018: HK$15,593.7 million) while total benefits paid and payable and transfers out to other schemes (exclusive of forfeitures) amounted to HK$4,101.7 million (2018: HK$3,014.3 million). For the year ended 31 December 2019, the Scheme recognised a net gain of HK$7,709.2 million (2018: net loss of HK$5,769.3 million) which was attributed to a net realised and unrealised investment gain of HK$8,494.1 million (2018: net loss of HK$5,020.8 million), interest from bank deposits of HK$164.9 million (2018: HK$86.9 million), exchange loss of HK$1.9 million (2018: exchange loss of HK$18.5 million), dividend income of HK$11.4 million (2018: HK$2.0 million), other income of HK$1.8 million (2018: HK$3.5 million) and operating expenses of HK$961.1 million (2018: HK$822.4 million).


2

Scheme report for the year ended 31 December 2019 (continued) Directory of parties Trustee Sun Life Trustee Company Limited 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong Sponsor1 Sun Life Hong Kong Limited 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong Custodian RBC Investor Services Trust Hong Kong Limited 41/F & 42/F One Taikoo Place, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong Administrator1 BestServe Financial Limited 10th Floor, One Harbourfront, 18 Tak Fung Street, Hunghom, Kowloon, Hong Kong Investment Manager1 Sun Life Asset Management (HK) Limited 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong 1 Associates of the Trustee


3

Scheme report for the year ended 31 December 2019 (continued) Directory of parties (continued) Delegate of the Investment Manager (for Sun Life MPF Conservative Fund (up to 31 August 2019) and Sun Life MPF RMB and HKD Fund) Invesco Hong Kong Limited 41st Floor, Champion Tower 3 Garden Road Central, Hong Kong Bankers The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong Standard Chartered Bank (Hong Kong) Limited 19th Floor, Standard Chartered Tower 388 Kwun Tong Road Kowloon, Hong Kong Auditor KPMG 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong Directors of the Trustee All directors can be contacted at the following address: 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong During the year and up to the date of this report, the directors of the Trustee were as follows: Carolyn Ann BUTLER Nigel Robin HAZELL LAI Man Wah Teresa (resigned with effect from 4 March 2020) LI Tsui Lai Michelle LEE Mei Fun Cynthia Judy YANG John Douglas Ham (appointed with effect from 15 July 2019)


4

Scheme report for the year ended 31 December 2019 (continued) Directors of the Sponsor The directors can be contacted at the following address: 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong During the year and up to the date of this report, the directors of the Sponsor are as follows: CHOU Chia Ling Niall Mario O’HARE Fabien Gerald JEUDY Jason Lee Clayton CARNE Claude Alan ACCUM (resigned with effect from 31 December 2019) Stuart Edward HARRISON (appointed with effect from 1 April 2019) Stuart John VALENTINE (resigned with effect from 1 April 2019) Leo Michel GREPIN (appointed with effect from 31 December 2019) Directors of the Administrator The directors can be contacted at the following address: 16th Floor, Cheung Kei Center, Tower A, No.18 Hung Luen Road, Hunghom, Kowloon, Hong Kong During the year and up to the date of this report, the directors of the Administrator are as follows: LUK Kwai Sim Belinda Shiney PRASAD Jeffrey Todd KOZAN


5

Investment report for the year ended 31 December 2019 This Investment Report provides analyses of the investments of the Scheme and its constituent funds of the movements in net asset value (“NAV”) and performance of the constituent funds. Each constituent fund of the Scheme has been approved by the Mandatory Provident Fund Schemes Authority (the “Authority”) and the Securities and Futures Commission (the “SFC”). The fourteen constituent funds operating during the year are: (1) Sun Life MPF RMB and HKD Fund (2) Sun Life MPF Conservative Fund (3) Sun Life MPF Hong Kong Dollar Bond Fund (4) Sun Life MPF Hong Kong Equity Fund (5) Sun Life MPF Global Bond Fund (6) Sun Life MPF Stable Fund (7) Sun Life MPF Balanced Fund (8) Sun Life MPF Growth Fund (9) Sun Life MPF Asian Equity Fund (10) Sun Life MPF Multi-Sector Equity Fund (11) Sun Life MPF Greater China Equity Fund (12) Sun Life FTSE MPF Hong Kong Index Fund (13) Sun Life MPF Age 65 Plus Fund (14) Sun Life MPF Core Accumulation Fund


6

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (i) Sun Life MPF RMB and HKD Fund

The Sun Life MPF RMB and HKD Fund is a money market fund which seeks to achieve long-term total returns through investments primarily in a portfolio of money market and debt instruments denominated in RMB and HKD. The constituent fund is expected to hold 30%-70% of its net asset value in assets denominated and settled in RMB and 30%-70% in assets denominated and settled in HKD. The return of the constituent fund over the long term is expected to follow the trend of the RMB and HKD denominated money market and debt instruments. The constituent fund achieves its investment objective through direct investments in RMB and HKD denominated money market instruments and debt instruments. Such money market instruments include mainly cash, fixed deposits, certificate of deposits and treasury bills, whereas debt instruments include mainly notes, government bonds and corporate bonds both in fixed and floating rate. All RMB denominated money market instruments and debt instruments (except cash and fixed deposits) will be issued or distributed outside mainland China, and will be settled in RMB. Cash and fixed deposits will be placed with banks in Hong Kong. Money market instruments and debt instruments may be issued by governments and quasi-government entities, banks, financial institutions and other corporations. The constituent fund will only invest in debt instruments that meet the credit rating requirements under the guidelines established by the Authority. The constituent fund will not invest in securities issued within Mainland China through any qualified foreign institutional investor (“QFII”) quota. The normal asset allocation for the constituent fund as percentage of NAV is expected to be: By investment type: - Money market instruments 70% - 100% - Debt instruments 0% - 30% By currency: - RMB denominated investments 30% - 70% - HKD denominated investments 30% - 70%


7

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (i) Sun Life MPF RMB and HKD Fund (continued)

However, the Investment Manager may, in its discretion, vary from the percentages within the range of normal asset allocation to go above of the constituent fund’s holdings in RMB and HKD denominated investments having regard to market conditions and other factors such as changes in RMB exchange policies or currency control policies. In the absence of available RMB denominated debt instruments, the constituent fund may invest a significant portion of its portfolio in RMB denominated money market instruments, subject to the normal asset allocation as mentioned above. Investments of the constituent fund will be limited to money market instruments with not more than 12 months in maturity and debt instruments with a remaining maturity of not more than 2 years. The constituent fund is suitable for members who are prepared to take a medium-to-long term time horizon and are prepared to accept a moderate level of risk in order to gain a higher level of return than is available from the Sun Life MPF Conservative Fund. The constituent fund will in effect maintain an effective currency exposure to HKD of not less than 30%. This will either result from investment exposure or currency hedging operations of the investments. The constituent fund will not engage in securities lending transactions, financial futures and option trading. Members in the Scheme should be informed that: (a) investments in the constituent fund are not the same as placing funds on

deposit with a bank or deposit taking company and that there is no obligation to redeem the investment at the subscription value; and

(b) the constituent fund is not subject to the supervision of the Hong Kong

Monetary Authority.


8

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (ii) Sun Life MPF Conservative Fund

The Sun Life MPF Conservative Fund seeks to provide members with a regular increase in value, with minimal risk to the underlying capital but with no guarantee of repayment of capital. The Sun Life MPF Conservative Fund achieves this result by investing primarily in money market instruments, cash deposits as well as short term corporate and government debt securities denominated in Hong Kong dollars. Where investment is made in debt securities of non-government issues, the constituent fund will only invest where the credit rating of the debt securities is in line with the guidelines established by the Authority. The constituent fund will invest in Hong Kong dollar denominated instruments, i.e. it will have a 100% effective exposure to the Hong Kong dollar; and it will not engage in securities lending transactions, financial futures and option trading. The normal asset allocation for the Sun Life MPF Conservative Fund as a percentage of NAV is expected to be: - HKD money market instruments, deposits and 100%

short term corporate and government debt securities The Sun Life MPF Conservative Fund is suitable for members who wish to take a very conservative approach towards investing their retirement savings, with the major emphasis on capital protection and returns approximating Hong Kong dollar bank savings rates. Members in the Scheme should be informed that: (a) investments in the Sun Life MPF Conservative Fund are not the same as

placing funds on deposit with a bank or deposit taking company and that there is no obligation to redeem the investment at the subscription value; and

(b) the Sun Life MPF Conservative Fund is not subject to the supervision of the

Hong Kong Monetary Authority. The fees and charges of the Sun Life MPF Conservative Fund can be deducted from either (i) the assets of the fund or (ii) members’ account by way of unit deduction. The Sun Life MPF Conservative Fund uses method (i) and, therefore, unit prices/ NAV/ fund performance quoted have incorporated the impact of fees and charges.


9

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (iii) Sun Life MPF Hong Kong Dollar Bond Fund

The Sun Life MPF Hong Kong Dollar Bond Fund is a fixed income fund which seeks to provide members with a return in excess of that achievable from bank deposits and money market securities. The Sun Life MPF Hong Kong Dollar Bond Fund achieves this objective by investing in a portfolio of Approved Pooled Investment Funds (“APIFs”) and/or Approved Index-Tracking Collective Investment Schemes (“ITCISs”), which in turn will invest at least 70% in bonds and other debt instruments which are denominated in Hong Kong dollars. The investment managers of the underlying APIFs and/or Approved ITCISs have the discretion to diversify the portfolio by investing in bonds or other debt instruments denominated in currencies other than Hong Kong dollars, provided such bonds or debt instruments meet the investment requirements prescribed by the Authority. Under normal asset allocation, through its investments in APIFs and/or Approved ITCISs, the Sun Life MPF Hong Kong Dollar Bond Fund will invest at least 70% of its net asset value in Hong Kong dollar denominated bonds and debt instruments. Where investments denominated in currencies other than Hong Kong dollars are made, the currency exposure may be hedged back into Hong Kong dollars by the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Hong Kong Dollar Bond Fund to minimize the currency risk. The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions; or entering into repurchase agreements. Any such use of derivative instruments or repurchase agreements will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Hong Kong Dollar Bond Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.


10

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (iii) Sun Life MPF Hong Kong Dollar Bond Fund (continued)

As the securities that the underlying APIFs and/or Approved ITCISs will invest in are normally traded on a daily basis, the net asset value of the Sun Life MPF Hong Kong Dollar Bond Fund may be subject to the changes in interest rate yields at which the bonds are traded. An increase in interest rates may result in a decline in the net asset value of the Sun Life MPF Hong Kong Dollar Bond Fund over short periods of time. Bonds with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities. Lower rated securities, whilst offering a higher yield, tend to have greater risk. The Sun Life MPF Hong Kong Dollar Bond Fund is suitable for members who are prepared to take a medium term investment horizon and are prepared to accept a low to moderate level of risk in order to gain a higher level of return than is available from the Sun Life MPF Conservative Fund.

(iv) Sun Life MPF Hong Kong Equity Fund The Sun Life MPF Hong Kong Equity Fund is an equity fund which seeks to provide members with long term capital appreciation by investing primarily in equities and equity-related securities (including but not limited to warrants and convertible bonds) listed on the Stock Exchange of Hong Kong Limited (“Hong Kong Stock Exchange”). Given the above investment objectives, the Sun Life MPF Hong Kong Equity Fund will be subject to short term volatility of stock market and the ensuing possibility of negative returns over short to medium term investment horizons.


11

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (iv) Sun Life MPF Hong Kong Equity Fund (continued)

The Sun Life MPF Hong Kong Equity Fund will invest in a portfolio of APIFs and/or Approved ITCISs, which in turn will invest at least 70% in equities and equity-related securities (including but not limited to warrants and convertible bonds) listed on the Hong Kong Stock Exchange. In addition, investment managers of the underlying APIFs and/ or Approved ITCISs may invest in securities issued by Hong Kong companies or other entities which in the investment manager’s opinion have significant assets, business, production activities, trading or other business interests in Hong Kong and traded in international markets. Investment managers of the underlying APIFs and/ or Approved ITCISs may also invest in offshore securities or instruments (such as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) or in other securities permitted by the Regulation (including, without limitation, interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes). ADRs are traded on the US stock markets while GDRs are traded and cleared internationally on the European and US markets. Under normal asset allocation, through its investments in APIFs and/or Approved ITCISs, the Sun Life MPF Hong Kong Equity Fund will invest at least 70% of its net asset value in Hong Kong equities and equity-related securities (including but not limited to warrants and convertible bonds) listed on the Hong Kong Stock Exchange. Actual asset and country weightings of the Sun Life MPF Hong Kong Equity Fund are determined by factors of the macro and micro economic conditions of the countries in which the underlying APIFs and/ or Approved ITCISs invest in. The geographical allocation of the underlying APIFs and/ or Approved ITCISs is classified in terms of the location of the primary listing of the securities except that in the case of the ADRs, GDRs or other depositary receipts, classification is in terms of the location of the primary listing of the underlying stocks. The currency exposure of the Sun Life MPF Hong Kong Equity Fund, in line with the underlying APIFs and/or Approved ITCISs, is expected to be primarily in Hong Kong dollars. Where investments of the underlying APIFs and/or Approved ITCISs are made in securities which are traded on foreign markets in foreign currencies, the currency exposure may be managed at the discretion of the investment managers of the underlying APIFs and/or Approved ITCISs, but it is likely that the impact of currency volatility on the portfolio will be limited.


12

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (iv) Sun Life MPF Hong Kong Equity Fund (continued)

Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions. Any such use of derivative instruments or securities lending transactions will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Hong Kong Equity Fund itself will not engage in securities lending transactions, financial futures or option trading or enter into repurchase agreements. The Sun Life MPF Hong Kong Equity Fund is suitable for members who are able to take a longer term investment horizon in order to access the higher returns usually available from equity investments and are prepared to accept a high level of risk so attached.

(v) Sun Life MPF Global Bond Fund The Sun Life MPF Global Bond Fund seeks to provide members with total return usually in excess of that achievable from bank deposits and money market securities. The Sun Life MPF Global Bond Fund achieves this objective by investing primarily in a portfolio of APIFs and/or Approved ITCISs to achieve a globally diversified portfolio of bonds and other debt instruments that meet the requirements of the Regulation. The Sun Life MPF Global Bond Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Global Bond Fund. Actual country weightings are determined by factors of the macro and micro economic conditions of the countries in which the underlying APIFs and/ or Approved ITCISs invest in.


13

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (v) Sun Life MPF Global Bond Fund (continued)

The underlying APIFs and/or Approved ITCISs may employ a portion of their assets in other securities permitted by the Regulation including money market instruments or other investments that are consistent with the objectives of the fund. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions; or entering into repurchase agreements. Any such use of these derivative instruments and repurchase agreements will be in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Global Bond Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements. As the securities that the underlying APIFs and/ or Approved ITCISs will invest in are normally traded on a daily basis, the net asset value of the Sun Life MPF Global Bond Fund may be subject to the changes in interest rate yields at which the bonds are traded. An increase in interest rates may result in a decline in the net asset value of the Sun Life MPF Global Bond Fund over short periods of time. Bonds with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities. Lower rated securities, whilst offering a higher yield, tend to have greater risk. The Sun Life MPF Global Bond Fund is suitable for members who are prepared to take a medium term time horizon and are prepared to accept a low to moderate level of risk in order to gain a higher level of return than is available from the Sun Life MPF Conservative Fund.


14

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (vi) Sun Life MPF Stable Fund

The Sun Life MPF Stable Fund is a balanced fund which seeks to provide members with steady capital appreciation. The Sun Life MPF Stable Fund achieves its investment policy by investing in a portfolio of APIFs and/ or Approved ITCISs, which in turn invest in the following assets – money market securities, cash deposits, fixed income securities and global equity securities. The Sun Life MPF Stable Fund is suitable for members who are prepared to accept a moderate degree of risk in order to gain a higher return than may be available from the Sun Life MPF Conservative Fund. Normal asset allocation for the Sun Life MPF Stable Fund is expected to be: By investment type: - Fixed income/money market investments 50% - 90% - Equity investments 10% - 50% Country allocations may vary according to the change of country market capitalization. The asset and country allocations of the Sun Life MPF Stable Fund are determined by factors of the macro and micro economic conditions of the countries underlying APIFs and/or Approved ITCISs invest in and may therefore change from time to time. The Sun Life MPF Stable Fund will maintain an effective currency exposure to the Hong Kong dollar of at least 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Stable Fund.


15

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (vi) Sun Life MPF Stable Fund (continued)

The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions or repurchase agreements. Any such use of derivative instruments, securities lending transactions or repurchase agreements will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Stable Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.

(vii) Sun Life MPF Balanced Fund The Sun Life MPF Balanced Fund is a balanced fund which seeks to provide members with moderate capital appreciation over the medium to long term. The Sun Life MPF Balanced Fund achieves this result by investing in a portfolio of APIFs and/ or Approved ITCISs, which in turn invest in the following assets: money market securities, cash deposits, fixed income securities and global equity securities. As such, the investment will, to a certain extent, be subject to the short term volatility of equity markets. The diversification of the portfolio between fixed income and equity securities is intended to reduce the impact of the short term risk, while enabling the Sun Life MPF Balanced Fund to meet its longer term objectives. The Sun Life MPF Balanced Fund is suitable for members who are able to take a medium to longer term investment horizon in order to access the potentially higher returns usually available from equity investments.


16

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (vii) Sun Life MPF Balanced Fund (continued)

The normal asset allocation for the Sun Life MPF Balanced Fund is expected to be: By investment type: - Fixed income/money market investments 30% - 70% - Equity investments 30% - 70% Country allocations may vary according to the change of country market capitalization. The asset and country allocations of the Sun Life MPF Balanced Fund are determined by factors of the macro and micro economic conditions of the countries underlying APIFs and/ or Approved ITCISs invest in and may therefore change from time to time. The Sun Life MPF Balanced Fund will maintain an effective currency exposure to the Hong Kong dollar of at least 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Balanced Fund. The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions or repurchase agreements. Any such use of derivative instruments, securities lending transactions or repurchase agreements will be effected in accordance with applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Balanced Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.


17

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (viii) Sun Life MPF Growth Fund

The Sun Life MPF Growth Fund is an equity fund which seeks to provide members with significant capital appreciation over the medium term to longer term, through investing in a portfolio of APIFs and/or Approved ITCISs, which in turn will invest primarily in equity investments. Given the primary focus on equity investments, the Sun Life MPF Growth Fund will usually maintain a limited exposure to fixed income securities. As such, the investment will be subject to the short term volatility of equity markets, which may result in a negative return over short term periods. The Sun Life MPF Growth Fund is suitable for members who are able to take a longer term investment horizon in order to access the potentially higher returns usually available from equity investments and are prepared to accept the risk so attached. The normal asset allocation for the Sun Life MPF Growth Fund is expected to be: By investment type: - Fixed income/money market investments 10% - 50% - Equity investments 50% - 90% The country allocations may vary according to the change of country market capitalization. The asset and country allocations of the Sun Life MPF Growth Fund are determined by factors of the macro and micro economic conditions of the countries underlying APIFs and/ or Approved ITCISs invest in and may therefore change from time to time. The Sun Life MPF Growth Fund will maintain an effective currency exposure to the Hong Kong dollar of at least 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Growth Fund.


18

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (viii) Sun Life MPF Growth Fund (continued)

The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions or repurchase agreements. Any such use of derivative instruments, securities lending transactions or repurchase agreements will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Growth Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.

(ix) Sun Life MPF Asian Equity Fund The Sun Life MPF Asian Equity Fund seeks to provide members with long term capital growth. The Sun Life MPF Asian Equity Fund achieves this objective through investing in a portfolio of APIFs and/ or Approved ITCISs that will invest at least 70% in Asian equities, including but not limited to Hong Kong, Singapore, South Korea, Taiwan, Thailand and Malaysia, but will not include Japan. Under normal asset allocation, through its investments in APIFs and/ or Approved ITCISs, the Sun Life MPF Asian Equity Fund will invest at least 70% of its net asset value in Asian equities, including but not limited to Hong Kong, Singapore, South Korea, Taiwan, Thailand and Malaysia, but will not include Japan. The Sun Life MPF Asian Equity Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Asian Equity Fund.


19

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (ix) Sun Life MPF Asian Equity Fund (continued)

The underlying APIFs and/or Approved ITCISs may employ a portion of their assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions. Any such use of derivative instruments or securities lending transactions will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Asian Equity Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements. The Sun Life MPF Asian Equity Fund is only suitable for members who are willing to assume a relatively higher level of risk to achieve potentially higher long term returns.

(x) Sun Life MPF Multi-Sector Equity Fund The Sun Life MPF Multi-Sector Equity Fund seeks to achieve long-term capital appreciation through investments in global equity sectors. The Sun Life MPF Multi-Sector Equity Fund achieves this objective through investing in a portfolio of APIFs and/ or Approved ITCISs. Given the above investment objective, investors should regard the Sun Life MPF Multi-Sector Equity Fund as a high risk investment. The return of the fund over the long term is expected to follow the trend of growth of global equity markets. The underlying APIFs and/or Approved ITCISs of the Sun Life MPF Multi-Sector Equity Fund will in aggregate invest in a portfolio of listed securities that belong to certain industry sectors, such as energy, financials, healthcare, technology or telecommunications through a geographically diversified portfolio of listed securities in world markets. The Investment Manager will, based on its own opinion on which sectors and what allocation weightings, decide which industry sectors to invest taking into account various factors including the growth outlook of the sectors, valuation of the sectors, technical indicators and the relative attractiveness of one sector over the other sectors. At all times, the Sun Life MPF Multi-Sector Equity Fund will invest in multiple sectors, and not a single sector.


20

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (x) Sun Life MPF Multi-Sector Equity Fund

Investments of underlying APIFs and/or Approved ITCISs in aggregate may cover a global range of markets including but not limited to Asia, Australasia, Japan, Europe and North America. The Sun Life MPF Multi-Sector Equity Fund will normally invest up to 100% of net asset in global equities. The Sun Life MPF Multi-Sector Equity Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will either result from investment exposure or currency hedging operations of the underlying APIFs and/ or Approved ITCISs of the Sun Life MPF Multi-Sector Equity Fund. The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts, options or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions. Any such use of derivative instruments or securities lending transactions will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Multi-Sector Equity Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.

(xi) Sun Life MPF Greater China Equity Fund The Sun Life MPF Greater China Equity Fund seeks to achieve long-term capital appreciation through investments in Hong Kong, China, Macau and Taiwan-related securities. The Sun Life MPF Greater China Equity Fund achieves this objective through investing in a portfolio of APIFs and/ or Approved ITCISs. Given the above investment objective, investors should regard the Sun Life MPF Greater China Equity Fund as a high risk investment. The return of the fund over the long term is expected to follow the trend of the growth of Greater China-related equity markets.


21

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xi) Sun Life MPF Greater China Equity Fund (continued)

The underlying portfolio of APIFs and/or Approved ITCISs of the Sun Life MPF Greater China Equity Fund invests at least 70% of their net asset value in a portfolio of listed securities issued by companies with either assets in, or revenues derived from, the People’s Republic of China, Hong Kong, Macau and/or Taiwan which are listed, traded or dealt in on regulated exchanges subject to the restrictions in the Regulation. Under normal asset allocation, through its investments in APIFs and/or Approved ITCISs, the Sun Life MPF Greater China Equity Fund will invest at least 70% of its net asset value in a portfolio of listed securities issued by companies with either assets in, or revenues derived from, the People’s Republic of China, Hong Kong, Macau and/or Taiwan which are listed, traded or dealt in on regulated exchanges subject to the restrictions in the Regulation. The Sun Life MPF Greater China Equity Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or Approved ITCISs of the Sun Life MPF Greater China Equity Fund. The underlying APIFs and/or Approved ITCISs may employ a portion of its assets in other securities permitted by the Regulation including, without limitation, money market instruments or interests in other collective investment schemes such as authorized unit trusts and index-tracking collective investment schemes. Assets of the underlying APIFs and/or Approved ITCISs may be applied for acquiring futures contracts and option or forward currency transactions for purposes allowed under the Regulation and in accordance with their investment limits and restrictions. Assets of the underlying APIFs and/or Approved ITCISs may also be applied for the purpose of entering into securities lending transactions. Any such use of derivative instruments or securities lending transactions will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs and/or Approved ITCISs. The Sun Life MPF Greater China Equity Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements.


