BEA (MPF) Master Trust Scheme Explanatory Memorandum · BEA (MPF) MASTER TRUST SCHEME EXPLANATORY MEMORANDUM BEA (MPF ... the Mandatory Provident Fund Schemes Authority ... CALCULATION

BEA (MPF) Master Trust SchemeExplanatory Memorandum

Mandatory Provident Fund

BEA (MPF) MASTER TRUST SCHEME

EXPLANATORY MEMORANDUM

BEA (MPF) Hotline : 2211 1777Fax : 3608 6003Web site address : http://www.hkbea.com

December, 2016

IMPORTANT:

• TheMaster Trust offers different Constituent Funds (i) investing in one ormoreApproved Pooled Investment Funds and/or Approved Index-TrackingFundswhich invest inequitiesorbonds;or (ii)makingdirectmoneymarketinvestments,eachwithdifferentriskprofile.

• BEA(MPF)LongTermGuaranteedFundinvestssolelyinanapprovedpooledinvestmentfundinaformofinsurancepolicyprovidedbyPrincipalInsuranceCompany (Hong Kong) Limited. A guarantee is also given by PrincipalInsuranceCompany(HongKong)Limited.YourinvestmentinthisConstituentFund, if any, is therefore subject to the credit risk of Principal InsuranceCompany (Hong Kong) Limited. Please refer to the Appendix 1 of theExplanatoryMemorandum for details of the credit risk, guarantee featuresand guarantee conditions of this Constituent Fund. If you are currentlyinvesting in BEA (MPF) Long TermGuaranteed Fund, awithdrawal of theaccruedbenefits on groundof terminal illnessmay affect your entitlementtotheguaranteeandyoumayloseyourguarantee.Fordetails,pleasecheckthe scheme offering document or consult your trustee beforemaking anysuchwithdrawal.

• BEA (MPF) Conservative Fund does not provide any guarantee of therepaymentofcapital.

• Youshouldconsideryourownrisktolerancelevelandfinancialcircumstancesbeforemaking investment choices.When, in your selection of ConstituentFunds, you are in doubt as to whether a certain Constituent Fund issuitable for you (includingwhether it is consistentwith your investmentobjectives),youshouldseekfinancialand/orprofessionaladviceandchoosethe Constituent Fund(s)most suitable for you taking into account yourcircumstances.

IMPORTANT INFORMATION

The Sponsor accepts responsibil ity for the information contained in this ExplanatoryMemorandum as being accurate at the date of publication. However, neither the delivery ofthisExplanatoryMemorandumnortheofferoforagreementtoparticipateintheMasterTrustshallunderanycircumstancesconstitutearepresentationthattheinformationcontainedinthisExplanatoryMemorandum is correct as of any time subsequent to such date. This ExplanatoryMemorandummay from time to time be updated. Intending participants in theMaster Trustshould ask the Sponsor if any supplements to this ExplanatoryMemorandumor any laterExplanatoryMemorandumhavebeenissued.

TheMasterTrusthasbeenauthorisedbytheSecuritiesandFuturesCommissionandapprovedbytheMandatoryProvidentFundSchemesAuthorityinHongKong.Ingrantingsuchauthorisationand approval, neither the Securities and Futures Commission nor theMandatory ProvidentFundSchemesAuthoritytakesanyresponsibilityforthefinancialsoundnessoftheMasterTrustor for the accuracy of any of the statementsmade or opinions expressed in this ExplanatoryMemorandum.SuchauthorisationandapprovaldoesnotimplythatparticipationintheMasterTrust is recommended by the Securities and Futures Commission or theMandatory ProvidentFundSchemesAuthority.

No action has been taken to permit an offering of participation in theMaster Trust or thedistributionofthisExplanatoryMemoranduminanyjurisdictionwhereactionwouldberequiredforsuchpurposeotherthanHongKong.Accordingly,thisExplanatoryMemorandummaynotbeusedinanyjurisdictionwhereitsdistributionisnotauthorised.

TABLE OF CONTENTS

Heading Page Number

DIRECTORY OF PARTIES ............................................................................................... 1

DEFINITIONS ................................................................................................................ 2

ABOUT BEA (MPF) MASTER TRUST SCHEME ............................................................... 4

HOWTOJOIN ...............................................................................................................................4

CONTRIBUTIONSANDBENEFITS ...................................................................................................4

CONTRIBUTIONSANDBENEFITSOFSPECIALVOLUNTARYCONTRIBUTIONACCOUNTMEMBERS ....5

INVESTMENTOFCONTRIBUTIONS ................................................................................................5

CONSTITUENT FUNDS .................................................................................................. 6

INVESTMENTOBJECTIVESANDPOLICIES .....................................................................................7

GENERAL ....................................................................................................................................17

RISKFACTORS .............................................................................................................................17

INVESTMENTANDBORROWINGRESTRICTIONS .........................................................................23

ESTABLISHMENT,TERMINATION,MERGERANDDIVISIONOFCONSTITUENTFUNDS ................24

MANAGEMENT AND ADMINISTRATION .................................................................... 25

SPONSOR ....................................................................................................................................25

INVESTMENTMANAGER ............................................................................................................25

TRUSTEE .....................................................................................................................................25

CONTRIBUTIONS ........................................................................................................ 26

MANDATORYCONTRIBUTIONS ..................................................................................................26

VOLUNTARYCONTRIBUTIONS ....................................................................................................27

PAYMENTOFCONTRIBUTIONSGENERALLY ...............................................................................28

INVESTMENTOFCONTRIBUTIONSINCONSTITUENTFUNDS ......................................................28

MANDATESTOINVESTCONTRIBUTIONS ....................................................................................28

INSTRUCTIONSTOCHANGEINVESTMENT ..................................................................................29

BENEFITS .................................................................................................................... 30

ENTITLEMENTTOBENEFITS ........................................................................................................30

REALISATIONOFUNITS ..............................................................................................................30

PAYMENTOFBENEFITS ..............................................................................................................31

TRANSFERS TO AND FROM OTHER SCHEMES ........................................................... 34

TRANSFERSTOOTHERSCHEMESOROTHERACCOUNT(S)WITHINTHEMASTERTRUST ...........34

TRANSFERSFROMOTHERSCHEMES ..........................................................................................35

CALCULATION OF NET ASSET VALUE AND ISSUE AND REALISATION PRICES ........... 37

CALCULATIONOFNETASSETVALUE .........................................................................................37

CALCULATIONOFISSUEANDREALISATIONPRICES ...................................................................37

PUBLICATIONOFPRICES .............................................................................................................37

SUSPENSIONOFCALCULATIONOFNETASSETVALUE ...............................................................38

CHARGES AND EXPENSES .......................................................................................... 39

BEA(MPF)CONSERVATIVEFUND ...............................................................................................39

BEA(MPF)LONGTERMGUARANTEEDFUND .............................................................................39

SPONSOR'S FEES .........................................................................................................................39

TRUSTEEANDINVESTMENTMANAGEMENTFEES ......................................................................40

NOSWITCHINGFEE ....................................................................................................................40

CHANGEINMANDATEFEE .........................................................................................................40

OTHERCHARGESANDEXPENSES ...............................................................................................41

CASHREBATESANDSOFTCOMMISSIONS ..................................................................................41

FEE TABLE ...................................................................................................................................41

TAXATION .................................................................................................................. 51

FOR EMPLOYERS ........................................................................................................................51

FOR EMPLOYEES .........................................................................................................................51

FORSELF-EMPLOYEDPERSONS ..................................................................................................51

FOR THE MASTER TRUST ............................................................................................................51

GENERAL INFORMATION ........................................................................................... 52

ACCOUNTS,REPORTSANDSTATEMENTS ...................................................................................52

TRUST DEED ...............................................................................................................................52

MODIFICATIONOFTRUSTDEEDANDPARTICIPATIONAGREEMENTS ........................................52

TERMINATION,MERGERORDIVISIONOFMASTERTRUST .........................................................52

MATERIALCONTRACT ................................................................................................................53

DOCUMENTSAVAILABLE ............................................................................................................53

APPENDIX 1 ............................................................................................................... 54

APPENDIX 2 ............................................................................................................... 76

Important – If you are in doubt about the meaning or effect of the contents of this

document, you should seek independent professional advice.

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DIRECTORY OF PARTIES

SponsorTheBankofEastAsia,Limited10DesVoeuxRoadCentral

HongKong

Trustee, Custodian and AdministratorBankofEastAsia(Trustees)Limited

32nd Floor, BEA Tower,MillenniumCity5,

418KwunTongRoad,KwunTong,Kowloon,

HongKong

Investment ManagerBEAUnionInvestmentManagementLimited

5thFloor,10DesVoeuxRoadCentralHongKong

GuarantorPrincipalInsuranceCompany(HongKong)Limited

Unit1001-1003CentralPlaza18HarbourRoad

WanchaiHongKong

Legal AdvisersDeacons

5thFloor,AlexandraHouse18ChaterRoad

Central,HongKong

AuditorsKPMG

8thFloor,Prince’sBuilding10ChaterRoad,Central

HongKong

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DEFINITIONS

“Approved Index-Tracking Fund”

an index-tracking collective investment scheme, as defined insection 1(1) of Schedule 1 to theGeneral Regulation, approvedbytheAuthorityforthepurposesofsection6AofSchedule1totheGeneralRegulation

“Approved Pooled Investment Fund”

a collective investment scheme approved by the AuthoritypursuanttotheMPFOrdinanceforinvestmentbyprovidentfundschemesregisteredundertheMPFOrdinance

“Authority” theMandatoryProvidentFundSchemesAuthorityofHongKong

“Business Day” meansaday(otherthanSaturday)onwhichbanksinHongKongare open for normal banking business provided thatwhere,as a result of a Number 8 Typhoon Signal or higher or a blackrainstormwarning or other similar event, the period duringwhichbanksinHongKongareopenfornormalbankingbusinessonanydayisreduced,suchdayshallnotbeaBusinessDayunlesstheTrusteeotherwisedetermines

“Commission” theSecuritiesandFuturesCommissionofHongKong

“Constituent Fund” a separate pool of assets of theMaster Trust,which is investedandadministeredseparatelyfromotherassetsoftheMasterTrust

“General Regulation” theMandatoryProvidentFundSchemes(General)Regulation

“Guarantor” Principal Insurance Company (Hong Kong) Limited as guarantoroftheApprovedPooledInvestmentFundinwhichtheBEA(MPF)LongTermGuaranteedFundinvests

“HKD” and “HK dollars” thecurrencyofHongKong

“Hong Kong” theHong Kong Special Administrative Region of the People’sRepublicofChina

“Investment Manager” BEAUnion InvestmentManagement Limited in its capacity asinvestmentmanageroftheMasterTrustotherthantheBEA(MPF)LongTermGuaranteedFund

“Master Trust” BEA(MPF)MasterTrustScheme

“maximum level of relevant income”

hasthesamemeaningasintheMPFOrdinance

“minimum level of relevant income”

hasthesamemeaningasintheMPFOrdinance

“Member” a member of the Master Trust being, (a) a self-employedpersonwho participates in theMaster Trust or (b) an employeeof a participating employerwho applies for and is grantedmembershipof theMaster Trustor (c) anyother eligiblepersonwhoparticipatesintheMasterTrust

“MPF Ordinance” theMandatoryProvidentFundSchemesOrdinanceofHongKong

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“personal account” hasthesamemeaningasintheGeneralRegulation

“RMB” Renminbi,thecurrencyofthePeople’sRepublicofChina

“relevant income” hasthesamemeaningasintheMPFOrdinance

“Special Voluntary Contribution Account Member”

aMemberwho has entered into a Participation Agreementwith the Trustee to participate in theMaster Trust as a SpecialVoluntary ContributionAccountMember (formerly known as“PersonalContributionAccountMember”)

“Sponsor” TheBankofEastAsia,Limited

“Trustee” Bank of East Asia (Trustees) Limited in its capacity as trustee oftheMasterTrust

“Trust Deed” the trust deed dated as of 31st January, 2000 establishing theMasterTrust,asamended

“Unit” 1 undiv ided share in the Const i tuent Fund to which theclass of Units relates. A fraction of a Unit shall represent thecorresponding fraction of an undivided share in the relevantConstituentFund

“Valuation Date” everyBusinessDayor suchotherdayordaysas theTrusteemaydeterminefromtimeto timeeithergenerallyor in relationtoaparticularConstituentFund

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ABOUT BEA (MPF) MASTER TRUST SCHEME

BEA (MPF)Master Trust Scheme is amaster trust established by a trust deed dated as of 31st January,2000betweenTheBankofEastAsia,LimitedassponsorandBankofEastAsia(Trustees)Limitedastrustee.ItisestablishedunderandgovernedbythelawsofHongKong.

How to Join

The following persons are eligible to join theMaster Trust by executing a ParticipationAgreement:

• anyemployer;

• anyself-employedperson;

• anyemployeewhowishestotransfertotheMasterTrust,hisaccruedbenefitsattributableto(i)themandatorycontributionsmadebyhiminrespectofhiscurrentemployment;or(ii)themandatory contributions paid by or in respect of such employee that are attributabletohisformeremploymentsorformerself-employments;or(iii)alloranyoneormoreofhispersonalaccountswithanotherregisteredscheme;

• anyeligibleperson,includinganypersonwhowishestojointheMasterTrustasapersonalaccount holder or onewhowishes tomake special voluntary contributions to theMasterTrust,asaSpecialVoluntaryContributionAccountMember.

A sampleParticipationAgreementmaybeobtained from theSponsor.Under theParticipationAgreement,eachpersonthatjoinstheMasterTrustagreestobeboundbythetermsoftheTrustDeed.

Contributions and Benefits

All participating employers,Memberswho are employees of such participating employers andMemberswho are self-employed personsmustmakemandatory contributions to theMasterTrustinaccordancewiththeMPFOrdinance.Theycanalsochoosetomakeadditionalvoluntarycontributions,eitheronaregularbasisorfromtimetotime.TheTrusteewillapplycontributionsmadebyoronbehalfofaMembertoacquireUnitsintheConstituentFundsfortheaccountofsuchMember.Forfurtherdetails,refertothe“Contributions”sectiononpage26.

The benefits payable to aMember on retirement or in other allowable circumstances aredependentonthecontributionspaidduringtheMember’speriodofmembershipoftheMasterTrustandthe investment returnachievedonthosecontributionsduringtheperiodand, in thecase of contributions invested in the BEA (MPF) Long TermGuaranteed Fund,whether suchcontributions qualify to receive the benefit of the guarantee. For further details, refer to the“Benefits”sectiononpage30.

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Contributions and Benefits of Special Voluntary Contribution Account Members

Any eligible person can choose to join theMaster Trust andmake voluntary contributions,eitheronaregularbasisorfromtimetotime.SuchapersonisaSpecialVoluntaryContributionAccountMember.

Currently, the Trusteewill only accept a personwho falls under any one of the followingcategoriestojoinasaSpecialVoluntaryContributionAccountMember:-

• anemployee;

• aself-employedperson;

• amemberoraformermemberofaregisteredscheme(asdefinedintheMPFOrdinance)oranORSOexempted schemeoranORSO registered scheme (eachasdefined in theGeneralRegulation).

The Trusteewill apply voluntary contributionsmade by a Special Voluntary ContributionAccountMember to acquireUnits in the Constituent Funds selected by such Special VoluntaryContributionAccountMember.

ThebenefitspayabletoaSpecialVoluntaryContributionAccountMemberaredependentontheamountofvoluntarycontributionsmadebytheSpecialVoluntaryContributionAccountMemberduringtheperiodwhilstheisamemberoftheMasterTrustandtheinvestmentreturnachievedon those voluntary contributions during such period. In the case of the BEA (MPF) Long TermGuaranteed Fund, thiswill also depend onwhether such contributions qualify to receive thebenefitoftheguarantee.

Special Voluntary ContributionAccountMembersmay elect tomake voluntary contributionstotheMasterTrustongivingsuchnoticeastheTrusteemayrequire inaformspecifiedbytheTrustee.SuchcontributionsaretreatedasvoluntarycontributionsforthepurposeoftheMasterTrust.VoluntarycontributionsshouldbepaidintotheMasterTrustinamannerasagreedintheParticipationAgreementand/orSupplementtotheParticipationAgreement.

Subject as provided in the ParticipationAgreement and/or Supplement to the ParticipationAgreement,aSpecialVoluntaryContributionAccountMemberisentitledtoredeemUnits(allorpart)atanytime.However, inrespectoftheSpecialVoluntaryContributionAccountMember’svoluntarycontributions invested in theBEA (MPF)LongTermGuaranteedFundmustbe forallandnotpartonlyofsuchvoluntarycontributions.

Fortheavoidanceofdoubt,aSpecialVoluntaryContributionAccountMemberisnotrequiredtomakemandatorycontributionstotheMasterTrust.

Investment of Contributions

Contributionsare invested in1ormoreoftheConstituentFundsestablishedundertheMasterTrust,inaccordancewithinstructionsgivenfromtimetotimebyMembers.

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CONSTITUENT FUNDS

Under the Trust Deed, the Trustee is required to establish andmaintain separate ConstituentFunds inwhich contributionsmay be invested. The Constituent Funds are notional fundsestablishedwithintheMasterTrustandareonlyavailableforinvestmentbyMembers.

TheMasterTrustcurrentlyoffers16ConstituentFundsforinvestment,listedbelow:–

NameofConstituentFund FundType InvestmentStructure

BEA(MPF)GrowthFund MixedAssetsFund–Global–Maximum90%inequity

Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)BalancedFund MixedAssetsFund–Global–Maximum60%inequity


BEA(MPF)StableFund MixedAssetsFund–Global–Maximum40%inequity


BEA(MPF)GlobalEquityFund EquityFund–Global Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)EuropeanEquityFund

EquityFund–Europe Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA (MPF) North American EquityFund

EquityFund–NorthAmerica


BEA(MPF)AsianEquityFund EquityFund–Asiaex-Japan Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)GreaterChinaEquityFund

EquityFund–GreaterChina Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)JapanEquityFund EquityFund–Japan Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)HongKongEquityFund

EquityFund–HongKong Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEAChinaTrackerFund EquityFund–China Investment in a single ApprovedIndex-TrackingFund

BEAHongKongTrackerFund EquityFund–HongKong Investment in a single ApprovedIndex-TrackingFund

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NameofConstituentFund FundType InvestmentStructure

BEA(MPF)GlobalBondFund BondFund–Global Investmentin2ormoreApprovedPooled Investment Funds and/orApprovedIndex-TrackingFunds

BEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB)

MoneyMarketFund–ChinaandHongKong

Direct investment in a portfolioof mainly HK dol lar and RMBdeposits andHK dollar and RMBdenominateddebtinstruments

BEA(MPF)LongTermGuaranteedFund

GuaranteedFund–guaranteepayableconditionally

Investment in a single ApprovedPooledInvestmentFund

BEA(MPF)ConservativeFund MoneyMarketFund–HongKong

DirectinvestmentinaportfolioofHK dollar deposits andHK dollardenominateddebtinstruments

Investment Objectives and Policies

EachConstituentFundhasaseparateanddistinctinvestmentobjectiveandpolicy,asdescribedbelow.

Investors should note that the statements of expected return for each of the Constituent Funds set out below represent the Investment Manager’s expectations based on the Investment Manager’s past experience. However, there is no guarantee that such returns will be achieved. In addition, the return of a Constituent Fund over the short term may be greater than or less than the return of a Constituent Fund over the long term, due to market fluctuations and other factors.

BEA (MPF) Growth Fund

Investment Objective: Toachievelongtermcapitalappreciationwithinacontrolledrisk–returnframework through investingmainly in global equitieswith some exposure in global debtsecurities/moneymarketinstruments. Investment Policy: TheBEA (MPF)GrowthFundwill investprimarily inglobalequityandbondmarkets. The BEA (MPF) Growth Fundwill invest in a range of Approved Pooled InvestmentFundsand/orApprovedIndex-TrackingFundstoobtainexposuretosuchmarkets(suchApprovedPooled Investment Funds and/or Approved Index-Tracking Funds selected by the InvestmentManager having regard to the investment objective and investment policy of the BEA (MPF)GrowthFund).TheunderlyingassetsoftheBEA(MPF)GrowthFundareexpectednormallytobeinvested60%to90%inequitiesand10%to40%incash,debtsecuritiesand/ormoneymarketinstruments.TheBEA(MPF)GrowthFundwillenterintofinancialfuturesandoptionscontractsforhedgingpurposesonly.TheBEA(MPF)GrowthFundwillnotengageinsecuritieslending.

Risk and Return Profile: TheBEA(MPF)GrowthFundissuitableforinvestorswhoarewillingtoassume a higher level of risk to achieve potentially higher long–term returns. The InvestmentManager expects the return of the BEA (MPF) Growth Fund over the long term to reflectmovementsintheglobalequitymarkets.

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BEA (MPF) Balanced Fund

Investment Objective: To achieve a stable rate of returnwith an opportunity for capitalappreciationthroughabalancedweightingofinvestmentsinglobalequitiesanddebtsecurities.

Investment Policy: TheBEA(MPF)BalancedFundwillinvestprimarilyinglobalequityandbondmarkets. The BEA (MPF) Balanced Fundwill invest in a range of Approved Pooled InvestmentFundsand/orApprovedIndex-TrackingFundstoobtainexposuretosuchmarkets(suchApprovedPooled Investment Funds and/or Approved Index-Tracking Funds selected by the InvestmentManager having regard to the investment objective and investment policy of the BEA (MPF)Balanced Fund). Theunderlying assets of theBEA (MPF) Balanced Fundare expectednormallytobe invested40% to60% inequities and40% to60% in cash,debt securities and/ormoneymarket instruments.TheBEA(MPF)BalancedFundwillenter intofinancialfuturesandoptionscontractsforhedgingpurposesonly.TheBEA(MPF)BalancedFundwillnotengageinsecuritieslending.

Risk and Return Profile: TheBEA (MPF)BalancedFund is suitable for investorswhoarewillingto assume some degree of risk. The InvestmentManager expects the return of the BEA (MPF)Balanced Fund over the long term to be the balance of the returns of the BEA (MPF)GrowthFund (reflectingmovements of the global equitymarkets) and the BEA (MPF) Stable Fund (areturnexpectedtoexceedtheHongKonginflationrate).

BEA (MPF) Stable Fund

Investment Objective: Tominimise short–term capital riskwithmodest capital growth overthe long term through a higherweighting of investments in global debt securities to providesteady income and lower exposure to global equities to providemodest potential for capitalappreciation.

Investment Policy: TheBEA(MPF)StableFundwillinvestprimarilyintheglobalequityandbondmarkets.TheBEA(MPF)StableFundwillinvestinarangeofApprovedPooledInvestmentFundsand/or Approved Index-Tracking Funds to obtain exposure to suchmarkets (suchApprovedPooled Investment Funds and/or Approved Index-Tracking Funds selected by the InvestmentManager having regard to the investment objective and investment policy of the BEA (MPF)StableFund).Theunderlyingassetsof theBEA (MPF)StableFundareexpectednormally tobeinvested10%to40%inequitiesand60%to90%incash,debtsecuritiesand/ormoneymarketinstruments.TheBEA(MPF)StableFundwillenterintofinancialfuturesandoptionscontractforhedgingpurposesonly.TheBEA(MPF)StableFundwillnotengageinsecuritieslending.

Risk and Return Profile: TheBEA (MPF)StableFund is suitable for investorswhowanta stablereturnwithreducedriskthroughdiversification.TheInvestmentManagerexpectsthereturnoftheBEA(MPF)StableFundoverthelongtermtoexceedtheHongKonginflationrate.

BEA (MPF) Global Equity Fund

Investment Objective: Toachievelongtermcapitalappreciationwithinacontrolledrisk–returnframework through investingmainly in global equitieswith some exposure in global debtsecurities/moneymarketinstruments.

Investment Policy: The BEA (MPF) Global Equity Fundwill invest primarily in global equitymarkets.TheBEA(MPF)GlobalEquityFundwillinvestinarangeofApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFundstoobtainexposuretosuchglobalequitiesmarket(suchApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFundsselectedbytheInvestmentManager having regard to the investment objective and investment policy of theBEA(MPF)GlobalEquityFund).TheunderlyingassetsoftheBEA(MPF)GlobalEquityFundareexpectednormallytobe invested70%to100%inequitymarkets (includingbutnot limitedtotheUnitedStatesofAmerica,UnitedKingdom,Japan,Canada,Germany,Switzerland,AustraliaandSpain).TheunderlyingassetsoftheBEA(MPF)GlobalEquityFundmayinvestupto30%incash,debtsecuritiesand/ormoneymarket instrumentsforcashmanagementpurpose.TheBEA

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(MPF) Global Equity Fundwill enter into financial futures and options contracts for hedgingpurposesonly.TheBEA(MPF)GlobalEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: The BEA (MPF) Global Equity Fund is suitable for investorswho arewilling to assume a higher level of risk to achieve potentially higher long–terms returns.The InvestmentManager expects the return of the BEA (MPF) Global Equity Fund to reflectmovementsintheglobalequitymarkets.

BEA (MPF) European Equity Fund

Investment Objective: Toachievelongtermcapitalappreciationwithinacontrolledrisk–returnframeworkthroughinvestingmainlyinEuropeanequitieswithsomeexposureinEuropeanandotherdebtsecurities/moneymarketinstruments.

Investment Policy: The BEA (MPF) European Equity Fundwill invest primarily in Europeanequitymarkets.TheBEA(MPF)EuropeanEquityFundwillinvestinarangeofApprovedPooledInvestment Funds and/orApproved Index-Tracking Funds to obtain exposure to such Europeanequitymarkets(suchApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFundsselectedbythe InvestmentManagerhavingregardtothe investmentobjectiveandinvestmentpolicyoftheBEA(MPF)EuropeanEquityFund).TheunderlyingassetsoftheBEA(MPF)EuropeanEquityFundareexpectednormallytobeinvested70%to100%inequitymarkets(includingbutnotlimitedtoUnitedKingdom,France,Germany,Switzerland,Spain,Italy,Netherlands,Swedenand Finland). The underlying assets of the BEA (MPF) European Equity Fundmay invest up to30% in cash, debt securities and/ormoneymarket instruments for cashmanagement purpose.The BEA (MPF) European Equity Fundwill enter into financial futures and options contractsfor hedgingpurposes only. TheBEA (MPF) European Equity Fundwill not engage in securitieslending.

Risk and Return Profile: The BEA (MPF) European Equity Fund is suitable for investorswhoarewilling to assume a higher level of risk to achieve potentially higher long–term returns.The InvestmentManagerexpects the returnof theBEA (MPF)EuropeanEquity Fund to reflectmovementsintheEuropeanequitymarkets.

BEA (MPF) North American Equity Fund

Investment Objective: Toachievelongtermcapitalappreciationwithinacontrolledrisk–returnframework through investingmainly inNorthAmerican equitieswith some exposure inNorthAmericanandotherdebtsecurities/moneymarketinstruments.

Investment Policy: The BEA (MPF) NorthAmerican Equity Fundwill invest primarily in NorthAmericanequitymarkets.TheBEA (MPF)NorthAmericanEquityFundwill invest ina rangeofApproved Pooled Investment Funds and/or Approved Index-Tracking Funds to obtain exposureto suchNorthAmerican equitymarkets (suchApproved Pooled Investment Funds and/ orApproved Index-Tracking Funds selected by the InvestmentManager having regard to theinvestment objective and investment policy of the BEA (MPF) NorthAmerican Equity Fund).Theunderlyingassetsof theBEA (MPF)NorthAmericanEquity Fundareexpectednormally tobe invested70%to100%inequitiesofcompaniesthatare listed in,orderiveorareexpectedtoderiveasignificantportionoftheirrevenuesfromNorthAmerica(includingbutnot limitedtoUnited States and Canada).The underlying assets of the BEA (MPF) NorthAmerican EquityFundmaybe investedupto30%incash,debt securitiesand/ormoneymarket instruments forcashmanagementpurpose.TheBEA(MPF)NorthAmericanEquityFundwillenterintofinancialfuturesandoptionscontractsforhedgingpurposesonly.TheBEA(MPF)NorthAmericanEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: TheBEA(MPF)NorthAmericanEquityFundissuitableforinvestorswhoarewillingtoassumeahigherlevelofrisktoachievepotentiallyhigherlong–termsreturns.TheInvestmentManagerexpectsthereturnoftheBEA(MPF)NorthAmericanEquityFundtoreflectmovementsintheNorthAmericanequitymarkets.

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BEA (MPF) Asian Equity Fund

Investment Objective: Toachievelongtermcapitalappreciationwithinacontrolledrisk–returnframework through investingmainly in Asian ex–Japan equities,with some exposure in debtsecurities/moneymarketinstruments.

Investment Policy: TheBEA(MPF)AsianEquityFundwill invest ina rangeofApprovedPooledInvestment Funds and/or Approved Index-Tracking Funds to obtain exposure to theAsianex–Japan equitymarkets (suchApproved Pooled Investment Funds and/or Approved Index-TrackingFunds selectedby the InvestmentManagerhaving regard to the investmentobjectiveand investment policy of the BEA (MPF) Asian Equity Fund). It is intended that, through itsinvestments in Approved Pooled Investment Funds and/or Approved Index-Tracking Funds,theBEA(MPF)AsianEquityFundwill investat least70%of itsunderlyingassets inequitiesofcompanies listedintheAsianequitymarkets(includingbutnot limitedtoSingapore,Malaysia,Korea,Taiwan,Thailand, Indonesia, thePhilippines, India,ChinaandHongKongbutexcludingJapan), andup to 30%of its underlyingassetsmaybe invested in cash, debt securities and/ormoneymarket instruments for cashmanagement purpose. The BEA (MPF) Asian Equity Fundwillenterintofinancialfuturesandoptionscontractsforhedgingpurposesonly.TheBEA(MPF)AsianEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: The BEA (MPF) Asian Equity Fund is suitable for investorswho arewilling to assume a higher level of risk to achieve potentially higher long–term returns. TheInvestmentManagerexpectsthereturnoftheBEA(MPF)AsianEquityFundoverthelongtermtoreflectmovementsintheAsianex–Japanequitymarkets.

BEA (MPF) Greater China Equity Fund

Investment Objective: To provide investorswith long–term capital growthwithin a controlledrisk–return framework through investingmainly in listed securities of companies that deriveorareexpectedtoderivea significantportionof their revenues fromgoodsproducedor sold,investmentsmadeorservicesperformedinGreaterChina,which includesthePeople’sRepublicof China (PRC), the Special Administrative Regions ofHongKong andMacau and Taiwan (the“GreaterChinaSecurities”).

Investment Policy: TheBEA(MPF)GreaterChinaEquityFundwillinvestinarangeofApprovedPooled Investment Funds and/or Approved Index-Tracking Funds to obtain exposure to theGreater China Securities (suchApproved Pooled Investment Funds and/or Approved Index-TrackingFunds selectedby the InvestmentManagerhaving regard to the investmentobjectiveandinvestmentpolicyoftheBEA(MPF)GreaterChinaEquityFund).Itisintendedthat,throughitsinvestmentsinApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFunds,theBEA(MPF)GreaterChinaEquityFundwillinvest70%–100%ofitsunderlyingassetsinGreaterChinaSecurities,andupto30%ofitsunderlyingassetsmaybeinvestedincash,debtsecuritiesand/ormoneymarketinstrumentsforcashmanagementpurpose.TheBEA(MPF)GreaterChinaEquity Fundwill enter into financial futures and options contracts for hedging purposes only.TheBEA(MPF)GreaterChinaEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: TheBEA(MPF)GreaterChinaEquityFundissuitablefor investorswhoarewillingtoassumeahigherlevelofrisktoachievepotentiallyhigherlong–termreturns.TheInvestmentManager expects the return of the BEA (MPF)Greater China Equity Fund over thelongtermtoreflecttheeconomicgrowthoftheGreaterChinaRegion.

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BEA (MPF) Japan Equity Fund

Investment Objective: Toachievelong–termcapitalappreciationwithinacontrolledrisk–returnframeworkthroughinvestingmainlyinJapaneseequities.

Investment Policy: TheBEA(MPF)JapanEquityFundwill invest inarangeofApprovedPooledInvestment Funds and/or Approved Index-Tracking Funds to obtain exposure to the Japaneseequitymarket (suchApprovedPooled InvestmentFundsand/orApproved Index-TrackingFundsselectedbythe InvestmentManagerhavingregardtothe investmentobjectiveandinvestmentpolicy of the BEA (MPF) Japan Equity Fund). It is intended that, through its investments inApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFunds,theBEA(MPF)JapanEquityFundwillinvestatleast70%ofitsunderlyingassetsinequitiesofcompanieslistedintheJapaneseequitymarket, andup to30%of itsunderlyingassetsmaybe invested in cash,debtsecuritiesand/ormoneymarketinstrumentsforcashmanagementpurpose.TheBEA(MPF)JapanEquity Fundwill enter into financial futures and options contracts for hedging purposes only.TheBEA(MPF)JapanEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: The BEA (MPF) Japan Equity Fund is suitable for investorswho arewilling to assume a higher level of risk to achieve potentially higher long–term returns. TheInvestmentManagerexpectsthereturnoftheBEA(MPF)JapanEquityFundoverthelong–termtoreflectmovementsintheJapaneseequitymarket.

BEA (MPF) Hong Kong Equity Fund

Investment Objective: To achieve long term capital appreciationwithin a controlled risk–returnframeworkthroughinvestingmainlyinHongKongequities,withsomeexposureindebtsecurities/moneymarketinstruments.

Investment Policy: The BEA (MPF) Hong Kong Equity Fundwill invest in a range of ApprovedPooled Investment Funds and/or Approved Index-Tracking Funds to obtain exposure to theHong Kong equitymarket (suchApproved Pooled Investment Funds and/or Approved Index-TrackingFunds selectedby the InvestmentManagerhaving regard to the investmentobjectiveandinvestmentpolicyoftheBEA(MPF)HongKongEquityFund).Itisintendedthat,throughitsinvestments inApproved Pooled Investment Funds and/orApproved Index-Tracking Funds, theBEA (MPF)HongKongEquity Fundwill invest 70%– 100%of its underlying assets in equitiesofcompaniesthatarelistedin,orderiveorareexpectedtoderiveasignificantportionoftheirrevenuesfromHongKong,andupto30%ofitsunderlyingassetsmaybeinvestedincash,debtsecuritiesand/ormoneymarketinstrumentsforcashmanagementpurpose.TheBEA(MPF)HongKongEquity Fundwill enter into financial futures andoptions contracts forhedgingpurposesonly.TheBEA(MPF)HongKongEquityFundwillnotengageinsecuritieslending.

Risk and Return Profile: The BEA (MPF) Hong Kong Equity Fund is suitable for investorswhoarewillingtoassumeahigherlevelofrisktoachievepotentiallyhigherlong–termreturns.TheInvestmentManagerexpectsthereturnoftheBEA(MPF)HongKongEquityFundoverthelongtermtoreflectmovementsintheHongKongequitymarket.

BEA China Tracker Fund

Investment Objective: Toprovide investment returns thatmatch theperformanceof theHangSengChinaEnterprisesIndexascloselyaspracticable.

Investment Policy: TheBEAChinaTracker Fundwill investdirectly ina singleApproved Index-Tracking Fund, namely theHang SengH–Share Index ETF. TheApproved Index-Tracking Fundaims to provide investment returns thatmatch the performance of theHang Seng ChinaEnterprises Index as closely aspracticable. TheApproved–IndexTracking Fundmayuse futurescontracts,warrantsandoptionsforhedgingpurposesortoachieveitsinvestmentobjective.TheApproved–IndexTrackingFundwillnotengageinsecuritieslending.

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TheBEAChinaTrackerFundmayholdcashandbankdepositsforancillarypurposes,suchasformeetingredemptionrequestsordefrayingoperatingexpenses.

TheBEAChinaTrackerFundwillnotenter intofinancialfuturesandoptionscontractsandwillnotengageinsecuritieslending.

WhilsttheinvestmentobjectiveoftheBEAChinaTrackerFundandtheApprovedIndex-TrackingFund is to track theHang Seng China Enterprises Index, there can be no assurance that theperformanceof theBEAChinaTrackerFundandtheApproved Index-TrackingFundwillatanytimebeidenticaltothatoftheHangSengChinaEnterprisesIndex.FurtherinformationontheHang Seng China Enterprises Index can be found in Appendix 2 annexed to this ExplanatoryMemorandum.

NoneofHangSeng InvestmentManagementLimited (themanagerof theHangSengH–ShareIndexETF)andHSBCProvidentFundTrustee(HongKong)Limited(thetrusteeoftheHangSengH–Share IndexETF)arerelatedtotheMasterTrustortheBEAChinaTrackerFundandnoneoftheseentitieswillhaveanyliabilityinconnectionwiththeMasterTrustortheBEAChinaTrackerFund.

Tracking of the Hang Seng China Enterprises Index:

HangSengH–ShareIndexETFlevel

MembersshouldbeawarethatwhilsttheHangSengH–ShareIndexETFinvests insubstantiallyallthesharesofconstituentcompaniesoftheHangSengChinaEnterprisesIndexinsubstantiallythesameweightings (i.e.proportions)as thesestockshave intheHangSengChinaEnterprisesIndex,noassurancecanbegiventhattheperformanceoftheHangSengH–ShareIndexETFwillbeidenticaltotheperformanceoftheHangSengChinaEnterprisesIndexduetocircumstancessuch as the fees and expenses of theHang SengH–Share Index ETF, any adjustmentmade tothe net asset value per unitwhich is considered to be an appropriate allowance to reflectduties (such as stamp duties) and chargeswhichwould be incurred if the investments of theHang SengH–Share Index ETFwere to be acquired or sold in certain circumstances, imperfectcorrelationbetween theHangSengH–Share IndexETF’s securitiesand those in theHangSengChina Enterprises Index, timing differences associatedwith additions to and deletions fromtheHang Seng China Enterprises Index, and changes in the number of shares outstanding ofthe constituent stocks in theHang SengChina Enterprises Index. The assets of theHang SengH–Share IndexETFmaynotbe fully invested in the constituent stocksof theHangSengChinaEnterprisesIndexattimes.

AttheHangSengH–ShareIndexETFlevel,whenastockceasestobeaconstituentstockoftheHangSengChinaEnterprisesIndex,rebalancingoccurswhichinvolvessellingtheoutgoingstockandusingtheproceedstoacquiretheincomingstock.

BEAChinaTrackerFundlevel

Due to the delay in actually subscribing for units in theHang SengH–Share Index ETF arisingfrom the time required to process instructions to invest in the BEA China Tracker Fund in theinitial period, the tracking error and the performance of the BEA China Tracker Fundmayrespectively be bigger and poorer immediately after launch although such a phenomenonwoulddiminishovertimeasthefundsizeoftheBEAChinaTrackerFundgrows.Otherthantheabove,duetothefactthattheBEAChinaTrackerFundwillholdidlecashtomeetredemption/switchingrequestsandthecalculationofperformanceoftheBEAChinaTrackerFundisonanafter–feebasis,trackingerrorresultedfromsuchcashholdingandfeedeductionfromtheBEAChinaTrackerFundwouldbeunavoidable.

Risk and Return Profile: The BEA China Tracker Fund is suitable for investorswho arewillingtoassumeahigher levelofrisktoachievepotentiallyhigherreturnsovertheshorttomediumterm. The InvestmentManager expects the return of the BEA China Tracker Fund to reflectmovementsintheH–Sharemarketovertheshorttomediumterm.Pleaserefertotheriskfactor

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“Risk in relation to Investments in Index-Tracking Funds” for the particular risks involved ininvestinginanindex-trackingfund.

BEA Hong Kong Tracker Fund

Investment Objective: ToprovideinvestmentresultsthatcloselycorrespondtotheperformanceoftheHangSengIndex.

Investment Policy: The BEAHong Kong Tracker Fundwill invest directly in a single ApprovedIndex-TrackingFund,namelytheTrackerFundofHongKong.TheApprovedIndex-TrackingFundaimstoprovideinvestmentresultsthatcloselycorrespondtotheperformanceoftheHangSengIndex. TheApproved–Index Tracking Fundmay use futures contracts and options for hedgingpurposes or to achieve its investment objective. TheApproved–Index Tracking Fundwill notengageinsecuritieslending.

TheBEAHongKongTrackerFundmayholdcashandbankdepositsforancillarypurposes,suchasformeetingredemptionrequestsordefrayingoperatingexpenses.

TheBEAHongKongTrackerFundwillnotenterintofinancialfuturesandoptionscontractsandwillnotengageinsecuritieslending.

Whilst the investmentobjectiveof theBEAHongKongTracker Fundand theApproved Index-TrackingFundistotracktheHangSengIndex,therecanbenoassurancethattheperformanceoftheBEAHongKongTrackerFundandtheApprovedIndex-TrackingFundwillatanytimebeidentical to thatof theHangSeng Index. Further informationon theHangSeng Index canbefoundinAppendix2annexedtothisExplanatoryMemorandum.

None of State Street Global Advisors Asia Limited (themanager of the Tracker Fund of HongKong),StateStreetBankandTrustCompany(thetrusteeoftheTrackerFundofHongKong),ortheHongKongGovernmentarerelatedtotheMasterTrustortheBEAHongKongTrackerFundandnoneoftheseentitieswillhaveanyliabilityinconnectionwiththeMasterTrustortheBEAHongKongTrackerFund.

Tracking of the Hang Seng Index:

TrackerFundofHongKonglevel

ThemanageroftheTrackerFundofHongKongreviewsthestocksheld intheTrackerFundofHongKong’sportfoliooneachbusinessday,checkingthosestocksagainsttheconstituentstocksoftheHangSengIndexandcomparingtheweightingofeachstockintheTrackerFundofHongKong’s portfolio to theweighting of the corresponding constituent stock in theHang SengIndex.

MembersshouldbeawarethatwhilsttheBEAHongKongTrackerFundthroughits investmentintheTrackerFundofHongKong(which,inturn,investsall,orsubstantiallyall,ofitsassetsinthesharesofconstituentcompaniesoftheHangSengIndexinsubstantiallysimilarcompositionandweightingastheyappeartherein)aimstoachieveareturnwhichfollowsthetrendoftheHangSengIndex,thereisnoguaranteeorassuranceofexactoridenticalreplicationatanytimeoftheperformanceoftheHangSengIndex.

In the event that there is any deviation between the Tracker Fund of Hong Kong’s portfolioand the composition andweighting of theHang Seng Index thereby giving rise to a trackingerrorwhich is consideredby themanagerof theTracker FundofHongKong tobe significanttaking into account the investment objective, themanagerwould effect adjustments of theTrackerFundofHongKong’sportfoliowhichitconsidersappropriateassoonasitisreasonablypracticable,afterconsideringtransactioncostsandtheimpact,ifany,onthemarket.However,itwillnotalwaysbeefficienttoreplicateorattempttoreplicateidenticallythesharecompositionoftheHangSengIndex.Forexample,ifthetransactioncoststobeincurredbytheTrackerFundof Hong Kong in performing adjustments of the nature justmentionedwould outweigh the

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anticipated reduction those adjustments could bring about in the tracking error in question,those adjustmentsmay not bemade.Minormis-weightings are, accordingly, likely to occur. ItshouldalsobenotedthatthemanageroftheTrackerFundofHongKongmayberestrictedfromeffectingcertainadjustmentsorrequiredtoperformcertainadjustmentsbyapplicablelawsandregulations.

BEAHongKongTrackerFundlevel

Due to the delay in actually subscribing for shares in the Tracker Fund of Hong Kong arisingfromthetimerequiredtoprocess instructionsto invest intheBEAHongKongTrackerFund inthe initialperiod, thetrackingerrorandtheperformanceoftheBEAHongKongTrackerFundmayrespectivelybebiggerandpoorer immediatelyafter launchalthoughsuchaphenomenonwould diminish over time as the fund size of the BEAHong Kong Tracker Fund grows.Otherthan the above, due to the fact that the BEAHong Kong Tracker Fundwill hold idle cash tomeetredemption/switchingrequestsandthecalculationofperformanceoftheBEAHongKongTracker Fund is on an after–fee basis, tracking error resulted from such cash holding and feedeductionfromtheBEAHongKongTrackerFundwouldbeunavoidable.

Risk and Return Profile: The BEAHong Kong Tracker Fund is suitable for investorswho arewilling to assume a higher level of risk to achieve potentially higher returns over the shorttomedium term. The InvestmentManager expects the return of the BEAHong Kong TrackerFund to reflectmovements in theHong Kong equitymarket over the short tomedium term.Please refer to the risk factor“Risk in relationto Investments in Index-TrackingFunds” for theparticularrisksinvolvedininvestinginanindex-trackingfund.

BEA (MPF) Global Bond Fund

Investment Objective: Toprovidetotalinvestmentreturnoverthemediumtolongtermthroughinvestinginglobalbonds,withsomeexposureinmoneymarketinstruments.

Investment Policy: TheBEA(MPF)GlobalBondFundwill invest ina rangeofApprovedPooledInvestment Funds and/or Approved Index-Tracking Funds to obtain exposure to global bondmarkets (suchApproved Pooled Investment Funds and/or Approved Index-Tracking Fundsselectedbythe InvestmentManagerhavingregardtothe investmentobjectiveandinvestmentpolicy of the BEA (MPF) Global Bond Fund). It is intended that, through its investments inApprovedPooledInvestmentFundsand/orApprovedIndex-TrackingFunds,theBEA(MPF)GlobalBondFundwillinvestatleast70%ofitsunderlyingassetsinadiversifiedrangeofglobalbondsdenominatedinvariousmajorcurrencies(includingbutnotlimitedto,USdollars,Euro,PoundsSterling, JapaneseYenandHongKongdollars),withbalancebeingheld in cashand/ormoneymarket instruments. The BEA (MPF) Global Bond Fundwill enter into financial futures andoptionscontractsforhedgingpurposesonly.TheBEA(MPF)GlobalBondFundwillnotengageinsecuritieslending.

Risk and Return Profile: The BEA (MPF) Global Bond Fund is suitable for investorswho arewillingtoassumea lower levelof risk toachievepotentially stable returnover themediumtolongterm.TheInvestmentManagerexpectsthereturnoftheBEA(MPF)GlobalBondFundoverthelongtermtoreflectmovementsintheglobalbondmarkets.

BEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Investment Objective: To achieve a rate of returnover the long term in linewith the interestrateofferedbyauthorisedfinancialinstitutionsinHongKongonHKDandRMBsavingsaccountswhilemaintainingstabilityoftheprincipalamountinvested.

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Investment Policy: The BEA (MPF) RMB&HKDMoneyMarket Fund (this Constituent Fund isdenominated inHKDonlyandnot inRMB)willprimarily invest inHKDandRMBdenominatedinstruments, namely short-term deposits (such as certificates of deposits and term deposits)placedwithauthorisedfinancial institutionsinHongKonganddebtsecurities includingbonds,fixedandfloatingratesecurities,convertiblebondsandnoteswitharemainingmaturityperiodof2yearsorless,issuedordistributedoutsidemainlandChina(“offshore RMB debt securities”)bybanks,corporationsandgovernments,andwillnotinvestinsecuritiesissuedwithinmainlandChina through any qualified foreign institutional investor quota (“QFII”). The target rangesofassetallocationof theBEA (MPF)RMB&HKDMoneyMarketFund (thisConstituentFund isdenominatedinHKDonlyandnotinRMB)(asapercentageofitsnetassetvalue)areasfollows:

Asset Allocation* Min % Max %Short-termdeposits 90% 100%DebtSecurities 0% 10%

*Investors should note that the above ranges of asset allocations are for indication only andlongtermallocationsmayvarywithchangingmarketconditions.

TheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFund isdenominated inHKDonlyandnotinRMB)willnotenterintofinancialfuturesandoptionscontractsforanypurposeandwillnotengageinsecuritieslending.

The BEA (MPF) RMB & HKD Money Market Fund is denominated in HKD only and not in RMB. However, thisConstituentFund isexpectedtoholdat least50%of itsnetassetvalue inassetsdenominated and settled in RMB, andup to 50%of its net asset value in assets denominatedand settled in HKD under normal circumstances. In addition, this Constituent Fundwill at alltimesmaintainaneffectivecurrencyexposuretoHKDofnotlessthan30%byinvestinginHKDdenominatedinstrumentsand/orthroughcurrencyforwardcontracts.

VariationstothismayoccurduetothetimingofcashflowstoandfromtheBEA(MPF)RMB&HKDMoneyMarketFund (thisConstituentFund isdenominated inHKDonlyandnot inRMB).Further, the InvestmentManagermay, in itsdiscretion,vary thepercentageof thisConstituentFund’s holding in RMB andHKD should the InvestmentManager determine, in its opinion,thatmarket or other conditions such as change in the exchange policy, currency control or asignificantdownturnintheeconomywarrantsuchvariation.

Risk and Return Profile: TheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundis denominated in HKD only and not in RMB) is designed for conservative investorswith verylowcapital risk. The InvestmentManagerexpects the returnof thisConstituent Fundover thelongtermtobeinlinewiththeinterestratepayablefromtimetotimebyauthorisedfinancialinstitutionsinHongKongonHKDandRMBsavingsaccounts.

BEA (MPF) Long Term Guaranteed Fund

Investment Objective: To provide a competitive long–term total rate of return,while alsoprovidingaminimumguaranteedaverageannualreturnoverthecareeroftheMember.

Investment Policy: The BEA (MPF) Long TermGuaranteed Fundwill invest in anApprovedPooledInvestmentFundnamely,PrincipalLongTermGuaranteedFund(the“Underlying Fund”)guaranteed by Principal Insurance Company (Hong Kong) Limited (the “Guarantor”). TheUnderlying Fundwill invest in two ormoreApproved Pooled Investment Funds (the “APIFs”)and/or Approved Index-Tracking Funds (the “ITCIS”) and in selecting theseAPIFs and ITCIS,the investmentmanager of theUnderlying Fundwill seek to achieve the objectives of BEA(MPF)LongTermGuaranteedFund.Theunderlying investmentswill consistofdebtandequitysecurities. Such securitiesmay be denominated in HK dollars, US dollars or other currencies,consistentwith the overall risk–return objectives andpermissible geographic allocation (as setout below). The investmentmanager of theUnderlying Fund is Principal AssetManagementCompany(Asia)Limited.

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The target ranges of asset allocation and geographic allocation of theUnderlying Fund (as apercentageofthetotalUnderlyingFund)areasfollows:

Asset Allocation* Min % Min %EquitySecurities 10% 55%DebtSecurities 25% 90%Cash&ShortTermInvestments 0% 20%

Geographic Allocation* Min % Min %UnitedStatesandGreaterChina 40% 100%Other Asia 0% 50%Europe 0% 50%OtherCountries 0% 50%

*Investors should note that (i) the above ranges of asset and geographic allocations are forindication only and long term allocationsmay varywith changingmarket conditions; and (ii)thegeographicallocation forequity investments is classifiedby theplaceofprincipalbusinessof the issuersandthegeographicallocationfordebt investments isclassifiedbytheircurrencydenomination.

The BEA (MPF) Long TermGuaranteed Fundwill not enter into financial futures and optionscontractsforanypurposesandwillnotengage insecurities lending.TheUnderlyingFundmayacquire or hold financial futures contracts and financial options contracts, but only for thepurposeofhedging.

Risk and Return Profile: The BEA (MPF) Long TermGuaranteed Fund is categorised as aguaranteed fund. The level of risk is higher than amoneymarket fund butwith a guaranteeof capital (net of any offer spread – see “Sponsor’s Fees” below) and return (net of any bidspread – see “Sponsor’s Fees” below) for qualifying events (as described in theAppendix 1to this ExplanatoryMemorandum). Subject as otherwise described in theAppendix 1, theminimumguaranteedaverageannual return forqualifyingevents for theperiodduringwhichcontributionsareinvestedintheUnderlyingFundiscurrentlynotlessthan5%p.a.compoundedannually for contributions invested in theUnderlying Fund on or before 30th September, 2004 and not less than 1%p.a. compounded annually for contributions invested in theUnderlyingFundafter 30th September, 2004. The investmentmanagerof theUnderlying Fundexpects thereturnof theBEA (MPF) LongTermGuaranteedFundover the long term tobe similar to thatof theUnderlyingFundwhich isexpectedtobeno less thanthe inflationrates inHongKong.InvestmentintheBEA(MPF)LongTermGuaranteedFundissubjecttoadilutionofperformanceasaresultoftheguaranteestructurefortheBEA(MPF)LongTermGuaranteedFund.Potentialreturnsinexcessoftheguaranteedreturnaresubjecttoinvestmentriskandarenotguaranteed.Theguaranteeofcapitalandreturnonlyapplyupontheoccurrenceofaqualifyingevent.Fordetails,pleaseseetheAppendix1tothisExplanatoryMemorandumonpage54.

Details of the Guarantee: TheoperationoftheBEA(MPF)LongTermGuaranteedFundissubjectto a number of conditions and is described in detail in theAppendix 1 to this ExplanatoryMemorandum.Members should read the Appendix 1 carefully before making a decision to invest in the BEA (MPF) Long Term Guaranteed Fund. Please also refer to the first paragraph under the sub-section headed “Risk Factors” below.

BEA (MPF) Conservative Fund

Investment Objective: To achieve aminimum rate of returnwhilemaintaining stability of theprincipalamountinvested.

Investment Policy: TheBEA(MPF)ConservativeFundwillsolelyinvestinHKdollardenominatedinstruments,namely, short termdepositsanddebt securities issuedbybanks, corporationsand

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governments.TheBEA(MPF)ConservativeFundwillnotenterintofinancialfuturesandoptionscontractsforanypurposesandwillnotengageinsecuritieslending.

Note:FeesandchargesofanMPFconservativefundcanbedeductedfromeither(i)theassetsofsuchfundor(ii)member’saccountbywayofunitdeduction.BEA(MPF)ConservativeFundusesmethod(ii)and,therefore,unitprices,netassetvalueandfundperformancequoted(exceptforthefundperformancefiguresquotedinafundfactsheet)donotreflecttheimpactoffeesandcharges.

Risk and Return Profile: TheBEA(MPF)ConservativeFundisdesignedforconservativeinvestorswith very low capital risk. The InvestmentManager expects the return of the BEA (MPF)ConservativeFundoverthe longtermtobe in linewiththe interestratepayablefromtimetotimebymajorbanksinHongKongonHKdollarsavingsaccounts.