22

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xii) Sun Life FTSE MPF Hong Kong Index Fund

The Sun Life FTSE MPF Hong Kong Index Fund is an equity index fund which seeks to provide members with investment results that, before fees and expenses, closely track the performance of the FTSE MPF Hong Kong Index. The Sun Life FTSE MPF Hong Kong Index Fund achieves this objective through investing solely in the iShare Hong Kong Equity Index Fund, a sub-fund of the BlackRock Premier Funds. The iShare Hong Kong Equity Index Fund is an Approved ITCIS, and managed by BlackRock Asset Management North Asia Limited. To achieve the investment objective of the iShare Hong Kong Equity Index Fund, BlackRock Asset Management North Asia Limited intends to invest primarily in securities included in the FTSE MPF Hong Kong Index using a Representative Sampling Strategy. The iShare Hong Kong Equity Index Fund may hold securities that are not included in the FTSE MPF Hong Kong Index. The iShare Hong Kong Equity Index Fund will primarily invest directly in the equity securities of the FTSE MPF Hong Kong Index. The iShare Hong Kong Equity Index Fund may invest up to 10% of its latest available net asset value in financial derivative instruments for the purposes of hedging and non-hedging including investment, and/or return optimization. The iShare Hong Kong Equity Index Fund does not intend to use financial derivative instruments extensively for investment purposes. The iShare Hong Kong Equity Index Fund will not directly or indirectly invest in China A shares, B shares and/or debt securities. The Sun Life FTSE MPF Hong Kong Index Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. The iShare Hong Kong Equity Index Fund does not currently intend to enter into any stock lending, repurchase or similar over-the-counter transactions. The Sun Life FTSE MPF Hong Kong Index Fund itself will not engage in securities lending transactions or repurchase agreements, financial futures and option trading. Whilst the investment objective of the Sun Life FTSE MPF Hong Kong Index Fund and the iShare Hong Kong Equity Index Fund is to track the FTSE MPF Hong Kong Index, there can be no assurance that the performance of the Sun Life FTSE MPF Hong Kong Index Fund and the iShare Hong Kong Equity Index Fund will at any time be identical to that of the FTSE MPF Hong Kong Index. Investment in the Sun Life FTSE MPF Hong Kong Index Fund is essentially subject to the same risks of the iShare Hong Kong Equity Index Fund.


23

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xii) Sun Life FTSE MPF Hong Kong Index Fund (continued)

The Sun Life FTSE MPF Hong Kong Index Fund is designed for members who are willing to assume a relatively higher level of risk to achieve potentially higher long term returns. FTSE MPF Hong Kong Index The FTSE MPF Hong Kong Index is a free float adjusted market capitalization index consisting of Hong Kong and China constituent securities listed on the Hong Kong and Singapore stock markets. The base currency of the FTSE MPF Hong Kong Index is Hong Kong dollars. The FTSE MPF Hong Kong Index forms part of the FTSE MPF Index Series which is compiled and managed by FTSE International Limited (“FTSE”). The FTSE MPF Index Series is based on the FTSE All-World Index Series. Specifically, the FTSE MPF Hong Kong Index consists of the Hong Kong listed HSBC Holdings and eligible large and mid cap Hong Kong and China companies (H Shares, Red Chips and P Chips listed on the Stock Exchange of Hong Kong) from the FTSE All-World Index. The FTSE MPF Hong Kong Index is an unhedged total return index – this means that (i) the index will not hedge its non-Hong Kong dollar currency exposure in the index back into Hong Kong dollars and (ii) the index measures the price movements of constituents assuming any cash distributions after dividend withholding tax are reinvested back into the index. Index Provider Disclaimer The Sun Life FTSE MPF Hong Kong Index Fund is not in any way sponsored, endorsed, sold or promoted by FTSE or the London Stock Exchange Group companies (“LSEG”) (together the “Licensor Parties”) and none of the Licensor Parties make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to (i) the results to be obtained from the use of the FTSE MPF Hong Kong Index (upon which the Sun Life FTSE MPF Hong Kong Index Fund is based), (ii) the figure at which the FTSE MPF Hong Kong Index is said to stand at any particular time on any particular day or otherwise, or (iii) the suitability of the FTSE MPF Hong Kong Index for the purpose to which it is being put in connection with the Sun Life FTSE MPF Hong Kong Index Fund. None of the Licensor Parties have provided or will provide any financial or investment advice or recommendation in relation to the FTSE MPF Hong Kong Index to Sun Life Trustee Company Limited or to its clients. The FTSE MPF Hong Kong Index is calculated by FTSE or its agent. None of the Licensor Parties shall be (a) liable (whether in negligence or otherwise) to any person for any error in the FTSE MPF Hong Kong Index or (b) under any obligation to advise any person of any error therein. All rights in the FTSE MPF Hong Kong Index vest in FTSE. “FTSE®” is a trade mark of LSEG and is used by FTSE under licence.


24

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xii) Sun Life FTSE MPF Hong Kong Index Fund (continued)

Description of Index Methodology of the FTSE MPF Hong Kong Index In accordance with the rules set out for the management of the FTSE MPF Index Series, exchanges that are not approved by the Authority will be excluded from the calculation of the FTSE MPF Index Series. More information about the FTSE MPF Hong Kong Index including the index rules, further information of the index methodology, the latest index value (published daily), index information, monthly reports (including top 10 largest constituents and weighting information) and other important news relating to the FTSE MPF Hong Kong Index can be obtained from the website of the index provider at www.ftse.com/hkmpf. FTSE and BlackRock Asset Management North Asia Limited (or its connected persons) are independent of each other. The index methodology of the FTSE MPF Hong Kong Index is subject to change from time to time and investors may refer to this website for up-to-date information about the index methodology.

(xiii) Sun Life MPF Age 65 Plus Fund Investment Objective The investment objective of the Sun Life MPF Age 65 Plus Fund is to provide stable growth to members by investing in a globally diversified manner.


25

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xiii) Sun Life MPF Age 65 Plus Fund (continued)

Investment Structure The Sun Life MPF Age 65 Plus Fund is a feeder fund and invest in an APIF, namely, Schroder MPF Core 20/80 Fund, which in turn invests in two APIFs as allowed under the Regulation. The investment structure of the Sun Life MPF Age 65 Plus Fund is illustrated as follows:

Managed by Sun Life Asset Management

(HK) Limited

Managed by Schroder Investment Management

(Hong Kong) Limited

Asset Allocation Through the underlying investment of Schroder MPF Core 20/80 Fund, the Sun Life MPF Age 65 Plus Fund will hold 20% of its net assets in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global fixed income and money market instruments). The asset allocation to Higher Risk Assets may vary between 15% and 25% due to differing price movements of various equity and bond markets. The principal underlying investments will be in securities listed on stock exchanges, government and corporate bonds and cash deposits worldwide. The asset allocation of the Sun Life MPF Age 65 Plus Fund to equities and fixed income instruments and money market instruments is set out below. Members should note that the actual allocation may at times be varied as market, economic and other conditions change. In any case, the Sun Life MPF Age 65 Plus Fund will at all times comply with the asset allocation requirements applicable to Age 65 Plus Fund (as defined in the MPF Ordinance). Subject to the above, the investment manager of the Schroder MPF Core 20/80 Fund invested by the Sun Life MPF Age 65 Plus Fund has discretion as to the asset allocation of the Schroder MPF Core 20/80 Fund.

Sun Life MPF

Age 65 Plus Fund

Schroder MPF

Core 20/80 Fund

APIF

APIF


26


Geographical Allocation Global equities 15% to 25%

Asia Pacific excluding Japan 0% to 12.5% United States 1.5% to 17.5% Japan 0% to 6.25% Europe 1.5% to 12.5% Others 0% to 7.5%

Fixed income securities and money market instruments 75% to 85% US Dollar 7.5% to 76.5% Global currencies Ex US Dollar 7.5% to 76.5%

Investment Strategy The two underlying APIFs invested by the Schroder MPF Core 20/80 Fund will be actively managed with reference to the constituent index for equity securities and the constituent index for fixed income securities (each a “Constituent Index”) under the Reference Portfolio respectively. The two underlying approved pooled investment funds adopt an investment strategy which selects securities based on certain characteristics such as (in the case of equity securities) attractive valuation, high quality, and low return volatility, and (in the case of fixed income securities) maturity, credit rating and liquidity, to build a diversified portfolio of equity securities and a diversified portfolio of fixed income securities, respectively. Up to 10% of the net asset value of the underlying APIFs may be invested in securities other than the underlying securities of the respective Constituent Index with the aim to enhance returns or reduce portfolio risks when compared to similar underlying securities of the respective Constituent Index. Hong Kong Dollar Currency Exposure The Sun Life MPF Age 65 Plus Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or the Sun Life MPF Age 65 Plus Fund.


27


Use of Derivatives, Securities Lending and Repurchase Agreement The Sun Life MPF Age 65 Plus Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements. The underlying APIFs may employ a portion of its assets in acquiring futures contracts, options and forward currency transactions for hedging purposes. The underlying APIFs do not intend to enter into securities lending transactions or repurchase agreements. Any such use of derivative instruments will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs. Risk Inherent and Expected Return The risk profile of Sun Life MPF Age 65 Plus Fund is determined by the Investment Manager with reference to that of Schroder MPF Core 20/80 Fund, which in turn is determined by Schroder Investment Management (Hong Kong) Ltd, based on various factors including volatility, investment objective and policy and asset allocation. This risk profile is provided for reference only, and may be updated periodically based on prevailing market conditions. The risk level of Sun Life MPF Age 65 Plus Fund is low and, as such, is suitable for members with 15 or less years before retirement. The return of the Sun Life MPF Age 65 Plus Fund over the long term is expected to be similar to the return of the Reference Portfolio.

(xiv) Sun Life MPF Core Accumulation Fund Investment Objective The investment objective of the Sun Life MPF Core Accumulation Fund is to provide capital growth to members by investing in a globally diversified manner.


28

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xiv) Sun Life MPF Core Accumulation Fund (continued)

Investment Structure The Sun Life MPF Core Accumulation Fund is a feeder fund and invest in an APIF, namely, Schroder MPF Core 60/40 Fund, which in turn invests in two APIFs as allowed under the Regulation. The investment structure of the Sun Life MPF Core Accumulation Fund is illustrated as follows:

Managed by Sun Life Asset Management

(HK) Limited

Managed by Schroder Investment Management

(Hong Kong) Limited

Asset Allocation Through the underlying investment of the Schroder MPF Core 60/40 Fund, the Sun Life MPF Core Accumulation Fund will hold 60% of its net assets in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global fixed income and money market instruments). The asset allocation to Higher Risk Assets may vary between 55% and 65% due to differing price movements of various equity and bond markets. The principal underlying investments will be in securities listed on stock exchanges, government and corporate bonds and cash deposits worldwide. The asset allocation of the Sun Life MPF Core Accumulation Fund to equities and fixed income instruments and money market instruments is set out below. Members should note that the actual allocation may at times be varied as market, economic and other conditions change. In any case, the Sun Life MPF Core Accumulation Fund will at all times comply with the asset allocation requirements applicable to Core Accumulation Fund (as defined in the MPF Ordinance). Subject to the above, the investment manager of the Schroder MPF Core 60/40 Fund invested by the Sun Life MPF Core Accumulation Fund has discretion as to the asset allocation of the Schroder MPF Core 60/40 Fund.

Sun Life MPF Core Accumulation Fund

Schroder MPF

Core 60/40 Fund

APIF

APIF


29

Investment report for the year ended 31 December 2019 (continued) The investment policies of the respective constituent funds are as follows: (continued) (xiv) Sun Life MPF Core Accumulation Fund (continued)

Geographical Allocation Global equities 55% to 65%

Asia Pacific excluding Japan 0% to 32.5% United States 5.5% to 45.5% Japan 0% to 16.25% Europe 5.5% to 32.5% Others 0% to 19.5%

Fixed income securities and money market instruments 35% to 45% US Dollar 3.5% to 40.5% Global currencies Ex US Dollar 3.5% to 40.5%

Investment Strategy The two underlying APIFs invested by the Schroder MPF Core 60/40 Fund will be actively managed with reference to the constituent index for equity securities and the constituent index for fixed income securities (each a “Constituent Index”) under the Reference Portfolio respectively. The two underlying approved pooled investment funds adopt an investment strategy which selects securities based on certain characteristics such as (in the case of equity securities) attractive valuation, high quality, and low return volatility, and (in the case of fixed income securities) maturity, credit rating and liquidity, to build a diversified portfolio of equity securities and a diversified portfolio of fixed income securities, respectively. Up to 10% of the net asset value of the underlying APIFs may be invested in securities other than the underlying securities of the respective Constituent Index with the aim to enhance returns or reduce portfolio risks when compared to similar underlying securities of the respective Constituent Index. Hong Kong Dollar Currency Exposure The Sun Life MPF Core Accumulation Fund will maintain an effective currency exposure to Hong Kong dollars of not less than 30%. This will result from investment exposure or currency hedging operations of the underlying APIFs and/or the Sun Life MPF Core Accumulation Fund.


30

Investment report for the year ended 31 December 2019 (continued) (xiv) Sun Life MPF Core Accumulation Fund (continued)

Use of Derivatives, Securities Lending and Repurchase Agreement The Sun Life MPF Core Accumulation Fund itself will not engage in securities lending transactions, financial futures and option trading or enter into repurchase agreements. The underlying APIFs may employ a portion of its assets in acquiring futures contracts, options and forward currency transactions for hedging purposes. The underlying APIFs do not intend to enter into any securities lending transactions or repurchase agreements. Any such use of derivative instruments will be effected in accordance with the applicable regulatory requirements and the terms of the constitutive documents of the underlying APIFs. Risk Inherent and Expected Return The risk profile of Sun Life MPF Core Accumulation Fund is determined by the Investment Manager with reference to that of Schroder MPF Core 60/40 Fund, which in turn is determined by Schroder Investment Management (Hong Kong) Ltd, based on various factors including volatility, investment objective and policy and asset allocation. This risk profile is provided for reference only, and may be updated periodically based on prevailing market conditions. The risk level of Sun Life MPF Core Accumulation Fund is medium and, as such, is suitable for members with more than 10 years before retirement. The return of Sun Life MPF Core Accumulation Fund over the long term is expected to be similar to the return of the Reference Portfolio.


31

Investment report for the year ended 31 December 2019 (continued) Review Global equity markets gained in 2019, mainly driven the stellar performance from the US market. MSCI AC world Net Total Return Index ended the year higher by 26.6%. Despite the intensified US-China trade tension where the trade negotiations was once in a deadlock in the middle of the year, strong US economic backdrop, mainly revealed by robust job creation and consumption data, fueled corporate earnings and therefore the stock market. S&P 500 Index, the benchmark for US equities, surged 28.9% in the year. Tech sector delivered even brisker return with the tech-laden Nasdaq Composite Index surging as much as 35.2% in the year. Other developed market equities also ended the year higher but obviously underperformed their US counterparts. In the wake of the overhang from Brexit and weakened industrial production, European equities had weaker upward momentum. Japanese market was also dragged by continued disinflation and subdued consumption, while the enlarged government fiscal packages managed to buoy the stock market. MSCI AC Asia ex Japan Net Total Return Index rose 18.2% in 2019. China equity market, being the major one within the region, came under pressure for the better part of the year, mainly hit by the nation’s protracted trade negations with the US. In addition, investors were concerned over the domestic economy on the heels of slower GDP and industrial profit prints. In the fourth quarter, China equities staged a strong comeback as investors turned more upbeat upon a slew of positive factors. US-China trade wars were poised to de-escalate, with the “phase one” trade deal implying no further tariff hikes to be imposed for Chinese exports. Certain leading indicators such as manufacturing PMIs and credit growth also managed to show sequential improvement. Other major Asian markets were mix. Taiwanese equities were the major gainer in 2019, fueled by the strong performance in tech names. Korean and Indian equities were relatively weaker due to subsided domestic consumption. Indian market was particularly hit by rising fiscal pressure so that its country outlook was downgraded by Moody’s. MSCI Hong Kong Net Total Return Index was 10.3% higher for the year, also trailed among Asian markets. Prolonged protests in Hong Kong badly hit domestic property, retail and tourism industries. Hong Kong economy entered into a technical recession in the third quarter. Fixed income broad markets registered promising returns to investors in 2019, with Bloomberg Barclays Global Aggregate Total Return Index rising 6.8%. US Fed pivoted to accommodative monetary policy throughout the year, by cutting interest rates three times and expanding the size of their balance sheet to nearly US$4.2 trillion. The Fed also signaled that interest rates would remain at their low level through 2020. US treasury yield declined in the year, with the 10-year genre falling from 2.68% to 1.92%. Other major central banks also acted in concert to cut rates, against the backdrop of US-China trade spats and Brexit. The European Central Bank announced rate cuts and a new round of quantitative easing, which were designated to stimulate economic growth and


32

Investment report for the year ended 31 December 2019 (continued) Review (continued) boost inflation. The central bank moved interest rates further into negative territory. The European Central Bank’s asset purchase program resumed in November at a pace of 20 billion euros per month. In China, RMB depreciated sharply during the second and third quarters of 2019, when the US-China trade tension and worsened macro condition severely dampened market sentiment. However, RMB strengthened towards the end of the year when US-China “phase one” trade deal was around the corner. For the full-year, RMB fell slightly of 1.2%. People’s Bank of China’s monetary policy stance remained fairly loose throughout the year, especially in the second half whereby liquidity being injected into onshore banking system with investors’ higher expectation of reserve requirement ratio cut. In Hong Kong, intensified US-China trade tension led to risk-off sentiment and rising HIBOR during the second quarter of 2019, while the effect of protests and credit rating downgrades on Hong Kong rates market remained muted. HKD funding squeeze before the year-end resulted into a higher rates from HKD compared to USD. Widened interest rate differential led HKD to move away from the weak side of the trading band and finished the year at 7.79.


33

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Investment income and performance Sun Life MPF RMB and HKD Fund 2019 2018 2017 Net appreciation/(depreciation) of

investments - unrealised $ 2,318,800 $ (319,346) $ 3,471,371 Net (loss)/return from investments

- realised (3,038,638) (4,010,467) 3,334,351

Sun Life MPF Conservative Fund 2019 2018 2017 Net appreciation of investments -

unrealised $ 1,820,190 $ 10,144,956 $ 1,050,262 Net return from investments - realised 27,836,033 5,852,372 2,305,729

Sun Life MPF Hong Kong Dollar Bond Fund 2019 2018 2017 Net appreciation of investments -

unrealised $ 84,340,486 $ 31,692,925 $ 35,061,695 Net return from investments - realised 20,651,309 15,057,451 36,540,048

Sun Life MPF Hong Kong Equity Fund

2019 2018 2017 Net appreciation/(depreciation) of

investments - unrealised $ 3,709,586,100 $(5,427,396,210) $ 6,085,242,382 Net return from investments - realised 551,210,427 2,535,661,575 1,670,134,248


34

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Investment income and performance (continued) Sun Life MPF Global Bond Fund 2019 2018 2017 Net appreciation/(depreciation) of

investments - unrealised $ 46,762,211 $ (6,998,457) $ 17,014,835 Net return from investments - realised 5,148,495 141,374 397,862

Sun Life MPF Stable Fund 2019 2018 2017 Net appreciation/(depreciation) of

investments - unrealised $ 509,549,463 $ (295,073,001) $ 273,353,554 Net return from investments - realised 33,870,785 107,025,817 189,396,299

Sun Life MPF Balanced Fund 2019 2018 2017 Net appreciation/(depreciation) of


Sun Life MPF Growth Fund 2019 2018 2017 Net appreciation/(depreciation) of


Sun Life MPF Asian Equity Fund 2019 2018 2017 Net appreciation/(depreciation) of



35

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Investment income and performance (continued) Sun Life MPF Multi-Sector Equity Fund 2019 2018 2017 Net appreciation/(depreciation) of


Sun Life MPF Greater China Equity Fund 2019 2018 2017 Net appreciation/(depreciation) of


Sun Life FTSE MPF Hong Kong Index Fund 2019 2018 2017 Net appreciation/(depreciation) of


Sun Life MPF Age 65 Plus Fund 2019 2018 2017 Net appreciation/(depreciation) of

investments - unrealised $ 52,367,906 $ (3,769,717) $ 2,267,584 Net return from investments - realised 3,275,541 596,632 403,717

Sun Life MPF Core Accumulation Fund 2019 2018 2017 Net appreciation/(depreciation) of



36

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF RMB and HKD Fund Investment portfolio

Nominal

value Market

value % of net

assets Quoted investments Bonds Denominated in Renminbi Agricultural Development Bank Of China 3.08%

29/05/2020 10,000,000 $ 11,211,337 1.67 Agricultural Development Bank Of China 4.16%

27/09/2020 5,000,000 5,694,492 0.85 Bank Of China Ltd (Johannesburg Branch)

4.88% 20/04/2020 10,000,000 11,339,950 1.69 Bank Of China Ltd (Macau Branch) 3.1%

17/04/2020 17,000,000 19,129,231 2.84 People's Republic Of China Government 3%

21/05/2020 5,000,000 5,618,054 0.83 People's Republic Of China Government 3.99%

26/06/2020 10,000,000 11,253,180 1.67 Fonterra Co-Operative Group Ltd 4%

22/06/2020 15,000,000 16,830,422 2.50 Hong Kong Mortgage Corp Ltd 2.71%

21/02/2020 15,000,000 17,159,452 2.55 Korea Development Bank 3.05% 22/02/2020 10,000,000 11,475,218 1.71 KFW 2.75% 14/05/2020 15,000,000 17,053,252 2.54 Oversea-Chinese Banking Corporation Ltd

3.5% 05/02/2020 2,000,000 2,269,066 0.34 Royal Bank Of Canada 4.25% 29/09/2020 10,000,000 11,397,453 1.69

$ 140,431,107 20.88 ------------------- ------------


37

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF RMB and HKD Fund (continued) Investment portfolio (continued)

Nominal

value Market

value % of net

assets Quoted investments (continued) Certificates of deposit Denominated in Hong Kong Dollar Agricultural Bank Of China Ltd (Hong Kong

Branch) 0% 24/04/2020 10,000,000 $ 9,920,537 1.49 Agricultural Bank Of China Ltd (Hong Kong

Branch) 1.75% 26/03/2020 8,000,000 8,090,597 1.20 Agricultural Bank Of China Ltd (Hong Kong

Branch) 2.14% 13/05/2020 3,000,000 3,035,222 0.45 Bank Of China Ltd (Hong Kong Branch) 0%

15/01/2020 8,000,000 7,992,960 1.19 Bank Of China Ltd (Hong Kong Branch) 2%

08/04/2020 5,000,000 5,062,313 0.75 Bank Of China Ltd (Hong Kong Branch) 2.15%



23/01/2020 6,000,000 6,130,863 0.91 China Development Bank (Hong Kong Branch)

2.1% 03/11/2020 5,000,000 4,998,486 0.74 China Development Bank (Hong Kong Branch)


2.2% 31/01/2020 5,000,000 5,041,916 0.75 DBS Bank Hong Kong Ltd 0% 18/05/2020 8,000,000 7,931,520 1.18 Hongkong And Shanghai Banking Corporation

Ltd 1.95% 09/04/2020 7,000,000 7,083,856 1.05

$ 81,422,824 12.11 ------------------- ------------


38

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF RMB and HKD Fund (continued) Investment portfolio (continued)

Nominal

value Market

value % of net

assets Quoted investments (continued) Certificates of deposit (continued) Denominated in Renminbi China Development Bank (Hong Kong Branch)

2.54% 17/07/2020 10,000,000 $ 11,276,380 1.68 China Development Bank (Hong Kong Branch)

2.8% 22/07/2020 10,000,000 11,301,214 1.68 Industrial And Commercial Bank Of China Ltd

(Sydney Branch) 3.3% 02/04/2020 10,000,000 11,461,844 1.70 Industrial And Commercial Bank Of China Ltd

(Sydney Branch) 3.33% 03/04/2020 15,000,000 17,193,606 2.56

$ 51,233,044 7.62 ------------------- ------------

Total quoted investments * $ 273,086,975 40.61 Other net assets 399,446,377 59.39

Net assets attributable to the members at 31 December 2019 $ 672,533,352 100.00

Total investments at cost * $ 269,132,760 * Investments are accounted for on a trade date basis.