General

Unlessotherwiseagreedwith theCommissionand theAuthority, theTrusteewillgivenot lessthan1month’snoticeofanychange inthe investmentobjectivesandpoliciesofaConstituentFundtoMembersandtoparticipatingemployers.

Eachof theConstituentFunds isdenominated inHKdollars.TheBEA (MPF)ConservativeFundwillmaintainaneffectivecurrencyexposuretoHKdollarsof100%.TheotherConstituentFundswillmaintainaneffectivecurrencyexposuretoHKdollarsofnotlessthan30%.

Risk Factors

Units in theBEA (MPF) LongTermGuaranteedFundareguaranteed in themannerand in thecircumstances described in theAppendix 1 to this ExplanatoryMemorandum. Pleasenote thattheoperationof theguarantee is subject toanumberof conditionsand isdescribed indetailintheAppendix1tothisExplanatoryMemorandum.AMemberwhohaselectedtotransferhisaccruedbenefitsintheBEA(MPF)LongTermGuaranteedFund(i)fromoneaccounttoanotheraccountwithin theMaster Trust, (ii) to another Constituent Fundwithin theMaster Trust or(iii) to another registered schememay not be entitled to the guarantee.Please refer to the Appendix 1 to this Explanatory Memorandum for details.

The other Constituent Funds are not guaranteed and accordingly are subject tomarketfluctuationsandto the risks inherent inall investments. Investment involves risks.ThepriceofUnitsofanyConstituentFundandtheincomefromthemmaygodownaswellasup.

InvestmentintheBEA(MPF)ConservativeFundandBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB)isnotequivalenttoplacingfunds on depositwith a bank or deposit-taking company. AMember’s rights to benefits inrespectofanyUnitsheldfortheaccountoftheMemberintheBEA(MPF)ConservativeFundandBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB)arelimitedtotherealisationpriceofsuchUnitsattherelevanttime,whichmaybemoreorlessthanthepriceatwhichsuchUnitswereissued.TheBEA(MPF)ConservativeFundandBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFund isdenominated inHKDonlyandnotinRMB)arenotsubjecttothesupervisionoftheHongKongMonetaryAuthority.

China market risk

AConstituent Fundor its underlyingApproved Pooled Investment Fund(s) orApproved Index-TrackingFund(s)mayinvestinsecuritiesofcompaniesthataredomiciledorconductasignificantportionoftheirbusinessactivitiesin,orderiveorareexpectedtoderiveasignificantportionoftheirrevenuesfrom,China.TotheextentthatsuchConstituentFundoritsunderlyingApprovedPooledInvestmentFund(s)orApprovedIndex-TrackingFund(s)hasexposuretosuchcompanies,thevalueoftheassetsofsuchConstituentFundor itsunderlyingApprovedPooled InvestmentFund(s) or Approved Index-Tracking Fund(s)may be affected by political, legal, economic andfiscaluncertaintieswithinChina.Existinglawsandregulationsmaynotbeconsistentlyapplied.

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Since 1978, the Chinese government has implemented economic reformmeasureswhichemphasise decentralisation and the utilisation ofmarket forces in the development of theChineseeconomy.Suchreformshaveresultedinsignificanteconomicgrowthandsocialprogress.Many of the reforms are unprecedented or experimental and are expected to be refined orchanged.Otherpolitical,economicandsocialfactorscouldalsoleadtofurtherreadjustmentstothe reformmeasures.Theoperationsand financial resultsof thecompanies thataConstituentFundoritsunderlyingApprovedPooledInvestmentFund(s)orApprovedIndex-TrackingFund(s)investsincouldbeadverselyaffectedbyadjustmentsinChinesestateplans,political,economicandsocialconditions,changesinthepoliciesoftheChinesegovernmentsuchaschangesinlawsand regulations (or the interpretation thereof),measureswhichmay be introduced to controlinflation, changes in the rate ormethod of taxation, imposition of additional restrictions oncurrencyconversionandtheimpositionofadditionalimportrestrictions.

The transformation from a centrally planned, socialist economy to amoremarket–orientedeconomy has resulted inmany economic and social disruptions and distortions.Moreover,there canbeno assurance that the economic andpolitical initiatives necessary to achieve andsustain such a transformationwill continue or, if such initiatives continue and are sustained,that theywill be successful. In the past the Chinese government has applied nationalization,expropriation, confiscatory levels of taxation and currency blockage. Any changes in thesepolicies and regulationsmay adversely impact on the companies or securities inwhich therelevant Constituent Fund or its underlyingApproved Pooled Investment Fund(s) or ApprovedIndex-TrackingFund(s)investsin.

Accounting, auditing and financial reporting standards in Chinamay not be equivalent tostandards applicable in Hong Kong or in other developed countries. As a result, the lowerlevels of disclosure and transparency of certainmaterial informationmay impact on thevalue of investmentsmade by the relevant Constituent Fund or its underlyingApprovedPooled Investment Fund(s) orApproved Index-Tracking Fund(s). This, if combinedwith aweakregulatory environment, could result in lower standards of corporate governance and lessprotection ofminority shareholder rights of the companies inwhich the relevant ConstituentFundoritsunderlyingApprovedPooledInvestmentFund(s)orApprovedIndex-TrackingFund(s)invest.

Concentration risk

Some of the Constituent Funds or their underlyingApproved Pooled Investment Funds orApproved Index-TrackingFundsmay investonly inaspecificcountryorregion.Theirportfoliosmaynotbewelldiversifiedintermsofthenumberofholdings.Investorsshouldbeawarethatsuch Constituent Funds or their underlyingApproved Pooled Investment Funds or ApprovedIndex-TrackingFundsarelikelytobemorevolatilethanabroad–basedfund,suchasaglobalorregionalequityfund,astheyaremoresusceptibletofluctuationsinvalueresultingfromlimitednumberofholdingsoradverseconditionsintheirrespectivecountries.

Credit risk

TheBEA(MPF)LongTermGuaranteedFundissubjecttothecreditriskofasingleentitywhichistheGuarantorandtheissueroftheUnderlyingFund.

ThevalueofaConstituentFundmaybeaffectedifanyofthefinancial institutionswithwhichthe cash of the Constituent Fund is invested or deposited, or a counterparty of a ConstituentFundoritsApprovedPooledInvestmentFunds,suffers insolvencyorotherfinancialdifficulties.Thisriskisminimisedtotheextentthattheexposuretoanyoneinstitutionisgenerallylimitedto themaximum level of 10 per cent of the total net asset value of a Constituent Fund asinvestmentpermittedunderSchedule1totheGeneralRegulation.

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Currency risk

Some of the Constituent Funds or their underlyingApproved Pooled Investment Fundsmayinvest inwhole or in part in assets quoted in other currencies. The performanceof themmaythereforebeaffectedbymovements intheexchangeratebetweenthecurrencies inwhichtheassetsareheldandtheirrespectivebasecurrencies.

In addition, the BEA (MPF) RMB & HKDMoneyMarket Fund’s (this Constituent Fund isdenominated in HKD only and not in RMB) investment in RMB deposits and RMB debtinstrumentswill be subject to additional currency risks. In particular, RMB is currently nota freely convertible currency and is subject to foreign exchange controls and repatriationrestrictions imposed by the Chinese government. There is no assurance that RMBwill not besubjecttodevaluation.AnydevaluationoftheRMBcouldadverselyaffectthenetassetvalueoftheBEA (MPF)RMB&HKDMoneyMarketFund (thisConstituentFund isdenominated inHKDonlyandnot inRMB).Further,theBEA(MPF)RMB&HKDMoneyMarketFundisdenominatedinHKDonlyandnotinRMBwhereasitisexpectedtoholdatleast50%ofitsnetassetvalueinassetsdenominatedandsettledinRMB.Thus,theperformanceofthisConstituentFundmaybeadverselyaffectedbychangesintheHKD/RMBexchangerateiftheRMBdepreciatesagainsttheHKD.ThisriskisminimisedtotheextentthatthisConstituentFund’seffectivecurrencyexposuretoHKDwillatalltimesbemaintainedatnotlessthan30%.

Interest rates risk

Interest ratesmay be subject to fluctuation. High yield bonds are particularly susceptible tointerestratechangesandmayexperiencesignificantpricevolatility.Anyfluctuationin interestratesmayhaveadirecteffectontheincomereceivedbytheinvestors.

Emerging market risk

Variouscountries inwhichBEA(MPF)AsianEquityFundwill investareconsideredasemergingmarkets.Asemergingmarkets tend tobemorevolatile thandevelopedmarkets, anyholdingsin emergingmarkets are exposed to higher levels ofmarket risk. The securitiesmarkets ofsomeoftheemergingcountriesarenotyetfullydevelopedwhichmay, insomecircumstances,lead to a potential lack of liquidity.Accounting, auditing and financial reporting standards insomeof the emergingmarketsmay be less vigorous than international standards.As a result,certainmaterialdisclosuresmaynotbemadebysomecompanies.Inmanycases,governmentsofemergingmarketsretainahighdegreeofdirectcontrolovertheeconomyandmaytakeactionshaving suddenandwidespreadeffects suchas suspensionof tradeandmoratoriumwhichmayaffectvaluationofassets.InvestmentsinproductsofemergingmarketmayalsobecomeilliquidwhichmayconstraintheInvestmentManager’sabilitytorealisesomeoralloftheportfolioandthusaffecttherepatriationofcapital.

Risk in relation to futures and options contracts

Some of the Constituent Fundsmay use futures and options contracts for hedging purposes.Thevalueorreturnofthesetypesofinstrumentsisbasedontheperformanceofanunderlyingasset. These instrumentsmay be volatile and involve various risks, includingmarket risk, theriskof lackof correlationor leverageeffect, liquidity risk, the riskofnon-performanceby thecounterparty.

Market / liquidity risk

Weak financial and credit conditionsmay have a negative impact on the equitiesmarketsresulting in increasedvolatility. InvestorsshouldnotethataConstituentFundor itsunderlyingApproved Pooled Investment Fund(s) that invests in equities will be subject tomarket/liquidity risk. Investment expectationsmay therefore fail to be realised in such instances. Thisrisk isminimised to the extent that investment in equities and other securities is subject tothe diversification requirements of Schedule 1 to theGeneral Regulation, underwhich theinvestmentofaConstituentFundislimitedto10percentofsharesofaparticularclassissuedby

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anyissuerandanyinvestmentrepresentingnotmorethan10percentoftotalnetassetvalueofsuchConstituentFundissuedbyanyoneissuer.

Further, a Constituent Fund or its underlyingApproved Pooled Investment Fund(s)may alsoencounterdifficulties indisposingofassetsattheirfairpriceduetoadversemarketconditionsleadingtolimitedliquidity.

In addition, the BEA (MPF) RMB & HKDMoneyMarket Fund’s (this Constituent Fund isdenominated inHKDonlyandnot inRMB) investment inoffshoreRMBdebt securitieswill besubject to additional liquidity risks. There is currently no active secondarymarket for offshoreRMBdebt securities. In the absenceof an active secondarymarket, this Constituent Fundmayneedtoholdinvestmentsuntiltheirmaturitydate.Ifsizeableredemptionrequestsarereceived,theBEA (MPF)RMB&HKDMoneyMarketFund (thisConstituentFund isdenominated inHKDonly andnot in RMB)mayneed to liquidate its investments at a substantial discount in orderto satisfy such requests and this Constituent Fundmay suffer significant losses in trading suchinvestments.Evenifasecondarymarketisdeveloped,thepricesatwhichthisConstituentFund’sinvestmentsaretradedmaybehigherorlowerthantheinitialsubscriptionpricesduetomanyfactorsincludingtheprevailinginterestrates.

Change of Laws / regulations, Political and Economic Conditions

TheperformanceoftheConstituentFundoritsunderlyingApprovedPooledInvestmentFund(s)and itsability topay redemptionproceedsmaybeaffectedbychanges ineconomicconditionsand uncertainties such as change in political conditions including strikes and curfew andgovernmentpolicies,theimpositionofrestrictionsonthetransferofcapitalandchangesinlawsorregulatoryrequirements.

Risk in relation to Investments in Index-Tracking Funds

Investors shouldnote that theConstituentFundsmay invest inApproved Index-TrackingFundswhichcanbesubjecttothefollowingrisks:

(i) marketriskofthesectorormarkettrackedbytherelevantindex

Each of such Constituent Funds tracks an underlying index by investing in anApprovedIndex-Tracking Fund. As a result, such Constituent Funds are subject to the fluctuationsand adverse conditions in the sector ormarketwhich the relevant index seeks to track.The InvestmentManager does not have discretion to take defensive positionswhere themarket(s)representedbytherelevantindexdecline.Hence,anyfallintheunderlyingindexwillresultincorrespondingfallinthevalueoftheApprovedIndex-TrackingFundandhencethe Constituent Fund. Furthermore, since an underlying indexmay focus on a particulargeographical region or industry, investments of anApproved Index-Tracking Fundmay beconcentratedinthesecuritiesofasingleissuerorseveralissuerswhentheApprovedIndex-Tracking Fund endeavours tomatch as closely as practicable its holdings of constituentstocksoftheindex.Therefore,theConstituentFundsmaybesubjecttotheadditionalrisksofconcentrationinthesemarketsorregions.

Further,thereisnoguaranteethattheinformationusedinconnectionwiththecomputationoftherelevantindexisfreefrominaccuracies,omissions,mistakes,errorsorincompleteness.The underlying indexmay not be able to achieve its intended objective in tracking theperformanceofaparticulargeographicalregionorindustry.

AnApproved–Index Tracking Fundmay invest in financial derivatives instruments to gainexposure to the constituent stocks of the underlying index. As such, theApproved–IndexTrackingFundwillbesubjecttoinsolvencyordefaultriskoftheissuersorcounterpartiesoftheseinstruments.AnydefaultorfailuretoperformitsobligationsbysuchissuersmayleadtosubstantiallosstotheApproved–IndexTrackingFund,whichmayinturnaffectthevalueoftherelevantConstituentFund.

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(ii) failuretofullyreplicatetheperformanceoftheindex

While theApproved Index-Tracking Fund inwhich a Constituent Fund investswill seekto track the performance of the underlying index, changes in the net asset value of suchConstituent Fundmay not replicate exactly changes in the relevant index. This is due to,amongotherfactors,thefeesandexpensespayablebytheConstituentFundandtransactionfees and stamp duty incurred in adjusting the composition of the investment portfolioaccordingtochanges intherelevant index,anddividendsreceived,butnotdistributed,bytherelevantApprovedIndex-TrackingFund.

In addition, as a result of the unavailability of constituent stocks of an underlying index,thetransactioncostsinmakinganadjustmentoutweighingtheanticipatedbenefitsofsuchadjustmentor forcertainother reasons, theremaybetimingdifferencesbetweenchangesintheunderlyingindexandthecorrespondingadjustmenttotheshareswhichcomprisetheApprovedIndex-TrackingFund’sportfolio.

During timeswhen the constituent stocksof anunderlying index areunavailableorwhenthe investmentmanager of theApproved Index-Tracking Funddetermines it is in thebestinterestof theApproved Index-TrackingFund todo so, theApproved Index-TrackingFundmaymaintainacashpositionorinvestinothercontractsorinvestmentsaspermittedbytheapplicable laws and regulations until the constituent stocks become available. Such costs,expenses, cash balances or timing differences could cause theApproved Index-TrackingFund’s net asset value to be lower or higher than the relative level of the index it tracks.ThemagnitudeoftrackingerrorofanApprovedIndex-TrackingFundwoulddependonthecashflow, size of the portfolio and the extent of use of financial instruments andmay behigherorlowerthanotherindextrackingfunds.

(iii) theindexcompositionmaychangeovertimewhichmayaffectperformance

The indexcompositionmaychangefromtimetotimeandthe InvestmentManagerhasnocontrol over the selectionof the constituent stocks comprisingof the index.Generally, anunderlyingApprovedIndex-TrackingFund’sholdingofconstituentstockmaynotexceedtheconstituentstock’sweightingintherelevantindex,exceptwheretheweightingisexceededas a result of changes in the composition of the relevant indexwhere the excess is onlytransitionalandtemporaryinnature,wheresuchexcessisduetopurchaseofboardlotsorwheresuchexcessisduetotheimplementationofadocumentedsamplingoroptimizationtechnique the purpose ofwhich is for the underlyingApproved Index-Tracking Fund toachieveitsobjectiveoftrackingtherelevantindex.

(iv) anApprovedIndex-TrackingFundmaybetradedatamarketprice,whichmaybedifferentfromitsnetassetvalueandmayfluctuate

Themarket price of the units in anApproved Index-Tracking Fundmay sometimes tradeaboveorbelow itsnetassetvalue.There isa risk, therefore, that therelevantConstituentFundmaynotbeabletobuyorsellatapriceclosetothenetassetvalueoftheApprovedIndex-Tracking Fund. The deviation from net asset value is dependent on a number offactors, butwill be accentuatedwhen there is a large imbalance betweenmarket supplyand demand for the constituent stocks of the index. The “bid/ask” spread (being thedifferencebetweenthepricesbeingbidbypotentialpurchasersandthepricesbeingaskedbypotentialsellers) isanothersourceofdeviationfromnetassetvalue.Thebid/askspreadcanwidenduringperiodsofmarketvolatilityormarketuncertainty,therebyincreasingthedeviationfromnetassetvalue.

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(v) anApprovedIndex-TrackingFundoranunderlyingindexmaybeterminated

Any license granted to the service provider of the underlyingApproved Index-TrackingFundfortheuseof,andreferenceto,therespectiveunderlyingindex,maybeterminated,or theunderlying indexmaycease tobeoperatedoravailable.Asa result, theunderlyingApproved Index-Tracking Fundmay be terminated. In such circumstances, the InvestmentManagermay, subject to the prior approval of theAuthority and the Commission, seek areplacementoftheApprovedIndex-TrackingFund.TherelevantConstituentFundmayalsobeterminatedifnosuitablereplacementunderlyingfundisfound.

Lack of RMB denominated debt securities

Although the issuance of offshore RMB debt securities has increased substantially in recentyears, supply still lags thedemand foroffshoreRMBdebt securities.As a result, new issuesofoffshore RMB debt securities are usually oversubscribed andmay be priced higher than and/or tradewith a lower yield than equivalent onshore RMB debt securities. If the onshore RMBdebt securitiesmarket subsequently opens up, thismay lead to the convergence of the yieldsin the twomarkets. Thismay result in higher yields for theoffshoreRMBdebt securities and,consequently,decreasethepriceofsuchoffshoreRMBdebtsecurities.ThismayadverselyaffectthenetassetvalueoftheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB).

Currently,mostof theoffshoreRMBdebt securities available in themarketmaynotmeet therequirements under Schedule 1 to theGeneral Regulation and therefore, the offshore RMBdebtssecuritiesavailableforinvestmentbytheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB)maybelimitedwhichmayresultinconcentrationofcreditrisk.

However,thisriskisminimisedasitiscurrentlyintendedthattheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB)willonlyinvestupto10%ofitsnetassetvalueinRMBdebtsecurities.Inanyevent,theexposuretoanysingleissuerislimitedtothemaximumlevelof10%ofthenetassetvalueofthisConstituentFundaspermittedunderSchedule1toGeneralRegulation.

Early Termination risk

The Trusteemaywith the consent of the Sponsor terminate a Constituent Fundongivingnotlessthanonemonth’snoticetoMembersandeachparticipatingemployer(orsuchotherperiodofnoticeastheAuthorityortheCommissionmayrequire).

IfaConstituentFund is terminated,contributionswill ceasetobe invested in suchConstituentFund and amounts invested in such Constituent Fundmust be switched (free of charge) intoanother Constituent Fund chosen by the relevantMember.Members should note that suchamount to be switched from the terminating Constituent Fundmay be less than the amountcontributedbythem.

Further,theMasterTrustmaybewoundupbythecourtinaccordancewiththeMPFOrdinanceonapplicationby theAuthority to the court. TheTrustee shall givenot less thanonemonth’snotice (or such other period as theAuthority or the Commissionmay agree or require) toparticipatingemployersandMembersoftheterminationoftheMasterTrustandarrangementswill bemade for the transfer ofMembers’ accrued benefits in theMaster Trust to anotherregisteredscheme.Membersshouldnotethattheaccruedbenefitstobetransferredtoanotherregisteredschememaybelessthantheamountcontributedbythem.

Forfurtherdetails,pleaserefertothesectionsheaded“Establishment,Termination,MergerandDivisionofConstituentFunds”and“Termination,MergerorDivisionofMasterTrust”below.

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Investment and Borrowing Restrictions

Each Constituent Fund is subject to the investment and borrowing restrictions in Schedule1 of theGeneral Regulation. The investment and borrowing restrictions applicable to eachConstituentFundaredescribedbelow:-

For the BEA (MPF) Conservative Fund

TheBEA (MPF)ConservativeFund is subject to the investment restrictionsapplicable to capitalpreservation fundspursuant to theMPFOrdinance (as setout in section37and Schedule1oftheGeneralRegulation).

For the BEA (MPF) Long Term Guaranteed Fund

TheBEA (MPF) LongTermGuaranteed Fund is a feeder fundand invests in a singleApprovedPooled InvestmentFundguaranteedbyPrincipal InsuranceCompany(HongKong)Limited.TheunderlyingApprovedPooledInvestmentFundissubjecttotheinvestmentrestrictionsapplicabletoApprovedPooledInvestmentFundspursuanttotheMPFOrdinance(assetoutinSchedule1oftheGeneralRegulation).

For the BEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

TheBEA(MPF)RMB&HKDMoneyMarketFund(thisConstituentFund isdenominated inHKDonlyandnotinRMB)willmakedirectinvestmentinaportfolioofmainlyHKDandRMBdepositsandHKD and RMBdenominated debt instruments and is subject to the applicable investmentrestrictionspursuanttotheMPFOrdinance(assetoutinSchedule1oftheGeneralRegulation).

For the BEA China Tracker Fund and BEA Hong Kong Tracker Fund

Each of these Constituent Funds is a feeder fundwhich invests in a single Approved Index-Tracking Fund (referred to in the section headed “InvestmentObjectives and Policies”). EachunderlyingApprovedIndex-TrackingFundhasbeenapprovedbytheAuthoritypursuanttotheMPFOrdinance(assetoutinSchedule1oftheGeneralRegulation)andtheMPFGuidelines.

TheConstituentFundswillnotenterintofinancialfuturesandoptioncontracts.

For the BEA (MPF) Growth Fund, BEA (MPF) Balanced Fund, BEA (MPF) Stable Fund, BEA (MPF) Global Equity Fund, BEA (MPF) European Equity Fund, BEA (MPF) North American Equity Fund, BEA (MPF) Asian Equity Fund, BEA (MPF) Greater China Equity Fund, BEA (MPF) Japan Equity Fund, BEA (MPF) Hong Kong Equity Fund and BEA (MPF) Global Bond Fund

These Constituent Funds are “funds of funds” and are subject to the following investmentrestrictions:-

(1) the relevant Constituent Fundmay only invest in Approved Pooled Investment Funds andApprovedIndex-TrackingFunds;

(2) the relevant Constituent Fundmust invest in not less than 2Approved Pooled InvestmentFundsand/orApprovedIndex-TrackingFunds;

(3) noinvestmentmaybemadefortheaccountoftherelevantConstituentFundifasaresultthe value of that Constituent Fund’s holding of interests in any oneApproved PooledInvestmentFundorApprovedIndex-TrackingFundwouldexceed90%ofthenetassetvalueofthatConstituentFund;

(4) the InvestmentManagermay enter into currency forward contracts, futures contracts andoptions contracts for the account of the relevant Constituent Fund for hedging purposesonly.

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EachoftheApprovedPooledInvestmentFundsthattheConstituentFundsinvestinissubjecttothe investmentandborrowing restrictionsapplicable toApprovedPooled Investment Fundsassetout intheMPFOrdinance,theGeneralRegulation,theMPFGuidelines,andtheAuthority’sCodeonMPFInvestmentFunds.

Investment Restrictions

The investmentmanagercurrentlydoesnot intendtoenter intoanyrepurchaseagreements inrespectofeachConstituentFund.

Borrowing Restrictions

TheTrusteemayborrowfortheaccountofeachConstituentFundforliquiditypurposestomeetbenefitpayments and forother limitedpurposes aspermittedpursuant to theMPFOrdinance(assetoutinSchedule1oftheGeneralRegulation).TheassetsoftherelevantConstituentFundmaybechargedorpledgedassecurityforanysuchborrowings.

General

TheInvestmentManagerisnotimmediatelyrequiredtosellapplicableinvestmentsifanyoftheinvestmentrestrictionsareexceededasaresultofchangesinthevalueofaConstituentFund’sinvestments, reconstructions or amalgamations, payments out of the assets of the ConstituentFund or realisations of Units but for so long as such limits are exceededwill not acquire anyfurther investments subject to the relevant restriction andwill as a priority objective take allreasonable steps to restore theposition so that the limitsareno longerexceeded,atall timeshavingregardtotheinterestsofMembers.

Establishment, Termination, Merger and Division of Constituent Funds

The Trusteemaywith the consent of the Sponsor establish new Constituent Funds in future.TheTrusteewillnotifyparticipatingemployersandMemberswhereanewConstituentFund isestablished.

The Trusteemaywith the consent of the Sponsor terminate a Constituent Fundongivingnotless than 1month’s notice toMembers and each participating employer (or such other periodofnoticeastheAuthorityortheCommissionmayrequire).IfaConstituentFundisterminated,contributionswill cease tobe invested in suchConstituent Fundandamounts invested in suchConstituent Fundmust be switched (free of charge) into another Constituent Fund chosen bythe relevantMember. If the relevantMember fails tomakea choicewhen requested todo so,theMember’s Units in the terminating Constituent Fundwill be switched into the BEA (MPF)StableFundandfuturecontributionsbyoronbehalfoftheMemberwhichwouldotherwisebeinvestedintheterminatingConstituentFundwillbeinvestedintheBEA(MPF)StableFund.

Subject to the prior approval of theAuthority and the Commission, the Trusteemaywiththe prior approval of the Sponsor at any time and from time to timemerge or subdivide anyConstituentFundsbygivingnotlessthanonemonth’snotice(orsuchotherperiodofnoticeastheAuthority and the Commissionmay agree or require) to each participating employer andeach Member.

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MANAGEMENT AND ADMINISTRATION

Sponsor

TheSponsorisTheBankofEastAsia,Limited(the“Bank”).

IncorporatedinHongKongin1918,BEAisdedicatedtoprovidingcomprehensiveretailbanking,commercial banking,wealthmanagement, and investment services to its customers in HongKongandothermajormarketsaroundtheworld.BEAis the largest independent localbank inHongKong,withtotalconsolidatedassetsofHK$478.1billion (US$61.4billion)asof30th June,2010. The Bank is listed on The Stock Exchange of Hong Kong and is one of the constituentstocksoftheHangSengIndex.

Where contributions to theMaster Trust and other amounts are held in an interest bearingaccountwiththeBankasdescribedinthisExplanatoryMemorandum,theBankwillpayinterestonsuchamountsataratenolowerthantheprevailingcommercialratefordepositsofasimilarsizeandduration.

Investment Manager

BEAUnion InvestmentManagement Limited is the InvestmentManager of theMaster Trust.Incorporated in Hong Kong on 12 th April, 1988 and previously known as East Asia AssetManagementCompanyLimited,theInvestmentManagerisjointlyownedbytheBankandUnionAssetManagementHoldingAG.

The InvestmentManager has been appointed tomanage the assets of the Constituent FundsotherthantheBEA(MPF)LongTermGuaranteedFund.AstheBEA(MPF)LongTermGuaranteedFund is a feeder fund investing in a single Approved Pooled Investment Fund, no investmentmanagerwillbeappointedforit.

Trustee

BankofEastAsia (Trustees)Limitedwas incorporated inHongKong in1975and is the trusteeof theMaster Trust. The Trustee is registered as a trust company inHongKong and has beenapprovedbytheAuthorityasanapprovedtrusteeforMPFpurposes1.TheTrusteeisalsoawhollyownedsubsidiaryoftheBank.

UndertheTrustDeed,theTrusteeisresponsiblefortheadministrationoftheMasterTrustandthesafekeepingoftheassetsoftheMasterTrust.TheTrusteewillactascustodianoftheassetsoftheMasterTrust.

1SuchapprovaldoesnotimplyrecommendationbytheAuthority

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CONTRIBUTIONS

Mandatory Contributions

A participating employermustmakemandatory contributions to theMaster Trust in respectof eachMember employed by it and, except as provided below,must deductmandatorycontributions from the relevant income of eachMember employed by it and pay thosemandatorycontributionstotheMasterTrust.

CalculationofMandatoryContributions

The amount of the employer’s mandatory contributions and theMember’s mandatorycontributionsisasfollows:-

Employer’smandatorycontributions

– 5% (or any other percentage as may be prescribed by theMPFOrdinance) of relevant income (provided thatmandatorycontributionsarenotrequiredonrelevantincomeinexcessofthestatutorymaximumlevelofrelevantincome)

Member’smandatorycontributions

– ifmonthly relevant income is less than statutoryminimum levelof relevant income, nil; otherwise, 5% (or any other percentageasmaybeprescribedby theMPFOrdinance) of relevant income(provided thatmandatory contributions are not required onrelevant income in excess of the statutorymaximum level ofrelevantincome)

Note: Member’smandatorycontributionsarenotrequired inrespectof (1)wheretheMemberis paidmonthly ormore frequently, anywageperiod that commences onor before theMember’s 30thdayofemployment;and(2)wheretheMemberispaidlessfrequentlythanmonthly, the period from commencement of theMember’s employment to the last dayin the calendar month in which the Member’s 30th day of employment falls. Employer’smandatorycontributionsarerequiredinrespectoftheseperiods.

Memberswho are self-employedmust also paymandatory contributions to theMaster Trustunless their relevant income is less than the statutoryminimum level of relevant income. Theamountof suchmandatory contributions is5% (oranyotherpercentageasmaybeprescribedbytheMPFOrdinance)oftheMember’srelevantincome(providedthatmandatorycontributionsare not required on relevant income in excess of the statutorymaximum level of relevantincomes).

Memberswho are interested in knowing the current statutoryminimum andmaximum levelof relevant incomemaycall theBEA(MPF)Hotlineat22111777, requestviaelectronicmail [email protected]:http://www.hkbea.com.

PaymentofMandatoryContributions

Mandatory contributionsmustbepaid to theTrusteewithin such timesasare requiredby theMPF Ordinance.

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Voluntary Contributions

Participatingemployers,Memberswhoareemployeesofsuchparticipatingemployers,Memberswhoareself-employedpersonsandSpecialVoluntaryContributionAccountMembersmayelecttomakevoluntary contributions to theMasterTrustongiving suchpriornoticeas theTrusteemay require in a form specifiedby the Trustee.A ParticipationAgreement and/or Supplementto the ParticipationAgreementmay require the relevant employer and/orMembers tomakecontributions to theMaster Trust in addition tomandatory contributions (where relevant).Such additional contributions are treated as voluntary contributions for the purposes of theMaster Trust. Voluntary contributions for Special Voluntary ContributionAccountMembersshouldbepaidinthemanneragreedintheParticipationAgreementand/orSupplementtotheParticipationAgreement. For further details of voluntary contributions by Special VoluntaryContributionAccountMembers please refer to the section headed “Contribution and Benefitsof SpecialVoluntaryContributionAccountMembers”above.Unlessotherwiseagreedwith theTrustee, voluntary contributions in respectofotherMembers shouldbepaidat the same timeandinthesamemannerasmandatorycontributions.

Unless otherwise stated in the relevant ParticipationAgreement and/or Supplement to theParticipationAgreement,voluntarycontributionsmadebyanemployerinrespectofaMembervestinthatMember:-

(a) onretirementonoraftertheMember’s60thbirthday;

(b) onthetotalincapacityoftheMember;

(c) ontheMember’sdeath;

(d) exceptondismissalforcauseasdescribedbelow,otherwisebyreferencetotheperiodoftheMember’semploymentwiththerelevantemployer(andwithanyotheremployernominatedbytherelevantemployer)(“Service”)inaccordancewiththefollowingtable:-

YearsofServices VestedPercentage

less than 3 Nil3ormorebutlessthan4 30%4ormorebutlessthan5 40%5ormorebutlessthan6 50%6ormorebutlessthan7 60%7ormorebutlessthan8 70%8ormorebutlessthan9 80%9ormorebutlessthan10 90%10 or more 100%

IfaMemberisdismissedfromemploymentonanyofthefollowinggrounds:

(i) wilfullydisobeyingalawfulandreasonableorder;

(ii) misconduct, such conduct being inconsistentwith the due and faithful discharge of theMember’sduties;

(iii)beingguiltyoffraudordishonesty;

(iv) beinghabituallyneglectfulintheMember’sduties;or

(v) uponanyothergroundonwhichtheMember’semployerwouldbeentitledtoterminatetheMember’scontractofemploymentwithoutnoticeatcommonlaw,

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and the Trustee is satisfied that dismissalwasmade upon any of the above grounds thenall voluntary contributionsmade by theMember’s employer in respect of thatMember areforfeited.

Payment of Contributions Generally

ContributionstotheMasterTrustshouldonlybepaidtotheTrustee.

Investment of Contributions in Constituent Funds

The Trusteewill apply contributionsmade by or on behalf of aMember to acquire Units inthe Constituent Funds in accordancewith the instructions of theMember.Where the Trusteereceivesthecorrectamountofcontributions inclearedfundsandadulycompletedremittancestatement, the Trusteewill apply the contributions received to acquire Units on a ValuationDatewithin 20 Business Days of receipt. A ValuationDate is each Business Day. Pending theacquisitionofUnits in theConstituentFunds, theTrusteewillholdcontributions inan interestbearingaccountwithTheBankofEastAsia,Limited.InterestearnedwillbeusedbytheTrusteetomeetgeneraloperatingexpensesoftheMasterTrust.

Issue price of Units: The issuepriceofUnitsofaConstituentFundonaValuationDatewillbecalculatedbyreferencetothenetassetvalueperUnitofthatConstituentFundasatthecloseofbusinessonthatValuationDate(forfurtherdetails,see“CalculationofIssueandRealisationPrices”onpage37below).

Offer spread: Although theSponsorhas thepower to levyanoffer spreadofup to5%of theissue price per Unit issued, the Sponsor does not currently intend to levy such charge. TheSponsorwill givenot less than 3months’ notice toMembers of any change in such intention.NoofferspreadwillbeleviedontheissueofUnitsrelatingtotheBEA(MPF)ConservativeFund.In any event, in respect of a transfer of accrued benefits (i) from another registered schemeinto theMaster Trust; (ii) from an accountwithin theMaster Trust to another accountwithintheMasterTrust; (iii) in the sameaccountwithin theMasterTrust, fromaConstituentFundtoanotherConstituentFund,noofferspreadshallbechargedotherthananamountrepresentingthenecessarytransactioncoststhatareincurred,orreasonablylikelytobeincurred,insellingorpurchasinginvestmentsinordertogiveeffecttothetransfer.

General: For the BEA (MPF) Long TermGuaranteed Fund, fractions of not less than 1/10,000of aUnitwill be issued. For theother Constituent Funds, fractions of not less than 1/1,000ofa Unitwill be issued. Contributions representing smaller fractions of a Unitwill be retainedby the relevant Constituent Fund. NoUnits of a Constituent Fundwill be issuedwhere thedeterminationof thenetassetvalueof thatConstituentFund is suspended(for furtherdetailssee“SuspensionofCalculationofNetAssetValue”onpage38below).

Mandates to Invest Contributions

On becoming amember of theMaster Trust, aMembermust give an instruction in a formspecified by the Trustee (a “Mandate”) setting out how contributionsmade by and on behalfof theMember are to be invested in the Constituent Funds. If aMember elects to invest in aparticular Constituent Fund then not less than 10%of theMember’s total contributionsmustbe invested in thatConstituent Fund. In theabsenceofaMandate, theTrusteewill invest therelevantcontributionsintheBEA(MPF)StableFund.

AMember can change theMember’sMandate by giving a newMandate to the Trustee. ThenewMandatewillapplywitheffectnolaterthanthelatestof:theValuationDatefallingonorimmediatelyaftertheeffectivedatespecified intheMandate (ifany),aValuationDatewithin7 BusinessDays after receipt of thenewMandateby the Trustee, or receipt by the TrusteeofanyfeepayableforchangingtheMandate.ThenewMandatewillonlyapplyto investmentofcontributionsreceivedbytheTrusteeonoraftertheValuationDateonwhichthenewMandatetakeseffect.

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MembersmaygiveanunlimitednumberofinstructionstochangeMandatesfreeofcharge.

Forms forMandatesandchangesofMandatesareavailable fromtheTrusteeand theSponsor.Mandatesmay be given to the Trustee bywritten notice or other authenticatedmeans ofcommunication. However, the Trusteewill not be responsible to anyMember for any lossresultingfromthenon-receiptofaMandateoranyamendmenttoaMandatepriortoreceiptbytheTrustee.

Instructions to Change Investment

Membershavetheright (subjecttoanysuspension inthedeterminationofthenetassetvalueof any relevant Constituent Fund) to switch all or (subject as provided below) part of theUnits relating to a Constituent Fund credited to their account intoUnits relating to anotherConstituentFundorConstituentFundsbygivinganinstructioninaformspecifiedbytheTrustee(a “Switching Instruction”).Where aMembergives a Switching Instruction in respect ofUnitsrelating to the BEA (MPF) Long TermGuaranteed Fund, the Switching Instructionmust be inrespectofallsuchUnitscreditedtotheaccountoftherelevantMember.

MembersmaygiveanunlimitednumberofSwitchingInstructionsfreeofcharge.

Forms for Switching Instructions are available from the Trustee and the Sponsor. SwitchingInstructionsmay be given to the Trustee bywritten notice or other authenticatedmeans ofcommunication. However, the Trusteewill not be responsible to anyMember for any lossresulting from the non-receipt of a Switching Instruction or any amendment to a SwitchingInstructionpriortoreceiptbytheTrustee.

InrespectofaSwitchingInstructionUnitsrelatingtoaConstituentFund(the“Existing Units”)willberealisedonaValuationDatewithin7BusinessDaysofreceiptoftheSwitchingInstructionbytheTrusteeor, if later,theValuationDatefallingonor immediatelyaftertheeffectivedatespecified in the Switching Instruction (if any) or the ValuationDate falling on or immediatelyafter the day onwhich the Trustee receives any fee payable in respect of the SwitchingInstruction. ThedayonwhichUnits relating to theConstituent Fund intowhichpart or all ofthe holding are to be switched (the “New Units”)will be issued shall be on aValuationDatefallingnolaterthan5BusinessDaysaftertheValuationDateonwhichtheExistingUnitswererealised.TheExistingUnitswillberealisedandtheNewUnitswillbeissuedatratesdeterminedbyreferencetotheirrespectiveUnitpricesontherelevantValuationDates.PendinginvestmentintheConstituentFundrelatingtotheNewUnits,theTrusteewillholdtherealisationproceedsoftheExistingUnitsinaninterestbearingaccountwithTheBankofEastAsia,Limited.InterestearnedwillbecreditedtotheConstituentFundrelatingtotheExistingUnits.

Currently, no offer spread or bid spreadwill be charged for implementing a SwitchingInstruction. Under the Trust Deed no feesmay be charged, and no financial penaltiesmaybe imposed on anyMember in relation to any Switching Instruction other than an amountrepresentingthenecessarytransactioncoststhatareincurred,orreasonablylikelytobeincurredby the Trustee in selling or purchasing investments in order to give effect to the SwitchingInstruction and are payable to a party other than the Trustee. Any such necessary transactioncosts imposed and received shall be used to reimburse the relevant Constituent Fund. Pleaserefertothesectionheaded“NoSwitchingFee”belowforfurtherdetails.

Anyfractionsmallerthan1/1,000ofaNewUnit(or1/10,000ofaNewUnitrelatingtotheBEA(MPF)LongTermGuaranteedFund)arisingastheresultofaswitchwillbeignoredandmoneysrepresentinganysuchfractionwillberetainedaspartoftheConstituentFundtowhichtheNewUnits relate.

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BENEFITS

Entitlement to Benefits

AMemberwillbecomeentitledtobenefitsinrespectofmandatorycontributionstotheMasterTrust in thecircumstancessetout in theMPFOrdinance.Currently, thesecircumstances includewhere theMember (i) reaches the age of 65, (ii) permanently ceases employment or self–employmentafterreachingtheageof60orceasesemploymentorself-employmentasaresultoftotalincapacity,(iii)hasaterminalillness,(iv)permanentlydepartsfromHongKong,(v)diesor(vi)hastherighttoclaimasmallbalancepursuanttotheMPFOrdinance.

AMemberwillbecomeentitledtobenefits in respectofvoluntarycontributionstotheMasterTrust in the circumstances set out in the TrustDeed and the relevant ParticipationAgreementand/or Supplement to the ParticipationAgreement, subject to such vesting conditions asdescribed above in the “Voluntary Contributions” section. Unless the ParticipationAgreementand/or Supplement to the ParticipationAgreement states otherwise, aMemberwill becomeentitled to benefits in respect of voluntary contributions in the same circumstances as thosenotedintheprecedingparagraphinrespectofmandatorycontributions,subjectto,inthecaseofaMemberwho isanemployeeofaparticipatingemployer, thecessationofemploymentoftherelevantMember.

Subject as provided in the ParticipationAgreement and/or Supplement to the ParticipationAgreement, aMemberwho is a self-employedperson is entitled to request theTrustee topaytheMember all (but not part only) of the amounts attributable to theMember’s voluntarycontributionsatanytime.

Subject as provided in the ParticipationAgreement and/or Supplement to the ParticipationAgreement,aSpecialVoluntaryContributionAccountMemberisentitledtorequesttheTrusteeto pay theMember all or part only of the amounts attributable to theMember’s voluntarycontributionsatanytime.

Where aMember who is an employee of a participating employer hasmade voluntarycontributionsinadditiontothoserequiredbythetermsoftherelevantParticipationAgreementand/or Supplement to the ParticipationAgreement (“Additional Voluntary Contributions”),theMember is entitled to request the Trustee to pay theMember amounts attributable totheMember’s Additional Voluntary Contributions. The followingwill apply, unless the Trusteeagreesotherwise:(1)therequestmustbeinaformspecifiedbytheTrustee,(2)therequestmustrelatetoallamountsattributableto theMember’sAdditionalVoluntaryContributions;and (3)notmorethan2requestsmaybemadeinanyonefinancialyearoftheMasterTrust(theperiodfrom1stAprilinayearto31stMarchinthefollowingyear).

Unclaimed benefitswill continue to be held and invested in theMaster Trust, subject to theprovisionsoftheMPFOrdinance.

Realisation of Units

WhereaMemberbecomes entitled tobenefits anda claim is submitted for suchbenefits, theTrusteewill realise theUnits credited to the account of theMember tomeet such claim forbenefits.Subjectasnotedbelow,UnitswillberealisedonaValuationDate,within20BusinessDaysofthelaterofthedatetheentitlementarisesandthedatetheTrusteereceivessatisfactorynoticeofsuchentitlement(togetherwithappropriatesupportingdocumentation).

Units realised on a ValuationDatewill be realised at a price calculated by reference to thenet asset value per Unit of the relevant Constituent Fund as at the close of business on thatValuationDate(forfurtherdetails,see“CalculationofIssueandRealisationPrices”onpage37below).AlthoughtheSponsorhasthepowertolevyabidspreadofupto0.5%oftherealisationpriceof eachUnit realised, the Sponsordoesnotpresently intend to levy such charge.Nobidspreadwill be levied on the realisationofUnits relating to the BEA (MPF) Conservative Fund.

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In any event, in respect of a transfer of accruedbenefits (i) from theMaster Trust to anotherregistered scheme; (ii) fromanaccountwithin theMaster Trust toanotheraccountwithin theMaster Trust; (iii) in the same accountwithin theMaster Trust, from a Constituent Fund toanotherConstituentFund,andinrespectofpaymentofaccruedbenefits,totheextentrequiredby theGeneralRegulation,nobid spreadshallbechargedother thananamountrepresentingthenecessarytransactioncoststhatareincurred,orreasonablylikelytobeincurred,insellingorpurchasinginvestmentsinordertogiveeffecttosuchtransferorpayment.

Realisation of Unitswill be suspended and payment of benefitswill be delayedwhere thedeterminationofthenetassetvalueoftherelevantConstituentFundissuspended(forfurtherdetailssee“SuspensionofCalculationofNetAssetValue”onpage38below).

Inaddition,withaviewtoprotectingthe interestsofMembers, theTrustee isentitledto limitthenumberofUnitsrelatingtoanyConstituentFundrealisedonanyValuationDateto10%ofthetotalnumberofUnitsrelatingtothatConstituentFundinissue(disregardinganyUnitsthataretobe issuedonsuchValuationDate). In thisevent, the limitationwillapplyproratatoallMembersinrespectofwhomUnitsrelatingtothatConstituentFundaretoberealisedonthatValuationDate so that theproportionof suchUnits realised in respectof eachMember is thesame.Unitsnotrealised(butwhichwouldotherwisehavebeenrealised)willbecarriedforwardforrealisation,subjecttothesamelimitation,onthenextValuationDate.Ifrealisationsaresocarriedforward,theTrusteewillinformtheMembersconcerned.

Payment of Benefits

Lumpsumpayment

Subject as noted below, lump sum benefits (including amounts attributable to voluntarycontributions)willbepaidassoonasreasonablypracticableandinanyeventnotlaterthan(i)30daysafterthedateonwhichtheclaimislodgedor(ii)30daysafterthecontributiondayinrespectofthelastcontributionperiodthatendsbeforetheclaimislodged,whicheverislater.

Withdrawalbyinstalments

A Member (“Eligible Member”)who becomes entitled to benefits in respect ofmandatorycontributions and,where applicable, voluntary contributions upon reaching the age of 65 orpermanently ceasing employment or self-employment after reaching the age of 60,may electto have his benefits derived frommandatory contributions and,where applicable, voluntarycontributions(together“Eligible Benefits”)paidinalumpsumorbyinstalments(i.e.partialwithdrawal). Such election is not available in other circumstanceswhen aMember becomesentitledtobenefitsinrespectofmandatoryand/orvoluntarycontributionsandthebenefitswillbepaidinalumpsumonly.

IfanEligibleMemberelectstohavehisEligibleBenefitspaidbyinstalments,foreachinstalment,heisrequiredtogiveinstructionstotheTrusteebysubmittingaseparateclaimform(availablefromtheTrusteeandtheSponsor)specifyingtheamountofwithdrawal.

Suchwithdrawal instructionswillapply tobenefitsboth in respectofmandatory contributionsand,where applicable, voluntary contributions, on a pro-rata basis. For example if an EligibleMember is entitled to accrued benefits of HK$80,000which are derived frommandatorycontributions (“Mandatory Benefits”) and HK$20,000which are derived from voluntarycontributions (“Voluntary Benefits”), and the EligibleMemberwishes towithdrawHK$5,000,then HK$4,000will be withdrawn from theMandatory Benefits, and HK$1,000will bewithdrawnfromtheVoluntaryBenefits,inproportiontothebenefitsattributabletomandatorycontributionsandvoluntarycontributions,respectively.

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Unless otherwise agreed between the Trustee and the EligibleMember, and subject as notedbelow,theTrusteewillpayeachwithdrawaltosuchEligibleMembernolaterthan30daysafterthedateonwhichtheEligibleMemberinstructstheTrusteetopaythatwithdrawal.

In respectof withdrawalby instalments, the first 4 instalments (or such furthernumberofinstalments as determined by the Trustee) in any calendar year (the period from 1st Januaryto 31stDecember inayear)willbepaid freeof charge (other than any necessary transactioncosts permitted under the General Regulation). Thereafter, each additionalwithdrawal byinstalmentinthesamecalendaryearissubjecttoafeeofHK$100,whichshallbepaidtoabankaccountdesignatedbytheTrusteeasspecifiedintheclaimform.PleasenotethatbankchargesmayapplytoMembers’bankingaccountsifMemberschoosetobepaidthewithdrawalamountdirectlytotheirbankaccount.

Tomeeteachwithdrawalrequest,theEligibleBenefitsinalloftheConstituentFunds(includingtheBEA(MPF)LongTermGuaranteedFund)heldbytheEligibleMemberwillberealised,sofaraspracticable,onapro-ratabasis.

Subjecttoasdescribedinthesucceedingparagraph, ifanEligibleMemberwishestowithdrawpart, but not all of his Eligible Benefits under the BEA (MPF) Long TermGuaranteed Fund,he should first file a Valid Claim for his Eligible Benefits (i.e. a claim for all accrued benefitsand not a partial claim, as described in the sub-section headed “Meaning of “Valid Claim” inAppendix 1 to this ExplanatoryMemorandum).With such a Valid Claim, the Eligible Benefitsheldby theEligibleMember in theBEA (MPF)LongTermGuaranteedFundwillbe transferredto thepersonalaccountwith theapplicationof theguarantee toenjoy the fullbenefitof theguarantee of capital and guaranteed rate of return up to the date of the transfer. After thetransfer,anywithdrawalbyinstalmentofthebalancesinthepersonalaccountwillberegardedasa“redemptionorswitchingout”fromtheBEA(MPF)LongTermGuaranteedFundotherthananoccurrenceofaqualifyingeventandwill lose theguaranteeentitlement in respectof suchamountwithdrawn. If, however, after the transfer, the EligibleMember subsequently files aValidClaiminrespectofall theremainingbalancefromthepersonalaccountuponoccurrenceof a qualifying event, the EligibleMemberwill still be entitled to the guarantee under thenewapplicable rate (asdescribed in the“GuaranteeMechanism”section inAppendix1 to thisExplanatoryMemorandum) in respect of the remaining balance in the personal account, fromthedateofthetransfertothepersonalaccountuptothedateofthewithdrawal.

IfaMember (who is (i)a self-employedpersonand remains in self-employmentafter reachingtheageof65;or (ii) anemployeeMemberwhocontinuesemploymentafter reaching theageof 65) files a “ValidClaim” towithdrawanypart of his EligibleBenefits under theBEA (MPF)LongTermGuaranteedFund,therewillnotbeanytransferoftheEligibleBenefitstoapersonalaccount.Nonetheless,theguaranteeofcapitalandguaranteedrateofreturnshallapplyuptothedatewhentherelevantunits intheBEA(MPF)LongTermGuaranteedFundareredeemed.Theguaranteeofcapitalandguaranteedrateofreturnshallapplytotheentireamountofhisrespective accrued benefits (either thewhole accrued benefits attributable to (i)MandatoryContribution and Voluntary Contribution if he is a self-employed person; or (ii) thewholeaccruedbenefits attributable toMandatoryContribution if he is an employeeMember) in theBEA (MPF) Long TermGuaranteed Fund once at the timewhen the relevant units in the BEA(MPF)LongTermGuaranteedFundareredeemedinrespectofhisValidClaim.Fortheavoidanceofdoubt,anysubsequentwithdrawalbyinstalmentofthebalancesinthecontributionaccountwillberegardedasa“redemptionorswitchingout”fromtheBEA(MPF)LongTermGuaranteedFundother than anoccurrenceof a qualifying event and theMemberwill lose theguaranteeentitlementinrespectofthesubsequentamountwithdrawn.

IfanEligibleMember(i.e.aMemberwhomeetsqualifyingevent(a))holdsbenefitsinapersonalaccountoraSpecialVoluntaryContributionAccountoftheMasterTrustandwishestowithdrawpart,butnotallofhis accruedbenefitsunder theBEA (MPF) LongTermGuaranteedFund,hewill also lose the guarantee entitlement in respect of suchwithdrawal by instalment of thebalanceinhispersonalaccountorspecialvoluntarycontributionaccountassuchwithdrawalbyinstalmentfailstomeettherequirementofaValidClaimwhichrequiresaclaimforallaccruedbenefits. If,however,theEligibleMembersubsequentlyfilesaValidClaiminrespectofallthe

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remaining balance from the personal account or special voluntary contributionaccountupon occurrence of a qualifying event, theMemberwill still be entitled to the guarantee inrespect of the remaining balance in the personal account or special voluntary contributionaccount,asthecasemaybe.

If you are currently investing in BEA (MPF) Long Term Guaranteed Fund, a withdrawal of the Eligible Benefits by instalments may affect your entitlement to the guarantee and you may lose your guarantee. The guarantee charge will continue to apply to investments that remain in the BEA (MPF) Long Term Guaranteed Fund. For further details relating to how the guarantee works, please refer to Appendix 1, including the illustrations under “How the Guarantee works – Examples”, or contact our BEA (MPF) Hotline on 2211 1777 before making any such withdrawal.

Members should note that in the case ofwithdrawal of benefits by instalments, any balanceremaininginaMember’saccountwillcontinuetobeinvestedintherelevantConstituentFund(s)andthereforesubjecttoinvestmentrisks.

Other points to note

Benefitswill be paid in HK dollars to the relevant recipient at the recipient’s risk by chequeunlessotherwiseagreedbetweentheTrusteeandtherelevantrecipient.

Saveasdisclosedabove,nofeesorfinancialpenaltiesshallbechargedorimposedforpaymentofbenefits(inalumpsumorbyinstalmentsforthefirst4instalmentsinacalendaryear)otherthan an amount representing the necessary transaction costs that are incurred, or reasonablylikelytobeincurred,bytheTrusteeinsellingorpurchasinginvestments inordertogiveeffectto thepayment andarepayable to apartyother than the Trustee. Suchnecessary transactioncostswould include, but are not limited to, items such as brokerage commissions, fiscalcharges and levies, government charges, bank charges, exchange fees, costs and commissions,registration fees and charges, collection fees and expenses, etc. Any amount of such fees andchargesimposedandreceivedmustbeusedtoreimbursetherelevantConstituentFund.

Paymentmay be delayed in certain circumstances pursuant to theMPFOrdinance, includingwhere theMaster Trust is being audited or investigated at the instigation of theAuthority.Pending thepaymentofbenefits, theTrusteewill hold the realisationproceedsofUnits in aninterest bearing accountwith The Bank of East Asia, Limited. Interest earnedwill be creditedto the Constituent Fund(s) inwhich such amountswere invested immediately prior to therealisationofUnits.