39

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF RMB and HKD Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December

2018 Additions Deductions

As at 31 December

2019 Quoted investments Bonds Denominated in Renminbi Agricultural Development Bank Of China

3.20% 10/11/2019 - 25,000,000 25,000,000 - Agricultural Development Bank Of China

3.08% 29/05/2020 - 10,000,000 - 10,000,000 Agricultural Development Bank Of China

4.16% 27/09/2020 - 5,000,000 - 5,000,000 ANZ Banking Group Ltd (Anleihe) 3.80%

30/09/2019 - 7,000,000 7,000,000 - Bank Of China (Macau Branch) 4.45%

05/03/2019 15,000,000 - 15,000,000 - Bank Of China Ltd (Johannesburg

Branch) 4.88% 20/04/2020 - 10,000,000 - 10,000,000 Bank Of China Ltd (Macau Branch) 3.1%

17/04/2020 - 17,000,000 - 17,000,000 Bank Of China Ltd (Paris Branch) 3.85%

15/07/2019 - 4,000,000 4,000,000 - Central American Bank for Economic

Integration 3.95% 21/09/2019 - 19,000,000 19,000,000 - People's Republic Of China Government

2.65% 29/06/2019 - 4,000,000 4,000,000 - People's Republic Of China Government

3% 21/11/2019 - 4,500,000 4,500,000 - People's Republic Of China Government

3% 21/05/2020 - 5,000,000 - 5,000,000 People's Republic Of China Government

3.25% 22/05/2019 - 15,500,000 15,500,000 - People's Republic Of China Government

3.99% 26/06/2020 - 10,000,000 - 10,000,000 China Construction Bank (Asia) Corp Ltd

3.75% 18/11/2019 - 25,000,000 25,000,000 -


40

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF RMB and HKD Fund (continued) Statement of movements in investment portfolio (continued) Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments (continued) Bonds (continued) Denominated in Renminbi Export-import Bank of Korea 3.7%

28/11/2019 - 12,000,000 12,000,000 - Export-import Bank of Korea 4.45%

09/12/2019 - 15,000,000 15,000,000 - Export Development Canada 4.18%

29/03/2019 15,000,000 - 15,000,000 - Fonterra Co-Operative Group Ltd 3.6%

29/01/2019 15,000,000 - 15,000,000 - Fonterra Co-Operative Group Ltd 4%

22/06/2020 - 15,000,000 - 15,000,000 Hong Kong Mortgage Corp Ltd 2.71%

21/02/2020 - 15,000,000 - 15,000,000 ICBC (Tokyo Branch) 3.80%%

31/10/2019 - 25,000,000 25,000,000 - ICBC (Singapore Branch) 3.7%

23/09/2019 - 14,730,000 14,730,000 - International Finance Corporation 3.1%

24/09/2019 - 19,890,000 19,890,000 - KFW 2.75% 14/05/2020 - 15,000,000 - 15,000,000 Korea Development Bank 3.05%

22/02/2020 - 10,000,000 - 10,000,000 L-Bank 3.8% 03/06/2019 - 15,000,000 15,000,000 - Oversea-Chinese Banking Corporation

Ltd 3.5% 05/02/2020 - 2,000,000 - 2,000,000 Rabobank 3.4% 26/08/2019 - 25,000,000 25,000,000 - Royal Bank Of Canada 4.25%

29/09/2020 - 10,000,000 - 10,000,000


41


As at 31 December


As at 31 December

2019 Quoted investments (continued) Certificates of deposits Denominated in Hong Kong Dollar Agricultural Bank Of China Ltd (Hong

Kong Branch) 0% 27/11/2019 - 8,000,000 8,000,000 - Agricultural Bank Of China Ltd (Hong

Kong Branch) 0% 22/01/2019 5,000,000 - 5,000,000 - Agricultural Bank Of China Ltd (Hong


Kong Branch) 0% 24/04/2020 - 10,000,000 - 10,000,000 Agricultural Bank Of China Ltd (Hong

Kong Branch) 1.75% 26/03/2020 - 8,000,000 - 8,000,000 Agricultural Bank Of China Ltd (Hong

Kong Branch) 1.9% 25/01/2019 10,000,000 - 10,000,000 - Agricultural Bank Of China Ltd (Hong

Kong Branch) 2.14% 13/05/2020 - 3,000,000 - 3,000,000 Bank Of China Ltd (Hong Kong Branch)

0% 09/07/2019 10,000,000 - 10,000,000 - Bank Of China Ltd (Hong Kong Branch)

0% 15/01/2020 - 8,000,000 - 8,000,000 Bank Of China Ltd (Hong Kong Branch)


2.12% 14/03/2019 5,000,000 - 5,000,000 - Bank Of China Ltd (Hong Kong Branch)

2.15% 21/05/2020 - 6,000,000 - 6,000,000 Bank Of China Ltd (Hong Kong Branch)




2.6% 10/10/2019 5,000,000 - 5,000,000 -


42


As at 31 December


As at 31 December

2019 Quoted investments (continued) Certificates of deposits (continued) Denominated in Hong Kong Dollar China Development Bank (Hong Kong

Branch) 0% 02/05/2019 15,000,000 - 15,000,000 - China Development Bank (Hong Kong



Branch) 2.1% 03/11/2020 - 5,000,000 - 5,000,000 China Development Bank (Hong Kong


Branch) 2.2% 31/01/2020 - 5,000,000 - 5,000,000 DAH Sing Bank Ltd 2.55% 06/09/2019 5,000,000 - 5,000,000 - DBS Bank (Hong Kong) Ltd 0%

24/05/2019 5,000,000 - 5,000,000 - DBS Bank (Hong Kong) Ltd 0%

18/05/2020 - 8,000,000 - 8,000,000 DBS Bank (Hong Kong) Ltd 1.65%

02/05/2019 - 5,000,000 5,000,000 - DBS Bank (Hong Kong) Ltd 2%

15/11/2019 - 7,000,000 7,000,000 - Hongkong And Shanghai Banking

Corporation Ltd 1.95% 09/04/2020 - 7,000,000 - 7,000,000 Shinhan Bank (Hong Kong Branch) 0%

22/01/2019 5,000,000 - 5,000,000 - Shinhan Bank (Hong Kong Branch) 0%

29/04/2019 - 5,000,000 5,000,000 -


43


As at 31 December


As at 31 December

2019 Quoted investments (continued) Certificates of deposits (continued) Denominated in Renminbi Bank Of China Ltd (Hong Kong Branch)

3.4% 23/08/2019 - 10,000,000 10,000,000 - Bank Of Communication 3.8% 02/08/19 - 25,000,000 25,000,000 - China Development Bank (Hong Kong

Branch) 3.5% 09/09/2019 - 5,000,000 5,000,000 - China Development Bank (Hong Kong



Branch) 3.8% 31/05/2019 10,000,000 - 10,000,000 - Industrial And Commercial Bank Of

China Ltd (Sydney Branch) 2.18% 18/12/2019 - 15,000,000 15,000,000 -

Industrial And Commercial Bank Of China Ltd (Sydney Branch) 3.3% 02/04/2020 - 10,000,000 - 10,000,000

Industrial And Commercial Bank Of China Ltd (Sydney Branch) 3.33% 03/04/2020 - 15,000,000 - 15,000,000

Treasury Bills Denominated in Hong Kong Dollar Hong Kong Treasury Bills 0% 13/11/2019 - 5,000,000 5,000,000 -


44

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Conservative Fund Investment portfolio

Nominal

value Market

value % of net

assets Quoted investments Certificates of deposit Denominated in Hong Kong Dollar Agricultural Bank Of China Ltd (Hong Kong

Branch) 0% 24/04/2020 80,000,000 $ 79,364,292 0.77 Agricultural Bank Of China Ltd (Hong Kong

Branch) 1.75% 26/03/2020 42,000,000 42,475,636 0.41 Agricultural Bank Of China Ltd (Hong Kong

Branch) 2.14% 13/05/2020 15,000,000 15,176,108 0.15 Bank Of China Ltd (Hong Kong Branch) 0%

15/01/2020 50,000,000 49,956,000 0.48 Bank Of China Ltd (Hong Kong Branch) 2%




23/01/2020 75,000,000 76,635,782 0.74 China Development Bank (Hong Kong Branch)


2.2% 31/01/2020 105,000,000 105,880,235 1.03


45

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Conservative Fund (continued) Investment portfolio (continued)

Nominal

value Market

value % of net

assets Quoted investments (continued) Certificates of deposit (continued) Denominated in Hong Kong Dollar DAH Sing Bank Ltd 2.18% 18/05/2020 25,000,000 25,300,757 0.25 DBS Bank Hong Kong Ltd 2.24% 28/02/2020 70,000,000 70,483,742 0.68 Fubon Bank Hong Kong Ltd 2.34% 23/04/2020 200,000,000 200,588,249 1.94 Hongkong And Shanghai Banking Corporation

Ltd 1.95% 09/04/2020 80,000,000 80,958,355 0.78 Hongkong And Shanghai Banking Corporation

Ltd 2.13% 03/02/2020 105,000,000 105,845,264 1.02 KDB Asia Ltd 2% 12/05/2020 80,000,000 80,849,386 0.78

$ 1,297,323,340 12.55

Total quoted investments * $ 1,297,323,340 12.55 Other net assets 9,043,591,880 87.45

Net assets attributable to the members at 31 December 2019 $10,340,915,220 100.00

Total investments at cost * $ 1,284,473,173

* Investments are accounted for on a trade date basis.


46

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Conservative Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Certificates of deposit Denominated in Hong Kong Dollar Agricultural Bank Of China Ltd (Hong

Kong Branch) 0% 27/11/2019 - 80,000,000 80,000,000 - Agricultural Bank Of China Ltd (Hong



Kong Branch) 1.9% 25/01/2019 52,000,000 - 52,000,000 - Agricultural Bank Of China Ltd (Hong

Kong Branch) 0% 24/04/2020 - 80,000,000 - 80,000,000 Agricultural Bank Of China Ltd (Hong

Kong Branch) 1.75% 26/03/2020 - 42,000,000 - 42,000,000 Agricultural Bank Of China Ltd (Hong

Kong Branch) 2.14% 13/05/2020 - 15,000,000 - 15,000,000 Bank Of China Ltd (Hong Kong Branch)

0% 09/07/2019 100,000,000 - 100,000,000 - Bank Of China Ltd (Hong Kong Branch)








2.4% 23/01/2020 - 75,000,000 - 75,000,000


47

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Conservative Fund (continued) Statement of movements in investment portfolio (continued) Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments (continued) Certificates of deposit (continued) Denominated in Hong Kong Dollar China Development Bank (Hong Kong




Branch) 2.38% 31/05/2019 70,000,000 - 70,000,000 - China Development Bank (Hong Kong


Branch) 2.2% 31/01/2020 - 105,000,000 - 105,000,000 DAH Sing Bank Ltd 2.18% 18/05/2020 - 25,000,000 - 25,000,000 Dah Sing Bank Ltd 2.55% 06/09/2019 50,000,000 - 50,000,000 - DBS Bank (Hong Kong) Ltd 0%



25/01/2019 100,000,000 - 100,000,000 - DBS Bank (Hong Kong) Ltd 2.24%

28/02/2020 - 70,000,000 - 70,000,000 DBS Bank (Hong Kong) Ltd 1.65%

04/05/2019 - 100,000,000 100,000,000 - DBS Bank (Hong Kong) Ltd 2%

15/11/2019 - 97,000,000 97,000,000 - Fubon Bank Hong Kong Ltd 2.34%

23/04/2020 - 200,000,000 - 200,000,000 Hongkong And Shanghai Banking

Corporation Ltd 1.95% 09/04/2020 - 80,000,000 - 80,000,000 Hongkong And Shanghai Banking

Corporation Ltd 2.13% 03/02/2020 - 105,000,000 - 105,000,000 Hongkong And Shanghai Banking

Corporation Ltd 1.74% 04/10/2019 - 78,000,000 78,000,000 -


48

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Conservative Fund (continued) Statement of movements in investment portfolio (continued) Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments (continued) Certificates of deposit (continued) Denominated in Hong Kong Dollar KDB Asia Ltd 2% 12/05/2020 - 80,000,000 - 80,000,000 OCBC Wing Hang Bank Limited 2%

29/11/2019 - 70,000,000 70,000,000 - Shinhan Bank (Hong Kong Branch) 0%

22/01/2019 36,000,000 - 36,000,000 - Shinhan Bank (Hong Kong Branch) 0%

29/04/2019 - 51,000,000 51,000,000 - Sumitomo Mitsui Trust Bank Ltd (Hong

Kong Branch) 0% 08/02/2019 35,000,000 - 35,000,000 - Treasury Bills Denominated in Hong Kong Dollar Hong Kong Treasury Bills 0% 04/09/2019 - 200,000,000 200,000,000 - Hong Kong Treasury Bills 0% 07/08/2019 - 200,000,000 200,000,000 - Hong Kong Treasury Bills 0% 11/09/2019 - 340,000,000 340,000,000 - Hong Kong Treasury Bills 0% 14/08/2019 - 200,000,000 200,000,000 - Hong Kong Treasury Bills 0% 18/09/2019 - 200,000,000 200,000,000 - Hong Kong Treasury Bills 0% 21/08/2019 - 100,000,000 100,000,000 - Hong Kong Treasury Bills 0% 28/08/2019 - 100,000,000 100,000,000 -


49

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Hong Kong Dollar Bond Fund Investment portfolio

Holdings Market value % of net

assets Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Hong Kong Bond Fund 126,047,518 $ 2,005,416,004 53.43 Invesco Pooled Investment Fund - HK$ Bond Fund Class B 38,505,341 749,668,180 19.97 JPMorgan SAR Funds - JPMorgan SAR HK$ Bond Fund - Class C 11,673,240 120,117,639 3.20 Principal Life Style Fund - Principal Hong Kong Bond Fund Pension

Class 69,890,408 855,283,869 22.79

Total quoted investments * $ 3,730,485,692 99.39 Other net assets 23,037,690 0.61

Net assets attributable to the members at 31 December 2019 $ 3,753,523,382 100.00

Total investment at cost * $ 3,563,885,752

* Investment is accounted for on a trade date basis.


50

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Hong Kong Dollar Bond Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Hong Kong Bond Fund 100,445,093 38,282,550 12,680,125 126,047,518 Invesco Pooled Investment Fund - HK$ Bond Fund Class B 29,387,581 20,439,390 11,321,630 38,505,341 JPMorgan SAR HK$ Bond Fund - Class C - 11,673,240 - 11,673,240 Principal Life Style Fund - Principal Hong Kong Bond Fund

Pension Class 49,213,027 33,062,994 12,385,613 69,890,408


51

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Hong Kong Equity Fund Investment portfolio


assets Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Hong Kong Equity Fund 433,403,209 $21,206,419,017 69.57 Invesco Pooled Investment Fund - Hong Kong and China Fund Class B 27,518,792 1,529,555,014 5.02 Principal Life Style Fund - Principal Hong Kong Equity Fund Pension

Class 53,762,103 2,391,806,085 7.85 Schroder Institutional Pooled Fund - Hong Kong Equity Fund Class B 56,854,547 4,223,150,050 13.86 Templeton MPF Investment Funds - Franklin MPF Hong Kong Equity Fund

Class X 89,369,713 893,697,130 2.93

Total quoted investments * $30,244,627,296 99.23 Other net assets 235,265,991 0.77

Net assets attributable to the members at 31 December 2019 $30,479,893,287 100.00

Total investment at cost * $24,357,761,020



52

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Hong Kong Equity Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Hong Kong Equity

Fund 351,719,076 115,468,741 33,784,608 433,403,209 Invesco Pooled Investment Fund - Hong Kong and China Fund Class B - 27,518,792 - 27,518,792 Principal Life Style Fund - Principal Hong Kong Equity Fund

Pension Class 94,370,165 16,030,722 56,638,784 53,762,103 Schroder Institutional Pooled Fund - Hong Kong Equity Fund Class B 75,591,691 9,999,250 28,736,394 56,854,547 Templeton MPF Investment Funds - Franklin MPF Hong Kong Equity Fund

Class X 117,846,133 - 28,476,420 89,369,713


53

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Global Bond Fund Investment portfolio


assets Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund 16,730,489 $ 431,479,317 27.47 - First State MPF Global Bond Fund 31,960,453 631,218,956 40.18 Invesco Pooled Investment Fund - MPF Bond Fund Class B 19,131,931 452,839,416 28.82 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund Class A 2,170,796 45,825,501 2.92






54

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Global Bond Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund - 16,957,190 226,701 16,730,489 - First State MPF Global Bond Fund 18,486,657 18,779,265 5,305,469 31,960,453 Invesco Pooled Investment Fund - MPF Bond Fund Class B 11,151,733 10,121,625 2,141,427 19,131,931 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund

Class A 9,980,352 2,414,513 10,224,069 2,170,796


55

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Stable Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund - Allianz Choice Asian Fund Ordinary Class I 2,773,988 $ 127,880,857 1.99 First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund 26,513,520 683,783,675 10.64 - First State MPF Asia Region Equity Fund 4,619,515 401,666,791 6.25 - First State MPF Global Bond Fund 112,852,256 2,228,832,056 34.70 - First State MPF Hong Kong Bond Fund 17,003,621 270,527,607 4.21 - First State MPF Hong Kong Equity Fund 11,926,285 583,553,112 9.08 - Stewart Investors MPF Global Equity Fund 13,742,910 356,216,233 5.55 Invesco Pooled Investment Fund - MPF Bond Fund Class B 34,298,245 811,815,459 12.64 Principal Life Style Fund - Principal Hong Kong Bond Fund Pension

Class 18,867,704 230,893,524 3.59 - Principal Hong Kong Equity Fund Pension

Class 2,696,682 119,971,892 1.87 Schroder MPF Umbrella Fund - Schroder MPF International Fund Class B 22,186,388 505,849,649 7.87 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund Class A 49,192 1,038,453 0.02






56

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Stable Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund - Allianz Choice Asian Fund Ordinary

Class I 3,901,747 1,608,732 2,736,491 2,773,988 First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund 16,984,081 11,843,455 2,314,016 26,513,520 - First State MPF Asia Region Equity

Fund 3,768,533 1,247,763 396,781 4,619,515 - First State MPF Global Bond Fund 95,275,538 24,850,556 7,273,838 112,852,256 - First State MPF Hong Kong Bond Fund 16,296,515 2,665,443 1,958,337 17,003,621 - First State MPF Hong Kong Equity Fund 12,431,573 602,607 1,107,895 11,926,285 - Stewart Investors MPF Global Equity

Fund 13,202,598 2,038,800 1,498,488 13,742,910 Invesco Pooled Investment Fund - MPF Bond Fund Class B 16,831,795 19,701,286 2,234,836 34,298,245 Principal Life Style Fund - Principal Hong Kong Bond Fund

Pension Class 22,152,450 5,789,065 9,073,811 18,867,704 - Principal Hong Kong Equity Fund

Pension Class 4,447,209 797,926 2,548,453 2,696,682 Schroder MPF Umbrella Fund - Schroder MPF International Fund

Class B 15,815,406 10,962,368 4,591,386 22,186,388 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund

Class A 10,024,202 2,011,634 11,986,644 49,192


57

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Balanced Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund - Allianz Choice Asian Fund Ordinary Class I 1,648,291 $ 75,986,197 1.35 First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund 23,092,342 595,551,488 10.61 - First State MPF Asia Region Equity Fund 4,821,281 419,210,351 7.47 - First State MPF Global Bond Fund 57,046,086 1,126,660,194 20.08 - First State MPF Hong Kong Bond Fund 11,840,568 188,383,430 3.36 - First State MPF Hong Kong Equity Fund 14,111,185 690,460,301 12.30 - Stewart Investors MPF Global Equity Fund 14,140,831 366,530,351 6.53 Invesco Pooled Investment Fund - MPF Bond Fund Class B 18,266,939 432,365,656 7.71 Principal Life Style Fund - Principal Hong Kong Bond Fund Pension

Class 11,589,054 141,821,052 2.53 - Principal Hong Kong Equity Fund Pension

Class 2,428,547 108,042,877 1.93 Schroder MPF Umbrella Fund - Schroder MPF International Fund Class B 61,185,597 1,395,031,612 24.86 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund Class A 36,729 775,349 0.01






58

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Balanced Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund - Allianz Choice Asian Fund Ordinary

Class I 3,579,012 564,207 2,494,928 1,648,291 First State MPF Umbrella Fund - First State MPF Asia Region Bond Fund 10,127,270 14,166,936 1,201,864 23,092,342 - First State MPF Asia Region Equity

Fund 3,276,874 1,818,719 274,312 4,821,281 - First State MPF Global Bond Fund 53,054,232 6,413,315 2,421,461 57,046,086 - First State MPF Hong Kong Bond Fund 11,236,539 1,506,742 902,713 11,840,568 - First State MPF Hong Kong Equity

Fund 11,846,811 3,259,703 995,329 14,111,185 - Stewart Investors MPF Global Equity

Fund 13,348,498 1,976,592 1,184,259 14,140,831 Invesco Pooled Investment Fund - MPF Bond Fund Class B 9,761,362 9,473,668 968,091 18,266,939 Principal Life Style Fund - Principal Hong Kong Bond Fund

Pension Class 11,629,927 4,908,479 4,949,352 11,589,054 Principal Hong Kong Equity Fund

- Pension Class 3,214,590 675,020 1,461,063 2,428,547 Schroder MPF Umbrella Fund - Schroder MPF International Fund

Class B 54,280,304 12,137,046 5,231,753 61,185,597 Templeton MPF Investment Funds - Templeton MPF Global Bond Fund

Class A 7,807,368 2,176,967 9,947,606 36,729


59

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Growth Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Asian Fund Ordinary

Class I 3,481,651 $ 160,504,114 1.96 First State MPF Umbrella Fund − First State MPF Asia Region Bond Fund 23,926,001 617,051,563 7.54 − First State MPF Asia Region Equity

Fund 6,875,903 597,859,800 7.30 − First State MPF Global Bond Fund 34,642,900 684,197,282 8.36 − First State MPF Hong Kong Equity Fund 32,553,506 1,592,843,071 19.46 − Stewart Investors MPF Global Equity

Fund 37,577,462 974,007,809 11.90 Invesco Pooled Investment Fund − MPF Bond Fund Class B 22,468,671 531,817,726 6.49 Principal Life Style Fund − Principal Hong Kong Bond Fund

Pension Class 7,849,544 96,058,800 1.17 − Principal Hong Kong Equity Fund

Pension Class 10,710,052 476,476,298 5.82 Schroder MPF Umbrella Fund − Schroder MPF International Fund

Class B 102,782,376 2,343,438,172 28.62 Templeton MPF Investment Funds − Templeton MPF Global Bond Fund

Class A 24,537 517,983 0.01






60

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Growth Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Asian Fund Ordinary

Class I 7,546,204 1,841,464 5,906,017 3,481,651 First State MPF Umbrella Fund − First State MPF Asia Region Bond Fund 9,183,167 15,703,706 960,872 23,926,001 − First State MPF Asia Region Equity

Fund 3,831,764 3,415,010 370,871 6,875,903 − First State MPF Global Bond Fund 32,231,245 3,417,571 1,005,916 34,642,900 − First State MPF Hong Kong Equity Fund 30,154,608 5,120,099 2,721,201 32,553,506 − Stewart Investors MPF Global Equity

Fund 36,159,214 3,814,456 2,396,208 37,577,462 Invesco Pooled Investment Fund − MPF Bond Fund Class B 15,774,839 7,925,565 1,231,733 22,468,671 Principal Life Style Fund − Principal Hong Kong Bond Fund

Pension Class 1,533,383 6,316,161 - 7,849,544 − Principal Hong Kong Equity Fund

Pension Class 12,543,447 1,386,808 3,220,203 10,710,052 Schroder MPF Umbrella Fund − Schroder MPF International Fund

Class B 95,902,390 17,547,067 10,667,081 102,782,376 Templeton MPF Investment Funds − Templeton MPF Global Bond Fund

Class A 5,860,113 1,719,342 7,554,918 24,537


61

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Asian Equity Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Asian Fund Ordinary

Class I 23,760,163 $ 1,095,343,499 50.75 Schroder Institutional Pooled Funds − Hong Kong Equity Fund Class B 2,861,192 212,529,066 9.84 Schroder MPF Umbrella Fund − Schroder MPF Asian Fund Class B 15,329,295 831,460,956 38.52






62

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Asian Equity Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Asian Fund Ordinary

Class I 26,595,281 3,855,647 6,690,765 23,760,163 Schroder Institutional Pooled Funds − Hong Kong Equity Fund Class B - 2,861,192 - 2,861,192 Schroder MPF Umbrella Fund − Schroder MPF Asian Fund Class B 13,423,237 5,390,697 3,484,639 15,329,295


63

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Multi-Sector Equity Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Invesco Pooled Investment Fund − Global Equities Fund Class B 14,648,083 $ 466,377,380 11.13 Schroder MPF Umbrella Fund − Schroder MPF International Fund

Class B 83,630,712 1,906,780,243 45.53

$ 2,373,157,623 56.66 --------------------- ----------- Approved index-tracking collective

investment scheme iShares Global Consumer Staples

ETF

350,000 151,211,687 3.61 iShares Global Healthcare ETF 702,000 375,720,004 8.97 iShares Global Financials ETF 450,000 240,951,283 5.75 iShares Global Tech ETF 220,000 360,539,185 8.61 Vanguard FTSE Asia ex Japan Index

ETF HKD

6,400,000 154,880,000 3.70 Vanguard S&P 500 Index ETF HKD 19,700,000 455,070,000 10.87

$ 1,738,372,159 41.51 --------------------- -----------






64

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Multi-Sector Equity Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Invesco Pooled Investment Fund − Global Equities Fund Class B 26,478,791 11,689,022 23,519,730 14,648,083 Schroder MPF Umbrella Fund − Schroder MPF International Fund

Class B 91,426,404 22,178,716 29,974,408 83,630,712 Approved index-tracking collective

investment scheme iShares Global Consumer Staples ETF - 750,000 400,000 350,000 iShares Global Healthcare ETF 702,000 150,000 150,000 702,000 iShares Global Financials ETF - 450,000 - 450,000 iShares Global Tech ETF - 220,000 - 220,000 iShares Global Comm Services ETF - 500,000 500,000 - Tracker Fund of Hong Kong 4,400,000 3,300,000 7,700,000 - Vanguard FTSE Asia ex Japan Index

ETF HKD - 6,400,000 - 6,400,000 Vanguard S&P 500 Index ETF HKD - 19,700,000 - 19,700,000


65

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Greater China Equity Fund Investment portfolio


assets Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Greater China Fund

Ordinary Class I 31,539,713 $ 568,345,636 21.67 Invesco Pooled Investment Fund − Hong Kong and China Fund Class B 16,841,314 936,077,268 35.70 JPMorgan SAR Greater China Fund -

Class C 92,773,146 1,089,156,733 41.54






66

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Greater China Equity Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investments Approved pooled investment funds Allianz Global Investors Choice Fund − Allianz Choice Greater China Fund

Class I 66,234,091 5,515,475 40,209,853 31,539,713 Invesco Pooled Investment Fund − Hong Kong and China Fund Class B 19,974,566 6,303,040 9,436,292 16,841,314 JPMorgan SAR Greater China Fund -

Class C - 92,773,146 - 92,773,146 Exchange trade Funds SPDR FTSE Greater China ETF - 600,000 600,000 -


67

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life FTSE MPF Hong Kong Index Fund Investment portfolio


assets Quoted investment Approved index-tracking collective investment

scheme BlackRock Premier Funds − iShares Hong Kong Equity Index Fund

Class I2 7,246,790 $ 1,136,935,190 98.49

Total quoted investment * $ 1,136,935,190 98.49 Other net assets 17,428,796 1.51





68

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life FTSE MPF Hong Kong Index Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investment Approved index-tracking collective

investment scheme BlackRock Premier Funds − iShares Hong Kong Equity Index Fund

Class I2 5,663,964 3,825,520 2,242,694 7,246,790


69

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Age 65 Plus Fund Investment portfolio


assets HKD Quoted investment Approved pooled investment fund Schroder MPF Umbrella Fund − Schroder MPF Core 20/80 Fund Class B 82,211,663 $ 928,991,790 99.46

Total quoted investment * $ 928,991,790 99.46 Other net assets 5,046,290 0.54

Net assets attributable to the members at 31 December 2019 $ 934,038,080 100.00

Total investment at cost * $ 878,126,017



70

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Age 65 Plus Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investment Approved pooled investment fund Schroder MPF Umbrella Fund − Schroder MPF Core 20/80 Fund

Class B 44,354,422 49,748,074 11,890,833 82,211,663


71

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Core Accumulation Fund Investment portfolio


assets HKD Quoted investment Approved pooled investment fund Schroder MPF Umbrella Fund − Schroder MPF Core 60/40 Fund Class B 230,350,401 $ 2,766,508,312 99.42

Total quoted investment * $ 2,766,508,312 99.42 Other net assets 16,108,111 0.58





72

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Sun Life MPF Core Accumulation Fund (continued) Statement of movements in investment portfolio Portfolio Holdings

As at 31 December


As at 31 December

2019 Quoted investment Approved pooled investment fund Schroder MPF Umbrella Fund − Schroder MPF Core 60/40 Fund

Class B 133,033,359 122,910,486 25,593,444 230,350,401


73

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Performance table 2019 Net asset value Fund expense ratio

Total net

asset value per unit Class A

per unit Class B per unit Class A Class B

Transaction costs

% % % (1) Sun Life MPF RMB and HKD

Fund 672,533,352 1.0278 1.0307 N/A 1.30 1.26 N/A - (2) Sun Life MPF Conservative

Fund 10,340,915,220 1.1212 1.1250 N/A 0.95 0.95 N/A - (3) Sun Life MPF Hong Kong

Dollar Bond Fund 3,753,523,382 1.4003 1.4517 N/A 1.77 1.56 N/A - (4) Sun Life MPF Hong Kong

Equity Fund 30,479,893,287 6.5191 6.7581 N/A 1.77 1.56 N/A - (5) Sun Life MPF Global Bond

Fund 1,570,974,594 0.9791 0.9989 N/A 1.84 1.63 N/A - (6) Sun Life MPF Stable Fund 6,424,057,248 2.1542 2.2331 N/A 1.78 1.58 N/A - (7) Sun Life MPF Balanced

Fund 5,611,738,545 2.5498 2.6432 N/A 1.78 1.58 N/A - (8) Sun Life MPF Growth Fund 8,186,581,367 2.9495 3.0575 N/A 1.78 1.58 N/A - (9) Sun Life MPF Asian Equity

Fund 2,158,457,877 1.5295 1.5661 N/A 1.98 1.77 N/A - (10) Sun Life MPF Multi-Sector

Equity Fund 4,187,963,966 1.4395 1.4741 N/A 1.83 1.63 N/A 1,288,029 (11) Sun Life MPF Greater China

Equity Fund 2,622,227,940 1.3183 1.3488 N/A 1.99 1.78 N/A 14,568 (12) Sun Life FTSE MPF Hong

Kong Index Fund 1,154,363,986 1.3301 1.3301 N/A 0.99 0.98 N/A - (13) Sun Life MPF Age 65 Plus

Fund 934,038,080 N/A N/A 1.0981 N/A N/A 0.80 - (14) Sun Life MPF Core

Accumulation Fund 2,782,616,423 N/A N/A 1.1624 N/A N/A 0.82 -


74

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Performance table (continued) 2018 Net asset value Fund expense ratio

Total net



Transaction costs

% % % (1) Sun Life MPF RMB and

HKD Fund 673,814,073 1.0285 1.0310 N/A 1.31 1.26 N/A - (2) Sun Life MPF Conservative

Fund 7,258,468,679 1.1087 1.1125 N/A 0.99 0.98 N/A - (3) Sun Life MPF Hong Kong

Dollar Bond Fund 2,737,296,387 1.3720 1.4195 N/A 1.77 1.57 N/A - (4) Sun Life MPF Hong Kong

Equity Fund 24,236,640,795 5.6470 5.8423 N/A 1.79 1.58 N/A - (5) Sun Life MPF Global Bond

Fund 816,419,836 0.9369 0.9539 N/A 1.94 1.73 N/A - (6) Sun Life MPF Stable Fund 4,986,424,692 1.9812 2.0497 N/A 1.80 1.59 N/A - (7) Sun Life MPF Balanced

Fund 4,254,257,510 2.2765 2.3552 N/A 1.81 1.60 N/A - (8) Sun Life MPF Growth Fund 6,243,485,253 2.5735 2.6625 N/A 1.81 1.60 N/A - (9) Sun Life MPF Asian Equity

Fund 1,726,224,175 1.3411 1.3704 N/A 2.00 1.79 N/A - (10) Sun Life MPF Multi-Sector

Equity Fund 2,931,089,419 1.2107 1.2373 N/A 1.88 1.67 N/A 84,214 (11) Sun Life MPF Greater

China Equity Fund 2,016,745,882 1.1184 1.1420 N/A 2.04 1.83 N/A - (12) Sun Life FTSE MPF Hong

Kong Index Fund 780,528,281 1.1568 1.1568 N/A 1.00 1.00 N/A - (13) Sun Life MPF Age 65 Plus

Fund 463,763,729 N/A N/A 1.0080 N/A N/A 0.85 - (14) Sun Life MPF Core

Accumulation Fund 1,394,349,841 N/A N/A 1.0155 N/A N/A 0.87 -


75

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Performance table (continued) 2017 Net asset value Fund expense ratio

Total net



% % % (1) Sun Life MPF RMB and HKD

Fund 507,363,322 1.0483 1.0503 N/A 1.33 1.27 N/A (2) Sun Life MPF Conservative

Fund 3,239,873,114 1.1015 1.1052 N/A 0.96 0.95 N/A (3) Sun Life MPF Hong Kong

Dollar Bond Fund 2,210,410,581 1.3720 1.4166 N/A 1.80 1.59 N/A (4) Sun Life MPF Hong Kong

Equity Fund 26,000,087,674 6.4208 6.6295 N/A 1.77 1.57 N/A (5) Sun Life MPF Global Bond

Fund 523,458,584 0.9603 0.9758 N/A 2.02 1.83 N/A (6) Sun Life MPF Stable Fund 3,845,456,390 2.0888 2.1567 N/A 1.88 1.67 N/A (7) Sun Life MPF Balanced Fund 3,493,896,855 2.4513 2.5309 N/A 1.87 1.66 N/A (8) Sun Life MPF Growth Fund 5,943,467,685 2.8341 2.9262 N/A 1.83 1.63 N/A (9) Sun Life MPF Asian Equity

Fund 1,884,453,782 1.6119 1.6439 N/A 2.01 1.81 N/A (10) Sun Life MPF Multi-Sector

Equity Fund 2,658,111,000 1.3726 1.3999 N/A 2.04 1.84 N/A (11) Sun Life MPF Greater China

Equity Fund 2,287,109,534 1.3546 1.3804 N/A 2.06 1.86 N/A (12) Sun Life FTSE MPF Hong

Kong Index Fund 665,393,760 1.3502 1.3502 N/A 1.02 1.02 N/A (13) Sun Life MPF Age 65 Plus

Fund 177,373,577 N/A N/A 1.0243 N/A N/A 0.77 (14) Sun Life MPF Core

Accumulation Fund 605,730,720 N/A N/A 1.0788 N/A N/A 0.78


76

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Performance table (continued) 2019

Highest

issue price Lowest

redemption price Net investment return

(note) Class A Class B Unit price Class A Class B Unit price Class A Class B % % % (1) Sun Life MPF RMB

and HKD Fund $ 1.0518 $ 1.0544 $ N/A $ 1.0080 $ 1.0107 $ N/A -0.07 -0.03 N/A (2) Sun Life MPF

Conservative Fund 1.1212 1.1250 N/A 1.1089 1.1126 N/A 1.13 1.12 N/A (3) Sun Life MPF Hong

Kong Dollar Bond Fund 1.4312 1.4826 N/A 1.3682 1.4158 N/A 2.06 2.27 N/A

(4) Sun Life MPF Hong

Kong Equity Fund 6.7096 6.9454 N/A 5.4705 5.6597 N/A 15.44 15.68 N/A (5) Sun Life MPF Global

Bond Fund 1.0017 1.0213 N/A 0.9384 0.9555 N/A 4.50 4.72 N/A (6) Sun Life MPF Stable

Fund 2.1548 2.2338 N/A 1.9715 2.0397 N/A 8.73 8.95 N/A (7) Sun Life MPF

Balanced Fund 2.5519 2.6454 N/A 2.2545 2.3325 N/A 12.01 12.23 N/A (8) Sun Life MPF Growth

Fund 2.9530 3.0612 N/A 2.5295 2.6170 N/A 14.61 14.84 N/A (9) Sun Life MPF Asian

Equity Fund 1.5364 1.5732 N/A 1.3102 1.3389 N/A 14.05 14.28 N/A (10) Sun Life MPF Multi-

Sector Equity Fund 1.4444 1.4790 N/A 1.1882 1.2143 N/A 18.90 19.14 N/A (11) Sun Life MPF Greater

China Equity Fund 1.3241 1.3548 N/A 1.0849 1.1078 N/A 17.87 18.11 N/A (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.3727 1.3727 N/A 1.1336 1.1336 N/A 14.98 14.98 N/A

(13) Sun Life MPF Age 65

Plus Fund N/A N/A 1.1010 N/A N/A 1.0080 N/A N/A 8.94 (14) Sun Life MPF Core

Accumulation Fund N/A N/A 1.1662 N/A N/A 1.0078 N/A N/A 14.47


77


Highest

issue price Lowest



and HKD Fund $ 1.0817 $ 1.0838 $ N/A $ 1.0174 $ 1.0197 $ N/A -1.89 -1.84 N/A (2) Sun Life MPF




Kong Equity Fund 7.0148 7.2438 N/A 5.4165 5.6019 N/A -12.05 -11.87 N/A (5) Sun Life MPF Global

Bond Fund 0.9691 0.9851 N/A 0.9176 0.9341 N/A -2.44 -2.24 N/A (6) Sun Life MPF Stable

Fund 2.1608 2.2314 N/A 1.9363 2.0025 N/A -5.15 -4.96 N/A (7) Sun Life MPF

Balanced Fund 2.5714 2.6554 N/A 2.2445 2.3220 N/A -7.13 -6.94 N/A (8) Sun Life MPF Growth

Fund 3.0054 3.1036 N/A 2.5286 2.6159 N/A -9.20 -9.01 N/A (9) Sun Life MPF Asian

Equity Fund 1.7336 1.7683 N/A 1.2855 1.3131 N/A -16.80 -16.64 N/A (10) Sun Life MPF Multi-

Sector Equity Fund 1.4695 1.4990 N/A 1.3413 1.3682 N/A -11.80 -11.62 N/A (11) Sun Life MPF Greater

China Equity Fund 1.4975 1.5263 N/A 1.0698 1.0920 N/A -17.44 -17.27 N/A (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.4892 1.4892 N/A 1.1102 1.1102 N/A -14.32 -14.32 N/A


Plus Fund N/A N/A 1.0333 N/A N/A 0.9985 N/A N/A -1.59 (14) Sun Life MPF Core

Accumulation Fund N/A N/A 1.1219 N/A N/A 0.9915 N/A N/A -5.87


78


Highest

issue price Lowest



and HKD Fund $ 1.0499 $ 1.0516 $ N/A $ 0.9833 $ 0.9846 $ N/A 6.75 6.81 N/A (2) Sun Life MPF




Kong Equity Fund 6.5275 6.7382 N/A 4.5512 4.6899 N/A 42.11 42.39 N/A (5) Sun Life MPF Global

Bond Fund 0.9763 0.9914 N/A 0.9281 0.9412 N/A 2.98 3.18 N/A (6) Sun Life MPF Stable

Fund 2.0890 2.1569 N/A 1.8320 1.8879 N/A 14.01 14.24 N/A (7) Sun Life MPF

Balanced Fund 2.4515 2.5311 N/A 2.0543 2.1168 N/A 19.53 19.77 N/A (8) Sun Life MPF Growth

Fund 2.8343 2.9264 N/A 2.2711 2.3403 N/A 25.18 25.43 N/A (9) Sun Life MPF Asian

Equity Fund 1.6365 1.6686 N/A 1.1727 1.1936 N/A 38.49 38.77 N/A (10) Sun Life MPF Multi-

Sector Equity Fund 1.3732 1.4005 N/A 1.1207 1.1407 N/A 23.14 23.38 N/A (11) Sun Life MPF Greater

China Equity Fund 1.3752 1.4011 N/A 1.0012 1.0182 N/A 35.69 35.96 N/A (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.3522 1.3522 N/A 0.9660 0.9660 N/A 40.63 40.63 N/A


Plus Fund N/A N/A 1.0275 N/A N/A 0.9980 N/A N/A N/A (14) Sun Life MPF Core

Accumulation Fund N/A N/A 1.0799 N/A N/A 0.9981 N/A N/A N/A


79


Highest

issue price Lowest

redemption price Net investment

return (note) Class A Class B Class A Class B Class A Class B % % (1) Sun Life MPF RMB and HKD

Fund $ 1.0251 $ 1.0261 $ 0.9819 $ 0.9832 (2.54) (2.49) (2) Sun Life MPF Conservative

Fund 1.1014 1.1052 1.1012 1.1050 0.00 0.01 (3) Sun Life MPF Hong Kong Dollar

Bond Fund 1.4032 1.4449 1.3324 1.3730 (1.38) (1.22) (4) Sun Life MPF Hong Kong Equity

Fund 4.8993 5.0453 3.8444 3.9545 0.48 0.68 (5) Sun Life MPF Global Bond Fund 1.0030 1.0164 0.9219 0.9331 1.30 1.51 (6) Sun Life MPF Stable Fund 1.9600 2.0185 1.7717 1.8223 0.93 1.13 (7) Sun Life MPF Balanced Fund 2.1899 2.2551 1.9214 1.9762 1.77 1.97 (8) Sun Life MPF Growth Fund 2.4134 2.4853 2.0487 2.1071 2.92 3.13 (9) Sun Life MPF Asian Equity

Fund 1.2742 1.2960 0.9993 1.0152 2.05 2.25 (10) Sun Life MPF Multi-Sector

Equity Fund 1.1315 1.1510 0.9427 0.9578 2.10 2.31 (11) Sun Life MPF Greater China

Equity Fund 1.0920 1.1099 0.8274 0.8400 (0.04) 0.16 (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.0419 1.0419 0.7791 0.7791 2.25 2.25 (13) Sun Life RCM MPF Capital

Stable Fund (Note 1) N/A N/A N/A N/A N/A N/A (14) Sun Life RCM MPF Stable

Growth Fund (Note 1) N/A N/A N/A N/A N/A N/A (15) Sun Life RCM MPF Balanced

Fund (Note 1) N/A N/A N/A N/A N/A N/A Note 1: Sun Life RCM MPF Capital Stable Fund, Sun Life RCM MPF Stable Growth Fund and Sun Life RCM MPF

Balanced Fund ceased having any investments and operations starting from 27 May 2016 and were terminated on 2 December 2016.


80


Highest

issue price Lowest





Bond Fund 1.3674 1.4058 1.3370 1.3723 1.49 1.69 (4) Sun Life MPF Hong Kong Equity

Fund 5.3438 5.4880 4.1589 4.2740 0.38 0.58 (5) Sun Life MPF Global Bond Fund 0.9619 0.9716 0.9103 0.9212 (3.92) (3.73) (6) Sun Life MPF Stable Fund 1.8952 1.9464 1.7884 1.8380 (0.77) (0.57) (7) Sun Life MPF Balanced Fund 2.1411 2.1988 1.9607 2.0153 (0.54) (0.34) (8) Sun Life MPF Growth Fund 2.3780 2.4422 2.1125 2.1714 (0.36) (0.16) (9) Sun Life MPF Asian Equity

Fund 1.4415 1.4623 1.0804 1.0966 (10.45) (10.27) (10) Sun Life MPF Multi-Sector

Equity Fund 1.2920 1.3106 1.0267 1.0424 (4.79) (4.60) (11) Sun Life MPF Greater China

Equity Fund 1.3199 1.3379 0.9431 0.9567 (6.97) (6.78) (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.2283 1.2283 0.8782 0.8782 (7.53) (7.54) (13) Sun Life RCM MPF Capital

Stable Fund 1.1153 1.1310 1.0297 1.0449 (3.55) (3.36) (14) Sun Life RCM MPF Stable

Growth Fund 1.1486 1.1652 1.0167 1.0322 (4.03) (3.84) (15) Sun Life RCM MPF Balanced

Fund 1.1957 1.2129 1.0114 1.0269 (4.47) (4.28)


81


Highest

issue price Lowest






Fund 4.8721 4.9971 4.0734 4.1731 0.15 0.35 (5) Sun Life MPF Global Bond Fund 0.9954 1.0041 0.9531 0.9626 (1.56) (1.37) (6) Sun Life MPF Stable Fund 1.8709 1.9188 1.7706 1.8139 1.40 1.59 (7) Sun Life MPF Balanced Fund 2.0853 2.1388 1.9287 1.9759 1.49 1.69 (8) Sun Life MPF Growth Fund 2.2891 2.3478 2.0609 2.1114 1.72 1.93 (9) Sun Life MPF Asian Equity



Equity Fund 1.1214 1.1353 0.9498 0.9604 2.65 2.85 (12) Sun Life FTSE MPF

Hong Kong Index Fund 1.0710 1.0710 0.9091 0.9091 1.84 1.83 (13) Sun Life RCM MPF Capital



Fund 1.1531 1.1682 1.0622 1.0764 (3.18) (2.99)


82


Highest

issue price Lowest



Fund $ 1.0407 $ 1.0405 $ 1.0144 $ 1.0138 2.44 2.48 (2) Sun Life MPF Conservative


Bond Fund 1.3578 1.3889 1.2829 1.3133 (4.14) (3.95) (4) Sun Life MPF Hong Kong Equity

Fund 4.5003 4.6089 3.8205 3.9093 9.75 9.97 (5) Sun Life MPF Global Bond Fund 1.0129 1.0190 0.9596 0.9664 (4.18) (3.99) (6) Sun Life MPF Stable Fund 1.8100 1.8533 1.7008 1.7403 2.43 2.64 (7) Sun Life MPF Balanced Fund 1.9968 2.0449 1.8300 1.8725 6.28 6.50 (8) Sun Life MPF Growth Fund 2.1704 2.2231 1.9337 1.9786 10.23 10.45 (9) Sun Life MPF Asian Equity




Hong Kong Index Fund 1.0000 1.0000 0.9864 0.9865 (0.28) (0.27) (13) Sun Life RCM MPF Capital

Stable Fund 1.0925 1.1048 1.0222 1.0327 2.62 2.83 (14) Sun Life RCM MPF Stable

Growth Fund 1.1077 1.1207 0.9979 1.0086 6.63 6.84 (15) Sun Life RCM MPF Balanced

Fund 1.1320 1.1453 0.9810 0.9915 11.13 11.36


83


Highest

issue price Lowest



Fund $ 1.0174 $ 1.0167 $ 0.9977 $ 0.9967 1.59 1.53 (2) Sun Life MPF Conservative



Fund 4.0841 4.1749 3.3091 3.3788 22.15 22.40 (5) Sun Life MPF Global Bond Fund 1.0345 1.0402 1.0058 1.0103 (0.18) 0.03 (6) Sun Life MPF Stable Fund 1.7651 1.8043 1.6455 1.6787 7.06 7.27 (7) Sun Life MPF Balanced Fund 1.8829 1.9246 1.6990 1.7347 10.38 10.60 (8) Sun Life MPF Growth Fund 1.9745 2.0183 1.7200 1.7562 13.69 13.92 (9) Sun Life MPF Asian Equity




Hong Kong Index Fund N/A N/A N/A N/A N/A N/A (13) Sun Life RCM MPF Capital



Fund 1.0207 1.0306 0.8974 0.9051 13.27 13.50


84


Highest

issue price Lowest



Fund $ N/A $ N/A $ N/A $ N/A N/A N/A (2) Sun Life MPF Conservative

Fund

1.1011

1.1048

1.1007

1.1045 0.00 0.01 (3) Sun Life MPF Hong Kong Dollar


Fund 3.8878 3.9586 2.9100 2.9674 (10.94) (10.76) (5) Sun Life MPF Global Bond Fund 1.0518 1.0553 0.9917 0.9938 1.09 1.28 (6) Sun Life MPF Stable Fund 1.7272 1.7605 1.5995 1.6310 (1.53) (1.33) (7) Sun Life MPF Balanced Fund 1.8360 1.8715 1.6195 1.6514 (3.79) (3.60) (8) Sun Life MPF Growth Fund 1.9196 1.9566 1.6135 1.6453 (5.94) (5.75) (9) Sun Life MPF Asian Equity

Fund 1.1901 1.1975 0.8411 0.8472 (15.12) (14.95) (10) Sun Life MPF Multi-Sector

Equity Fund 1.0220 1.0285 0.7505 0.7559 (14.68) (14.51) (11) Sun Life MPF Greater China

Equity Fund 1.0930 1.0989 0.6999 0.7044 (24.46) (24.31) (12) Sun Life FTSE MPF




Fund 1.0443 1.0509 0.8328 0.8388 (10.93) (10.76)


85


Highest

issue price Lowest



Fund $ N/A $ N/A $ N/A $ N/A N/A N/A (2) Sun Life MPF Conservative



Fund 3.9006 3.9703 2.8227 2.8688 24.41 24.65 (5) Sun Life MPF Global Bond Fund 1.0345 1.0361 0.9633 0.9641 0.66 0.87 (6) Sun Life MPF Stable Fund 1.7021 1.7325 1.5309 1.5568 6.90 7.11 (7) Sun Life MPF Balanced Fund 1.7918 1.8238 1.5453 1.5715 9.87 10.09 (8) Sun Life MPF Growth Fund 1.8566 1.8897 1.5413 1.5674 12.63 12.85 (9) Sun Life MPF Asian Equity







Fund 1.0183 1.0238 0.8371 0.8409 8.17 8.40 Note: The net investment return is calculated by comparing the net asset value per unit

at the year end against the net asset value per unit at the beginning of the year. For constituent funds that were launched during the years, the net investment return is calculated by comparing the net asset value per unit at the period end against the initial subscription price of the investment funds of $1.00 in the respective periods that the constituent funds were launched.


86

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Trustee’s commentary Analysis of the investments held by the Scheme

Annualized return (in terms of %)

1 year 5 years 10 years Since

Launch Sun Life MPF Conservative Fund Launch date: 01/12/2000

Class A 1.13% 0.36% 0.18% 0.60%

Class B 1.12% 0.36% 0.18% 0.62%

Benchmark / Performance Target (Lipper MPF Conservative Fund category median)

1.13% 0.35% 0.22% 0.68%

Deviation from the benchmark /performance target

Below Above Below Below

Trustee’s commentary For the past year, the fund performance slightly trailed the benchmark. Underperformance continued to improve as 5-year performance managed to outperform while 10-year and since launch performance take time to reflect. Rates environment continued to be volatile in 2019 as the US Fed changed monetary policies and fund manager strategies.


87

Investment report for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Trustee’s commentary (continued) Analysis of the investments held by the Scheme (continued) Annualized return (in terms of %)


Launch Sun Life MPF Hong Kong Dollar Bond Fund Launch date: 01/12/2000

Class A 2.06% 0.90% 1.13% 1.78%

Class B 2.27% 1.10% 1.33% 1.97%

Benchmark / Performance Target (Lipper MPF Hong Kong Dollar Bond Fund category median)

3.03% 1.52% 1.74% 1.79%

Deviation from the benchmark/performance target

Below Below Below Below (Class A) Above (Class B)

Trustee’s commentary The performance was below benchmark for the specified periods. The fund has stayed defensive and resulted in performance that trailed peer group as global bond yields fell in the first three quarters last year. It was only after Hong Kong's soverign ratings was downgraded by rating agencies, Hong Kong bond yields showed increase.


88



Launch Sun Life MPF RMB and HKD Fund Launch date: 30/06/2012

Class A -0.07% -0.09% N/A 0.37%

Class B -0.03% -0.04% N/A 0.40%

Benchmark / Performance Target (Lipper MPF RMB and HKD Money Market Fund category median)

-0.03% -0.04% N/A 0.40%


Below (Class A) Above (Class B)

Below N/A Below (Class A) Above (Class B)

Trustee’s commentary The performance was below benchmark for the specified periods (for Class A only). The difference is not substantial and partly driven by short duration in recent quarters for RMB portion to position for market opportunities.


89



Launch Sun Life MPF Global Bond Fund Launch date: 01/01/2010

Class A 4.50% 0.43% N/A -0.21%

Class B 4.72% 0.64% N/A -0.01% Benchmark / Performance Target (Lipper MPF Global Bond Fund category median)

5.05% 0.85% N/A 1.83%


Below Below N/A Below

Trustee’s commentary The performance was below benchmark since launch; as well as for the periods of 1 year and 5 years. The fund has stayed defensive as rate environment continued to be volatile in 2019 amid change of monetary policies by the US Fed. The focus on quality issuers and defensiveness has resulted in lower portfolio yield and performance that trailed peer group in recent years.