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TRANSFERS TO AND FROM OTHER SCHEMES

Transfers to Other Schemes or other account(s) within the Master Trust

A participating employermay elect by notice inwriting to the trustee of another scheme totransfer amounts held to the credit ofMembers employed by the relevant employer undertheMaster Trust and that relate to theMembers’ employmentwith the employer to thatother scheme inwhich the employerwill participateon themerger, divisionorwindingupoftheMaster Trust in accordancewith theMPFOrdinance orwhere the employer gives notice,personallyor through the trusteeof another scheme,of its intention to ceaseparticipation intheMasterTrustinrespectofsuchMembers.

Where aMemberwho is an employee of a participating employer ceases to be so employed,theMembermay elect by notice inwriting to the Trustee or the trustee of the new scheme,as thecasemaybe, tohaveamountsheldtothecreditof theMemberundertheMasterTrusttransferredto(a)anotheraccountintheMasterTrustor(b)anaccountinanothermastertrustscheme nominated by theMember or (c) an existing account of theMember in an industryscheme or (d) a contribution account in a registered scheme inwhich theMember’s newemployerisparticipatinginrelationtothatMember.Inaddition:-

(a) aMemberwhoisanemployeemayatanytimeelecttohave-

(i) all the amounts held to the credit of the relevantMember under theMaster Trustattributable to the relevantMember’smandatory contributions in respect of therelevantMember’s current employment, transferred to (a) a personal account in theMasterTrustnominatedbytherelevantMemberbynoticeinwritingtotheTrustee;or(b)apersonal account in another registered schemewhich is amaster trust schemeor anindustryschemenominatedbytherelevantMemberbynoticeinwritingtothetrusteeofthenewscheme;and

(ii) all the amounts held to the credit of the relevantMember under theMaster Trustattributable to allmandatory contributions paid by or in respect of the relevantMember that are attributable to theMember’s former employments or former self-employments, transferred to (a) a personal account or contribution account in theMasterTrustnominatedbytherelevantMemberbynoticeinwritingtotheTrustee;or(b)a contributionaccountwithinanother registered schemeorapersonalaccountwithinanotherregisteredschemewhichisamastertrustschemeoranindustryscheme,ineachcase as nominated by the relevantMember by notice inwriting to the trustee of thenew scheme.

Anelectiontotransferunderparagraph(i)abovemayonlybemadeonceineverycalendaryear.

(b) aMemberwho has accrued benefits held in one ormore than one personal account intheMaster Trustmay at any time elect to have all the amounts held in one ormore ofthe personal accounts of the relevantMember, transferred to (a) a personal account orcontribution account in theMaster Trust nominated by the relevantMember by notice inwriting to the Trustee; or (b) a contribution accountwithin another registered scheme orapersonalaccountwithinanother registered schemewhich isamaster trust schemeoranindustryscheme,ineachcaseasnominatedbytherelevantMemberbynoticeinwritingtothetrusteeofthenewscheme.

AMemberwho is a self-employed personmay at any time elect by notice inwriting to thetrusteeofthenewschemetohaveamountsheldtothecreditoftheMemberundertheMasterTrust transferred to (a) an account in anothermaster trust schemenominatedby theMemberor(b)anexistingaccountoftheMemberinanindustryschemeor(c)anaccountinanindustryscheme towhich theMember is eligible to belong or (d)where theMember subsequentlybecomes employed, a contribution account in the scheme inwhich theMember’s employer isparticipatinginrelationtotheMember.

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No fees shall be charged and no financial penalties shall be imposed for transferring accruedbenefits (i) from a registered scheme to another registered scheme; (ii) from an accountwithin theMaster Trust to another accountwithin theMaster Trust; (iii) in the same accountwithin theMaster Trust, froma Constituent Fund to another Constituent Fund, other than anamount representing the necessary transaction costs that are incurred, or reasonably likelyto be incurred, by the Trustee in selling or purchasing investments in order to give effect tothe transfer and are payable to a party other than the Trustee. Such necessary transactioncostswould include, but are not limited to brokerage commissions, fiscal charges and levies,governmentcharges,bankcharges,exchangefees,costsandcommissions,registrationfeesandcharges, collectionfeesandexpenses.Anyamountof suchnecessary transactioncosts imposedandreceivedshallbeusedtoreimbursetherelevantConstituentFund.

The redemption price of the Approved Pooled Investment Fund(s) inwhich the relevantConstituent Fund(s) investmay be adjusted to take account of realisation expenses including(butnotlimitedto)brokerage;stampduty;transactionfees,anybid/offerspreadofunderlyinginvestment; registration and transfer fees; bank charges; conversion charges; and any othertransaction costs. In the normal course, such adjustment is not expected to exceed 1%of theredemption price.

AnelectiontotransfermustbemadeintheformspecifiedbytheAuthorityandavailablefromscheme trustees. The Trustee on receipt fromanother trustee of notificationof an election totransfer(fortransfertootherschemes)andreceiptofnotificationofanelectiontotransfer(fortransferwithintheMasterTrust)willeffectatransferwithin30daysofsuchnotificationorifanelectionismadebyaMemberwhoisanemployeeofaparticipatingemployerwhoceasestobesoemployed,within30daysafter the last contributionday in respectof theemployment thathasceased,whicheveristhelater.TransfersmaybedelayedwherevaluationoftheConstituentFunds are suspended (see “Suspension of Calculation of Net Asset Value” on page 38) and incertaincircumstancesspecifiedpursuanttotheMPFOrdinance,includinginrespectofatransfermade under section 150 or section 150A of theGeneral Regulation there are contributionsor contribution surcharges or bothwhich are outstanding at the time of notification of suchtransfer. Pending the transfer of benefits, the Trusteewill hold the realisation proceeds ofUnitsinaninterestbearingaccountwithTheBankofEastAsia,Limited.Interestearnedwillbecredited to theConstituentFund(s) inwhich suchamountswere invested immediatelyprior totherealisationofUnits.

AMemberwho has elected to transfer his accrued benefits in the BEA (MPF) Long TermGuaranteed Fund (i) from one account to another accountwithin theMaster Trust, (ii) toanotherConstituentFundwithintheMasterTrustor(iii)toanotherregisteredschememaynot beentitledtotheguarantee.Please refer to the Appendix 1 to this Explanatory Memorandum for details of the operation of the guarantee relating to the BEA (MPF) Long Term Guaranteed Fund.

Transfers from Other Schemes

The Trustee has power to accept transfers from other schemes into theMaster Trust. Inparticular:-

(a) aMemberwho isanemployeemembermay transferallofhis (i) accruedbenefitsderivedfrommandatory contributionsmade by him in respect of his current employment;(ii) accrued benefits derived frommandatory contributions attributable to his formeremploymentsor former self-employmentor (iii) accruedbenefits inhispersonalaccount(s)within another registered scheme into a personal account (for all of the above cases) ora contribution account (for (ii) and (iii) above) of theMemberwithin theMaster Trust inaccordancewiththeGeneralRegulation;

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(b) any other eligible personsmay transfer all of his accrued benefits held in his personalaccount(s)within another registered scheme into a personal account or a contributionaccountwithintheMasterTrustinaccordancewiththeGeneralRegulation.

TheTrusteewillapplyamountsreceivedfromotherschemestoacquireUnitsintheConstituentFundsinaccordancewiththeinstructionsoftheMemberonaValuationDate,within20BusinessDaysofreceiptofsuchamountsinclearedfunds,togetherwithallrelevantdocumentationfromtheMemberandthetrusteeoftheotherscheme.Currently,noofferspreadwillbeleviedontheissueof suchUnits. Pending theacquisitionofUnits in theConstituent Funds, theTrusteewillholdsuchamounts inan interestbearingaccountwithTheBankofEastAsia,Limited. InterestearnedwillbeusedbytheTrusteetomeetgeneraloperatingexpensesoftheMasterTrust.

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CALCULATION OF NET ASSET VALUE AND ISSUE AND

REALISATION PRICES

Calculation of Net Asset Value

The Trusteewill value each Constituent Fund and calculate the issue and realisation prices ofUnitsinaccordancewiththeTrustDeedasatthecloseofbusinessinthelastrelevantmarkettocloseoneachValuationDate.TheTrustDeedprovides(interalia)that:-

(i) the value of any interest in a collective investment scheme (which, for the avoidance ofdoubt,doesnotincludeinterestsinlistedApprovedIndex-TrackingFunds)shallbecalculatedbyreferencetothepriceofsuchinterestquotedattherelevanttimebythemanageroftherelevantcollectiveinvestmentscheme(orifmorethanonepriceisquoted,thebidprice);

(ii) the value of any investment not included in paragraph (i) abovewhich is listed, quotedor dealt in on an approved stock exchange or approved futures exchange (which, for theavoidance of doubt, includes investments in Approved Index-Tracking Funds) shall becalculatedbyreferencetothelasttradedpriceofsuchinvestment;

(iii) thevalueofanyotherinvestment(orinthecaseofanyinvestmentincludedinparagraphs(i)or(ii)abovetheprevailingpriceofwhichisnotconsideredtobefairbytheTrustee)shallbedeterminedbyanyperson (including the Sponsor) approvedby theTrusteeasqualified tovaluetherelevantinvestment;

(iv) notwithstanding the foregoing, the Trusteemaymake such adjustments as it thinksappropriate to take account of any other assets or liabilities attributable to the relevantConstituentFundnototherwisereflectedinavaluationortoprovideafairerattributionofassetsandliabilitiesasbetweentheConstituentFunds;and

(v) amountsexpressedincurrenciesotherthanHKdollarsshallbeconvertedintoHKdollarsatsuchprevailingratesofexchangeastheTrusteeshallconsiderappropriate.

Calculation of Issue and Realisation Prices

TheissuepriceofaUnitinaConstituentFundonaValuationDateisthenetassetvalueperUnitof suchclass roundedto4decimalplaces (with fractionsofHKD0.00005roundedup)providedthat the Trusteemay add an allowance (for the benefit of the relevant Constituent Fund) forfiscalandpurchasechargeswhichmightbepayable tobuy investments for theaccountof therelevantConstituentFund.

TherealisationpriceofaUnit inaConstituentFundonaValuationDate isthenetassetvalueperUnitof such class rounded to4decimalplaces (with fractionsofHKD0.00005 roundedup)providedthattheTrusteemaydeductanallowance(forthebenefitoftherelevantConstituentFund)forfiscalandsalechargeswhichmightbepayabletosell investmentsfortheaccountoftherelevantConstituentFund.

The net asset value per Unit in a Constituent Fund is calculated by valuing the assets of thatConstituent Fund, deducting the liabilities attributable to the relevant Constituent Fund anddividingtheresultantsumbythenumberofUnitsoftherelevantclassinissue.

Publication of Prices

TheissueandrealisationpricesperUnitofeachConstituentFundwillbepublisheddailyintheSouthChinaMorningPostandHongKongEconomicTimes.

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Suspension of Calculation of Net Asset Value

UnlessotherwiseprohibitedbytheMPFOrdinance,theTrusteemaydeclareasuspensionofthedeterminationofthenetassetvalueofanyConstituentFund:

(a) during any period when any stock exchange or other market on which any of theinvestmentsforthetimebeingheldfortheaccountofsuchConstituentFundarequotedisclosedotherwisethanforordinaryholidays;or

(b) during any periodwhen any dealings on any such stock exchange or othermarket arerestrictedorsuspended;or

(c) duringtheexistenceofanystateofaffairsasa resultofwhichdisposalof investmentsforthetimebeingcomprisedinsuchConstituentFundcannotintheopinionoftheTrusteebeeffectednormally;or

(d) duringanybreakdown in themeansof communicationnormally employed indeterminingthe value of such Constituent Fund or part thereof or the issue price or realisation priceofUnits relating to suchConstituent Fundorwhen for anyother reason the valueof anyinvestment for the time being comprised in such Constituent Fund and representing asignificantpartofthevaluethereofcannotbepromptlyandaccuratelyascertained;or

(e) during any periodwhen the realisation of any investments for the time being comprisedinsuchConstituentFundorthetransferoffundsinvolvedinsuchrealisationcannotintheopinionoftheTrusteebeeffectedatnormalpricesornormalratesofexchangerespectively;or

(f) during any suspensionof payment of benefits from theMaster Trust pursuant to theMPFOrdinance.

Whenever the Trustee declares such a suspension it shall, as soon asmay be practicable afterany suchdeclaration andat least once amonthduring theperiodof such suspension, publisha notice in the South ChinaMorning Post andHong Kong Economic Times stating that suchdeclaration has been made.

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CHARGES AND EXPENSES

BEA (MPF) Conservative Fund

TheSponsorisentitledtoreceiveafeeequalto0.79%p.a.ofthenetassetvalueofBEA(MPF)ConservativeFund.

Fees, charges and expenseswill only be payable out of the BEA (MPF) Conservative Fund tothe extent permitted by theMPFOrdinance. The Sponsorwill bear any charges or expensesattributabletotheBEA(MPF)ConservativeFundwhicharenotpermittedtobepayableoutoftheBEA(MPF)ConservativeFund.


The Sponsor has determined that the total fees payable out of the BEA (MPF) Long TermGuaranteedFund(beingtheaggregateofthefeespayabletotheSponsorandthemanagementfee payable to themanager of the underlyingApproved Pooled Investment Fund and theunderlying funds includingApproved Index-Tracking Funds inwhich theBEA (MPF) LongTermGuaranteedFundinvests)willnotexceed1.5%p.a.ofthenetassetvalueoftheBEA(MPF)LongTermGuaranteed Fund. If the total feespayableoutof theBEA (MPF) LongTermGuaranteedFundwouldexceed this amount, the Sponsorwill reduce its feeaccordingly.Noother chargesorexpenseswillbepaidoutoftheBEA(MPF)LongTermGuaranteedFund,althoughseparatelya guarantee charge of 1%p.a. is levied on the value of the underlyingApproved PooledInvestmentFundinwhichtheBEA(MPF)LongTermGuaranteedFundinvests.

Sponsor’s Fees

TheSponsorisentitledtoreceiveafeefortheConstituentFundssetoutbelow(atthespecifiedrate):

Constituent Fund Rate (p.a. of net asset value)BEA(MPF)GlobalEquityFund 1.175%BEA(MPF)EuropeanEquityFund 1.175%BEA(MPF)NorthAmericanEquityFund 1.175%BEA(MPF)JapanEquityFund 1.175%BEAChinaTrackerFund 0.60%BEAHongKongTrackerFund 0.60%BEA(MPF)GlobalBondFund 0.99%BEA(MPF)RMB&HKDMoneyMarketFund(this ConstituentFundisdenominatedinHKDonlyandnotinRMB)

0.79%

SubjectasprovidedaboveinrelationtotheBEA(MPF)ConservativeFund,BEA(MPF)LongTermGuaranteedFund,BEA (MPF)GlobalEquityFund,BEA (MPF)EuropeanEquityFund,BEA (MPF)NorthAmericanEquityFund,BEA(MPF)JapanEquityFund,BEAChinaTrackerFund,BEAHongKong Tracker Fund, BEA (MPF) Global Bond Fund and BEA (MPF) RMB&HKDMoneyMarketFund(thisConstituentFundisdenominatedinHKDonlyandnotinRMB),theSponsorisentitledtoreceiveafeeequalto1.20%p.a.ofthenetassetvalueofeachConstituentFundotherthanthoseabove.This fee is calculatedandaccruesoneachValuationDateand ispayablemonthlyinarrears.TheSponsor’s fee is inclusiveof the feespayable to theTrusteeand the InvestmentManagerand theSponsorwillpay the feesof theTrusteeand the InvestmentManageroutofits own fee. The fees payable to the Trustee are inclusive of administration and custody feespayabletotheTrusteeinitscapacityastheAdministratorandCustodian(but,exclusiveoffeespayabletosub-custodianswhichwillbepaidfromtheassetsoftheMasterTrust).

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The Sponsormay increase the rate of fee payable in respect of any Constituent Fund (up toor towards amaximum rate of 3%p.a.) on giving not less than 3months’ notice to affectedMembers.

The Sponsordoes not currently intend to levy anoffer spreador a bid spreadon the issueorrealisationofUnits,althoughithasthepowerto levy (a)anofferspreadonthe issueofUnitsineachConstituentFund(otherthantheBEA(MPF)ConservativeFund)ofupto5%oftheissuepriceofsuchUnitsand(b)abidspreadontherealisationofUnitsineachConstituentFund(otherthantheBEA(MPF)ConservativeFund)ofupto0.5%oftherealisationpriceofsuchUnits.TheSponsorwillgivenotlessthan3months’noticetoMembersofanychangeinsuchintention.

TheSponsormayshareanyfeesitreceiveswithdistributorsoragentsprocuringsubscriptionstotheMasterTrust.

Trustee and Investment Management Fees

The Sponsorwill pay the fees of the Trustee and the InvestmentManager out of its own fee.TheTrusteeandthe InvestmentManagerdonotcurrentlychargeanyfeestotheMasterTrust,althoughtheTrusteeisentitledtochargeafeeofupto3%p.a.ofthenetassetvalueofeachConstituentFundongivingnotlessthan3months’noticetoaffectedMembers.ItisthepresentintentionoftheSponsorthatthetotaloftheSponsor’sfees,theTrustee’sfees(ifany)andtheInvestmentManager’s fees (if any) charged to each Constituent Fund (except BEA (MPF) LongTermGuaranteed Fund)will not exceed 1.20%p.a. of the net asset value of the ConstituentFund.

WhereaConstituentFund invests ina fundmanagedby the InvestmentManageroranyof itsassociatesnoofferspreadwillbepayablebytheConstituentFundinrespectofsuchinvestment.

TheInvestmentManageranditsassociates(asdefinedinSchedule8oftheMPFOrdinance)maywith the consent of the Trustee dealwith any Constituent Fund, both as principal and agent,and, subject as provided below under “Cash Rebates and Soft Commissions”,may retain anybenefitwhichtheyreceiveasaresult.

No Switching Fee

Nofeesmaybecharged,andnofinancialpenaltiesmaybeimposedonanyMemberinrelationtoanySwitchingInstructionotherthananamountrepresentingthenecessarytransactioncoststhat are incurred, or reasonably likely to be incurred by the Trustee in selling or purchasinginvestments in order to give effect to the Switching Instruction and are payable to a partyother than the Trustee. Such necessary transaction costsmay include, but are not limited to,items such as brokerage commissions, fiscal charges and levies, government charges, bankcharges,exchangefees,costsandcommissions,registrationfeesandcharges,collectionfeesandexpenses,etc.Furthermore,any suchnecessary transactioncosts imposedandreceived shallbeusedtoreimbursetherelevantConstituentFund.

Change in Mandate Fee

Currently,nofeewillbechargedforimplementingachangeinMandate.UndertheTrustDeed,theTrusteemayelecttochargeachangeinmandatefeeofuptoHKD200.TheTrusteewillgive3months’noticetoMembersofanyelectiontochargesuchchangeinmandatefee.

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Other Charges and Expenses

SubjectasprovidedaboveinrelationtotheBEA(MPF)ConservativeFund,eachConstituentFundwill bear the costs set out in the Trust Deedwhich are directly attributable to it.Where suchcostsarenotdirectlyattributable toaConstituent Fund,eachConstituent Fundwillbear suchcostsinproportiontoitsrespectivenetassetvalueorinsuchothermannerastheTrusteeshallconsider fair. Such costs includebut arenot limited to the costs of investing and realising theinvestmentsof theConstituentFunds, the feesandexpensesof sub-custodiansof theassetsoftheMasterTrust,thefeesandexpensesoftheauditors,valuationcosts,legalfees,thestatutorycompensation fund levy (if any), premiums payable in respect of the Trustee’s indemnityinsurance,thecosts incurredinconnectionwithanyregulatoryapprovalandthecosts incurredinthepreparationandprintingofanyexplanatorymemorandum,reportsandstatements.

No advertising or promotional expenseswill be charged to theMaster Trust or theApprovedPooledInvestmentFundsinwhichtheMasterTrustinvests.

Thecostsandexpensesdescribedinthis“OtherChargesandExpenses”sectionandattributabletotheBEA(MPF)LongTermGuaranteedFund(otherthanthestatutorycompensationfundlevy(ifany))willbebornebytheSponsor.Asaresult,theonlyamountsthatwillbepaidoutoftheBEA(MPF) Long TermGuaranteed Fund are the statutory compensation fund levy (if any) and thefeesoftheSponsorsubjecttothemaximumdescribedinthe“BEA(MPF)LongTermGuaranteedFund”sectionabove.

Cash Rebates and Soft Commissions

Neither the InvestmentManager nor any of its connected personsmay retain cash or otherrebatesfromabrokerordealerinconsiderationofdirectingtransactionstothem.

TheInvestmentManagerandanyofitsconnectedorassociatedpersonsmayeffecttransactionsbyor throughtheagencyofanotherpersonwithwhomthe InvestmentManageroranyof itsconnectedpersonshaveanarrangementunderwhichthatpartywillfromtimetotimeprovideto or procure for the InvestmentManager or any of its connected persons, goods, services orother benefits, such as research and advisory services, computer hardware associatedwithspecialisedsoftwareorresearchservicesandperformancemeasuresetc.,thenatureofwhichissuchthattheirprovisioncanreasonablybeexpectedtobenefittheMasterTrustasawholeandmaycontributetoanimprovementintheMasterTrust’sperformanceandthatoftheInvestmentManager or any of its connected persons in providing services to theMaster Trust and forwhichnodirectpayment ismadebut instead the InvestmentManageroranyof its connectedpersonsundertaketoplacebusinesswiththatparty.Fortheavoidanceofdoubtsuchgoodsandservicesdonotincludetravel,accommodation,entertainment,generaladministrativegoodsandservices, general office equipment or premises,membership fees, employee salaries or directmoneypayments.DetailsofsoftcommissionarrangementswillbedisclosedintheMasterTrust’saccounts.

Fee Table

The following tabledescribes the fees, chargesandexpenses thatparticipatingemployersandMembersmay pay upon and after joining theMaster Trust. Important explanatory notes anddefinitionsaresetoutatthebottomofthetable.

(A) JOINING FEE & ANNUAL FEE

Type of fees Current amount (HKD) Payable by

Joiningfee1 Nil N/A

Annualfee2 Nil N/A

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(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS IN INDIVIDUAL MEMBER’S ACCOUNT

Type of fees & charges

Name of Constituent Fund Current level Payable by

Contributioncharge3

BEA(MPF)GrowthFund Nil N/A

BEA(MPF)BalancedFund Nil N/A

BEA(MPF)StableFund Nil N/A

BEA(MPF)GlobalEquityFund Nil N/A

BEA(MPF)EuropeanEquityFund Nil N/A

BEA(MPF)NorthAmericanEquityFund Nil N/A

BEA(MPF)AsianEquityFund Nil N/A

BEA(MPF)GreaterChinaEquityFund Nil N/A

BEA(MPF)JapanEquityFund Nil N/A

BEA(MPF)HongKongEquityFund Nil N/A

BEAChinaTrackerFund Nil N/A

BEAHongKongTrackerFund Nil N/A

BEA(MPF)GlobalBondFund Nil N/A


Nil N/A

BEA(MPF)LongTermGuaranteedFund Nil N/A

BEA(MPF)ConservativeFund N/A

Offerspread4 BEA(MPF)GrowthFund CurrentlyWaived N/A

BEA(MPF)BalancedFund CurrentlyWaived N/A

BEA(MPF)StableFund CurrentlyWaived N/A

BEA(MPF)GlobalEquityFund CurrentlyWaived N/A

BEA(MPF)EuropeanEquityFund CurrentlyWaived N/A

BEA(MPF)NorthAmericanEquityFund CurrentlyWaived N/A

BEA(MPF)AsianEquityFund CurrentlyWaived N/A

BEA(MPF)GreaterChinaEquityFund CurrentlyWaived N/A

BEA(MPF)JapanEquityFund CurrentlyWaived N/A

BEA(MPF)HongKongEquityFund CurrentlyWaived N/A

BEAChinaTrackerFund CurrentlyWaived N/A

BEAHongKongTrackerFund CurrentlyWaived N/A

BEA(MPF)GlobalBondFund CurrentlyWaived N/A


CurrentlyWaived N/A

BEA(MPF)LongTermGuaranteedFund CurrentlyWaived N/A


43

(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS IN INDIVIDUAL MEMBER’S ACCOUNT

Type of fees & charges

Name of Constituent Fund Current level Payable by

Bid spread5 BEA(MPF)GrowthFund CurrentlyWaived N/A

BEA(MPF)BalancedFund CurrentlyWaived N/A

BEA(MPF)StableFund CurrentlyWaived N/A

BEA(MPF)GlobalEquityFund CurrentlyWaived N/A

BEA(MPF)EuropeanEquityFund CurrentlyWaived N/A

BEA(MPF)NorthAmericanEquityFund CurrentlyWaived N/A

BEA(MPF)AsianEquityFund CurrentlyWaived N/A

BEA(MPF)GreaterChinaEquityFund CurrentlyWaived N/A

BEA(MPF)JapanEquityFund CurrentlyWaived N/A

BEA(MPF)HongKongEquityFund CurrentlyWaived N/A

BEAChinaTrackerFund CurrentlyWaived N/A

BEAHongKongTrackerFund CurrentlyWaived N/A

BEA(MPF)GlobalBondFund CurrentlyWaived N/A


CurrentlyWaived N/A

BEA(MPF)LongTermGuaranteedFund CurrentlyWaived N/A


Withdrawal charge6

BEA(MPF)GrowthFund Nil N/A

BEA(MPF)BalancedFund Nil N/A

BEA(MPF)StableFund Nil N/A

BEA(MPF)GlobalEquityFund Nil N/A

BEA(MPF)EuropeanEquityFund Nil N/A

BEA(MPF)NorthAmericanEquityFund Nil N/A

BEA(MPF)AsianEquityFund Nil N/A

BEA(MPF)GreaterChinaEquityFund Nil N/A

BEA(MPF)JapanEquityFund Nil N/A

BEA(MPF)HongKongEquityFund Nil N/A

BEAChinaTrackerFund Nil N/A

BEAHongKongTrackerFund Nil N/A

BEA(MPF)GlobalBondFund Nil N/A


Nil N/A

BEA(MPF)LongTermGuaranteedFund Nil N/A


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(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDS

Type of charges & expenses

Name of Constituent Fund Current level Deducted from

Managementfees7

BEA(MPF)GrowthFund 1.20%p.a.ofNAV

RelevantConstituentFund

assets

BEA(MPF)BalancedFund 1.20%p.a.ofNAV

BEA(MPF)StableFund 1.20%p.a.ofNAV

BEA(MPF)GlobalEquityFund 1.175%p.a.ofNAV

BEA(MPF)EuropeanEquityFund 1.175%p.a.ofNAV

BEA(MPF)NorthAmericanEquityFund 1.175%p.a.ofNAV

BEA(MPF)AsianEquityFund 1.20%p.a.ofNAV

BEA(MPF)GreaterChinaEquityFund 1.20%p.a.ofNAV

BEA(MPF)JapanEquityFund 1.175%p.a.ofNAV

BEA(MPF)HongKongEquityFund 1.20%p.a.ofNAV

BEAChinaTrackerFund 0.60%p.a.ofNAV

BEAHongKongTrackerFund 0.60%p.a.ofNAV

BEA(MPF)GlobalBondFund 0.99%p.a.ofNAV


0.79%p.a.ofNAV

BEA(MPF)LongTermGuaranteedFund upto1.50%p.a.ofNAV

BEA(MPF)ConservativeFund 0.79%p.a.ofNAVRelevantMember’saccountbyUnitdeduction

Other expenses

The Constituent Fundswill bear the operating expensesof theMaster Trust (e.g. compensation fund levy (if any),indemnity insurance, auditor’s fees and legal charges)in proportion to their respective net asset values or insuch othermanner as the Trustee shall consider fair. Suchexpenses are summarised in point (vi) of the ExplanatoryNotes.