90



Launch Sun Life MPF Age 65 Plus Fund Launch date: 01/04/2017

8.94% N/A N/A 3.46%

Benchmark / Performance Target (HKIFA Reference Portfolios for Constituent Funds under the Default Investment Strategy)

9.63% N/A N/A 4.18%


Below N/A N/A Below

Trustee’s commentary For the past year, the fund performance slightly trailed its respective Reference Portfolio. The detraction is because: 1) our fund has overweight position in the stocks with value characteristics which underperformed; and 2) the reference portfolio has relatively higher exposure to companies with higher growth expectation which remained highly sought after. The relative performance in the fixed income portion remained steady.


91



Launch Sun Life MPF Stable Fund Launch date: 01/12/2000

Class A 8.73% 3.32% 3.26% 4.10%

Class B 8.95% 3.53% 3.46% 4.30%

Benchmark / Performance Target (Lipper MPF Lifestyle (>20-40% Equity) Fund category median)

8.75% 2.39% 2.39% 3.42%


Below (Class A) Above (Class B)

Above Above Above

Trustee’s commentary The performance was above benchmark for the specified periods.


92



Launch Sun Life MPF Core Accumulation Fund Launch date: 01/04/2017

14.47%

N/A

N/A

5.62%

Benchmark / Performance Target (HKIFA Reference Portfolios for Constituent Funds under the Default Investment Strategy)

17.03% N/A

N/A

7.17%


Below N/A N/A Below

Trustee’s commentary For the past year, the fund performance slightly trailed its respective Reference Portfolio. The detraction is because: 1) our fund has overweight position in the stocks with value characteristics which underperformed; and 2) the reference portfolio has relatively higher exposure to companies with higher growth expectation which remained highly sought after. The relative performance in the fixed income portion remained steady.


93



Launch Sun Life MPF Balanced Fund Launch date: 01/12/2000

Class A 12.01% 4.70% 4.70% 5.02%

Class B 12.23% 4.91% 4.91% 5.22%


11.58% 3.27% 3.49% 4.03%


Above Above Above Above



94



Launch Sun Life MPF Growth Fund Launch date: 01/12/2000

Class A 14.61% 5.96% 6.08% 5.83%

Class B 14.84% 6.17% 6.29% 6.03%


14.26% 4.38% 4.43% 4.50%





95



Launch Sun Life MPF Multi-Sector Equity Fund Launch date: 03/03/2008

Class A 18.90% 4.65% 4.93% 3.13%

Class B 19.14% 4.86% 5.14% 3.33%

Benchmark / Performance Target (Lipper MPF Global Equity Fund category median)

21.96% 6.04% 6.65% 4.31%


Below Below Below Below

Trustee’s commentary The performance was below benchmark since launch; as well as for the periods of 1 year and 5 years. The fund performance was a result of its structural overweight in Hong Kong equities since inception and that Hong Kong market was trailing developed markets for an extended period of time. Such structural rigidity was removed when the current multi-manager structure took effect at around mid-2016. For the past year, the fund performance was detracted by the strong performance of global cyclical sectors which our fund has underweight position.


96



Launch Sun Life MPF Asian Equity Fund Launch date: 03/03/2008

Class A 14.05% 3.73% 5.15% 3.66%

Class B 14.28% 3.94% 5.36% 3.86%

Benchmark / Performance Target (Lipper MPF Asia ex Japan Equity Fund category median)

14.04% 4.70% 5.24% 7.10%


Above Below Below (Class A) Above (Class B)

Below

Trustee’s commentary The performance was above benchmark for the past year; albeit below the benchmark for 5 years and since launch. Over those two periods, the fund’s historic overweight exposure to Hong Kong market, which lagged behind other regional markets in earlier years, led to its underperformance. With increased exposure to regional markets in the past year, the fund managed to outperform category median.


97



Launch Sun Life MPF Greater China Equity Fund Launch date: 03/03/2008

Class A 17.87% 4.19% 3.09% 2.36%

Class B 18.11% 4.40% 3.29% 2.56% Benchmark / Performance Target (Lipper MPF Greater China Equity Fund category median)

20.81% 6.04% 3.29% 6.32%


Below Below Below (Class A) Above (Class B)

Below

Trustee’s commentary The performance was below benchmark for the specified periods. Since mid-2016, the fund has been restructured to Greater China equity mandate, from Hong Kong equity mandate, hence the longer term performance is less relevant. For the past year, the fund’s overweight position to Hong Kong and China caused the detraction whereas Taiwan equities outperformed throughout the whole year.


98



Launch Sun Life FTSE MPF Hong Kong Index Fund Launch date: 10/12/2013

Class A 14.98% 5.54% N/A 4.82%

Class B 14.98% 5.54% N/A 4.82%

Benchmark / Performance Target (Lipper MPF Hong Kong Equity (Index Tracking) Fund category median)

12.08% 6.12% N/A 5.49%


Above Below N/A Below

Trustee’s commentary The performance was below the benchmark since launch and for the period of 5-year. Among all Hong Kong Index tracking funds in the MPF market, the fund is the only one that tracks the FTSE Hong Kong Index, whereas most all others track the Hang Seng Index. The Hang Seng Index is highly concentrated and focused on giant cap stocks and the financial sector. The FTSE Hong Kong Index is a lot more broad-based and has exposure to mid- and smaller caps. Since launch and for the period of 5-year, Hong Kong market has been mainly led by large to giant cap stocks hence causing the fund to trail the category median. For the past year, mid to smaller cap stocks outperformed so that our fund was above the benchmark.


99



Launch Sun Life MPF Hong Kong Equity Fund Launch date: 01/12/2000

Class A 15.44% 7.79% 8.03% 10.32%

Class B 15.68% 8.00% 8.24% 10.53%

Benchmark / Performance Target (Lipper MPF Hong Kong Equity Fund category median)

14.49% 5.37% 4.34% 7.36%




l 7

l

.. ,

r

l l J J

fl L J

Li

u LJ

u u J J

Investment report


for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars)

Trustee's assessment framework and action

In relation to Investment Manager of the Sun Life Rainbow MPF Scheme (the "Scheme"), a set of key performance indicators ("KPls") has been set as a benchmark to evaluate the performance of the Investment Manager. The Board of Trustee meets quarterly to discuss the operational and investment performance of the Investment Manager through assessing the achievement of KPls as well as the performance of constituent funds of Sun Life Rainbow MPF Scheme. As per the Investment Manager's governance practice, evaluation of investment performance of underlying investments of constituent funds considers both qualitative and quantitative factors, not just limited to fund performance. These include a review of the firm (ownership, turnover of key personnel, assets under management, and regulation and/or compliance) and the investment fund (turnover of key investment professionals, investment process, investment policies, fund assets, and performance vs. benchmark and peers). Any issues of concern are monitored until the Board of Trustee is satisfied they have been adequately addressed. In case where serious concerns persist, the Trustee will define a course of actions to rectify the fund performance issue.

For and on behalf of Sun Life Trustee Company Limited

Hong Kong,

2 4 JUN 2020

100

kpmg

101

Independent auditor’s report to the Trustee of Sun Life Rainbow MPF Scheme Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Sun Life Rainbow MPF Scheme (“the Scheme”) set out on pages 108 to 164, which comprise the statement of assets and liabilities attributable to members as at 31 December 2019, the statement of comprehensive income, the statement of changes in net assets attributable to members and the cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Scheme as at 31 December 2019, and of its financial transactions and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Basis for Opinion We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) and with reference to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Scheme in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Information Other than the Financial Statements and Auditor’s Report Thereon The Trustee of the Scheme is responsible for the other information. The other information comprises all the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

kpmg

102

Independent auditor’s report to the Trustee of Sun Life Rainbow MPF Scheme (continued) Report on the Audit of the Financial Statements (continued) Responsibilities of Trustee for the Financial Statements The Trustee of the Scheme is responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and for such internal control as the Trustee determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Trustee of the Scheme is responsible for assessing the Scheme’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustee either intends to liquidate the Scheme or to cease operations, or has no realistic alternative but to do so. In addition, the Trustee of the Scheme is required to ensure that the financial statements have been properly prepared in accordance with sections 80, 81, 83 and 84 of the Mandatory Provident Fund Schemes (General) Regulation (the “General Regulation”). Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. This report is made solely to you, in accordance with section 102 of the General Regulation, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Scheme have been properly prepared, in all material respects, in accordance with sections 80, 81, 83 and 84 of the General Regulation.

kpmg

103

Independent auditor’s report to the Trustee of Sun Life Rainbow MPF Scheme (continued) Report on the Audit of the Financial Statements (continued) Auditor’s Responsibilities for the Audit of the Financial Statements (continued) As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements,

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

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

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Trustee of the Scheme.

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

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

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

'7

n l l l r,

! l •

[]

[ l u u u I 1

lJ

u u J J J

Independent auditor's report to the Trustee of Sun Life Rainbow MPF Scheme (continued)

Report on matters under the Mandatory Provident Fund Schemes (General) Regulation

a. 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.

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

Ce~ Accountants

8th Floor, Prince's Building 10 Chater Road Central, Hong Kong

2 4 JUN 2020

104

l ~l .....,

I

r-1

1

n l J

n J

. l L.:

u LJ

u u J I I

I

' '-,I

J J

Independent auditor's assurance report to the Trustee of Sun Life Rainbow MPF Scheme

We have audited the financial statements of Sun Life Rainbow MPF Scheme (the "Scheme") for the year ended 31 December 2019 in accordance with Hong Kong Standards on Auditing and with reference to Practice Note 860.1 (Revised), The Audit of Retirement Schemes ("PN 860.1 (Revised)") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), and have issued an unqualified auditor's report thereon dated 2 't JUN 2020 Pursuant to section 102 of the Mandatory Provident Fund Schemes (General) Regulation (the "General Regulation"), we are required to report whether the Scheme complied with certain requirements of the Mandatory Provident Fund Schemes Ordinance ("MPFSO") and the General Regulation.

Trustee 's Responsibility

The General Regulation requires the Trustee to ensure that:

a. proper accounting and other records are kept in respect of the constituent funds of the Scheme, the Scheme assets and all financial transactions entered into in relation to the Scheme;

b. the requirements specified in the guidelines made by the Mandatory Provident Fund Schemes Authority ("the Authority") under section 28 of the MPFSO with respect to forbidden investment practices and the requirements of sections 37(2), 51 and 52 and Part 10 of, and Schedule 1 to, the General Regulation are complied with;

c. the requirements under sections 34D8(1 )(a), (b), (c) and (d), 34DC(1 ), 34D0(1) and (4) of the MPFSO are complied with; and

d. the Scheme assets are not subject to any encumbrance, otherwise than as permitted by the General Regulation.

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

105

kpmg

106

Independent auditor’s assurance report to the Trustee of Sun Life Rainbow MPF Scheme (continued) Auditor’s Responsibility Our responsibility is to report solely to you, on the Scheme’s compliance with the above requirements based on the results of the procedures performed by us, 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 engagement in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and with reference to PN 860.1 (Revised) issued by the HKICPA. We have planned and performed our work to obtain reasonable assurance on whether the Scheme has complied with the above requirements. We have planned and performed such procedures as we considered necessary with reference to the procedures recommended on PN 860.1 (Revised), which included reviewing, on a test basis, evidence obtained from the Trustee regarding the Scheme’s compliance with the above requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion Based on the foregoing: 1. in our opinion:

a. proper accounting and other records have been kept during the year ended

31 December 2019 in respect of the constituent funds of the Scheme, the Scheme assets and all financial transactions entered into in relation to the Scheme;

b. the requirements specified in the guidelines made by the Authority under

section 28 of the MPFSO with respect to forbidden investment practices and the requirements of sections 37(2), 51 and 52 and Part 10 of, and Schedule 1 to, the General Regulation have been complied with, in all material respects, as at 31 March 2019, 30 September 2019 and 31 December 2019;

c. the requirements specified in the MPFSO under sections 34DB(1)(a), (b), (c)

and (d), 34DC(1) and 34DD(1) and (4)(a) with respect to the investment of accrued benefits and control of payment for services relating to Sun Life MPF Core Accumulation Fund and Sun Life MPF Age 65 Plus Fund have been complied with, in all material respects, as at 31 March 2019, 30 September 2019 and 31 December 2019;

r-,

n n n 1

~

J D

u u u J u L

Independent auditor's assurance report to the Trustee of Sun Life Rainbow MPF Scheme (continued)

Opinion (continued)

Based on the foregoing: (continued)

1. in our opinion: (continued)

d. the requirements specified in section 34DD(4)(b) of the MPFSO with respect to the controls of out-of-pocket expenses of the Sun Life MPF Core Accumulation Fund and Sun Life MPF Age 65 Plus Fund have been complied with, in all material respects, as at 31 December 2019.

2. as at 31 December 2019, the Scheme assets were not subject to any encumbrance, otherwise than as permitted by the General Regulation.

Other Matter

The requirements specified in the MPFSO under sections 34Dl(1) and (2) and 34DK(2) with respect to the transfer of accrued benefits to an account and specified notice, and 34DJ(2), (3), (4), (5) with respect to locating scheme members relating to Sun Life MPF Core Accumulation Fund and Sun Life MPF Age 65 Plus Fund are not applicable to the Trustee during the year ended 31 December 2019 as the Trustee has completed the relevant transitional provisions and the default investment arrangement of the Scheme prior to 1 April 2017 was not guaranteed funds. Accordingly, there is no reporting on this section.

Intended Users and Purpose

This report is intended solely for submission by the Trustee to the Authority pursuant to section 102 of the General Regulation, and is not intended to be, and should not be, used by anyone for any other purposes.

~~ Certified Public Accountants

8th Floor, Prince's Building 10 Chater Road Central, Hong Kong

2 4 JUN 2020

107

Sun Life Rainbow MPF Scheme Financial statements for the year ended 31 December 2019

108

Statement of assets and liabilities attributable to members as at 31 December 2019 (Expressed in Hong Kong dollars)

Note Sun Life MPF RMB and HKD Fund Sun Life MPF Conservative Fund Sun Life MPF Hong Kong Dollar

Bond Fund Sun Life MPF Hong Kong Equity

Fund Sun Life MPF Global Bond Fund Sun Life MPF Stable Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Assets Cash at bank $ 404,395,505 $ 500,577,315 $ 9,019,953,654 $ 5,999,401,423 $ 37,784,776 $ 53,354,062 $ 311,834,162 $ 264,973,344 $ 18,241,092 $ 17,408,341 $ 109,157,798 $ 38,573,357 Amounts receivable on sales of

investments - - - - - 18,193,227 - 55,493,725 - 1,955,085 - 7,568,852 Amounts receivable on subscriptions 3,282,556 3,186,006 86,694,447 59,198,764 32,578,447 21,052,699 87,522,832 43,903,726 14,216,478 4,511,977 19,234,572 9,945,362 Contributions receivable - - - - - - - - - - - - Dividend, interest and other

receivables 1,084,523 1,560,583 36,861,026 17,483,420 16,028 - - - 57,496 253,302 1,303 252,224 Investments 273,086,975 171,650,287 1,297,323,340 1,228,657,306 3,730,485,692 2,672,019,650 30,244,627,296 23,972,062,672 1,561,363,190 795,932,815 6,322,029,308 4,947,916,980

Total assets $ 681,849,559 $ 676,974,191 $10,440,832,467 $ 7,304,740,913 $ 3,800,864,943 $ 2,764,619,638 $30,643,984,290 $24,336,433,467 $ 1,593,878,256 $ 820,061,520 $ 6,450,422,981 $ 5,004,256,775 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Liabilities Amounts payable on redemptions $ 8,421,284 $ 2,284,163 $ 89,898,737 $ 39,100,374 $ 41,926,321 $ 23,487,138 $ 122,113,507 $ 65,408,951 $ 20,733,487 $ 2,558,811 $ 17,425,499 $ 11,062,270 Amounts payable on purchases of

investments - - - - - - - - - - - - Benefits payable - - - - - - - - - - - - Forfeiture payable - - - - - - - - - - - - Accruals and other payables 894,923 875,955 10,018,510 7,171,860 5,415,240 3,836,113 41,977,496 34,383,721 2,170,175 1,082,873 8,940,234 6,769,813

Liabilities (excluding net assets attributable to members) $ 9,316,207 $ 3,160,118 $ 99,917,247 $ 46,272,234 $ 47,341,561 $ 27,323,251 $ 164,091,003 $ 99,792,672 $ 22,903,662 $ 3,641,684 $ 26,365,733 $ 17,832,083

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

Net assets attributable to members $ 672,533,352 $ 673,814,073 $10,340,915,220 $ 7,258,468,679 $ 3,753,523,382 $ 2,737,296,387 $30,479,893,287 $24,236,640,795 $ 1,570,974,594 $ 816,419,836 $ 6,424,057,248 $ 4,986,424,692 Number of units in issue 3 Class A 146,289,527 147,948,219 1,594,302,227 1,282,939,593 532,246,652 457,702,076 887,704,687 861,124,111 285,318,614 178,789,357 588,609,325 530,252,381 Class B 506,626,659 505,974,848 7,603,022,529 5,246,092,837 2,072,260,373 1,485,931,231 3,653,838,180 3,316,145,576 1,293,053,303 680,252,017 2,308,909,818 1,920,197,804 Net assets attributable to members

per unit Class A 1.0278 1.0285 1.1212 1.1087 1.4003 1.3720 6.5191 5.6470 0.9791 0.9369 2.1542 1.9812 Class B 1.0307 1.0310 1.1250 1.1125 1.4517 1.4195 6.7581 5.8423 0.9989 0.9539 2.2331 2.0497

The notes on pages 118 to 164 are an integral part of the financial statements.


109

Statement of assets and liabilities attributable to members as at 31 December 2019 (continued) (Expressed in Hong Kong dollars)

Note Sun Life MPF Balanced Fund Sun Life MPF Growth Fund Sun Life MPF Asian Equity Fund Sun Life MPF Multi-Sector Equity

Fund Sun Life MPF Greater China Equity

Fund Sun Life FTSE MPF

Hong Kong Index Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Assets Cash at bank $ 76,104,163 $ 61,863,500 $ 114,975,553 $ 64,158,939 $ 21,261,704 $ 57,052,136 $ 73,100,709 $ 99,926,583 $ 26,613,650 $ 83,414,165 $ 22,153,444 $ 9,544,821 Amounts receivable on sales of

investments - 7,067,472 - 13,702,819 - 3,691,561 - 23,769,927 - 4,989,023 2,600,000 2,151,357 Amounts receivable on subscriptions 16,713,477 6,802,931 26,857,199 6,913,413 9,900,391 1,337,982 47,354,356 23,764,405 20,977,668 4,777,437 10,221,030 7,213,293 Contributions receivable - - - - - - - - - - - - Dividend, interest and other

receivables 973 192,808 650 147,442 - - - 1,277,929 232,585 - - - Investments 5,540,818,858 4,192,047,593 8,074,772,618 6,181,840,568 2,139,333,521 1,671,874,178 4,111,529,782 2,816,259,514 2,593,579,637 1,932,574,826 1,136,935,190 766,114,507

Total assets $ 5,633,637,471 $ 4,267,974,304 $ 8,216,606,020 $ 6,266,763,181 $ 2,170,495,616 $ 1,733,955,857 $ 4,231,984,847 $ 2,964,998,358 $ 2,641,403,540 $ 2,025,755,451 $ 1,171,909,664 $ 785,023,978 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Liabilities Amounts payable on redemptions $ 14,031,133 $ 7,812,944 $ 18,503,622 $ 14,424,051 $ 8,551,892 $ 4,895,180 $ 38,171,275 $ 29,472,866 $ 15,107,536 $ 5,603,996 $ 16,631,058 $ 3,865,671 Amounts payable on purchases of

investments - - - - - - - - - - - - Benefits payable - - - - - - - - - - - - Forfeiture payable - - - - - - - - - - - - Accruals and other payables 7,867,793 5,903,850 11,521,031 8,853,877 3,485,847 2,836,502 5,849,606 4,436,073 4,068,064 3,405,573 914,620 630,026

Liabilities (excluding net assets attributable to members) $ 21,898,926 $ 13,716,794 $ 30,024,653 $ 23,277,928 $ 12,037,739 $ 7,731,682 $ 44,020,881 $ 33,908,939 $ 19,175,600 $ 9,009,569 $ 17,545,678 $ 4,495,697

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

Net assets attributable to members $ 5,611,738,545 $ 4,254,257,510 $ 8,186,581,367 $ 6,243,485,253 $ 2,158,457,877 $ 1,726,224,175 $ 4,187,963,966 $ 2,931,089,419 $ 2,622,227,940 $ 2,016,745,882 $ 1,154,363,986 $ 780,528,281

Number of units in issue 3 Class A 446,493,934 398,649,929 577,987,963 534,023,154 311,645,221 293,977,524 586,581,963 523,385,044 488,912,403 468,222,041 191,645,034 162,939,890 Class B 1,692,392,898 1,420,965,207 2,119,949,665 1,828,823,532 1,073,876,816 971,927,938 2,268,267,999 1,856,784,004 1,466,238,558 1,307,365,964 676,255,335 511,809,920 Net assets attributable to members

per unit Class A 2.5498 2.2765 2.9495 2.5735 1.5295 1.3411 1.4395 1.2107 1.3183 1.1184 1.3301 1.1568 Class B 2.6432 2.3552 3.0575 2.6625 1.5661 1.3704 1.4741 1.2373 1.3488 1.1420 1.3301 1.1568


[_ - [_ ] : _]

Statement of assets and liabilities attributable to members as at 31 December 2019 (continued) (Expressed in Hong Kong dollars)

Note Sun Lffe MPF Age 65 Plus Fund Sun Ute MPF Core Accumulation Fund Scheme 2019 2018 2019 2018 2019

Assets

Cash at bank $ 3,893,561 2,800,921 s 21,900,927 $ 7,124,965 s 303,022,875 s Amounts receivable on sales of investments 3,672,497 7,270,128 Amounts receivable on subscriptions 13,219,351 6,190,449 18,458,604 7,0CF,,226 (407,231,400) Contributions receivable 456,841,949 Dividend, interest and other receivables Investments 928,991,790 456,963,460 2,7ffi,508,312 1,383,546,933

Total assets s 946,110,892 s 468,633,327 s 2,800,927,843 s 1,404,950,272 s 351,633,416 s -------------- - ---------------Liabilities

Amounts payable on redemptions s 11,298,344 s 4,492,007 Amounts payable on purchases of investments

s 22,032,794 s 9,457,946 (444,846,489) s Benefits payable 535,837,054 Forfeiture payable 90,765,754 Accruals and other payables n4,268 376,731 2,278,626 1,142,485 104,484,643

Liabilities (excluding net assets attributable to members) s 12,072,612 s 4,869,598 s 24,311,420 s 10,8:Xl,431 s 200,240,962 s -------------- ---------------Net assets attributable to members s 934,038,000 s <16'.l,763,729 2,782,616,423 s 1,394,349,841 s 55,392,454 s ----- ------Number of units in issue 3 850,591,472 460,039,296 2,393.935,189 1,373,029,615

Net assets attributable to members per unit 1.0981 1,0CF,O 1.1624 1.0155

Approved and authorised for issue by the Trustee on 2 4 JUN 2020

For and on behalf of Sun Life Trustee Company Limited


110

_ _J J Sun Ute Rainbow MPF Scheme

Financial statements for the year ended 31 December 2019

Total 2018 2019 2018

214,545,783 s 10,564,459,563 s 7,474,725,675 2,600,000 149,525,673

(205,800,670) 372,586,341 456,841,949 372,586,341

38254,584 21,167,700 70,721,385,509 53,188,461,289

381,325,454 s 81,782,541,605 s 61,206,4ffi,6!l6 ---------------

(223,927,228) s s 213,564,174 535,837,054 213,564,174 62,737,844 90,765,754 62,737,844 88,920,137 210,ffi1,076 170,625,589

141,284,927 s 837,263884 s 446,917,607 ---------------240,040,527 s oo,945,2n,121 s 60,759,549,079


111

Statement of comprehensive income for the year ended 31 December 2019 (Expressed in Hong Kong dollars)



Fund Sun Life MPF Global Bond Fund Sun Life MPF Stable Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Income Net (loss)/gain on investments 5 $ (719,838) $ (4,329,813) $ 29,656,223 $ 15,997,328 $ 104,991,795 $ 46,750,376 $ 4,260,796,527 $ (2,891,734,635) $ 51,910,706 $ (6,857,083) $ 543,420,248 $ (188,047,184) Interest on bank deposits 9,652,158 13,009,473 154,352,453 73,707,415 3,716 - 57,609 - 2,229 - 26,404 - Exchange loss (935,500) (18,068,479) - - - - - - - - - - Dividend income - - - - - - - - - - - - Other income 72 3,283 - 5,089 16,028 727 - 144,050 548,813 931,808 354,948 995,999

Total investment income/(loss) $ 7,996,892 $ (9,385,536) $ 184,008,676 $ 89,709,832 $ 105,011,539 $ 46,751,103 $ 4,260,854,136 $ (2,891,590,585) $ 52,461,748 $ (5,925,275) $ 543,801,600 $ (187,051,185) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Expenses Administration fees 7(a) $ 3,767,458 $ 4,705,213 $ 40,621,012 $ 27,986,276 $ 20,689,886 $ 19,050,733 $ 180,069,068 $ 200,749,719 $ 6,893,929 $ 5,383,432 $ 36,117,036 $ 35,530,015 Investment management fees 7(b) 2,734,609 2,688,523 25,321,757 16,696,238 13,062,141 8,997,396 108,400,312 96,820,196 3,809,415 2,006,456 20,134,562 14,829,212 Sponsor fees 7(c) 1,018,600 - 6,753,579 - 7,965,240 4,309,839 67,291,670 45,569,634 2,795,976 1,220,316 13,723,154 8,052,766 Trustee fees 7(d) 418,756 417,404 4,386,536 2,591,322 3,771,265 1,814,092 31,129,480 18,380,950 1,308,264 502,007 6,416,179 3,312,634 Custodian fees 545,190 546,348 5,398,845 3,248,664 876,472 685,390 7,088,444 6,579,646 339,007 243,173 1,478,711 1,220,094 Sub-custodian fees 53,781 54,204 215,307 132,491 - - - - - - - - Auditor's fees 8,812 15,340 152,778 145,220 53,216 47,027 457,676 396,403 21,645 16,544 89,262 95,765 Legal and other professional fees 2,637 - 39,273 - 14,415 - 113,093 - 5,810 - 24,226 - Professional indemnity insurance 512 520 10,349 16,885 3,651 1,575 26,415 16,891 1,706 1,115 5,833 5,385 Fund price publication expenses 2,981 4,367 35,151 33,303 13,197 16,058 118,082 166,826 4,325 4,502 23,475 29,398 Bank charges 8,083 8,237 8,740 8,390 - - - - - - - - Printing and postage expenses 100,409 138,167 1,550,598 1,219,514 552,611 472,028 4,751,942 4,394,689 214,250 148,119 940,335 905,316 Transaction costs - - - - - - - - - - - - Miscellaneous expenses 5,444 5,753 6,219 6,122 5,695 5,995 8,363 9,300 5,458 5,754 5,975 6,205

Total operating expenses $ 8,667,272 $ 8,584,076 $ 84,500,144 $ 52,084,425 $ 47,007,789 $ 35,400,133 $ 399,454,545 $ 373,084,254 $ 15,399,785 $ 9,531,418 $ 78,958,748 $ 63,986,790

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

(Decrease)/increase in net assets attributable to members $ (670,380) $ (17,969,612) $ 99,508,532 $ 37,625,407 $ 58,003,750 $ 11,350,970 $ 3,861,399,591 $ (3,264,674,839) $ 37,061,963 $ (15,456,693) $ 464,842,852 $ (251,037,975)



112

Statement of comprehensive income for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars)




Hong Kong Index Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Income Net (loss)/gain on investments 5 $ 620,262,299 $ (252,785,039) $ 1,072,451,499 $ (524,555,942) $ 287,029,326 $ (306,449,858) $ 647,878,369 $ (335,750,101) $ 413,401,564 $ (378,981,286) $ 133,848,347 $ (115,113,097) Interest on bank deposits 24,947 - 34,490 - 4,227 - 554,479 84,334 4,421 - 772 - Exchange loss - - - - - - (931,538) (398,433) - - - - Dividend income - - - - - - 11,386,058 1,998,510 - - - - Other income 284,499 765,369 213,790 670,389 - 2,246 - 5,646 380,113 1,829 - 537

Total investment income/(loss) $ 620,571,745 $ (252,019,670) $ 1,072,699,779 $ (523,885,553) $ 287,033,553 $ (306,447,612) $ 658,887,368 $ (334,060,044) $ 413,786,098 $ (378,979,457) $ 133,849,119 $ (115,112,560) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Expenses Administration fees 7(a) $ 31,484,012 $ 30,927,967 $ 46,386,979 $ 48,695,219 $ 12,537,873 $ 14,431,089 $ 22,477,774 $ 22,658,113 $ 15,164,029 $ 17,479,559 $ 4,847,046 $ 4,497,315 Investment management fees 7(b) 18,512,240 13,882,074 28,250,073 22,909,920 12,412,224 11,452,633 15,312,317 14,673,561 14,923,242 14,937,670 217,219 186,671 Sponsor fees 7(c) 11,944,655 7,002,854 17,489,370 11,021,573 4,653,546 3,260,757 8,524,740 5,130,030 5,619,876 3,934,923 1,252,265 149,911 Trustee fees 7(d) 5,601,641 2,907,810 8,249,415 4,590,543 2,210,529 1,377,289 4,010,456 2,128,223 2,726,986 1,726,743 491,880 374,776 Custodian fees 1,295,561 1,070,106 1,874,354 1,644,209 546,643 594,728 941,784 895,128 647,030 709,482 305,940 266,384 Sub-custodian fees - - - - - - 104,037 - 1,834 - - - Auditor's fees 78,960 77,954 115,094 108,658 30,669 28,154 56,167 54,374 38,880 32,740 17,957 13,825 Legal and other professional fees 20,950 - 30,287 - 7,819 - 14,907 - 9,486 - 4,139 - Professional indemnity insurance 5,048 5,517 7,145 6,918 1,782 1,164 3,546 4,803 2,231 18 1,079 1,701 Fund price publication expenses 20,496 25,502 30,410 40,343 8,237 12,043 14,782 18,813 9,899 14,519 3,980 4,709 Bank charges - - - - - - - - - - - - Printing and postage expenses 827,119 762,588 1,209,854 1,132,397 322,639 314,726 590,375 547,507 401,865 372,367 178,741 137,160 Transaction costs - - - - - - 1,288,029 84,214 14,568 - - - Miscellaneous expenses 5,890 6,163 6,150 6,503 5,573 5,943 5,742 6,050 5,607 6,003 949 1,272

Total operating expenses $ 69,796,572 $ 56,668,535 $ 103,649,131 $ 90,156,283 $ 32,737,534 $ 31,478,526 $ 53,344,656 $ 46,200,816 $ 39,565,533 $ 39,214,024 $ 7,321,195 $ 5,633,724

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

(Decrease)/increase in net assets attributable to members $ 550,775,173 $ (308,688,205) $ 969,050,648 $ (614,041,836) $ 254,296,019 $ (337,926,138) $ 605,542,712 $ (380,260,860) $ 374,220,565 $ (418,193,481) $ 126,527,924 $ (120,746,284)



113

Statement of comprehensive income for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Note Sun Life MPF Age 65 Plus Fund Sun Life MPF Core Accumulation Fund Scheme Total 2019 2018 2019 2018 2019 2018 2019 2018 Income Net (loss)/gain on investments 5 $ 55,643,447 $ (3,173,085) $ 273,489,486 $ (75,782,523) $ - $ - $ 8,494,059,998 $ (5,020,811,942) Interest on bank deposits 656 - 2,604 - 214,614 77,023 164,935,779 86,878,245 Exchange loss - - - - - - (1,867,038) (18,466,912) Dividend income - - - - - - 11,386,058 1,998,510 Other income - - - - - - 1,798,263 3,526,972

Total investment income/(loss) $ 55,644,103 $ (3,173,085) $ 273,492,090 $ (75,782,523) $ 214,614 $ 77,023 $ 8,670,313,060 $ (4,946,875,127) -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- Expenses Administration fees 7(a) $ 2,660,987 $ 1,302,439 $ 8,017,465 $ 4,002,315 $ - $ - $ 431,734,554 $ 437,399,404 Investment management fees 7(b) 1,663,117 814,025 5,010,915 2,501,447 - - 269,764,143 223,396,022 Sponsor fees 7(c) - - - - - - 149,032,671 89,652,603 Trustee fees 7(d) 399,148 195,366 1,202,620 600,347 - - 72,323,155 40,919,506 Custodian fees 264,768 129,593 797,738 398,230 - - 22,400,487 18,231,175 Sub-custodian fees - - - - - - 374,959 186,695 Auditor’s fees 13,756 10,024 40,632 28,772 - - 1,175,504 1,070,800 Legal and other professional fees 3,332 - 9,617 - - - 299,991 - Professional indemnity insurance 1,002 1,641 2,833 5,195 - - 73,132 69,328 Fund price publication expenses 2,539 1,997 7,701 6,109 - - 295,255 378,489 Bank charges - - - - 78,511 71,753 95,334 88,380 Printing and postage expenses 132,576 79,349 392,639 234,481 - - 12,165,953 10,858,408 Transaction costs - - - - - - 1,302,597 84,214 Miscellaneous expenses 911 1,202 1,021 1,253 - - 68,997 73,518

Total operating expenses $ 5,142,136 $ 2,535,636 $ 15,483,181 $ 7,778,149 $ 78,511 $ 71,753 $ 961,106,732 $ 822,408,542

-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- (Decrease)/increase in net assets attributable to members $ 50,501,967 $ (5,708,721) $ 258,008,909 $ (83,560,672) $ 136,103 $ 5,270 $ 7,709,206,328 $ (5,769,283,669)



114

Statement of changes in net assets attributable to members for the year ended 31 December 2019 (Expressed in Hong Kong dollars)



Fund Sun Life MPF Global Bond Fund Sun Life MPF Stable Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Balance at the beginning of the year $ 673,814,073 $ 507,363,322 $ 7,258,468,679 $ 3,239,873,114 $ 2,737,296,387 $ 2,210,410,581 $24,236,640,795 $26,000,087,674 $ 816,419,836 $ 523,458,584 $ 4,986,424,692 $ 3,845,456,390 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Proceeds on subscriptions of units 3,11 $ 256,143,070 $ 544,814,302 $ 7,392,770,380 $ 6,847,039,560 $ 2,320,237,124 $ 1,644,097,338 $ 9,257,437,846 $ 8,652,901,670 $ 1,211,714,434 $ 675,527,463 $ 2,135,246,063 $ 2,501,184,902 Payments on redemptions of units 3,12 (256,753,411) (360,393,939) (4,409,832,371) (2,866,069,402) (1,362,013,879) (1,128,562,502) (6,875,584,945) (7,151,673,710) (494,221,639) (367,109,518) (1,162,456,359) (1,109,178,625)

Net subscriptions $ (610,341) $ 184,420,363 $ 2,982,938,009 $ 3,980,970,158 $ 958,223,245 $ 515,534,836 $ 2,381,852,901 $ 1,501,227,960 $ 717,492,795 $ 308,417,945 $ 972,789,704 $ 1,392,006,277 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (Decrease)/increase in net assets

attributable to members $ (670,380) $ (17,969,612) $ 99,508,532 $ 37,625,407 $ 58,003,750 $ 11,350,970 $ 3,861,399,591 $ (3,264,674,839) $ 37,061,963 $ (15,456,693) $ 464,842,852 $ (251,037,975)

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

Balance at the end of the year $ 672,533,352 $ 673,814,073 $10,340,915,220 $ 7,258,468,679 $ 3,753,523,382 $ 2,737,296,387 $30,479,893,287 $24,236,640,795 $ 1,570,974,594 $ 816,419,836 $ 6,424,057,248 $ 4,986,424,692



115

Statement of changes in net assets attributable to members for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars)




Hong Kong Index Fund 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018

Balance at the beginning of the year $ 4,254,257,510 $ 3,493,896,855 $ 6,243,485,253 $ 5,943,467,685 $ 1,726,224,175 $ 1,884,453,782 $ 2,931,089,419 $ 2,658,111,000 $ 2,016,745,882 $ 2,287,109,534 $ 780,528,281 $ 665,393,760 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Proceeds on subscriptions of units 3,11 $ 1,655,254,568 $ 1,912,735,159 $ 2,178,578,442 $ 2,235,233,754 $ 598,109,535 $ 650,975,632 $ 1,980,805,734 $ 1,855,619,020 $ 884,525,052 $ 838,803,929 $ 934,852,409 $ 828,423,421 Payments on redemptions of units 3,12 (848,548,706) (843,686,299) (1,204,532,976) (1,321,174,350) (420,171,852) (471,279,101) (1,329,473,899) (1,202,379,741) (653,263,559) (690,974,100) (687,544,628) (592,542,616)

Net subscriptions $ 806,705,862 $ 1,069,048,860 $ 974,045,466 $ 914,059,404 $ 177,937,683 $ 179,696,531 $ 651,331,835 $ 653,239,279 $ 231,261,493 $ 147,829,829 $ 247,307,781 $ 235,880,805 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- (Decrease)/increase in net assets

attributable to members $ 550,775,173 $ (308,688,205) $ 969,050,648 $ (614,041,836) $ 254,296,019 $ (337,926,138) $ 605,542,712 $ (380,260,860) $ 374,220,565 $ (418,193,481) $ 126,527,924 $ (120,746,284)

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

Balance at the end of the year $ 5,611,738,545 $ 4,254,257,510 $ 8,186,581,367 $ 6,243,485,253 $ 2,158,457,877 $ 1,726,224,175 $ 4,187,963,966 $ 2,931,089,419 $ 2,622,227,940 $ 2,016,745,882 $ 1,154,363,986 $ 780,528,281



116

Statement of changes in net assets attributable to members for the year ended 31 December 2019 (continued) (Expressed in Hong Kong dollars) Note Sun Life MPF Age 65 Plus Fund Sun Life MPF Core Accumulation Fund Scheme Total 2019 2018 2019 2018 2019 2018 2019 2018 Balance at the beginning of the year $ 463,763,729 $ 177,373,577 $ 1,394,349,841 $ 605,730,720 $ 240,040,527 $ 129,509,449 $ 60,759,549,079 $ 54,171,696,027 -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- Proceeds on subscriptions of units 3,11 $ 746,591,011 $ 496,161,286 $ 1,763,343,339 $ 1,254,428,043 $ (16,459,882,562) $ (15,344,207,878) $ 16,855,726,445 $ 15,593,737,601 Payments on redemptions of units 3,12 (326,818,627) (204,062,413) (633,085,666) (382,248,250) 16,285,098,386 15,454,733,686 (4,379,204,131) (3,236,600,880)

Net subscriptions $ 419,772,384 $ 292,098,873 $ 1,130,257,673 $ 872,179,793 $ (174,784,176) $ 110,525,808 $ 12,476,522,314 $ 12,357,136,721 -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- (Decrease)/increase in net assets attributable to members $ 50,501,967 $ (5,708,721) $ 258,008,909 $ (83,560,672) $ 136,103 $ 5,270 $ 7,709,206,328 $ (5,769,283,669)

-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- Balance at the end of the year $ 934,038,080 $ 463,763,729 $ 2,782,616,423 $ 1,394,349,841 $ 65,392,454 $ 240,040,527 $ 80,945,277,721 $ 60,759,549,079



117

Cash flow statement for the year ended 31 December 2019 (Expressed in Hong Kong dollars) Note 2019 2018 Cash flows from operating activities Increase/(decrease) in net assets

attributable to members

$ 7,709,206,328 $ (5,769,283,669) Adjustments for:

Net increase in investments (17,532,924,220) (3,094,523,554) Net increase in bank deposits with

original maturity over 3 months

(2,970,118,040) (347,438,498) Change in amounts receivable/payable

on sales/purchases of investments

146,925,673 234,298,394 Net increase in dividend, interest and

other receivables

(17,086,876) (12,583,150) Increase in accruals and other payables 40,035,487 29,492,584

Net cash outflow from operating activities

$(12,623,961,648) $ (8,960,037,893)

---------------------- ---------------------- Cash flows from financing activities Contributions and transfers in received $16,772,470,837 $15,500,276,169 Benefits and transfers out paid 8 (3,779,394,343) (3,038,064,063) Forfeitures paid 8 (249,498,998) (219,332,280)

Net cash inflow from financing activities $12,743,577,496 $12,242,879,826 ---------------------- ---------------------- Net increase in cash and cash

equivalents

$ 119,615,848 $ 3,282,841,933 Cash and cash equivalents

at the beginning of the year

6,455,412,961 3,172,571,028

Cash and cash equivalents at the end of the year

$ 6,575,028,809 $ 6,455,412,961

Analysis of balance of cash and cash equivalents:

Cash at bank $10,564,459,563 $ 7,474,725,675 Less: Bank deposits with original maturity

over 3 months

(3,989,430,754) (1,019,312,714)

$ 6,575,028,809 $ 6,455,412,961



118

Notes to the financial statements (Expressed in Hong Kong dollars)

1 The Scheme Sun Life Rainbow MPF Scheme (the “Scheme”) is a master trust scheme established and governed by a Trust Deed dated 31 January 2000, as amended from time to time. The Scheme is registered under Section 21 of the Hong Kong Mandatory Provident Fund Schemes Ordinance (the “MPF Ordinance”) and is required to comply with the MPF Ordinance and the relevant regulations, guidelines and codes issued by the Hong Kong Mandatory Provident Fund Schemes Authority (the “Authority”). The Scheme consists of fourteen constituent funds which are presented separately on the face of the statement of assets and liabilities attributable to members, the statement of comprehensive income and the statement of changes in net assets attributable to members. The constituent funds operating in the current and previous year are: (1) Sun Life MPF RMB and HKD Fund (2) Sun Life MPF Conservative Fund (3) Sun Life MPF Hong Kong Dollar Bond Fund (4) Sun Life MPF Hong Kong Equity Fund (5) Sun Life MPF Global Bond Fund (6) Sun Life MPF Stable Fund (7) Sun Life MPF Balanced Fund (8) Sun Life MPF Growth Fund (9) Sun Life MPF Asian Equity Fund (10) Sun Life MPF Multi-Sector Equity Fund (11) Sun Life MPF Greater China Equity Fund (12) Sun Life FTSE MPF Hong Kong Index Fund (13) Sun Life MPF Age 65 Plus Fund (14) Sun Life MPF Core Accumulation Fund


119

1 The Scheme (continued) The “Scheme” column represents: (i) the movement between the current year-end and prior year-end for contributions

receivable and contributions surcharge receivable. Contributions receivable and contributions surcharge receivable are contributions due, but not yet received from employers and members as at year-end;

(ii) the timing difference between contribution and redemption requests being received

by the Scheme and the transactions being processed by the constituent funds; (iii) expenses charged to, and income received by, the Scheme and not attributable to

specific constituent funds; and (iv) the elimination of the impact of fund switching between constituent funds and fund

classes. As at 31 December 2019, the Sun Life MPF RMB and HKD Fund and the Sun Life MPF Conservative Fund hold investments directly. The Sun Life FTSE MPF Hong Kong Index Fund, the Sun Life MPF Core Accumulation Fund and the Sun Life MPF Age 65 Plus Fund are feeder funds each investing in a corresponding index-tracking collective investment scheme or approved pooled investment fund (as the case may be). The other constituent funds are portfolio management funds that invest into a range of underlying funds. These portfolio management funds are multi-management funds and their assets are invested in multiple underlying funds managed by various investment managers selected by Sun Life Asset Management (HK) Limited (the “Investment Manager”). The underlying funds in which the constituent funds invest shall be referred to as the “Investment Funds”. All the Investment Funds are set up as pooled investment funds in accordance with Part IV of Schedule 1 of the Mandatory Provident Fund Schemes (General) Regulation (the “Regulation”), and have been approved by the Authority and the SFC as APIFs or as ITCISs approved by the Authority pursuant to the Regulation (“Approved ITCISs”).


120

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

(a) Statement of compliance The financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (the “HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (the “HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), accounting principles generally accepted in Hong Kong, the relevant provisions of the Trust Deed, as amended from time to time, and the relevant disclosure requirements set out in the MPF Ordinance, the Hong Kong Mandatory Provident Fund Schemes (General) Regulation (the “General Regulation”), the Hong Kong Code on MPF Investments Funds (the “MPF Code”) and Guideline II.4 (the “MPF Guideline”) issued by the Hong Kong Mandatory Provident Fund Schemes Authority. A summary of the significant accounting policies adopted by the Scheme is set out below. The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Scheme. Note 2(c) provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Scheme for the current and prior accounting periods reflected in these financial statements.

(b) Basis of preparation The financial statements are presented in Hong Kong dollars. The measurement basis used in the preparation of the financial statements is historical cost basis except that financial assets and financial liabilities are stated at their fair value as explained in the accounting policies set out below. The preparation of financial statements in conformity with the HKFRSs requires the Trustee to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.


121

2 Summary of significant accounting policies (continued)

(c) Changes in accounting policies A number of new standards are effective from 1 January 2019 but they do not have a material effect on the Scheme’s financial statements. The Scheme has consistently applied the accounting policies as set out in note 2 to all periods presented in these financial statements.

(d) Financial assets and financial liabilities

(i) Recognition and initial measurement Financial assets and financial liabilities at fair value through profit or loss (“FVTPL”) are initially recognised on the trade date, which is the date on which the Scheme becomes a party to the contractual provisions of the instrument. Other financial assets and financial liabilities are recognised on the date on which they are originated. A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue.

(ii) Classification On initial recognition, the Scheme classifies financial assets as measured at amortised cost or FVTPL. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: − it is held within a business model whose objective is to hold assets to collect

contractual cash flows; and

− its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”).

All other financial assets of the Scheme are measured at FVTPL.


122


(d) Financial assets and financial liabilities (continued)

(ii) Classification (continued) Business model assessment In making an assessment of the objective of the business model in which a financial asset is held, the Scheme considers all of the relevant information about how the business is managed. The Scheme has determined that it has two business models: − Held-to-collect: this includes cash at bank, amounts receivable on sales of

investments, amounts receivable on subscriptions, contributions receivables, dividend receivables, interest receivables and other receivable.

− Other: this includes investments where their performance is evaluated on a fair value

basis with frequent sales taking place. Assessment whether contractual cash flows are SPPI For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are SPPI, the Scheme considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

(iii) Measurement All investments have been designated by the Trustee as “financial assets at fair value through profit or loss” at inception. Purchases and sales of investments are accounted for on the trade date basis. Investments are initially recognised at fair value, excluding transaction costs which are expensed as incurred, and are subsequently re-measured at fair value. Realised and unrealised gains and losses on investments are included in the statement of comprehensive income in the period in which they arise. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Scheme has transferred substantially all risks and rewards of ownership.


123



(iii) Measurement (continued) Investments that are listed or traded on an exchange are fair valued based on quoted bid prices. Investments which are not listed on an exchange are valued by using bid price quotes from brokers. Investments in debt securities are presented inclusive of accrued interest. Forward foreign exchange contracts are recognised initially on trade date at fair value. Outstanding forward foreign exchange contracts are valued at the year end date by reference to the forward rate of exchange applicable to the outstanding term of the contracts. Unrealised gains and losses on outstanding contracts and realised gains and losses on closed contracts are included in the “net (loss)/gain on investments” in the statement of comprehensive income.

(iv) Fair value measurement principles “Fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Scheme has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Scheme measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as “active” if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Scheme measures instruments quoted in an active market at a bid price. If there is no quoted price in an active market, then the Scheme uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. The Scheme recognises transfers between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.

(v) Amortised cost measurement The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount and, for financial assets, adjusted for any loss allowance.


124



(vi) Impairment The Scheme recognises loss allowances for expected credit loss on financial assets measured at amortised cost. A loss allowance on financial assets carried at amortised cost would be recognised with reference to credit losses expected to arise on the financial asset, discounted where the effect would be material, and taking into account whether the credit risk of the financial asset had increased significantly since initial recognition. At each reporting date, the Scheme assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. The gross carrying amount of a financial asset is written off when the Scheme has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

(vii) Derecognition The Scheme derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Scheme neither transfer nor retain substantially all of the risks and rewards of ownership and do not retain control of the financial asset. On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset that is derecognised) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss. Any interest in such transferred financial assets that is created or retained by the Scheme is recognised as a separate asset or liability. The Scheme enters into transactions whereby they transfer assets recognised on the statement of assets and liabilities, but retain either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all of the risks and rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all of the risks and rewards include sale and repurchase transactions. The Scheme derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire.


125



(viii) Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of assets and liabilities when, and only when, the Scheme has a legal right to offset the amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis for gains and losses from financial instruments at fair value through profit or loss and foreign exchange gains and losses.

(e) Income and expenses Realised and unrealised gains or losses on investments are included in the statement of comprehensive income. Realised gains or losses include net gains or losses on contracts which have been settled or for which offsetting contracts have been entered into. Interest income on assets other than those designated by the trustee as “financial assets at fair value through profit or loss” at inception is recognised on a time-apportioned basis using the effective interest method. Expenses are accounted for on an accruals basis.

(f) Translation of foreign currencies 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 as all contributions and benefit payments, subscriptions and redemptions of units, reporting to the members as well as settlement of fees and expenses are carried out in Hong Kong dollars. The Scheme and its constituent funds have adopted the Hong Kong dollar as their presentation currency as all members are based in Hong Kong.

(g) Subscription and redemption of units The price at which units are subscribed or redeemed is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day. Proceeds and payments for units subscribed and redeemed are included in the statement of changes in net assets attributable to members of the constituent funds.


126


(h) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition, net of bank overdrafts, if any, for the purpose of the cash flow statement.

(i) Amounts receivable on sales of investments Amounts receivable on sales of investments represent receivables for investments sold that have been contracted for but not yet delivered by the end of the year. Amounts receivable on sales of investments are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at their amortised cost using the effective interest rate.

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

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

(l) Transfer values Transfer values are accounted for on the effective date of transfer.

(m) 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.

(n) Related parties (1) A person, or a close member of that person’s family, is related to the Scheme if

that person: (i) has control or joint control over the Scheme; (ii) has significant influence over the Scheme; or (iii) is a member of the key management personnel of the Scheme.