The establishment costs and payments incurred in theestablishment of each of the following Constituent Fundsareestimatedasfollows:

• BEA(MPF)NorthAmericanEquityFund–HKD117,000;

• BEAChinaTrackerFund–HKD138,000;

• BEAHongKongTrackerFund–HKD138,000;and

• BEA (MPF) RMB & HKDMoneyMarket Fund (thisConstituentFundisdenominatedinHKDonlyandnotinRMB)–HKD198,000.

SuchcostsandpaymentswillbebornebytheseConstituentFunds and amortised over the first 5 years following theirlaunch.

RelevantConstituentFund

assets (Other expensesofBEA(MPF)ConservativeFundaredeductedfromrelevant

Member’saccountbyUnitdeduction.)

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(D) FEES AND CHARGES PAYABLE OUT OF THE UNDERLYING FUNDS



Managementfees7

BEA(MPF)GrowthFund 0-1.1%p.a.ofNAV

Relevantunderlyingfund

assets

BEA(MPF)BalancedFund 0-1.1%p.a.ofNAV

BEA(MPF)StableFund 0-1.1%p.a.ofNAV

BEA(MPF)GlobalEquityFund 0-1.0%p.a.ofNAV

BEA(MPF)EuropeanEquityFundUpto1.0%p.a.of

NAV

BEA(MPF)NorthAmericanEquityFundUpto1.0%p.a.of

NAV

BEA(MPF)AsianEquityFund 0-1.1%p.a.ofNAV

BEA(MPF)GreaterChinaEquityFund 0-1.1%p.a.ofNAV

BEA(MPF)JapanEquityFundUpto1.1%p.a.of

NAV

BEA(MPF)HongKongEquityFund 0-1.1%p.a.ofNAV

BEAChinaTrackerFund 0.6%p.a.ofNAV

BEAHongKongTrackerFundUpto0.1%p.a.of

NAV

BEA(MPF)GlobalBondFund 0-1.1%p.a.ofNAV

Guaranteecharge8 BEA(MPF)LongTermGuaranteedFund 1%p.a.ofNAV

Other expenses

Eachunderlyingfundmaybearitscostsandoperatingexpenses(e.g.establishmentcostoftheunderlyingfund,indemnityinsurance,auditor’sfeesandlegalcharges).Suchexpensesaresummarisedinpoint(vii)oftheExplanatoryNotes.

Relevantunderlyingfund

assets

46

(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICESCopying Services for Member Charges (HKD) Payable By Receivable ByCopyof“TrustDeed” $500

(percopy)

Member Trustee

Copyof“ParticipationAgreement”(Forself-employedPersonandPersonalAccountHolderOnly)Re-issuanceof“NoticeofParticipation”(Forself-employedPersonandPersonalAccountHolderOnly)

$50(percopy)

Copyof“Member–MembershipApplicationForm”Re-issuanceof“NoticeofParticipation”/“EnrolmentConfirmation”

$50(percopy)

Copyofthelatest

$50(percopy)

“SpecimenSignature”“Member–Declaration/StatementofAccounts(self-employedperson)”Form“Member–ChangeofDetails”Form“Member–Addition/ChangeofAdditionalVoluntaryContribution”Form“Member–ChangeofMandatetoInvestContributions/FundSwitchingInstruction”Form“Member–Claim/ElectionFormforTransferofAccruedBenefits”Copyofthelatest“BenefitPaymentStatement”“UnitTransferStatement”“AnnualBenefitStatement”

$50(percopy)

Member Trustee

Copyof“QuarterlyBenefitStatement”inthelatestschemeyear

$50(perquarterly)

CopyofMPFContribution“Pay-inSlip”(Forself-employedpersonOnly)

$50(pereachPay-in

Slip)Copyof“ContributionReceipt” (Forself-employedpersonOnly)

$50(per each contribution

period)DetailsofMemberContribution $50

(per eachfinancialyear)

TotalamountofMPFAccruedBenefits $50(percopy)

Copyofotherform $50(percopy)

47

(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICESCopying Services for Employer Charges (HKD) Payable By Receivable ByCopyof“TrustDeed” $500

(percopy)

Employer Trustee

Copyof“ParticipationAgreement”Re-issuanceof“NoticeofAcceptance”

$50(percopy)

Copyofthelatest“SpecimenSignature”“ParticipatingEmployer’sRequestforFundTransferForm”“Employer–SupplementofEmployerVoluntaryContribution(RelevantEmployee)”

$50(percopy)

Copyofthelatest“Employer–ChangeofDetails”Form“Employer–NoticeofTermination(RelevantEmployee)”(pereachmember)

$50(percopy)

Copyof“Employer–RemittanceStatement”(ForRelevantEmployeeContribution)“ContributionReceipt”(forRelevantEmployeeContribution)

$50(per each contribution

period)

Copyofthelatest“AnniversaryReport” $50(percopy)

CopyofMPFContribution“Pay-inSlip” $50(pereachPay-in

Slip)Copyof“MemberPayRecord” $50(pereach

member in each contribution

period)DetailsofMemberContribution $50(pereach

member in each financialyear)

Copyofotherform $50(percopy)

Payment of benefits from mandatory or voluntary contributions (as the case may be) by withdrawal by instalments, if applicable

Charges (HKD) Payable By Receivable By

First4instalments(orsuchfurthernumberofinstalmentsasdeterminedbytheTrustee)inanycalendaryear(theperiodfrom1stJanuaryto 31stDecemberinayear)

Freeofcharge(other than anynecessary

transaction costs payabletoaparty

other than theTrusteeaspermittedundertheGeneralRegulation)

Member Trustee

48

(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICESPayment of benefits from mandatory or voluntary contributions (as the case may be) by withdrawal by instalments, if applicable

Charges (HKD) Payable By Receivable By

Eachadditionalinstalmentafterthefirst4instalments(orsuchfurthernumberoffreeinstalmentsasdeterminedbytheTrustee)inthesamecalendaryear(theperiodfrom1st Januaryto31stDecemberinayear

$100perinstalment (in

addition to anynecessary

transaction costs payabletoaparty

other than theTrusteeas

permittedundertheGeneralRegulation)

Member Trustee

49

DEFINITIONS

Thefollowingarethedefinitionsofthedifferenttypesoffeesandcharges.

1. “Joining fee”means the one–off fee charged by the trustee/sponsor of a scheme andpayablebytheemployersand/ormembersuponjoiningthescheme.

2. “Annual fee”meansthefeechargedbythetrustee/sponsorofaschemeonanannualbasisandpayablebytheemployersand/ormembersofthescheme.

3. “Contribution charge”means the fee charged by the trustee/sponsor of a scheme againstany contributions paid to the scheme. This fee is usually charged as a percentage ofcontributions andwill be deducted from the contributions. This charge does not apply totheBEA(MPF)ConservativeFund.

4. “Offer spread”ischargedbythetrustee/sponsoruponsubscriptionofunitsofaconstituentfundbyaschememember.OfferspreaddoesnotapplytotheBEA(MPF)ConservativeFund.Offerspreadforatransferofbenefitscanonlyincludenecessarytransactioncosts incurredor reasonably likely to be incurred in selling or purchasing investments in order to giveeffecttothetransferandarepayabletoapartyotherthanthetrustee.

5. “Bid spread” is chargedby the trustee/sponsor upon redemptionof units of a constituentfund by a schememember. Bid spread does not apply to the BEA (MPF) ConservativeFund. Bid spread for a transfer of benefits, orwithdrawal of benefits in a lump sum, orthe first 4 instalments (or such other number of instalments asmay be prescribed by theGeneralRegulation)ofwithdrawalofbenefitsinacalendaryearcanonlyincludenecessarytransaction costs incurred or reasonably likely to be incurred in selling or purchasinginvestmentsinordertogiveeffecttothetransferorwithdrawalandarepayabletoapartyotherthanthetrustee.

6. “Withdrawal charge”means the fee charged by the trustee/sponsor of a scheme uponwithdrawalofaccruedbenefitsfromthescheme.Thisfeeisusuallychargedasapercentageof thewithdrawalamountandwillbedeductedfromthewithdrawalamount.ThischargedoesnotapplytotheBEA(MPF)ConservativeFund.Awithdrawalchargeforwithdrawalof benefits in a lump sum, or the first 4 instalments (or such other number ofinstalmentsasmaybeprescribedbytheGeneralRegulation)ofwithdrawalofbenefitsinacalendar year can only include necessary transaction costs incurred or reasonably likely tobe incurred in selling or purchasing investments in order to give effect to the transfer orwithdrawalandarepayabletoapartyotherthanthetrustee.

7. “Management fees” include fees paid to the trustee, custodian, administrator, investmentmanager (including fees based on fund performance, if any) and sponsor of a scheme forproviding their services to the relevant fund. They are usually charged as a percentageofthenetassetvalueofafund.Sponsor’sfeesasdescribedinthisExplanatoryMemorandumcorrespond toManagement fees of constituent funds in the Fee Table.Management feesof BEA (MPF) Long TermGuaranteed Fund includes the fees of the underlying funds andthat such feeswould be deducted from the assets of both the constituent funds and theunderlyingfunds.

8. “Guarantee charge”referstoanamountthatisdeductedoutoftheassetsofaguaranteedfundforthepurposeofprovidingtheguarantee.Thisfeeisusuallychargedasapercentageofthenetassetvalueofaguaranteedfund.

50

EXPLANATORY NOTES

i. In respect of any increase in fees and charges from the current level as stated, at least 3monthspriornoticemustbegiventoallMembersandparticipatingemployers.

ii. TheBEA (MPF)LongTermGuaranteedFund,BEA (MPF)GrowthFund,BEA (MPF)BalancedFund, BEA (MPF) Stable Fund, BEA (MPF) Global Equity Fund, BEA (MPF) European EquityFund, BEA (MPF) NorthAmerican Equity Fund, BEA (MPF) Asian Equity Fund, BEA (MPF)Greater China Equity Fund, BEA (MPF) Japan Equity Fund, BEA (MPF) Hong Kong EquityFund, BEA China Tracker Fund, BEAHong Kong Tracker Fund and BEA (MPF) Global BondFundwill, indirectly, bear the fees, charges and expenses of theunderlying fund inwhichthey invest.Where a Constituent Fund invests in an underlying fundmanaged by theInvestmentManagerandwheretheTrusteeactsastrustee,nofeefor investmentmanagerortrusteewillbechargedonsuchunderlyingfund.

iii. TherateoftheManagementfeesmaybeincreaseduptoortowardsamaximumrateof3%p.a.ofthenetassetvalueofeachConstituentFundongivingnotlessthan3months’noticetoaffectedMembers(exceptBEA(MPF)LongTermGuaranteedFund).

iv. TheaggregateofthefeespayabletotheSponsorandthemanageroftheunderlyingfundinwhichtheBEA(MPF)LongTermGuaranteedFundinvestswillnotexceed1.5%p.a.ofthenetassetvalueoftheBEA(MPF)LongTermGuaranteedFund.

v. It is the present intention of the Sponsor that theManagement fees charged to eachConstituentFund(exceptBEA(MPF)LongTermGuaranteedFund)willnotexceed1.20%p.a.ofthenetassetvalueoftheConstituentFund.

vi. A Constituent Fundwill bear its operating expenses and the operating expenses of theMaster Trust, in the proportionwhich its net asset value bears to the net asset values oftheotherConstituentFunds, ifsuchexpensesarenotdirectlyattributabletoaConstituentFund (provided that (i) such operating expenseswill only be paid out of the BEA (MPF)ConservativeFund to theextentpermittedby theMPFOrdinanceand (ii) theSponsorwillbear thoseoperatingexpenses attributable to theBEA (MPF) LongTermGuaranteed Fundotherthanthestatutorycompensationfundlevy(ifany)).SuchexpensesincludebutarenotlimitedtothecostsofinvestingandrealisingtheinvestmentsoftheConstituentFunds,thefees and expenses of custodians and sub-custodians of the assets of theMaster Trust, thefees and expenses of the auditors, valuation costs, legal fees, the statutory compensationfund levy (if any), premiums payable in respect of the Trustee’s indemnity insurance,the costs incurred in connectionwith any regulatory approval, the costs incurred in thepreparation and printing of any explanatorymemorandum, reports and statements andlicense fee (ifany) (applicable to constituent funds that invest ina singleApproved Index-TrackingFund).

vii. Eachunderlyingfundmaybearitscostsandoperatingexpenseswhichmayincludebutnotlimitedtothefeesandexpensesofcustodians,sub-custodians,registrar,auditors,valuationcosts, legal fees, the costs incurred in connectionwith any listing or regulatory approval,thecostsincurredinthepreparationandprintingofanyexplanatorymemorandumandthelicense fee (if any) (applicable to the underlyingApproved Index-Tracking Funds inwhichtheconstituentfundsinvest).

viii.The Fee Table does not take into account any fee rebate thatmay be offered to someemployers/MembersoftheMasterTrust.

A document that illustrates the on–going costs on contributions to the Constituent Funds intheMaster Trust (except for the BEA (MPF) Conservative Fund)will be distributedwith thisExplanatoryMemorandum from 1st October, 2006 onwards and an illustrative example forthe BEA (MPF) Conservative Fund is currently available for distributionwith this ExplanatoryMemorandum. Beforemaking any investment decisions concerning investments in theMasterTrust, you should ensure that you have the latest version of these documents. Copies can beobtainedfromtheofficesoftheTrustee.

51

TAXATION

The following statements regarding taxation are based on advice received by the SponsorregardingthelawandpracticeinforceinHongKongatthedateofthisdocument.

Employers and prospectiveMembers should appreciate that as a result of changing law orpractice,thetaxationconsequencesofparticipatingintheMasterTrustmaybeotherwisethanas stated below. This summary is not intended to be comprehensive and should not be relieduponasasubstitutefordetailedandspecificadvice.EmployersandprospectiveMembersshouldseekprofessionaladviceregardingtheirparticulartaxcircumstances.

For Employers

Initial and special lump sum contributions are allowable for profits tax purposes in 5 equalinstalmentsover5years.

Annual contributionsmade by the employer in respect of an employee of up to 15%of thetotalemolumentsofsuchemployeeareallowableasadeductionforprofitstaxpurposes.Excesscontributionsarenotdeductible.

Refunds of voluntary contributions to the employerwill be treated as taxable receipts in thehandsoftheemployerforprofitstaxpurposes.

For Employees

Benefitsonretirementorearlierinthecaseofincapacity,terminalillnessordeatharegenerallynot subject to salaries tax in the hands of the employee. For tax purposes, “retirement” isdefinedasmeaning:-

– retirementfromtheserviceoftheemployerataspecifiedageofnotlessthan45years;

– retirementafteraperiodofservicewiththeemployerofnotlessthan10years;or

– attainmentofaspecifiedageofretirementor60years,whichever is later (whetherornottheemployeehasinfactretiredfromhisemploymentatsuchage).

Ifanemployeeleavesserviceotherwisethanonretirement,deathorincapacity,aproportionofthe employee’s accrued benefit paid deriving from employer’s voluntary contributionsmay besubjecttosalariestax.

Salariestaxisnotpayableontheportionofanypaymentthatrepresentseithertheemployee’scontributionsortheinvestmentearningsoftheMasterTrust.

The employer’s contributions are not taxable on the employee. For salaries tax purposes, adeduction from salary is allowed for the amount of the employee’smandatory contributionsto theMaster Trust. However, employees’ voluntary contributions to theMaster Trust are notdeductibleforsalariestaxpurposes.

For Self-Employed Persons

Self-employedpersonswillbeeligiblefordeductioninrespectoftheamountoftheirmandatorycontributionstotheMasterTrustfromtheirassessableprofits.

Profitstaxisnotpayableontheportionofanypaymentthatrepresentseithertheself-employedperson’scontributionsortheinvestmentearningsoftheMasterTrust.

For the Master Trust

TheMaster Trust is not expected to be subject to Hong Kong tax in respect of any of itsauthorisedactivities.

52

GENERAL INFORMATION

Accounts, Reports and Statements

TheMasterTrust’sfinancialyearendis31stMarchineachyear.

As soonaspracticableaftereach financial year, theTrusteewillpreparea consolidated reportconsistingof(i)theauditedaccountsoftheMasterTrustpreparedinaccordancewithapplicableaccounting guidelines, (ii) the Trustee’s report on theMaster Trust for the relevant financialyear and (iii) the InvestmentManager’s investment report for the relevant financial year. Thisconsolidated reportwillbeopen for inspectionbyMembers freeof chargeatany timeduringnormal business hours on any day (excluding Saturdays, Sundays and public holidays) at theoffices of the Trustee.Membersmay request the Trustee to provide themwith copies of theconsolidatedreportsfortheMasterTrustforanyofthepreceding7financialyears.

TheTrusteewillsendeachMemberanannualbenefitstatementwithin3monthsoftheendofeachfinancialyear.TheannualbenefitstatementwillincludedetailsofthecontributionstotheMasterTrustinrespectoftheMemberduringtheyear,theUnitscreditedtotheaccountoftheMember ineachConstituentFundandthevalueof theaccruedbenefitsof theMemberundertheMasterTrustasatthestartandendoftherelevantfinancialyear.

Trust Deed

TheMasterTrustwasestablishedunderHongKonglawbyatrustdeeddatedasof31stJanuary,2000madebetweentheSponsorandtheTrustee.AllMembersandparticipatingemployersareentitledtothebenefitof,areboundbyandaredeemedtohavenoticeoftheprovisionsoftheTrustDeed.

The Trust Deed contains provisions for the indemnification of the Trustee and the Sponsorand their relief from liability in certain circumstances.Members, participating employers andintending applicants are advised to consult the Trust Deed for further details on the relevantprovisions.

Modification of Trust Deed and Participation Agreements

TheTrusteeandtheSponsormayagreetomodifytheTrustDeedbysupplementaldeed,eithergenerallysoastoapplytoallMembersandparticipatingemployersorsoastoapplyspecificallyto a particularMember orMembers or a particular employer or employers andMembersemployedbysuchemployeroremployers.

AnymodificationstotheTrustDeedwillbesubmittedtotheAuthorityandtheCommissionforpriorapprovalandwillbenotifiedtoMembers.

TheTrustee,theSponsorandtherelevantemployer(orMemberinthecaseofaself-employedperson or other eligible person)may agree tomodify the ParticipationAgreement and/orSupplement to the ParticipationAgreement applicable to that employer (or self-employedpersonorothereligibleperson).

Termination, Merger or Division of Master Trust

TheMaster Trustmay bewound up by the court in accordancewith theMPFOrdinance onapplicationmadebytheAuthoritytothecourt.TheTrusteeshallgivenotlessthanonemonth’snotice (or such other period as theAuthority or the Commissionmay agree or require) toparticipatingemployersandMembersoftheterminationoftheMasterTrust.

Subject to the prior approval of theAuthority and the Commission, theMaster Trustmay bemergedwith one ormore other schemes or sub-divided into two ormore other schemes in

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accordancewiththeMPFOrdinance.TheTrusteewillgiveMembersandparticipatingemployersnotlessthanonemonth’snoticeofanymergerorsub-divisionoftheMasterTrust(orsuchotherperiodofnoticeastheAuthorityortheCommissionmayrequire).

Material Contract

TheTrusteehasentered intothefollowingcontractwhich isormaybematerial to theMasterTrust:-

• investmentmanagement agreement dated as of 31st January, 2000, as amended, pursuanttowhich the InvestmentManagerwas appointed as investmentmanager of theMasterTrust, tomanage theassetsof theConstituentFundsother than theBEA (MPF)LongTermGuaranteedFund.

Documents Available

Copies of the Trust Deed, any supplemental deeds, the investmentmanagement agreementreferredtoaboveandanyamendmentsthereto,thelatestExplanatoryMemorandum(togetherwithanyaddendum)andthelatestconsolidatedreportfortheMasterTrust(ifany)areavailablefor inspection freeof charge at any timeduringnormal business hours on anyday (excludingSaturdays, Sundaysandpublicholidays)at theofficesof theTrustee.Copiesof theTrustDeedand the contracts referred to above can be purchased from the Trustee on payment of areasonablefee.

Further, a copy of the latest ExplanatoryMemorandum (togetherwith any addendum) can beobtained freeof charge fromanyBEABranchor theMPFAdministrationCentre,orby callingtheBEA(MPF)[email protected],orbydownloadingacopyfromwww.hkbea.com.

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APPENDIX 1

BEA (MPF) LONG TERM GUARANTEED FUND

TheBEA (MPF) Long TermGuaranteed Fund in thisMaster Trust invests in an insurance policywhich includes a guarantee. The insurance policy is issued by the insurer, Principal InsuranceCompany(HongKong)Limited.

Investments in the insurance policy are held as the assets of Principal Insurance Company(Hong Kong) Limited. In the eventwhere Principal Insurance Company (Hong Kong) Limitedis liquidated, youmay not have access to your investments temporarily, or their valuemay bereduced.

Before you invest in this constituent fund, you should consider the risk posed by the insurer(referred to as “credit risk”) under the circumstances set out above and, if necessary, seekadditionalinformationoradvice.

Provision of guarantee

ContributionsmadebyoronbehalfofMembersforthesubscriptionofUnitsoftheBEA(MPF)Long TermGuaranteed Fund (net of any offer spread – see “Sponsor’s Fees” on page 39)willbe invested in anApproved Pooled Investment Fund (the “Underlying Fund”) guaranteed byPrincipal Insurance Company (Hong Kong) Limited (the “Guarantor”) andwill receive at theUnderlying Fund level a guarantee of capital aswell as a prescribed guarantee rate of returnovertheentireperiodhisorhercontributionsareinvestedintheUnderlyingFundinthemannerdescribedbelow.TheguaranteeisofferedbytheGuarantoroftheUnderlyingFund,whichisaninsurancepolicy.Fordetails,pleaserefertothesectionheaded“GuaranteeMechanism”below.

Guaranteeonoccurrenceofa“qualifyingevent”

The guarantee of capital and returnwill only be offered if the contributions invested in theUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)arewithdrawnupontheoccurrenceof a “qualifying event”,which is the receiptby theGuarantorof aValidClaim (asdefinedbelow)oftheaccruedbenefitsoftheMemberintheMasterTrustuponsatisfyinganyofthefollowingconditions:

(a) Attainmentofthenormalretirementageorretirementatoraftertheearlyretirementagebutbeforethenormalretirementage*

(b) Totalincapacity

(c) Death

(d) PermanentdeparturefromHongKong

(e) Claimof“smallbalance”

(f) TerminationoftheMember’semploymentandthecontinuousperiodforwhichtheMemberhasbeen investing in theUnderlyingFund (throughtheBEA (MPF)LongTermGuaranteedFund)uptoandincludingthelastdateofhisemployment(“qualifying period”)isatleast36complete months. (This only applies if the Member is employed in a company participating in the Master Trust).Suchqualifyingperiod isdeterminedattheschemeaccount level (seethe description of the guaranteemechanism below). The qualifying periodmay also beresettozeroiftheMember(orhispersonalrepresentative)effectsaredemption,switchingout orwithdrawal of investments from the BEA (MPF) Long TermGuaranteed Fund otherthanupon theoccurrenceof aqualifyingevent. For the avoidanceofdoubt, condition (f)does not apply to self-employed persons, personal account holders or Special VoluntaryContributionAccountMembers.

(g) TerminalIllness

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Theconditions (a) to (e),and (g)apply toemployeemembers, self-employedpersons,personalaccountholdersandSpecialVoluntaryContributionAccountMembers.

Meaningof“ValidClaim”

Forthispurpose,a“Valid Claim”means

(i) a claim of all the accrued benefits in theMaster Trust (except for event (g)where theemployeeMemberisstillunderemployment,theemployeeMemberwouldonlybeentitledto claim accrued benefits that have been paid asMandatory Contribution and such claimwouldbeconsideredasaValidClaim);or

(ii) in respect of a self-employed personwho remains in self-employment notwithstandingattaining the normal retirement age, either the first claim (for the avoidance of doubt,excluding any subsequent claims) of all of the accrued benefits (whether attributable totheMandatory Contribution and / or the Voluntary Contribution), or the first claim (forthe avoidance of doubt, excluding any subsequent claims) of part of the accrued benefits(whetherattributabletotheMandatoryContributionand/orVoluntaryContribution)uponreachingnormalretirementage;or

(iii) inrespectofanemployeeMemberwhoremains inemploymentnotwithstandingattainingnormal retirement age, either the first claim (for the avoidance of doubt, excluding anysubsequentclaims)ofalloftheaccruedbenefitsattributabletotheMandatoryContribution,or the first claim (for theavoidanceofdoubt,excludingany subsequent claims)ofpartofthe accrued benefits attributable to theMandatory Contribution, upon reaching normalretirementage;

submittedbytheMember(orhispersonalrepresentative)pursuantto,andwithallthenecessarysupportingdocumentationasprescribedbytheapplicableregulationsandtheTrustDeed.Suchclaimmust be received by theGuarantor through the Trustee. For the avoidance of doubt,whereaMemberinvestsintheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund) inhis capacityofanemployeeofmore thanoneemployment,a“ValidClaim”madebytheMember inrespectofoneemploymentshallmeanaclaimsubmittedbyhimofhisaccruedbenefitsintheMasterTrustunderthat(butnotanyother)employment.

Additionalsituationswhereguaranteewillapply

In addition, the guaranteewill also apply to contributions invested in theUnderlying Fund(through the BEA (MPF) Long TermGuaranteed Fund) in the following circumstances in themanner described.

1. Transfertopersonalaccountonretirementordeath

If theMember retires upon or after the attainment of the normal retirement age (condition(a), excluding early retirement) or dies (condition (c)), but he (or his personal representative)has failed to file aValidClaimofhis accruedbenefitsunder theMasterTrust and tomakeanelectionpursuanttosection146oftheGeneralRegulation,then,hisactualamountofaccruedbenefits in theMaster Trust (with the application of the guarantee)will be transferred to apersonal account under theMaster Trust pursuant to the applicable regulations and the TrustDeed. After the transfer, the guarantee at the “new applicable rate” (as described in the“GuaranteeMechanism”sectionbelow)willbeapplicabletohispersonalaccount inrespectofthebalancessocredited.WhentheMember(orhispersonalrepresentative)subsequentlyfilesaValidClaimfromthepersonalaccountupontheoccurrenceofaqualifyingevent, theMemberwill be entitled to the guarantee under the new applicable rate in respect of his personalaccountbalances.

2. Transfertopersonalaccountonterminationofemployment

In case of (f), if the employment of theMember is terminatedwith a qualifying period of 36completemonthsormorebuthehas failed to fileaValidClaimofhisaccruedbenefitsunder

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theMaster Trust and tomake an election pursuant to section 146 of theGeneral Regulation,then, his accrued benefits in theMaster Trust (with the application of the guarantee)will betransferredtoapersonalaccountundertheMasterTrustpursuanttotheapplicableregulationsand Trust Deed. Subsequent to the transfer, the guarantee at the “new applicable rate” (asdescribed in the “GuaranteeMechanism” section below)will be applicable to his personalaccount in respect of the balances so credited.When theMember subsequently files a ValidClaim from the personal account upon the occurrence of a qualifying event, theMemberwillbeentitled to theguaranteeunder thenewapplicable rate in respectofhispersonal accountbalances.

Members should also note that if a Member in the Master Trust fails to file a Valid Claim of his accrued benefits and, as a result, the Member’s accrued benefits are transferred to a personal account, then, unless otherwise provided in 1 or 2 above, (a) no guarantee will apply at the time when the accrued benefits in the Master Trust are transferred to the personal account; (b) any guarantee entitlements in respect of the Member prior to the transfer will be forfeited; and (c) the “new applicable rate” (as described in the “Guarantee Mechanism” section below) will be applicable to the personal account after the transfer of the accrued benefits in the Master Trust thereto. When the Member subsequently files a Valid Claim from the personal account upon the occurrence of a qualifying event, the Member will be entitled to the guarantee under the new applicable rate in respect of his personal account balances.

3. Intra-grouptransferofemployment

If there is any intra-group transfer of an employeeMember (and his new employer is alsoparticipating in theMasterTrust) and theaccruedbenefitsof theMember in theMasterTrustaretransferredtothenewemployer’sscheme,theaccruedbenefitsoftheMemberintheMasterTrust(withouttheapplicationoftheguarantee)willbetransferredtohisnewschemeaccountsunder theMaster Trust of his new employer, and such new scheme accountswill, for thepurposeoftheguarantee,betreatedasacontinuationofhisoriginalschemeaccountsandalltheguaranteeentitlementswhichhehasaccruedunder theold schemeaccountswill continueunder his new scheme accounts as if there hadnever been any transfer. Thus, any continuousperiodforwhichtheMemberhasbeeninvestingintheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)undertheoriginalemployer immediatelyprecedingsuchtransferwill also be taken into account in determining the qualifying period of thatMember underhis employmentwith the newemployer. The guaranteed rate of returnwhich is applicable tothe old scheme accountswill also be applicable to the new scheme accounts unless there is aredemption,switchingoutorwithdrawaloftheUnitsoftheBEA(MPF)LongTermGuaranteedFundotherthanupontheoccurrenceofaqualifyingevent. IftheMembersubsequentlyfilesaValidClaimofhisaccruedbenefitsintheMasterTrustfromthenewschemeaccountsupontheoccurrence of a qualifying event, the guaranteewill be applied as at the date ofwithdrawal.Pleaserefertothe“GuaranteeMechanism”sectionbelowfordetails.

Guarantee Mechanism

The guaranteewill be offered to contributionsmade to each scheme account of aMemberseparately. For this purpose, “scheme accounts”mean the sub-accountsmaintained by theTrustee for theMember under theMaster Trust pursuant to theMPFOrdinance (i.e., separatescheme accounts for employer’smandatory contributions,Member’smandatory contributions,employer’s voluntary contributions andMember’s voluntary contributions); and under theguaranteemechanism, a “qualifying balance”2 will be maintained in respect of each scheme accountoftheMember.WhenacontributionismadetotheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)inrespectofaparticularschemeaccount,anamountequalto the contributionmadewill be credited to the qualifying balance of that scheme account.Interestwillthenbecreditedtothequalifyingbalanceofthatschemeaccountinthemannerassetoutbelow.

2Suchqualifyingbalanceismerelyanaccountingrecordandanyamountcredited(ordebited)tothequalifyingbalancemeansthatsuchanamountisrecordedasacredit(ordebit)tothequalifyingbalance.

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Rateofguarantee

For contributionsmade to a scheme account or amounts switched to and invested in theUnderlying Fundonorbefore30th September, 2004, interestwill be credited to thequalifyingbalance of that scheme account at a rate of not less than 5%per annum; and in respect ofcontributionsmadetoaschemeaccountoramountsswitchedtoandinvestedintheUnderlyingFund after 30th September, 2004, interestwill be credited to the qualifying balance of thatscheme account at the “new applicable rate” (see below).However, if the Member (or his personal representative) effects a redemption, switching out or withdrawal of investments from the BEA (MPF) Long Term Guaranteed Fund from a scheme account after 30th September, 2004 other than on the occurrence of a qualifying event (as described above under “Provision of Guarantee”), the remaining qualifying balance of that scheme account (regardless of whether it includes contributions made to that scheme account and invested in the Underlying Fund on or before 30th September, 2004) will only be credited with interest at the “new applicable rate”. For theavoidanceofdoubt,no interestwill be credited if the remainingqualifyingbalance isnotgreaterthanzero.

Calculationofamountpayableunderguarantee

The guaranteewill be offered to aMemberwhen theMember files a Valid Claim upon theoccurrenceof aqualifyingevent, inwhich case, if thenet asset valueof theUnits of theBEA(MPF) Long TermGuaranteed Fund (without the application of the guarantee and before thedeductionoftheapplicablebidspread,ifany,undertheMasterTrust)inanyschemeaccountissmallerthanthequalifyingbalancemaintainedforthatschemeaccount,thequalifyingbalanceofthatschemeaccountwillbepaidandthe“shortfall”willbemadeupbytheGuarantor.(SuchnetassetvalueoftheUnitswithouttheapplicationoftheguaranteeandbeforedeductionoftheapplicablebidspreadisreferredtoas“normal account balance”or“NB”intheexamplessetoutattheendofthisAppendix1.)Ontheotherhand,ifthenetassetvalueoftheUnitsoftheBEA (MPF) LongTermGuaranteed Fund (without the applicationof theguarantee andbeforethedeductionoftheapplicablebidspread,ifany,undertheMasterTrust)inanyschemeaccountisequaltoorgreaterthanthequalifyingbalanceforthatschemeaccount,theMemberwillbeentitledtothenetassetvalue(lesstheapplicablebidspread, ifany), insteadofthequalifyingbalance.SuchacomparisonwillbecarriedoutforeachschemeaccountoftheMemberandtheGuarantorwillpayanamount(ifany)equaltotheaggregateoftheshortfallsasaresultofthecomparisons.

For the purpose of condition (f) of the qualifying events, the qualifying periodwill bedetermined in respect of each scheme account of theMember upon his termination ofemployment (i.e., the continuous period forwhich that scheme account has been investing intheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)uptoandincludingtheMember’slastdateofemployment).However, the qualifying period in respect of a scheme account may also be re-set to zero if the Member (or his personal representative) effects a redemption, switching out or withdrawal of the Units of the BEA (MPF) Long Term Guaranteed Fund from that scheme account other than upon the occurrence of a qualifying event. For the avoidance of doubt,where aMember invests in theUnderlying Fund (through the BEA (MPF)LongTermGuaranteedFund)inhiscapacityofanemployeeofmorethanoneemployment,theguaranteeofferedbytheGuarantorundertheUnderlyingFundwillbeapplicabletoeachsuchemployment(andwillnotbeaffectedbytheotheremployment),andaqualifyingbalanceandqualifying periodwill bemaintained by the Trustee in respect of each scheme account of theMemberforeachsuchemployment.

Forthepurposeofcondition(g)of thequalifyingevent, ifanemployeemembercontinueshisemployment andmakes a claim for accrued benefits on the ground of terminal illness, suchmemberwillonlybeentitledtoclaimhisaccruedbenefitsinrespectofmandatorycontributions.Following the claim, the qualifying period of the scheme account in respect ofmandatorycontributionwillberesettozero.Fordetails,pleaserefertothesub-sectionheaded“OperationoftheGuaranteeiftheemployeemembermakesaclaimforterminalillnesswithoutterminationofemployment.

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Effectoftransfertootherschemeaccount(s)withintheMasterTrust

As set out above,Members should note that the guaranteewill be offered to contributionsmadebyaMemberandheldintherelevantschemeaccountwiththeMasterTrust.IfaMemberelects to transferhisaccruedbenefits in theBEA (MPF) LongTermGuaranteedFund fromonescheme account to another scheme accountwithin theMaster Trust in accordancewith thesection headed “Transfers To and From Other Schemes”, theguaranteeoffered to the schemeaccount fromwhich the accrued benefits are transferred out (referred to as “existing scheme account” for the purposes hereof)will be affected and the qualifying balance of the existingschemeaccountwillbeadjusteddownwardtoreflecttheeffectofthetransfer(andmaybecomenegative if the amount transferred out is greater than the qualifying balance). The aforesaidadjustmentwill bemade notwithstanding that the accrued benefits transferred to anotherschemeaccountwithintheMasterTrustwillcontinuetobeinvestedintheBEA(MPF)LongTermGuaranteedFund.The“qualifyingperiod”(asstatedincondition(f)ofthequalifyingevent)inrespectoftheexistingschemeaccountwillbere-settozeroaftersuchtransfer-out.

IntheeventthattheaccruedbenefitstransferredtoanotherschemeaccountwithintheMasterTrustwill continue to be invested in the BEA (MPF) Long TermGuaranteed Fund, an amountequal to the amount transferred inwill be credited to the qualifying balance of that schemeaccount (referredtoas“new scheme account”for thepurposeshereof).Thequalifyingperiodofthenewschemeaccountwillbedeterminedas follows: (i) if,prior tosuchtransfer-in,noneoftheaccruedbenefitsheldinthenewschemeaccountisinvestedintheUnderlyingFund,thequalifyingperiodwill commence from the date onwhich the accruedbenefits are invested intheUnderlyingFundforthenewschemeaccount,or(ii)if,priortosuchtransfer-in,theaccruedbenefits held in thenew schemeaccount is already invested in theUnderlying Fund, then thequalifyingperiodwillnotbeaffected.

For the avoidanceof doubt, if the transfer of aMember’s accruedbenefits attributable to hisinvestment in the BEA (MPF) Long TermGuaranteed Fund to another scheme accountwithintheMaster Trust fallswithin the circumstances set out in the sub-section headed “Additional situations where guarantee will apply” above, the guaranteewill still apply to contributionsinvestedintheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund).

Effectofearlyredemption,switchingorwithdrawal

Similarly,Members should also note that the guarantee of capital and return offered to eachscheme account (as reflected in the value of the qualifying balance of that scheme account)is offered on the condition that all contributions to that scheme account and invested in theUnderlying FundwillNOT be redeemed, switched out or otherwisewithdrawn other thanon the occurrence of a qualifying event. If a redemption, switching out orwithdrawal of aMember’sUnitsoftheBEA(MPF)LongTermGuaranteedFundiseffectedinrespectofaschemeaccountotherthanontheoccurrenceofaqualifyingevent,includinganelectionbyaMemberto transfer his accrued benefits in the BEA (MPF) Long TermGuaranteed Fund to anotherConstituent Fundwithin theMaster Trust or to another registered scheme, the guaranteeoffered to that schemeaccountwill be affected. In such circumstances, thequalifyingbalanceof that scheme accountwill be adjusted downward to reflect the effect of the redemption,switching orwithdrawal of suchUnits (andmay become negative if the amount redeemed,switchedoutorwithdrawnisgreaterthanthequalifyingbalance).

Furthermore, the “qualifying period” (as stated in condition (f) of the qualifying event) inrespectof that schemeaccountwill be re-set to zero and re-commence from thedateof suchadjustment.However,iffollowingsuchredemption,switchingorwithdrawalofUnits,therearenolongeranycontributionsremainingintheUnderlyingFundinrespectoftheschemeaccount,thequalifyingperiodofthatschemeaccountwillonlyre-commencefromthedateonwhichanynewcontributionsaremadetotheUnderlyingFundforthatschemeaccount.

Forillustrations,pleaserefertotheexamplesunder“How the Guarantee works – Examples”attheendofthisAppendix1.

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OperationoftheGuaranteeiftheemployeemembermakesaclaimforterminalillnesswithoutterminationofemployment

Generally, an employeememberwill only become entitled to claim his benefits in respectof voluntary contributions on leaving employment. If an employeemember continues hisemploymentandmakesaclaimforaccruedbenefitsonthegroundofterminalillness(i.e.underqualifyingevent(g)),suchmemberwillonlybeentitledtoclaimhisaccruedbenefitsinrespectofmandatorycontributions.Followingtheclaim,thequalifyingperiodoftheschemeaccountinrespectofmandatorycontributionswillberesettozero.Accordingly,thequalifyingperiodandthe guaranteed rate of return, applicable to theMember’s voluntary contributionwill not beadverselyimpactedbythemember’sclaimofbenefitsinrespectofmandatorycontributions.

Due to the nature of the guarantee, the BEA (MPF) Long TermGuaranteed Fund is expectedtobea“long term” investment for theMembers.Members shouldnote that any redemption,switchingoutorwithdrawalofpartorallof their investments fromtheBEA (MPF)LongTermGuaranteed Fundmay have an adverse effect on their qualifying balance(s) and guaranteeentitlementunder theUnderlying Fund.Hence, Members are strongly advised not to redeem, switch out or withdraw part or all of their investments in the BEA (MPF) Long Term Guaranteed Fund other than upon occurrence of a qualifying event.

Membersshouldalsonotethatincreditinginteresttothequalifyingbalance(s)oftheMembers,thefollowingwillapply:inrespectofacontributionmadetotheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)byorinrespectofaMember,interestshallbeaccruedto the relevant qualifying balance in respect of such contribution from (and including) thedealingdayfortheUnderlyingFundonwhich it is invested intheUnderlyingFundupto (andexcluding) the dealing day for theUnderlying Fund onwhich it is redeemed by theMember(or his personal representative) upon the occurrence of a qualifying event. However, if thereis a redemption, switching out orwithdrawal by theMember from the BEA (MPF) Long TermGuaranteedFundother than theoccurrenceofaqualifyingevent, interest shallbeaccrued totheadjustedqualifyingbalance(providedthatit isgreaterthanzero)from(andincluding)thedealingday for theUnderlying Fundonwhich suchadjustment ismadeup to (andexcluding)the dealing day for theUnderlying Fund onwhich accrued benefits in theMaster Trust areredeemedby theMember (orhispersonal representative)upon theoccurrenceofaqualifyingevent.

OperationoftheGuaranteeiftheEmployermakesaclaimforseveranceorlongservicepayment

If an employer submits a claim under theMPFOrdinance for a payment from theMember’saccrued benefits in theMaster Trust for the purpose of setting off the severance payment orlongservicepaymentmadetotheleavingMember,theTrusteewillonlyprocesstheclaimafterit has received the relevant election form or claim form from theMember in respect of theMember’s accruedbenefits in theMaster Trust. The purpose of so doing is to ensure that anyguarantee entitlement of theMemberwill not be adversely affected by reason of the set offclaimmadebytheemployer.OncetherelevantelectionformorclaimformisreceivedfromtheMember, itwill be processed and the guaranteewill be applied, if applicable, beforemakingthe set off payment to the employer. However, if theMember fails to submit the electionformor claim formwithin3months after theTrusteehasbeennotifiedof the terminationofemploymentandtheaccruedbenefitsintheMasterTrustaretransferredtoapersonalaccount,thesetoffclaimoftheemployerwillbeprocessedattheendofsuch3–monthperiodwhensuchaccruedbenefitsaretransferred.Thus,inordertoavoidunduedelay,Membersareadvisedthattheirclaimsforaccruedbenefits intheMasterTrustshouldbesubmittedassoonaspracticableifaseverancepaymentorlongservicepaymenthasbeenmadetothembytheiremployers.OntransfertoapersonalaccountasaresultoftheMember’sfailuretosubmitanelectionformorclaimform,theguaranteewillapplyasdescribed inpoint2ofthesectionheaded“Additionalsituationswhereguaranteewillapply”ofthisAppendix1.

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“New Applicable Rate”

The“newapplicablerate”willbe1%perannumwhichwilltakeeffectfrom1st October, 2004, andsubject totheapprovalof theAuthority, suchratemayalsobeadjustedbytheGuarantoratafrequencyofnotmorethanonceevery3years.Ifthe“newapplicablerate”isadjusted,theGuarantorwillnotifytheTrusteeatleast3monthspriortotheeffectivedateoftheadjustmentand the Sponsorwill notify employers andMembers participating in theMaster Trust uponnotification from theGuarantor. For the avoidance of doubt, if the “new applicable rate”is applicable to a qualifying balance, any adjustment to the “new applicable rate”will alsobe applicable to the qualifying balance from the date of adjustment and shall not affect theapplicationoftherelevantguaranteedratepriorthereto.

Reserve

In order to assure proper functioning of theUnderlying Fund, a reserve for contingency hasbeenestablishedbytheGuarantor.TherewillbeaguaranteechargeleviedbytheGuarantorof1%perannumofthenetassetvalueoftheUnderlyingFundandsuchguaranteechargewillbededucted fromthevalueof theUnderlyingFund.Therewillbeadilutionofperformanceduetotheguaranteestructureinplace.Nopartofthereservewillformpartoftheschemeassets.IfthereserveisinsufficienttomeettheguaranteesoftheUnderlyingFund,theguaranteeswillbemetwithassetsof theGuarantor.UponterminationoftheUnderlyingFund, theGuarantorshalldistributetothethenexistingpolicyholders(includingtheTrustee)anamountequalto(i)theaggregatedguaranteechargesdeductedfromtheassetvalueofeachguaranteeclassoftheUnderlyingFundafter30thSeptember,2004,less(ii)theaggregateamountofshortfallspaidorpayablebytheGuarantoroutofthereserveafter30thSeptember,2004.TheamountdistributedtotheTrusteewillbedealtwith inaccordancewiththeTrustDeed.Suchdistributableamountmay be allocated to the Trustee and the then existing policyholders on a pro–rata basis inaccordancewith their respective amounts of investments in the insurance policy establishingtheUnderlying Fund. However, if theGuarantor considers that such allocation is not fair andequitable, theGuarantormay allocate the distributable amount in such othermanner, takinginto account the prevailing circumstances at the time of distribution. Accordingly, any suchdistributionwillformpartoftheassetsoftheBEA(MPF)LongTermGuaranteedFundandwillbereflectedinthepriceofUnitsoftheBEA(MPF)LongTermGuaranteedFund.

Changes to Underlying Fund policy

TheGuarantormay amend the insurance policy establishing theUnderlying Fund (includingthe termsof theguarantee) subject toapprovalby theAuthorityandongivingsuchnoticeoftheamendmentas theAuthoritymayrequire.TheSponsorwillnotifyemployersandMembersparticipatingintheMasterTrustatleast3months(orsuchotherperiodasmaybeagreedwiththeAuthority)priortotheeffectivedateofthechange.

Termination of the Underlying Insurance Policy by the Guarantor

Under the terms of the insurance policy establishing theUnderlying Fund, theGuarantor hasthe right to terminate the insurance policy by giving the Trustee 3months’written notice. IftheGuarantor terminates the insurance policy by giving such a notice, theGuarantorwill, inrespect of each schemeaccount of aMember, pay the Trustee an amount as if theMember iswithdrawing all theUnits of the BEA (MPF) Long TermGuaranteed Fund in all of his schemeaccounts upon occurrence of a qualifying event (i.e.,with the application of the guarantee).Thereafter,theguaranteewillceasetoapplyundertheBEA(MPF)LongTermGuaranteedFundand the BEA (MPF) Long TermGuaranteed Fundwill either be invested in another ApprovedPooled investment Fund or, if in the opinion of the InvestmentManager there is no otherappropriate Approved Pooled Investment Fund, terminated in themanner described under“EstablishmentandTerminationofConstituentFunds”above.

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How the Guarantee works – Examples:

Warnings

Theillustrations inthissectionaresubjecttothedetaileddescriptions intheprecedingpartofthisAppendix1.Membersareencouragedtorefertotherelevantsectionsofthosedescriptionswhenreviewingtheillustrations.

1. The following figures are for illustration purpose only, and should not be viewed as anindicationoffuturereturns.Actualinvestmentearningsmaygodownaswellasup.

2. The following illustrative examples assume that at the beginning of each year HKD2,500is contributed toeachof theemployer’s fundaccountandemployee’s fundaccount (each,a “scheme account”) and all such contributions are invested in the Underlying Fund(throughtheBEA(MPF)LongTermGuaranteedFund).ForeachMemberparticipatingintheUnderlyingFund,anormalaccountbalance(“NB”)andaqualifyingaccountbalance(“QB”),in respect of each scheme account,will bemaintained. TheQB ismerely an accountingrecord and any amount credited (or debited) to theQBmeans that such an amount isrecorded as a credit (or debit) to theQB. For the purpose of theUnderlying Fund,QBindicates theguaranteedamountofferedtotheMemberunder theUnderlyingFundupontheoccurrenceofaqualifyingevent.

3. TheNBisthenetassetvalueoftherelevantUnitsoftheBEA(MPF)LongTermGuaranteedFund (without the application of the guarantee and before deduction of any bid spreadundertheMasterTrust),andmaygodownaswellasup.Inotherwords,theNBwillreflecttheactualperformanceoftheUnitsheld intheBEA(MPF)LongTermGuaranteedFundbythe Member.

4. TheQB of each scheme account is determined based on an annually compounded rate ofreturnof(i)5%forcontributionsinvestedonorbefore30thSeptember,2004and/or(ii)1%forcontributionsinvestedafter30th September, 2004.

5. In the illustrations, in respect of each scheme account, QB 1 is theQB for contributionsinvested on or before 30th September, 2004, andQB2 is theQB for contributions investedafter 30th September, 2004. For the sake of simplicity, it is assumed that there are onlyemployer’s and employee’smandatory contributions. Therefore, only the operation of 2accounts are illustrated. IfMembers have other voluntary accounts, the same guaranteemechanismwillapply.

6. BothNBandQBarenetofallfeesandcharges.

7. In respectofeachschemeaccount, ifaqualifyingeventtakesplace, thegreaterof theNBandtheQBwillbepaid. IndeterminingtheamountofQB,interestwillonlybeaccruedtotheQBup to (but excluding) thedealingdayof theUnderlying Fundonwhich theactualredemption takes place.

8. Intheillustrations,inrespectofeachschemeaccount,the“dateonwhichtheMemberwillattain36monthsofqualifyingperiod”meansthedateonwhichtheschemeaccountofthatMemberhasinvestedintheUnderlyingFundforacontinuousperiodof36completemonthsandnowithdrawalhaseverbeenmadewithinthat36completemonthperiod.

9. If aMemberwishes to effect a redemption, switching out orwithdrawal of investmentsfromtheBEA(MPF)LongTermGuaranteedFundotherthanuponoccurrenceofaqualifyingevent, allunitsof theUnderlyingFund inallof the schemeaccountswillbe redeemed. Insuchcircumstances,thefollowingwillapply:–

(i) theNB in respect of thewithdrawnunits (less any applicable bid spread)will be paidfromeachoftheschemeaccounts;

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(ii) the qualifying period of each scheme accountwill be reset to zero andwill only re-commence for a scheme account from the date onwhich any new contributions aremadetotheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)forthatschemeaccount;

(iii) theQBundereachschemeaccountwillbeadjustedbasedontheamountofNBandQBatthetimeimmediatelypriortosuchwithdrawal:

(a) ifQBislessthanNB,theQBofthatschemeaccountwillbereducedbytheamountofNBasaresultoftheredemption,switchingoutorwithdrawal(andwillbecomenegative);and

(b) ifQBisgreaterthanorequaltoNB,theQBofthatschemeaccountwillberesettozero.

TheadjustedQBforeachschemeaccountwillapply inrelationtoanyfuturecontributionstotheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)madebytheMember.

10. Members shouldnotethat theQBofaMemberwillbedetermined independentofanyofhis former employment (other than in the caseof “intra-group transfer” as set out in thesectionheaded“Provisionofguarantee”inthisAppendix1).

Scenario1:NormalCase–MemberinvestedintheUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteed Fund)before 30th September, 2004.No redemption, switchingorwithdrawalhas been made

Employer’sFundAccount:

EndofYear

ActualAnnualisedReturnoftheFund

EndofYearNB

The Date on which the Member will

attain36monthsofQualifyingPeriod

EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $2,525.00 31-Dec-04 $2,625.00 $– $2,625.00

2003 2.00% $5,125.50 31-Dec-04 $5,381.25 $– $5,381.25

2004 9.00% $8,311.80 31-Dec-04 $8,275.31 $– $8,275.31

2005 7.00% $11,568.63 31-Dec-04 $8,689.08 $2,525.00 $11,214.08

Employee'sFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $– - $– $– $–

2003 2.00% $2,550.00 31-Dec-05 $2,625.00 $– $2,625.00

2004 9.00% $5,504.50 31-Dec-05 $5,381.25 $– $5,381.25

2005 7.00% $8,564.82 31-Dec-05 $5,650.31 $2,525.00 $8,175.31

Member first invested in the BEA (MPF) Long TermGuaranteed Fund on 1st January, 2002in respect of the employer’s fund account, and first invested in the BEA (MPF) Long TermGuaranteedFundon1stJanuary,2003inrespectoftheemployee’sfundaccount.

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Examples 1 to 3 below illustrate (i) the application of the 5%guaranteed rate of return; and(ii)thedifferentamountswhichaMembermayreceivewhenhisaccruedbenefitsintheMasterTrustarewithdrawnindifferentcasesofterminationofemployment.

Example1illustrateshowtheguaranteewillbeappliedwhentheMemberretiresatthenormalretirementage.

Example 2 illustrates the amounts which theMemberwill receive upon termination ofemploymentotherthantheoccurrenceofaqualifyingevent.

Example 3 illustrates the amounts which theMemberwill receive upon termination ofemployment,wherethequalifyingperiodismorethan36months.

IllustrativeExample1:

Endofyear2003–Memberretiredafterattainingthenormalretirementageof65.Memberthenmakes a claim for his accrued benefits in theMaster Trust. Actual redemption takesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Since retirement at normal retirement age is a qualifying event, the greater of theQualifyingAccountBalance(“QB”)andtheNormalAccountBalance(“NB”)foreachschemeaccountwillbepaid.

Employer EmployeeQB= $5,381.25 $2,625.00

NB= $5,125.50 $2,550.00

Therefore, $5,381.25 is paid from the employer’s fund account and $2,625.00 is paid fromtheemployee’sfundaccount.Thetotalpaymentis$8,006.25.

llustrativeExample2:

Endofyear2003–Member’semployment is terminated.Thequalifyingperiod is less than36months, and there is no qualifying event.Member thenmakes a claim for his accruedbenefitsintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

TheNBofbothschemeaccountswillbepaid.


NB= $5,125.50 $2,550.00



Endofyear2005–Member’semploymentisterminatedotherthanforreasonofretirement.MemberthenmakesaclaimforhisaccruedbenefitsintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Sincethequalifyingperiodfortheemployer’sfundaccountisequalto48months,this isaqualifyingeventandthegreateroftheQBandtheNBwillbepaid.

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Fortheemployee’sfundaccount,thequalifyingperiodisequalto36months,hencethis isalsoaqualifyingeventandthegreateroftheQBandtheNBwillbepaid.


NB= $11,568.63 $8,564.82

Therefore,$11,568.63 ispaidfromtheemployer’s fundaccountand$8,564.82 ispaidfromtheemployee’sfundaccount.Thetotalpaymentis$20,133.45.

Scenario 2: Normal Case – NewMember invested in theUnderlying Fund (through the BEA(MPF) Long TermGuaranteed Fund) after 30 th September, 2004. No redemption, switching orwithdrawal has been made.