127


(n) Related parties (continued)

(2) An entity is related to the Scheme if any of the following conditions applies: (i) The entity and the Scheme are members of the same group (which means

that each parent, subsidiary and fellow subsidiary is related to the others); (ii) One entity is an associate or joint venture of the other entity (or an associate

or joint venture of a member of a group of which the other entity is a member);

(iii) Both entities are joint ventures of the same third party; (iv) One entity is a joint venture of a third entity and the other entity is an

associate of the third entity; (v) The entity is a post-employment benefit plan for the benefit of employees of

an entity related to the Scheme; (vi) The entity is controlled or jointly controlled by a person identified in (1); or (vii) A person identified in (1)(i) has significant influence over the entity or is a

member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key

management personnel services to the Scheme or to the Scheme’s parent. Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(o) Units in issue The Scheme classifies financial instruments issued as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments.


128


(o) Units in issue (continued) A puttable financial instrument that includes a contractual obligation for the Scheme to repurchase or redeem that instrument for cash or another financial asset is classified as equity instruments if it meets all of the following conditions:

− it entitles the holder to a pro rata share of the Scheme’s net assets in the event of its

liquidation;

− it is in the class of instruments that is subordinate to all other classes of instruments;

− all financial instruments in the class of instruments that is subordinate to all other classes of instruments have identical features;

− apart from the contractual obligation for the Scheme to repurchase or redeem the

instrument for cash or another financial asset, the instrument does not include any other features that would require classification as a liability; and

the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Scheme over the life of the instrument.

In addition to the instrument having all the above features, the Scheme must have no other financial instrument or contract that has: − total cash flows based substantially on the profit or loss, the change in the recognised

net assets or change in the fair value of the recognised and unrecognised net assets of the Scheme; and

− the effect of substantially restricting or fixing the residual return to the puttable instrument holders.

The redeemable units are not in the class of instruments that are subordinate to all other classes of instruments which have identical features. Therefore, they do not meet the criteria for equity classification and therefore are classified as financial liabilities. They are measured at the present value of the redemption amounts.

(p) Segment reporting An operating segment is a component of the Scheme that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Scheme’s other components, whose operating results are reviewed regularly by the chief operating decision maker (the “CODM”) to make decisions about resources allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the Chief Executive Officer of the trustee acting as the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.


129

3 Number of units in issue 2019 2018 Class A Class B Class A Class B Sun Life MPF RMB and

HKD Fund Balance at the beginning

of the year 147,948,218.79 505,974,847.64 122,549,619.80 360,759,763.55 Units issued 59,419,371.08 188,441,434.76 132,197,793.92 381,332,433.89 Units redeemed (61,078,063.25) (187,789,623.19) (106,799,194.93) (236,117,349.80)

Balance at the end of the year 146,289,526.62 506,626,659.21 147,948,218.79 505,974,847.64

Sun Life MPF Conservative Fund

Balance at the beginning

of the year 1,282,939,592.98 5,246,092,837.02 706,119,763.39 2,227,615,041.77 Units issued 1,118,152,508.25 5,494,909,403.93 1,225,215,484.33 4,959,988,795.81 Units redeemed (806,789,874.28) (3,137,979,711.70) (648,395,654.74) (1,941,511,000.56)

Balance at the end of the year 1,594,302,226.95 7,603,022,529.25 1,282,939,592.98 5,246,092,837.02

Sun Life MPF Hong Kong Dollar Bond Fund


of the year 457,702,075.64 1,485,931,230.53 398,211,788.25 1,174,665,689.20 Units issued 303,233,988.09 1,301,830,298.55 275,404,487.55 910,132,069.95 Units redeemed (228,689,411.42) (715,501,156.19) (215,914,200.16) (598,866,528.62)

Balance at the end of the year 532,246,652.31 2,072,260,372.89 457,702,075.64 1,485,931,230.53


130

3 Number of units in issue (continued) 2019 2018 Class A Class B Class A Class B Sun Life MPF Hong

Kong Equity Fund Balance at the beginning

of the year 861,124,111.37 3,316,145,575.74 869,984,174.61 3,079,269,319.82 Units issued 283,221,599.92 1,160,058,889.50 273,407,887.22 1,056,257,364.22 Units redeemed (256,641,024.48) (822,366,284.79) (282,267,950.46) (819,381,108.30)


Sun Life MPF Global Bond Fund


of the year 178,789,356.92 680,252,016.77 131,594,748.26 406,921,244.11 Units issued 202,988,139.95 1,016,228,108.95 134,242,839.42 570,933,278.28 Units redeemed (96,458,883.36) (403,426,822.35) (87,048,230.76) (297,602,505.62)

Balance at the end of the year 285,318,613.51 1,293,053,303.37 178,789,356.92 680,252,016.77

Sun Life MPF Stable Fund


of the year 530,252,381.25 1,920,197,803.89 431,865,563.75 1,364,757,012.37 Units issued 196,197,519.07 790,658,999.55 253,128,051.67 928,918,162.26 Units redeemed (137,840,574.90) (401,946,985.21) (154,741,234.17) (373,477,370.74)


Sun Life MPF Balanced Fund





131

3 Number of units in issue (continued) 2019 2018 Class A Class B Class A Class B Sun Life MPF Growth

Fund Balance at the beginning



Sun Life MPF Asian

Equity Fund Balance at the beginning


Balance at the end of the year 311,645,220.88 1,073,876,815.51 293,977,523.58 971,927,938.33

Sun Life MPF Multi-Sector Equity Fund


of the year 523,385,044.13 1,856,784,003.96 458,902,835.68 1,448,772,096.20 Units issued 321,978,270.75 1,130,745,402.10 314,487,939.02 1,035,405,009.25 Units redeemed (258,781,351.81) (719,261,406.69) (250,005,730.57) (627,393,101.49)


Sun Life MPF Greater China Equity Fund





132

3 Number of units in issue (continued) 2019 2018 Class A Class B Class A Class B Sun Life FTSE MPF Hong

Kong Index Fund Balance at the beginning


Balance at the end of the year 191,645,034.44 676,255,334.96 162,939,890.24 511,809,919.84

Sun Life MPF Age 65 Plus Fund

Number of units Number of units Balance at the beginning

of the year 460,069,296.28 173,163,486.19 Units issued 695,719,372.94 487,510,912.27 Units redeemed (305,197,197.65) (200,605,102.18)

Balance at the end of the year 850,591,471.57 460,069,296.28



of the year 1,373,029,615.06 561,483,588.97 Units issued 1,594,949,364.37 1,167,749,260.53 Units redeemed (574,043,790.15) (356,203,234.44)

Balance at the end of the year 2,393,935,189.28 1,373,029,615.06


133

4 Financial risk management The Scheme and its constituent funds are exposed to various risks which are discussed below.

(a) Market risk The Scheme’s investment objective is to provide members with reasonable investment return or capital appreciation from their investment in accordance to the investment policies as set out in the investment report. The holding of securities and investing activities undertaken pursuant to this objective involves certain inherent risks. Below is a description of the principal risks inherent in the Scheme’s activities along with the actions it has taken to manage these risks. As at 31 December 2019 and 2018, the Scheme’s financial instruments mainly included investments in debt securities (only held by the Sun Life MPF RMB and HKD Fund and Sun Life MPF Conservative Fund) and sub-funds of umbrella unit trusts (the “Sub-Funds”) which in turn invested in instruments including equity and debt securities. These are held in accordance with the Scheme’s investment objectives and policies. The Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund and the Sub-Funds buy, sell or hold financial assets and liabilities in order to take advantage of changes in market prices or rates. The risks arising from the Scheme’s operations are market risk comprising equity price risk, foreign currency risk, interest rate risk and also credit risk and liquidity risk. The Trustee reviews the policies for managing each of these risks and they are summarised below. These policies have remained substantially unchanged since the beginning of the year to which these financial statements relate. The Trustee actively monitors market and economic data in their ongoing consideration of risk on a regular basis. A summary of the Scheme’s investment policies is set out in the investment report.

(b) Price risk Price risk is the risk that value of investments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. The Scheme is exposed to other price risk arising from changes in net assets of the underlying sub-funds. The Sub-Funds strive to invest in strong businesses with quality management and at sensible prices. Price risk is mitigated and monitored by the Investment Manager of the Sub-Funds on a regular basis by constructing a diversified portfolio of investments across difference issuers, sectors and markets.


134

4 Financial risk management (continued)

(b) Price risk (continued) Sensitivity analysis As at the reporting date, the investments in sub-funds held by each constituent fund were as follows. A 5% (2018: 5%) increase in prices of the investments held by each constituent fund at the reporting date, with all other variables held constant, would have increased the net assets of the respective constituent fund and the changes in net assets attributable to members by the amount shown below. A 5% (2018: 5%) decrease in prices would have an equal but opposite effect. The analysis is performed on the same basis for 2018. As at 31 December 2019

Sun Life MPF

RMB and HKD Fund Sun Life MPF

Conservative Fund Sun Life MPF Hong Kong

Dollar Bond Fund Sun Life MPF

Hong Kong Equity Fund Sun Life MPF

Global Bond Fund Sun Life MPF Stable Fund


Investments $ 273,086,975 $ 1,297,323,340 $ 3,730,485,692 $ 30,244,627,296 $ 1,561,363,190 $ 6,322,029,308 $ 5,540,818,858 Increase in net assets and changes in net assets

attributable to members 13,654,349 64,866,167 186,524,285 1,512,231,365 78,068,160 316,101,465 277,040,943 Percentage change in net assets 2.03% 0.63% 4.97% 4.96% 4.97% 4.92% 4.94%

As at 31 December 2019

Sun Life MPF Growth Fund

Sun Life MPF Asian Equity Fund



Sun Life FTSE MPF Hong Kong Index Fund



Investments $ 8,074,772,618 $ 2,139,333,521 $ 4,111,529,782 $ 2,593,579,637 $ 1,136,935,190 $ 928,991,790 $ 2,766,508,312 Increase in net assets and changes in net assets

attributable to members 403,738,631 106,966,676 205,576,489 129,678,982 56,846,760 46,449,590 138,325,416 Percentage change in net assets 4.93% 4.96% 4.91% 4.95% 4.92% 4.97% 4.97%


Sun Life MPF

RMB and HKD Fund Sun Life MPF

Conservative Fund Sun Life MPF Hong Kong

Dollar Bond Fund Sun Life MPF

Hong Kong Equity Fund Sun Life MPF

Global Bond Fund Sun Life MPF Stable Fund


Investments $ 171,650,287 $ 1,228,657,306 $ 2,672,019,650 $ 23,972,062,672 $ 795,932,815 $ 4,947,916,980 $ 4,192,047,593 Increase in net assets and changes in net assets

attributable to members 8,582,514 61,432,865 133,600,983 1,198,603,134 39,796,641 247,395,849 209,602,380 Percentage change in net assets 1.27% 0.85% 4.88% 4.95% 4.87% 4.96% 4.93%


Sun Life MPF Growth Fund

Sun Life MPF Asian Equity Fund



Sun Life FTSE MPF Hong Kong Index Fund



Investments $ 6,181,840,568 $ 1,671,874,178 $ 2,816,259,514 $ 1,932,574,826 $ 766,114,507 $ 455,963,460 $ 1,383,546,933 Increase in net assets and changes in net assets

attributable to members 309,092,028 83,593,709 140,812,976 96,628,741 38,305,725 22,798,173 69,177,347 Percentage change in net assets 4.95% 4.84% 4.80% 4.79% 4.91% 4.92% 4.96%


135


(c) Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The functional currency of all constituent funds is the Hong Kong dollars (“HKD”). As at 31 December 2019 and 2018, the Sun Life MPF Conservative Fund neither directly nor indirectly held any assets in currencies other than HKD. As a result, there was no currency risk exposure for this constituent fund. As at 31 December 2019 and 2018, the Sun Life MPF RMB and HKD Fund directly held assets in currencies other than the HKD. For all other constituent funds, the underlying sub-funds may directly or indirectly invest in a variety of financial instruments denominated in currencies other than Hong Kong dollar, which may expose the Scheme’s investments to indirect currency risk. The investment manager of the underlying sub-funds has policies and procedures to manage portfolios effectively and mitigate the currency risk. Details are provided in the financial statements of the underlying sub-funds. The following table summarises the foreign currency positions of the Sun Life MPF RMB and HKD Fund via its investment holdings as at 31 December 2019 and 2018 and shows the estimated percentage changes in values of the positions assuming 15% (2018: 15%) change in the underlying exchange rates occur immediately and uniformly across all currencies. The changes in value do not necessarily reflect the best or worst case scenarios and actual results may differ, but the reasonable possible change of the foreign currency position. Since the HKD is pegged to the United States dollars (“USD”), it is not considered to have significant currency risk and is not reported in the table below: (All amounts stated in HKD equivalent) 2019 2018 Sun Life MPF RMB and HKD Fund − Non HKD/USD currency position $ 438,628,033 $ 428,816,512

− Estimated possible change in exchange rate 15% 15% − Estimated change in NAV $ 65,794,205 $ 64,322,477


136


(d) Interest rate risk The Scheme held the Sub-Funds or debt securities as investments at 31 December 2019 and 2018. The carrying values of the investments as disclosed in the statement of assets and liabilities were subject to direct or indirect interest rate risks for the holdings in debt instruments. The strategy of the Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund or the Sub-Funds is to acquire fixed income securities that are attractively priced in relation to the perceived credit risk. The Investment Managers recognise and accept that losses may occur. The Sub-Funds may utilise derivative products to manage interest rate risks on a limited basis. The fair values of the fixed income investments of the Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund or the Sub-Funds fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally fair value of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument and other general market conditions. Fixed interest rate investments may be more sensitive to interest rate changes than variable rate investments. Interest rate risk is mitigated by the Investment Managers by constructing a diversified portfolio of fixed income securities with differing modified duration and term to maturity characteristics, which acts to reduce the overall exposure of the Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund or the Sub-Funds to interest rate risk and makes decisions accordingly about the composition of the portfolio of fixed income securities of the Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund or the Sub-Funds in order to ensure the interest rate risk in the portfolio is maintained at an appropriate level.


137


(d) Interest rate risk (continued) As at 31 December 2019 and 2018, the interest rate exposures of the Sun Life MPF RMB and HKD Fund and the Sun Life MPF Conservative Fund were as follows: Sun Life MPF RMB and HKD Fund 2019 2018

Up to 1 year Non-interest

bearing Total Up to 1 year Non-interest

bearing Total Assets Investments $ 273,086,975 $ - $ 273,086,975 $ 171,650,287 $ - $ 171,650,287 Cash at bank 404,395,505 - 404,395,505 500,577,315 - 500,577,315 Amounts receivable

on subscriptions - 3,282,556 3,282,556 - 3,186,006 3,186,006 Other assets - 1,084,523 1,084,523 - 1,560,583 1,560,583

Total assets $ 677,482,480 $ 4,367,079 $ 681,849,559 $ 672,227,602 $ 4,746,589 $ 676,974,191

Liabilities Liabilities (excluding

net assets attributable to the members) $ - $ 9,316,207 $ 9,316,207 $ - $ 3,160,118 $ 3,160,118

Total interest

sensitivity gap $ 677,482,480 $ 672,227,602

Sun Life MPF Conservative Fund 2019 2018

Up to 1 year Non-interest

bearing Total Up to 1 year Non-interest

bearing Total Assets Investments $ 1,297,323,340 $ - $ 1,297,323,340 $ 1,228,657,306 $ - $ 1,228,657,306 Cash at bank 9,019,953,654 - 9,019,953,654 5,999,401,423 - 5,999,401,423 Amounts receivable

on subscriptions - 86,694,447 86,694,447 - 59,198,764 59,198,764 Other assets - 36,861,026 36,861,026 - 17,483,420 17,483,420 Total assets $ 10,317,276,994 $ 123,555,473 $10,440,832,467 $ 7,228,058,729 $ 76,682,184 $ 7,304,740,913 Liabilities

Liabilities (excluding

net assets attributable to the members) $ - $ 99,917,247 $ 99,917,247 $ - $ 46,272,234 $ 46,272,234

Total interest

sensitivity gap $10,317,276,994 $ 7,228,058,729


138


(d) Interest rate risk (continued) The Scheme is exposed to interest rate risk via its holding of fixed income securities or the Sub-Funds. The following table summarises the estimated effects of hypothetical 100 basis points (“bps”) change in interest rates on NAV of the fixed income securities or the Sub-Funds of the Scheme that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each relevant category of instruments. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios but considered to be a reasonable possible change in market interest rate. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table. Assuming a 100bps (2018: 100bps) decrease in market interest rate, the estimated percentage increase in NAV of the Sub-Funds and the constituent funds are as follows: The Sub-Funds:

As at 31 December 2019 % increase

in NAV

First State MPF Asia Region Bond Fund 5.12%

First State MPF Global Bond Fund 8.23%

First State MPF Hong Kong Bond Fund 4.56%

Invesco Pooled Investment Fund - HK$ Bond Fund 3.98%

Templeton MPF Global Bond Fund 1.57%

Principal Life Style Fund - Principal Hong Kong Bond Fund 3.45%

JPMorgan SAR HK$ Bond Fund 4.32%

Schroder MPF Core 20/80 Fund 6.05%


As at 31 December 2018 % increase

in NAV

First State MPF Asia Region Bond Fund 5.12%

First State MPF Global Bond Fund 8.44%

First State MPF Hong Kong Bond Fund 4.24%

Invesco Pooled Investment Fund - HK$ Bond Fund 4.24%

Templeton MPF Global Bond Fund 0.84%

Principal Life Style Fund - Principal Hong Kong Bond Fund 3.80%




139


(d) Interest rate risk (continued) 2019 2018 The constituent funds: Sun Life MPF RMB and HKD Fund 0.14% 0.08% Sun Life MPF Conservative Fund 0.03% 0.07% Sun Life MPF Hong Kong Dollar Bond Fund 4.15% 4.05% Sun Life MPF Global Bond Fund 4.77% 4.01% Sun Life MPF Stable Fund 3.71% 3.64% Sun Life MPF Balanced Fund 2.43% 2.43% Sun Life MPF Growth Fund 1.12% 1.01% Sun Life MPF Age 65 Plus Fund 6.02% 4.77% Sun Life MPF Core Accumulation Fund 2.84% 2.72% The same percentage increase in market interest rate would have an equal but opposite effect. Sun Life MPF Hong Kong Equity Fund, Sun Life MPF Asian Equity Fund, Sun Life MPF Multi-Sector Equity Fund, Sun Life MPF Greater China Equity Fund and Sun Life FTSE MPF Hong Kong Index Fund invested in Sub-Funds which invested primarily in equity financial instruments. Thus, they were not exposed to significant interest rate risk and were not included in the table above.


140


(e) Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation to pay dues in time. The Scheme invests mainly in debt securities and the Sub-Funds of umbrella unit trusts. The Sub-Funds invest in debt instruments which are in turn exposed to credit risks. The investment managers of the umbrella unit trusts have credit review processes in place. This ensures review and monitoring of credit quality and credit risk exposure on an ongoing basis, which helps protect portfolios from anticipated negative credit events. The credit risks arising from these Sub-Funds are mitigated through diversification and control on exposure to any single issuer in the portfolio. There are internal control limits that ensure that exposures are orderly and not concentrated. As at 31 December 2019 and 2018, the Sun Life MPF RMB and HKD Fund and the Sun Life MPF Conservative Fund invested in debt securities and held bank deposits with the following credit quality: Sun Life MPF RMB and HKD Fund 2019 2018 Debt securities: − AAA(1) or Aaa(2) $ 17,053,252 $ 17,633,618 − AA+(1) or Aa1(2) 19,428,518 - − AA(1) or Aa2(2) 11,475,218 - − AA-(1) or Aa3(2) 11,397,453 - − A+(1) or A1(2) 64,246,244 17,318,294 − A-(1) or A3(2) 16,830,422 17,337,106 Certificate of deposits: − issued by authorised financial institutions

in Hong Kong 132,655,868 119,361,269

$ 273,086,975 $ 171,650,287 Bank deposits with: − authorised financial institutions in Hong Kong 388,197,393 456,517,023 − overseas bank: RBC Investor Services Bank 16,198,112 44,060,292

$ 677,482,480 $ 672,227,602


141


(e) Credit risk (continued) Sun Life MPF Conservative Fund 2019 2018 Certificate of deposits: − issued by authorised financial institutions

in Hong Kong $ 1,297,323,340 $ 1,228,657,306

$ 1,297,323,340 $ 1,228,657,306 Bank deposits with: − authorised financial institutions in Hong Kong 8,847,579,140 5,916,458,724 − overseas bank: RBC Investor Services Bank 172,374,514 82,942,699

$10,317,276,994 $ 7,228,058,729

(1) Determined by Standard and Poor’s Ratings Services

(2) Determined by Moody’s Investors Service The Sun Life MPF RMB and HKD Fund and the Sun Life MPF Conservative Fund’s financial assets exposed to credit risks were concentrated in the following industries: Sun Life MPF RMB and HKD Fund 2019 2018 Banking and finance $ 256,256,553 $ 154,313,181 Food and beverages 16,830,422 17,337,106

$ 273,086,975 $ 171,650,287


142

4 Financial risk management (continued) (e) Credit risk (continued)

Sun Life MPF Conservative Fund 2019 2018 Banking and finance $ 1,297,323,340 $ 1,228,657,306

$ 1,297,323,340 $ 1,228,657,306

The Scheme’s assets are safeguarded and administered by the Custodian. The Sponsor analyses the credit risk of the Scheme’s custodian regularly. The Scheme only has deposits with approved banks with credit ratings of Baa2 (Moody’s) or BBB (Standard & Poor’s), or with higher credit ratings. The corporate credit quality grade of the Custodian is AA- (Standard & Poor’s).

(f) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Scheme is exposed to liquidity risk of benefit payments. It therefore invests the majority of its assets in underlying investments that are traded in an active market and can be readily disposed of. The Scheme’s objective with regard to liquidity is to ensure continuity of funding. The assets of the Sun Life MPF RMB and HKD Fund, the Sun Life MPF Conservative Fund and the Sub-Funds comprise mainly of readily realisable securities which can be sold freely to meet funding commitments if necessary. Liquidity positions are monitored on a regular basis and action taken as necessary to maintain an adequate level of liquidity to meet all known funding requirements. Apart from liquidity risk related to benefit payments, the Scheme does not consider that there is any other significant liquidity risk.

(g) Fair value information As at 31 December 2019 and 2018, the only financial investments of the Scheme carried at fair value were investments. The major method and assumptions used in estimating the fair values are stated in note 2(d)(iv) to the financial statements. The carrying amounts of the Scheme’s financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2019 and 2018.


143

5 Net (loss)/gain on investments 2019 2018 Sun Life MPF RMB and HKD Fund Change in unrealised gain or loss in value of

investments $ 2,318,800 $ (319,346) Realised loss on sale of investments (3,038,638) (4,010,467)

$ (719,838) $ (4,329,813)

Sun Life MPF Conservative Fund Change in unrealised gain or loss in value of

investments $ 1,820,190 $ 10,144,956 Realised gain on sale of investments 27,836,033 5,852,372

$ 29,656,223 $ 15,997,328

Sun Life MPF Hong Kong Dollar Bond Fund Change in unrealised gain or loss in value of

investments $ 84,340,486 $ 31,692,925 Realised gain on sale of investments 20,651,309 15,057,451

$ 104,991,795 $ 46,750,376

Sun Life MPF Hong Kong Equity Fund Change in unrealised gain or loss in value of

investments $ 3,709,586,100 $ (5,427,396,210) Realised gain on sale of investments 551,210,427 2,535,661,575

$ 4,260,796,527 $ (2,891,734,635)

Sun Life MPF Global Bond Fund Change in unrealised gain or loss in value of

investments $ 46,762,211 $ (6,998,457) Realised gain on sale of investments 5,148,495 141,374

$ 51,910,706 $ (6,857,083)


144

5 Net (loss)/gain on investments (continued) 2019 2018 Sun Life MPF Stable Fund Change in unrealised gain or loss in value of

investments $ 509,549,463 $ (295,073,001) Realised gain on sale of investments 33,870,785 107,025,817

$ 543,420,248 $ (188,047,184)

Sun Life MPF Balanced Fund Change in unrealised gain or loss in value of


$ 620,262,299 $ (252,785,039)

Sun Life MPF Growth Fund Change in unrealised gain or loss in value of


$ 1,072,451,499 $ (524,555,942)

Sun Life MPF Asian Equity Fund Change in unrealised gain or loss in value of


$ 287,029,326 $ (306,449,858)

Sun Life MPF Multi-Sector Equity Fund Change in unrealised gain or loss in value of


$ 647,878,369 $ (335,750,101)

Sun Life MPF Greater China Equity Fund Change in unrealised gain or loss in value of


$ 413,401,564 $ (378,981,286)


145

5 Net (loss)/gain on investments (continued) 2019 2018 Sun Life FTSE MPF Hong Kong Index Fund Change in unrealised gain or loss in value of


$ 133,848,347 $ (115,113,097)

Sun Life MPF Age 65 Plus Fund Change in unrealised gain or loss in value of

investments $ 52,367,906 $ (3,769,717) Realised gain on sale of investments 3,275,541 596,632

$ 55,643,447 $ (3,173,085)

Sun Life MPF Core Accumulation Fund Change in unrealised gain or loss in value of


$ 273,489,486 $ (75,782,523)


146

6 Involvement with unconsolidated structured entities The Scheme has concluded that the Approved Pooled Investment Funds (“APIFs”) and an approved ITCIS in which its constituent funds (except Sun Life MPF RMB and HKD Fund and Sun Life MPF Conservative Fund) invest, but that they do not consolidate, meet the definition of structured entities because:

− the voting rights in the APIFs and the ITCIS are not dominant rights in deciding who

controls them because they relate to administrative tasks only;

− each APIF’s and the ITCIS’s activities are restricted by its prospectus; and

− the APIFs and the ITCIS have narrow and well-defined objectives to provide investment opportunities to investors.

The table below describes the types of structured entities that the constituent funds do not consolidate but in which they hold an interest.

Type of structured entity Nature and purpose Interest held by the

constituent funds Approved pooled investment

funds and an approved index-tracking collective investment scheme.

To manage assets on behalf of third party investors and generate fees for the investment managers. Financed through the issue of units to investors.

Investment in units issued by the APIFs and the ITCIS.

The table below sets out interest held by the constituent funds in unconsolidated structured entities. The maximum exposure to loss is the carrying amount of the financial assets held. 31 December 2019

Investment in investment funds

Number of

investee funds Total net assets

Carrying amount included

in financial assets at fair

value through profit or loss

Sun Life MPF Hong Kong Dollar Bond Fund − Approved pooled investment funds 4 $12,899,696,104 $ 3,730,485,692

Sun Life MPF Hong Kong Equity Fund − Approved pooled investment funds 5 $56,412,781,926 $30,244,627,296

Sun Life MPF Global Bond Fund − Approved pooled investment funds 4 $14,377,275,715 $ 1,561,363,190


147

6 Involvement with unconsolidated structured entities (continued) 31 December 2019 (continued)


Number of


Carrying amount

included in financial assets

at fair value through profit or

loss Sun Life MPF Stable Fund − Approved pooled investment funds 12 $74,862,370,887 $ 6,322,029,308

Sun Life MPF Balanced Fund − Approved pooled investment funds 12 $74,862,370,887 $ 5,540,818,858

Sun Life MPF Growth Fund − Approved pooled investment funds 11 $72,280,354,783 $ 8,074,772,618

Sun Life MPF Asian Equity Fund − Approved pooled investment funds 3 $15,941,040,000 $ 2,139,333,521

Sun Life MPF Multi-Sector Equity Fund − Approved pooled investment funds 2 $16,807,240,000 $ 2,373,157,623 − Approved index-tracking collective

investment schemes 6 $54,099,481,522 $ 1,738,372,159

8 $70,906,721,522 $ 4,111,529,782

Sun Life MPF Greater China Equity Fund − Approved pooled investment funds 3 $19,128,140,000 $ 2,593,579,637

Sun Life FTSE MPF Hong Kong Index Fund − Approved index-tracking collective

investment scheme 1 $ 1,675,120,000 $ 1,136,935,190

Sun Life MPF Age 65 Plus Fund − Approved pooled investment fund 1 $ 1,096,000,000 $ 928,991,790

Sun Life MPF Core Accumulation Fund − Approved pooled investment fund 1 $ 3,170,000,000 $ 2,766,508,312


148

6 Involvement with unconsolidated structured entities (continued) 31 December 2018


Number of


Carrying amount included

in financial assets at fair value

through profit or loss

Sun Life MPF Hong Kong Dollar Bond Fund − Approved pooled investment funds 3 $ 9,320,755,349 $ 2,672,019,650

Sun Life MPF Hong Kong Equity Fund − Approved pooled investment funds 4 $ 38,122,729,252 $ 23,972,062,672

Sun Life MPF Global Bond Fund − Approved pooled investment funds 3 $ 10,442,025,264 $ 795,932,815

Sun Life MPF Stable Fund − Approved pooled investment funds 12 $ 59,974,490,853 $ 4,947,916,980

Sun Life MPF Balanced Fund − Approved pooled investment funds 12 $ 59,974,490,853 $ 4,192,047,593

Sun Life MPF Growth Fund − Approved pooled investment funds 11 $ 57,940,067,109 $ 6,181,840,568

Sun Life MPF Asian Equity Fund − Approved pooled investment funds 2 $ 6,907,580,000 $ 1,671,874,178

Sun Life MPF Multi-Sector Equity Fund − Approved pooled investment funds 2 $ 14,048,650,000 $ 2,390,183,196 − Approved index-tracking collective

investment scheme 2 $ 95,402,801,321 $ 426,076,318

4 $ 109,451,451,321 $ 2,816,259,514

Sun Life MPF Greater China Equity Fund − Approved pooled investment funds 2 $ 10,339,660,000 $ 1,932,574,826

Sun Life FTSE MPF Hong Kong Index Fund − Approved index-tracking collective

investment scheme 1 $ 1,244,830,000 $ 766,114,507

Sun Life MPF Age 65 Plus Fund − Approved pooled investment fund 1 $ 547,000,000 $ 455,963,460

Sun Life MPF Core Accumulation Fund − Approved pooled investment fund 1 $ 1,622,000,000 $ 1,383,546,933

During the year, the constituent funds did not provide financial support to the APIFs and the ITCIS and has no intention of providing financial or other support. The constituent funds can redeem units in the APIFs and the ITCIS on a daily basis.


149

7 Transactions with associates The following is a summary of transactions with related parties during the year. All such transactions were entered into in the ordinary course of business and on normal commercial terms. Except as otherwise disclosed in the financial statements and in this note, the Scheme and its constituent funds did not have any material transactions with the Trustee, the Investment Manager or their associates or delegates during the year.

(a) Administration fees The Administrator, BestServe Financial Limited, is entitled to receive administration fees based on the NAV of the constituent funds. Prior to 1 July 2019, the administration fees were charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.7% 0.7% N/A Sun Life MPF Conservative Fund 0.54% 0.54% N/A Sun Life FTSE MPF Hong Kong

Index Fund 0.6% 0.6% N/A Sun Life MPF Age 65 Plus Fund N/A N/A 0.4% Sun Life MPF Core Accumulation

Fund N/A N/A 0.4% All other constituent funds 0.85% 0.75% N/A Effective from 1 July 2019, the administration fees are charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.4% 0.4% N/A Sun Life MPF Conservative Fund 0.4% 0.4% N/A Sun Life FTSE MPF Hong Kong


Fund N/A N/A 0.4% All other constituent funds 0.6% 0.5% N/A The administration fees are calculated and accrued on each valuation day and paid monthly in arrears. The fees earned during the year are disclosed in the statement of comprehensive income.


150

7 Transactions with associates (continued)

(a) Administration fees (continued) The administration fees payable as at 31 December were as follows: 2019 2018 Sun Life MPF RMB and HKD Fund $ 242,946 $ 411,012

Sun Life MPF Conservative Fund $ 3,483,324 $ 3,276,517

Sun Life MPF Hong Kong Dollar Bond Fund $ 1,761,611 $ 1,828,562

Sun Life MPF Hong Kong Equity Fund $ 13,887,573 $ 16,534,179

Sun Life MPF Global Bond Fund $ 728,708 $ 542,883

Sun Life MPF Stable Fund $ 2,981,712 $ 3,341,263

Sun Life MPF Balanced Fund $ 2,598,116 $ 2,871,292

Sun Life MPF Growth Fund $ 3,777,978 $ 4,254,868

Sun Life MPF Asian Equity Fund $ 987,841 $ 1,177,772

Sun Life MPF Multi-Sector Equity Fund $ 1,917,363 $ 2,003,927

Sun Life MPF Greater China Equity Fund $ 1,201,581 $ 1,380,888

Sun Life FTSE MPF Hong Kong Index Fund $ 406,969 $ 410,597

Sun Life MPF Age 65 Plus Fund $ 331,683 $ 158,714

Sun Life MPF Core Accumulation Fund $ 980,273 $ 480,164


151


(b) Investment management fees The Investment Manager, Sun Life Asset Management (HK) Limited, is entitled to receive investment management fees as a percentage of the NAV of the constituent funds. The fees incurred during the year are disclosed in the statement of comprehensive income. Prior to 1 July 2019, the investment management fees were charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.40% 0.40% N/A Sun Life MPF Conservative Fund 0.30% 0.30% N/A Sun Life MPF Asian Equity Fund 0.695% 0.695% N/A Sun Life MPF Multi-Sector Equity

Fund 0.58% 0.58% N/A Sun Life MPF Greater China Equity

Fund 0.745% 0.745% N/A Sun Life FTSE MPF Hong Kong


Fund N/A N/A 0.25% All other constituent funds 0.55% 0.55% N/A Effective from 1 July 2019, the investment management fees are charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.40% 0.40% N/A Sun Life MPF Conservative Fund 0.30% 0.30% N/A Sun Life MPF Asian Equity Fund 0.74% 0.74% N/A Sun Life MPF Multi-Sector Equity

Fund 0.625% 0.625% N/A Sun Life MPF Greater China Equity

Fund 0.79% 0.79% N/A Sun Life FTSE MPF Hong Kong


Fund N/A N/A 0.25% All other constituent funds 0.595% 0.595% N/A


152

7 Transactions with associates (continued) (b) Investment management fees (continued)

Effective from 1 September 2019, the investment management fees per annum for Sun Life MPF Conservative Fund have been further changed to as follows: Class A Class B Unit class Sun Life MPF Conservative Fund 0.27% 0.27% N/A The investment management fees paid to Sun Life Asset Management (HK) Limited are calculated and accrued on each valuation day and paid monthly in arrears. The investment management fees payable as at 31 December were as follows: 2019 2018 Sun Life MPF RMB and HKD Fund $ 242,950 $ 234,994

Sun Life MPF Conservative Fund $ 2,351,244 $ 1,820,287

Sun Life MPF Hong Kong Dollar Bond Fund $ 1,419,042 $ 887,219



Sun Life MPF Stable Fund $ 2,189,261 $ 1,398,874

Sun Life MPF Balanced Fund $ 1,989,908 $ 1,282,704

Sun Life MPF Growth Fund $ 2,984,364 $ 2,002,731

Sun Life MPF Asian Equity Fund $ 1,249,609 $ 938,697

Sun Life MPF Multi-Sector Equity Fund $ 1,531,046 $ 1,188,751


153


(b) Investment management fees (continued) 2019 2018 Sun Life MPF Greater China Equity Fund $ 1,350,693 $ 1,180,519




(c) Sponsor fees

The Sponsor, Sun Life Hong Kong Limited, was entitled to receive sponsor fees from the constituent funds other than the Sun Life MPF RMB and HKD Fund, Sun Life Conservative Fund, Sun Life MPF Age 65 Plus Fund and Sun Life MPF Core Accumulation Fund. Prior to 1 July 2019, the fee rate was as follows: Class A Class B Sun Life FTSE MPF Hong Kong Index Fund 0.02% per annum 0.02% per annum All other constituent funds 0.175% per annum 0.175% per annum Effective from 1 July 2019, the Sponsor, Sun Life Hong Kong Limited, is entitled to receive sponsor fees from the constituent funds other than the Sun Life MPF Age 65 Plus Fund and Sun Life MPF Core Accumulation Fund as follows: Class A Class B Sun Life MPF Conservative Fund 0.14% per annum 0.14% per annum Sun Life FTSE MPF Hong Kong Index Fund 0.22% per annum 0.22% per annum All other constituent funds 0.30% per annum 0.30% per annum The sponsor fees are calculated and accrued on each valuation day and paid monthly in arrears. Sponsor fees paid and payable for the year are disclosed in the statement of comprehensive income.


154


(c) Sponsor fees (continued) The sponsor fees payable as at 31 December were as follows: 2019 2018 Sun Life MPF RMB and HKD Fund $ 182,213 $ -

Sun Life MPF Conservative Fund $ 1,219,163 $ -

Sun Life MPF Hong Kong Dollar Bond Fund $ 1,016,196 $ 414,451



Sun Life MPF Stable Fund $ 1,721,216 $ 758,448

Sun Life MPF Balanced Fund $ 1,498,773 $ 651,206

Sun Life MPF Growth Fund $ 2,177,545 $ 963,717

Sun Life MPF Asian Equity Fund $ 568,683 $ 266,579

Sun Life MPF Multi-Sector Equity Fund $ 1,106,770 $ 453,881

Sun Life MPF Greater China Equity Fund $ 688,771 $ 311,420



155


(d) Trustee fees The Trustee, Sun Life Trustee Company Limited, is entitled to receive trustee fees based on the NAV of the constituent funds. Prior to 1 July 2019, the trustee fees were charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.10% 0.05% N/A Sun Life MPF Conservative Fund 0.05% 0.05% N/A Sun Life FTSE MPF Hong Kong


Fund N/A N/A 0.06% All other constituent funds 0.15% 0.05% N/A Effective from 1 July 2019, the trustee fees are charged per annum as follows: Class A Class B Unit class Sun Life MPF RMB and HKD Fund 0.10% 0.05% N/A Sun Life MPF Conservative Fund 0.05% 0.05% N/A Sun Life FTSE MPF Hong Kong


Fund N/A N/A 0.06% All other constituent funds 0.23% 0.13% N/A


156

7 Transactions with associates (continued) (d) Trustee fees (continued)

2019 2018 Sun Life MPF RMB and HKD Fund $ 37,165 $ 36,026

Sun Life MPF Conservative Fund $ 435,415 $ 303,381

Sun Life MPF Hong Kong Dollar Bond Fund $ 507,990 $ 172,619



Sun Life MPF Stable Fund $ 859,448 $ 308,332

Sun Life MPF Balanced Fund $ 750,574 $ 265,802

Sun Life MPF Growth Fund $ 1,094,470 $ 397,028

Sun Life MPF Asian Equity Fund $ 287,769 $ 111,046

Sun Life MPF Multi-Sector Equity Fund $ 553,705 $ 186,071

Sun Life MPF Greater China Equity Fund $ 353,926 $ 135,144





157

8 Cash and cash equivalents Reconciliation of liabilities arising from financing activities The table below details changes in the Scheme’s liabilities from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the cash flow statement as cash flows from financing activities.

Benefits payable

Forfeitures payable Total

At 1 January 2019 $ 213,554,174 $ 62,737,844 $ 276,292,018 Changes from financing cash

flows: Benefits and transfers out 4,101,677,223 - 4,101,677,223 Benefits and transfers out paid (3,779,394,343) - (3,779,394,343) Forfeitures - 277,526,908 277,526,908 Forfeitures paid - (249,498,998) (249,498,998)

At 31 December 2019 $ 535,837,054 $ 90,765,754 $ 626,602,808

Benefits payable

Forfeitures payable Total

At 1 January 2018 $ 237,347,476 $ 59,740,005 $ 297,087,481 Changes from financing cash

flows: Benefits and transfers out 3,014,270,761 - 3,014,270,761 Benefits and transfers out paid (3,038,064,063) - (3,038,064,063) Forfeitures - 222,330,119 222,330,119 Forfeitures paid - (219,332,280) (219,332,280)

At 31 December 2018 $ 213,554,174 $ 62,737,844 $ 276,292,018


158

9 Contributions Mandatory contributions for both the employers and members are equal to 5% of the members’ relevant income up to $30,000 per month except for members earning less than $7,100 per month where the members’ mandatory contribution is nil. Self-employed persons must contribute 5% of their relevant income subject to a maximum contribution of $1,500 per month or $18,000 per year to the Scheme unless their relevant income is less than $7,100 per month or $85,200 per year where the mandatory contribution is nil. Employers, members or self-employed persons under the Scheme may choose to make voluntary contributions as top-up contributions in addition to the mandatory contributions for each contribution period. The Special Private Contributions has been launched by the Scheme on 29 April 2011 that members can make their additional voluntary contributions to the Scheme on a regular basis (in an amount not lower than $300 per month) or in lump sum (in an amount not lower than $3,000 per payment). The tax deductible voluntary contributions (“TVC”) has been launched by the Scheme on 2 October 2019 that eligible persons can set up a TVC account and pay TVC into such account on a lump sum payment or on a monthly basis. Currently, there is no upper limit on the amount of TVC. TVC paid into the account will be eligible for tax deduction in accordance with the Hong Kong Inland Revenue Ordinance.

10 Benefits Members will become entitled to benefits in respect of mandatory contributions or TVC to the Scheme in the circumstances set out in the MPF 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. Benefits whether due to mandatory or voluntary contributions payable to an employee member, self-employed person or TVC member on the grounds of retirement at age 65 or early retirement at age 60, may be paid in instalments, if the member so elects.


159

11 Subscriptions Proceeds on issue of units in the statement of changes in net assets attributable to members are derived from the following: 2019 2018 From employers − Mandatory $ 2,041,766,579 $ 1,625,223,814 − Voluntary 843,285,562 561,813,442 From employees and self-employed persons − Mandatory 2,037,402,223 1,613,831,747 − Voluntary 103,601,869 83,143,210 Special private contributions and tax deductible

voluntary contributions (Note) 156,336,390 105,115,017

Contribution received and receivable $ 5,182,392,623 $ 3,989,127,230 Group transfers in from other schemes 3,340,753,175 3,139,341,644 Individual transfers in from other schemes 8,255,542,653 8,396,003,119 Bonus unit rebate 77,037,994 69,265,608

$16,855,726,445 $15,593,737,601

Note: Tax deductible voluntary contributions (“TVC”) was launched on 2 October 2019.

The amount of subscriptions in 2019 included both TVC and special private contributions.

12 Redemptions

Payments on redemption of units in the statement of changes in net assets attributable to members are derived from the following: 2019 2018 Permanent departure $ 640,719,935 $ 455,615,436 Refund of additional voluntary contributions

to leavers 240,332,289 195,770,075 Death 48,651,346 34,599,559 Retirement 506,819,145 286,559,472 Early retirement 181,924,651 134,948,869 Total incapacity 14,717,562 12,575,715 Terminal illness 7,961,805 10,801,740 Small balance 5,411 9,491

Benefits paid and payable $ 1,641,132,144 $ 1,130,880,357 Group transfers out to other schemes 443,709,066 221,434,342 Individual transfers out to other schemes 2,016,836,013 1,661,956,062 Forfeitures 277,526,908 222,330,119

$ 4,379,204,131 $ 3,236,600,880


160

13 Capital management The capital of the Scheme is represented by the net assets attributable to members. Subscriptions and redemptions during the year are shown in the statements of changes in net assets attributable to members. The amount of net assets attributable to members can change significantly on a daily basis as the constituent funds of the Scheme are subject to daily subscriptions and redemptions at the discretion of members. The constituent funds’ objective when managing capital is to safeguard their ability to continue as a going concern in order to provide retirement benefits to members and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the constituent funds. For capital management purpose, the Trustee performs the following:

− monitor the level of daily subscriptions and redemptions relative to the liquid assets;

and

− redeem and issue units of the constituent funds of the Scheme in accordance with the Trust Deed and the rules of the Scheme.

14 Accrued benefits

The total accrued benefits vested in the members’ accounts amounted to $78,482,381,135 as at 31 December 2019 (2018: $59,524,994,072).

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

16 Soft commission arrangements During the year, the Managers and their associates did not enter into any soft commission arrangements with brokers in relation to dealings in the assets of the Scheme and its constituent funds (2018: Nil).

17 Security lending arrangements During the year, the Scheme and its constituent funds did not enter into any security lending arrangements (2018: Nil).

18 Negotiability of assets At 31 December 2019 and 2018, there were no statutory or contractual requirements restricting the negotiability of the assets of the Scheme and its constituent funds.


161

19 Commitments The Scheme and its constituent funds had no commitments as at 31 December 2019 and 2018.

20 Contingent liabilities The Scheme and its constituent funds had no contingent liabilities as at 31 December 2019 and 2018.

21 Marketing expenses No advertising expenses, promotional expenses, commissions or brokerage fees paid and payable to the Mandatory Provident Fund (“MPF”) intermediaries were deducted from the Scheme or its constituent funds during the years ended 31 December 2019 and 2018.

22 Deferred expenses In accordance with section 37 of the General Regulation, administrative expenses for the Sun Life MPF Conservative Fund which have not been deducted in the respective months may be deducted in the following twelve months. As at 31 December 2019, the amount of deferred administrative expenses amounted to Nil (2018: Nil).

23 Segment information The CODM of the Scheme makes strategic resource allocations on behalf of the Scheme. The operating segments were determined based on the reports reviewed by the CODM, which are used to make strategic decisions. The CODM is responsible for the Scheme’s entire portfolio and considers the business as a single operating segment. The asset allocation decisions are based on a single, integrated investment strategy, and the Scheme’s performance is evaluated on an overall basis. The internal reporting provided to the CODM for the Scheme’s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of HKFRSs. The Scheme is established and domiciled in Hong Kong. During the year ended 31 December 2019 and 2018, the revenue of the Scheme was derived from investment funds established and domiciled in Hong Kong and bank deposits placed with authorised financial institutions in Hong Kong. The segment information provided to the CODM is the same as that disclosed in the statement of comprehensive income. The Scheme has a diversified population of members. No individual member holds more than 10% of the net assets of the Scheme. The Scheme has no assets classified as non-current assets as at 31 December 2019 and 2018.


162

24 Payments charged to default investments strategy constituent funds or scheme members who invest in the constituent funds Sun Life MPF Age 65 Plus Fund and Sun Life MPF Core Accumulation Fund are designated as default investment strategy (“DIS”) constituent funds with effect from 1 April 2017. Payments for services, out-of-pocket expenses and other payments charged to the DIS constituent funds are disclosed below. Payments for services and out-of-pocket expenses are those defined in the MPF Ordinance. During the year ended 31 December 2019

Sun Life MPF Age 65 Plus

Fund

Sun Life MPF Core

Accumulation Fund

a) Payments for services − Administration fees $ 2,660,987 $ 8,017,465 − Custodian fees 264,768 797,738 − Investment management fees 1,663,117 5,010,915 − Trustee fees 399,148 1,202,620

Total payments for services $ 4,988,020 $ 15,028,738 --------------------- --------------------- b) Out-of-pocket expenses − Auditor’s fees $ 13,756 $ 40,632 − Legal and other professional fees 3,332 9,617 − Printing and postage expenses 132,576 392,639 − Fund price publication expenses 2,539 7,701 − Professional indemnity insurance 1,002 2,833 − Miscellaneous expenses 911 1,021

Total out-of-pocket expenses $ 154,116 $ 454,443 --------------------- --------------------- c) Payments other than (a) and (b) above $ - $ - --------------------- ---------------------

Total payments $ 5,142,136 $ 15,483,181

Out-of-pocket expenses expressed as a percentage of net asset value of the DIS constituent funds 0.023% 0.022%

The net asset value used for calculating the percentage is the average of the net asset value of the DIS constituent funds as at the last dealing day of each month during the year ended 31 December 2019.


163

24 Payments charged to default investments strategy constituent funds or scheme members who invest in the constituent funds (continued) During the year ended 31 December 2018

Sun Life MPF Age 65 Plus

Fund

Sun Life MPF Core

Accumulation Fund

a) Payments for services − Administration fees $ 1,302,439 $ 4,002,315 − Custodian fees 129,593 398,230 − Investment management fees 814,025 2,501,447 − Trustee fees 195,366 600,347

Total payments for services $ 2,441,423 $ 7,502,339 --------------------- --------------------- b) Out-of-pocket expenses − Auditor’s fees $ 10,024 $ 28,772 − Printing and postage expenses 79,349 234,481 − Fund price publication expenses 1,997 6,109 − Professional indemnity insurance 1,641 5,195 − Miscellaneous expenses 1,202 1,253

Total out-of-pocket expenses $ 94,213 $ 275,810 --------------------- --------------------- c) Payments other than (a) and (b) above $ - $ - --------------------- ---------------------

Total payments $ 2,535,636 $ 7,778,149

Out-of-pocket expenses expressed as a percentage of net asset value of the DIS constituent funds 0.028% 0.027%

The net asset value used for calculating the percentage is the average of the net asset value of the DIS constituent funds as at the last dealing day of each month during the year ended 31 December 2018.


164

25 Non-adjusting event after the reporting period In early 2020, the global commercial activities were impacted by the emergence and rapid spread of the novel Coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization (“WHO”) on 11 March 2020. Disruptions caused by the COVID-19 pandemic are impacting the global economy, which has resulted in significant volatility in financial markets worldwide. The effect of COVID-19 remains an emerging and rapidly evolving issue, leading to a high degree of volatility and uncertainty. The Trustee has made an assessment of the impact of COVID-19 and did not aware of any material financial impact to the Financial Statements as at 31 December 2019 as a result of this subsequent event. The Trustee will continue to remain alert to the development of the COVID-19 outbreak and closely monitor its impact on the service providers of the Scheme based on existing business continuity measures. Other than those disclosed above, no subsequent events have occurred that would require adjustment or disclosure and have a material effect on the Financial Statements as at 31 December 2019.

26 Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 31 December 2019 Up to the date of issue of these financial statements, the HKICPA has issued a few amendments and new standards which are not yet effective for the year ended 31 December 2019 and which have not been adopted in these financial statements. These include the following which may be relevant to the Scheme.

Effective for accounting periods

beginning on or after Amendments to HKAS 1 and HKAS 8, Definition of material 1 January 2020 The Scheme is in the process of making an assessment of what the impact of these amendments are expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Scheme’s financial statements.

Sun Life Rainbow MPF Scheme · Sun Life Rainbow MPF Scheme Year ended 31 December 2019 1 Scheme...

Documents

Transcript of Sun Life Rainbow MPF Scheme · Sun Life Rainbow MPF Scheme Year ended 31 December 2019 1 Scheme...