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2005 0.00% $2,500.00 31-Dec-07 $– $2,525.00 $2,525.00

2006 –3.00% $4,850.00 31-Dec-07 $– $5,075.25 $5,075.25

Employer'sFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2005 0.00% $2,500.00 31-Dec-07 $– $2,525.00 $2,525.00

2006 –3.00% $4,850.00 31-Dec-07 $– $5,075.25 $5,075.25

MemberfirstinvestedintheBEA(MPF)LongTermGuaranteedFundon1stJanuary,2005inrespectofboththeemployer’sfundaccountandemployee’sfundaccount.

Examples 4 to 5 below illustrate (i) the application of the 1%guaranteed rate of return; and(ii)thedifferentamountswhichaMembermayreceivewhenhisaccruedbenefitsintheMasterTrustarewithdrawnindifferentcasesofterminationofemployment.

Example4illustrateshowtheguaranteewillbeappliedwhentheMemberretiresatthenormalretirementage.

Example 5 illustrates the amounts which theMemberwill receive upon termination ofemploymentotherthantheoccurrenceofaqualifyingevent.


Endofyear2005–Memberretiredafterattainingthenormalretirementageof65.Memberthenmakes a claim for his accrued benefits in theMaster Trust. Actual redemption takesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Sinceretirementatnormalretirementage isaqualifyingevent,thegreateroftheQBandtheNBforeachschemeaccountwillbepaid.

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NB= $2,500.00 $2,500.00



Endofyear2006–Member’semployment is terminated.Thequalifyingperiod is less than36months, and there is no qualifying event.Member thenmakes a claim for his accruedbenefitsintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

TheNBofeachschemeaccountwillbepaid.


NB= $4,850.00 $4,850.00


Scenario 3: FullWithdrawal is effectedwithQualifyingAccount Balance (“QB”) less than theNormalAccountBalance(“NB”)atthetimeofwithdrawal(i.e.,QB<NB).


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $2,525.00 31-Dec-04 $2,625.00 $– $2,625.00

2003 2.00% $5,125.50 31-Dec-04 $5,381.25 $– $5,381.25

2004 9.00% $8,311.80 31-Dec-04 $8,275.31 $– $8,275.31

2005 7.00% $– – $– $(354.55) $(354.55)

2006 –12.00% $2,200.00 31-Dec-08 $– $2,166.90 $2,166.90

2007 –12.00% $4,136.00 31-Dec-08 $– $4,713.57 $4,713.57


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $– – $– $– $–

2003 2.00% $2,550.00 31-Dec-05 $2,625.00 $– $2,625.00

2004 9.00% $5,504.50 31-Dec-05 $5,381.25 $– $5,381.25

2005 7.00% $– – $– $(389.51) $(389.51)

2006 –12.00% $– – $– $(389.51) $(389.51)

2007 –12.00% $2,200.00 31-Dec-09 $– $2,131.60 $2,131.60

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Forthepurposeofthis illustration,it isalsoassumedthatthereisnocontributionmadeintheemployee’s fundaccount in2006andcontribution in theemployee’s fundaccountwillonlyberesumedin2007.

Example 6 illustrates how a fullwithdrawal from theGuaranteed Fund (whereQB<NB)mayresultina“negative”QB.

Example7illustratesthesuspensionofthequalifyingperiodwhentheNBiszero.


End of year 2005 (i.e., 31 st December, 2005) –Member requests full withdrawal (i.e.,$11,568.63 from the employer’s fund account and $8,564.82 from the employee’s fundaccount)andtransferstheamountstoanotherConstituentFundintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Fortheemployer’sfundaccount:

NBbeforewithdrawalwas$11,568.63(i.e.,$8,311.80x1.07+$2,500x1.07).

TheNBafterthewithdrawalwas$0(sinceitwasfullwithdrawal).

QBbeforewithdrawalwas$11,214.08(i.e.,$8,275.31x1.05+$2,500x1.01 (i.e.,$8,275.31was increasedat5%until thewithdrawal ismadeandnewcontributionat thebeginningof2005of$2,500wasincreasedat1%)).

Since theQB is less than theNB immediately before thewithdrawal (i.e., $11,214.08<$11,568.63),theQBwillbereducedbytheamountwithdrawn(i.e.,$11,568.63).

QBafterwithdrawalis$11,214.08–$11,568.63=−$354.55– anegativeQBdoesnotmeanthatthecustomerowestheTrusteemoney,rather

it simply denotes that benefit exceeding the guaranteed amount has alreadybeenpaidout.

Newguaranteedrateof1%perannumwillbeappliedtotheQBafterthewithdrawal.

Qualifyingperiodwillberesettozero.

Fortheemployee’sfundaccount:

NBbeforewithdrawalwas$8,564.82(i.e.,$5,504.5x1.07+$2,500x1.07).

TheNBafterthewithdrawalwas$0(sinceitwasfullwithdrawal).

QBbeforewithdrawalwas$8,175.31(i.e.,$5,381.25x1.05+$2,500x1.01 (i.e.,$5,381.25was increasedat5%until thewithdrawal ismadeandnewcontributionat thebeginningof2005of$2,500wasincreasedat1%)).

SincetheQBislessthantheNBimmediatelybeforethewithdrawal(i.e.,$8,175.31<$8,564.82),theQBwillbereducedbytheamountwithdrawn(i.e.,$8,564.82).

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QBafterwithdrawalis$8,175.31–$8,564.82=−$389.51– anegativeQBdoesnotmeanthat thecustomerowestheTrusteemoney, rather it

simply denotes that benefit exceeding the guaranteed amount has already beenpaidout.

Newguaranteedrateof1%perannumwillbeappliedtotheQBafterthewithdrawal,but because of the negativeQB at the end of year 2005, no interestwill be accruedin year 2006 (i.e., – $389.51). Interestwill only accrue to theQB againwhen theQBbecomespositivein2007.



The qualifying period is reset upon fullwithdrawal from theGuaranteed Fund and issuspendedwhentheNBremainsatzero.Thequalifyingperiodwillonlyrecommencewhennew contributions aremade on 1st January, 2006 and 1st January, 2007 in respect of theemployer’sandemployee’sfundaccountrespectively.

End of year 2007 (i.e., 31st December, 2007) –Member’s employment is terminated. Thequalifying period is less than 36months, and there is no qualifying event.Member thenmakesaclaimforhisaccruedbenefitsintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Fortheemployer’sfundaccount:

NBwas$4,136.00(i.e.,($2,200.00+$2,500)x0.88).

QBwas$4,713.57(i.e., [(− $354.55 + $2,500) x 1.01 + $2,500]) x 1.01 (i.e., − $354.55 togetherwithnewcontributionatthebeginningof2006of$2,500wasincreasedat1%,andtheresultingQBof$2,166.90attheendof2006togetherwithnewcontributionatthebeginningof2007of$2,500wasincreasedat1%)).

Fortheemployee’sfundaccount:

NBwas$2,200.00(i.e.,$2,500x0.88).

QBwas$2,131.60(i.e., (−$389.51+$2,500)x1.01 (i.e.,−$389.51togetherwithnewcontributionatthebeginningof2007of$2,500wasincreasedat1%)).


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Scenario4:FullWithdrawaliseffectedwiththeQualifyingAccountBalance(“QB”)greaterthantheNormalAccountBalance(“NB”)atthetimeofwithdrawal(i.e.,QB>NB).

Employer’sFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $2,525.00 31-Dec-04 $2,625.00 $– $2,625.00

2003 2.00% $5,125.50 31-Dec-04 $5,381.25 $– $5,381.25

2004 3.00% $7,854.27 31-Dec-04 $8,275.31 $– $8,275.31

2005 4.00% $– – $– $– $–


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $– – $– $– $–

2003 2.00% $2,550.00 31-Dec-05 $2,625.00 $– $2,625.00

2004 3.00% $5,201.50 31-Dec-05 $5,381.25 $– $5,381.25

2005 4.00% $– – $– $– $–


Example 8 illustrates how a fullwithdrawal from theGuaranteed Fund (whereQB>NB)willaffecttheQB,NBandthequalifyingperiodoftheMember.


End of year 2005 (i.e., 31 st December, 2005) –Member requests full withdrawal (i.e.,$10,768.44 from the employer’s fund account and $8,009.56 from the employee’s fundaccount)andtransferstheamounttoanotherConstituentFundintheMasterTrust.ActualredemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Fortheemployer’sfundaccount,

NBbeforewithdrawalwas$10,768.44(i.e.,$7,854.27x1.04+2,500x1.04).

QBbeforewithdrawalwas$11,214.08(i.e., $8,275.31 x 1.05 + 2,500 x 1.01 (i.e., $8,275.31was increased at 5%until thewithdrawal ismadeandnewcontributionat thebeginningof2005of$2,500wasincreasedat1%)).

NBafterwithdrawal=$10,768.44–$10,768.44=$0(sinceitisfullwithdrawal)

Since the QB is greater than the NB immediately before the withdrawal ( i .e. ,$11,214.08>$10,768.44),theQBafterwithdrawalwillberesettozero.

QBafterwithdrawal=$0

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Fortheemployee’sfundaccount,

NBbeforewithdrawalwas$8,009.56(i.e.,$5,201.50x1.04+2,500x1.04).

QBbeforewithdrawalwas$8,175.31(i.e., $5,381.25 x 1.05 + 2,500 x 1.01 (i.e., $5,381.25was increased at 5%until thewithdrawal ismadeandnewcontributionat thebeginningof2005of$2,500wasincreasedat1%)).

NBafterwithdrawal=$8,009.56–$8,009.56=$0

Since the QB is greater than the NB immediately before the withdrawal ( i .e. ,$8,175.31>$8,009.56)theQBafterwithdrawalwillberesettozero.

QBafterwithdrawal=$0


Qualifying periodwill be reset to zero. The qualifying periodwill only recommencefor a schemeaccount from thedateonwhich anynew contributions aremade to theUnderlyingFund(throughtheBEA(MPF)LongTermGuaranteedFund)forthatschemeaccount.

Scenario5:EmployermakesaclaimforSeverancePayment(OnlytheEmployer’sFundAccountisshownforthisscenario)


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2002 1.00% $2,525.00 31-Dec-04 $2,625.00 $– $2,625.00

2003 2.00% $5,125.50 31-Dec-04 $5,381.25 $– $5,381.25

2004 9.00% $8,311.80 31-Dec-04 $8,275.31 $– $8,275.31

2005 1.00% $10,919.92 31-Dec-04 $8,689.08 $2,525.00 $11,214.08

MemberfirstinvestedintheBEA(MPF)LongTermGuaranteedFundon1stJanuary,2002inrespectoftheemployer’sfundaccountandthereforetheguaranteedrateofreturnof5%appliestohiscontributionsinvestedonorbefore30thSeptember,2004and1%appliestohiscontributions investedafter30thSeptember,2004.Noredemption,switchingorwithdrawalhas been made.

Example9 illustrateshowtheguaranteewillbeappliedwhentheemployermakesa claimforseverancepaymentpaid.


Endofyear2005–Member’semploymentisterminated.Employerpaysaseverancepaymentof$5,000totheMemberandclaimsasetoffpaymentfromtheTrustee.Memberthenmakesaclaim

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forhisaccruedbenefits intheMasterTrust.Actual redemptiontakesplaceonthefirstdayofthefollowingyearandNBforthatdayisassumedtobethesameastheNBforthepreviousday.

Sincethequalifyingperiodfortheemployer’sfundaccountisequalto48months,this isaqualifyingeventandtheMemberwillbeentitledtothegreateroftheQBandtheNBfromtheemployer’sfundaccount.

EmployerQB= $11,214.08

NB= $10,919.92

Therefore, theMemberwill be entitled to $11,214.08. However, the employer hasmadea claim of $5,000 and such an amount shall be paid to the employer from theMember’sentitlementfromtheemployer’sfundaccount(i.e.$11,214.08).Asaresult,theMemberwillonlyreceiveanamountof$6,214.08(i.e.$11,214.08–$5,000)andtheemployerwillreceivetheset–offpaymentof$5,000.

Scenario 6: Terminal Illness Case –Member invested in theUnderlying Fund (through the BEA(MPF)LongTermGuaranteedFund)after30th September, 2004. Noredemption,switchingorwithdrawalhasbeenmade.(OnlytheEmployee’sFundAccountisshownforthisscenario)

The following illustrative examples assume that at the beginning of each year HKD1,500 iscontributedtotheEmployee’sFundAccountinrespectofmandatorycontributions(“Employee’sMC FundAccount”) andHKD1,000 is contributed to Employee’s FundAccount in respect ofvoluntarycontributions(“Employee’sVCFundAccount”).MemberfirstinvestedintheBEA(MPF)LongTermGuaranteedFundon1stJanuary,2013.

Employee'sMCFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2013 1.00% $1,515.00 31-Dec-15 $0.00 $1,515.00 $1,515.00

2014 2.00% $3,075.30 31-Dec-15 $0.00 $3,045.15 $3,045.15

2015 9.00% $4,987.08 31-Dec-15 $0.00 $4,590.60 $4,590.60

Employee'sVCFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2013 1.00% $1,010.00 31-Dec-15 $0.00 $1,010.00 $1,010.00

2014 2.00% $2,050.20 31-Dec-15 $0.00 $2,030.10 $2,030.10

2015 9.00% $3,324.72 31-Dec-15 $0.00 $3,060.40 $3,060.40

Example10illustrateshowtheguaranteewillbeappliedwhentheemployeemembermakesaclaimonthegroundofterminalillnesswithoutemploymenttermination,andhowtheclaimwillaffecttheQB,NBandthequalifyingperiodoftheemployeemember.


Endof year2015–TheMember claimson thegroundof terminal illnesswithoutemploymenttermination.SincetheMemberisonlyentitledtobenefitsderivedfrommandatorycontributionsupona claimof terminal illnesswhilehe remainsemployedunder the currentemployment.Therefore$4,987.08ispayablefromtheEmployee’sMCFundAccount.TheNB,QBandqualifyingperiodoftheEmployee’sMCFundAccountarereset,whiletheNB,QBandqualifyingperiodofthe

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Employee’s VC FundAccountwill not be affected. After the claim, NB,QB and qualifyingperiod of the Employee’sMC FundAccount and the Employee’s VC FundAccounts are asfollows:

AdjustedEmployee’sMCFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2015 9.00% $0.00 - $0.00 $0.00 $0.00

Employee’sVCFundAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2015 9.00% $3,324.72 31-Dec-15 $0.00 $3,060.40 $3,060.40

Example11illustrateshowtheguaranteewillbeappliedwhentheemployeemembermakesaclaimonthegroundofterminalillnesswithemploymenttermination.


Endofyear2015–Memberclaimsforterminal illnesswithemploymenttermination.Sinceterminalillnessisaqualifyingevent,thegreateroftheQBandtheNBforeachaccountwillbepayable.

Employee’sMCFundAccount

Employee’sVCFundAccount

QB= $4,590.60 $3,060.40

NB= $4,987.08 $3,324.72

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Therefore, $4,987.08 is payable from the Employee’sMC FundAccount and $3,324.72 ispayable from the Employee’s VC FundAccount. The total payment is $8,311.80 from theEmployee’sFundAccount.

Scenario7:Employeememberwould like tocease theemploymentandtoeffectawithdrawalbyinstalmentuponearlyretirementafterreachingage60(OnlytheEmployee’sFundAccountisshownforthisscenario)

The following illustrative examples assume that at the beginning of each year HKD2,500 iscontributedtotheEmployee’sFundAccount.


EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2014 1.00% $2,525.00 31-Dec-16 $0.00 $2,525.00 $2,525.00

2015 -6.00% $4,723.50 31-Dec-16 $0.00 $5,075.25 $5,075.25

2016 4.00% $7,512.44 31-Dec-16 $0.00 $7,651.00 $7,651.00

MemberfirstinvestedintheBEA(MPF)LongTermGuaranteedFundon1stJanuary,2014and1%appliestohiscontributionsinvested.Noredemption,switchingorwithdrawalhasbeenmade.

Example 12 illustrates how an employeeMember can first file a Valid Claim upon earlyretirement after reachingage60 to transfer all accruedbenefits to apersonal accountbeforemakinganywithdrawalbyinstalment.


End of year 2016 – TheMember claims on the ground of early retirement after reachingage 60 and ceases employment. Since retirement is a qualifying event andwithdrawal bywayoftransferofallaccruedbenefitstoapersonalaccountmeetstherequirementofValidClaim,guaranteeentitlementappliestotheaccruedbenefitsuptothedateofthetransfer,whichwouldbethegreateroftheNBandtheQB.Therefore$7,651.00 istransferredfromEmployee’s FundAccount to personal account.After the transfer to the personal account,NB,QBandqualifyingperiodofaccruedbenefits inthepersonalaccountareasfollow.Noothernewcontributionismadetothepersonalaccountthereafter.

Member'sPersonalAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2016 4.00% $7,651.00 - $0.00 $7,651.00 $7,651.00

2017 2.00% $7,804.02 - $0.00 $7,727.51 $7,727.51

Pleasenote that ifhowever theMemberhas failed to fileaValidClaimuponearly retirementafterreachingage60inthemannerasdescribedinthesection“Benefits”

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– “Payment of Benefits” – “Withdrawal by instalments” above beforemaking anywithdrawalbyinstalment,hewilllosehisguaranteeentitlementtheamountwithdrawn.

Example 13 illustrates how the guaranteewill be affectedwhenMembermakes phasedwithdrawalunderthePersonalAccount.


Endofyear2017–TheMemberdecidestoeffectawithdrawalbyinstalmentandwithdraws$2,000 from the personal account. Since not all accrual benefits is withdrawn, therequirementofaValidClaimisnotsatisfied.TheremainingNBandQBwillbeadjustedasfollows.

NBbeforewithdrawalwas$7,804.02.

NBafterwithdrawalwas$5,804.02.

(i.e.$7,804.02-$2,000)

QBbeforewithdrawalwas$7,727.51.

QBafterwithdrawalwas$5,727.51.

(i.e.(thelesserof$7,804.02and$7,727.51)-$2,000)

Afterthewithdrawal,NB,QBandqualifyingperiodofthepersonalaccountareasfollows.Noothernewcontributionismadetothepersonalaccountthereafter.

Member'sPersonalAccount:

EndofYear


EndofYearNB



EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2017 2.00% $5,804.02 - $0.00 $5,727.51 $5,727.51

2018 -1.00% $5,745.98 - $0.00 $5,784.79 $5,784.79

Scenario13a:EmployeeMemberandself-employedpersonwouldliketocontinueemploymentorremains inself-employmentafterreachingtheageof65andtoeffectaphasedwithdrawaluponage65

(OnlytheemployeeMember’sMandatoryContributionAccountisshownforthisscenario)

Member'sMandatoryContributionAccount:

EndofYear

ActualAnnualisedReturnofthe

Fund

EndofYearNB EndofYearQB1

EndofYearQB2

EndofYearTotalQB

2016 2.00% $10,000.00 $0.00 $12,000.00 $12,000.00

Example13aillustrateshowanemployeeMembercontinuesemploymentatage65andclaimsaphased withdrawal.

IllustrativeExample13a:

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End of year 2016 – At age of 65, employeeMember continues employment andmakes afirst claim for phasedwithdrawal. Accordingly,Member is only entitled towithdraw hisbenefitsinrespectofmandatorycontributions(“MC”),andhemakesaclaimofwithdrawalof his accrued benefits in respect ofMC by instalments in the amount of $1,000. Uponreceipt ofMember’s first claim towithdraw accrued benefits by instalments, such claimwillbefirstlytreatedasawithdrawalofall theaccruedbenefitsderivedfromtheMCasaresultofattainingage65.Asthequalifyingbalancewasgreaterthanthemarketvalue,thequalifyingbalanceof$12,000willbefullyentitled.

Member'sMandatoryContributionAccountaftergettingthefullguaranteeentitlement:

EndofYear


Fund


EndofYearQB2

EndofYearTotalQB

2016 2.00% $12,000.00 $0.00 $12,000.00 $12,000.00

After getting the full guarantee entitlement by filing a first claim of accrued benefits byinstalments in respectof theMC, theTrusteewilleffect the firstphasedwithdrawal. Membermakes a first claim for phasedwithdrawal of $1,000. The Trustee then pays the instalmentof $1,000 toMember from hismandatory contribution account. As the partialwithdrawalof $1,000 is not aValidClaim, itwill be effectedas a redemption from theGuaranteed Fund.Afterpaymentof thewithdrawalof$1,000, thequalifyingbalanceand themarketvalue thenbecomes$11,000($12,000–$1,000).

Member'sMandatoryContributionAccount(afterphasedwithdrawal):

EndofYear


Fund


EndofYearQB2

EndofYearTotalQB

2016 2.00% $11,000.00 $0.00 $11,000.00 $11,000.00

Example13billustrateshowtheguaranteewillcontinuetoapplyafteraphasedwithdrawal.

Member'sMandatoryContributionAccount:

EndofYear


Fund


EndofYearQB2

EndofYearTotalQB

2016 2.00% $11,000.00 $0.00 $11,000.00 $11,000.00

2017 -5.00% $10,450.00 $0.00 $11,110.00 $11,110.00

Member'sVoluntaryContributionAccount:

EndofYear


Fund


EndofYearQB2

EndofYearTotalQB

2017 -5.00% $10,500.00 $0.00 $11,500.00 $11,500.00

IllustrativeExample13b:

Endofyear2017–Memberdecidestoretirefromwork,anduponcessationofemployment,hebecomesentitledtobenefitsderivedfromvoluntarycontributions.

As theMember’s claim is a Valid Claim upon occurrence of a qualifying event and thegreaterof theQBand theNBwill bepaid, aguaranteewill apply to thebenefitsderivedfrom both voluntary andmandatory contributions.Member is entitled to be paid thequalifyingbalanceof$22,610($11,110+$11,500)intheGuaranteeFund.

75

Example14illustrateshowtheguaranteewillcontinuetoapplyafteraphasedwithdrawal.


End of year 2018 – TheMember decides to fullywithdraw the remaining benefits for thereason of retirement. Since retirement is a qualifying event andwithdrawing all accruedbenefitsmeetstherequirementofValidClaim,theMemberisentitledtothegreateroftheNBandtheQB.

PersonalAccountQB= $5,784.79

NB= $5,745.98

Therefore,$5,784.79willbepaidfromtheMember’spersonalaccount.

76

APPENDIX 2

FURTHER INFORMATION ON THE INDICES

HangSengChinaEnterprisesIndex

TheHang Seng China Enterprises Index is themajor index that tracks the performance ofChinaenterprises listed inHongKong in the formofH–shares.Theuniverseof theHangSengChinaEnterprises Index comprisesallH–share companies thathave theirprimary listingon theMainBoardof the Stock ExchangeofHongKong Limited (the “SEHK”). TheHang SengChinaEnterprisesIndexisreviewedquarterly.

TheHang Seng China Enterprises Index currently comprises 40 constituent stockswhich arerepresentativeofChinaenterpriseslistedinHongKongintheformofH–shares.Theaggregatemarketvalueofthesestocksaccountsforabout91.7percentofthetotalmarketcapitalisationof all H–shares listed on theMain Board of SEHK. As at 31st October, 2011, the respectiveweightings of the top 10 largest constituent stocks of theHang Seng China Enterprises Indexare:

Code Stock Name Weighting

939 ChinaConstructionBankCorporation 10.50%

1398 IndustrialandCommercialBankofChinaLtd. 9.91%

857 PetroChinaCo.Ltd. 9.88%

3988 BankofChinaLtd. 8.07%

2628 ChinaLifeInsuranceCo.Ltd. 7.04%

386 ChinaPetroleum&ChemicalCorporation 5.70%

1088 ChinaShenhuaEnergyCo.Ltd. 5.61%

2318 PingAnInsurance(Group)Co.ofChinaLtd. 4.61%

1288 AgriculturalBankofChinaLtd. 3.73%

728 ChinaTelecomCorporationLtd. 3.09%

Real–timeupdateoftheHangSengChinaEnterprises IndexcanbeobtainedthroughThomsonReuters, Bloomberg and thewebsite of HSIL atwww.hsi.com.hk . The index rules and furtherinformationinrelationtotheHangSengChinaEnterprisesIndexareavailableatwww.hsi.com.hk .Asforother importantnewsoftheHangSengChinaEnterprises Index,HSILwillalsomakeannouncementsthroughpressreleasesandatwww.hsi.com.hk.

HSIL is the Index Providerof theHang SengChina Enterprises Index. The InvestmentManageranditsconnectedpersonsareindependentofHSIL.

In theevent that theHangSengChinaEnterprises Index is terminated, ceases tooperateor isnot available, the InvestmentManagermay subject to the approval of theAuthority and theCommission, seeka replacementof theHangSengChinaEnterprises Indexwithanother indexthat the InvestmentManagerdeemsappropriateas suitablebenchmark representing stocksofChina enterprises that are listed inHongKong in the formofH-shares. If no suitable index isfound,subjecttotheapprovaloftheCommissionandtheAuthority,theBEAChinaTrackerFundmaybeterminated.UnlessotherwiseagreedwiththeCommissionandtheAuthority,theTrusteewillgivenotlessthanonemonth’snoticeofanychangeintheunderlyingindex.

77

HangSengIndex

TheHangSengIndexisoneoftheearlieststockmarketindexesinHongKong,whichmeasuresthe performance of largest andmost liquid companies listed on theMain Board of the SEHK.ConstituentstocksoftheHangSengIndexareselectedbyarigorousprocessofdetailedanalysis.Only companieswith a primary listing on theMain Board of the SEHK are eligible potentialconstituents.MainlandChinaenterprisesthathaveHsharelistinginHongKongwillbeeligibleforinclusionintheHangSengIndexiftheymeetcertainconditions:

The constituent stocks are grouped under finance, utilities, properties, and commerce andindustrysub-indexes.TheHangSengIndexisreviewedquarterly.

TheHangSeng Indexcurrentlycomprises45constituentstockswhicharerepresentativeoftheHongKongstockmarket.Theaggregatemarketvalueofthesestocksaccountsforabout58percentofthetotalmarketcapitalisationofallstockslistedontheMainBoardofSEHK.Asat31st

October, 2011, the respectiveweightings of the top 10 largest constituent stocks of theHangSengIndexare:

Code Stock Name Weighting

5 HSBCHoldingsplc 16.02%

941 ChinaMobileLtd. 7.97%

939 ChinaConstructionBankCorporation 6.19%

1398 IndustrialandCommercialBankofChinaLtd. 5.70%

883 CNOOCLtd. 4.83%

857 PetroChinaCo.Ltd. 3.84%

1299 AIAGroupLtd. 3.60%

700 TencentHoldingsLtd. 3.58%

3988 BankofChinaLtd. 3.14%

16 SunHungKaiPropertiesLtd. 2.96%

Real–timeupdateoftheHangSengIndexcanbeobtainedthroughThomsonReuters,BloombergandthewebsiteofHSILatwww.hsi.com.hk .Theindexrulesandfurtherinformationinrelationto theHang Seng Index are available atwww.hsi.com.hk . As for other important news of theHang Seng Index, HSILwill alsomake announcements through press releases and atwww.hsi.com.hk.

HSIL is the IndexProviderof theHangSeng Index.The InvestmentManagerand its connectedpersonsareindependentofHSIL.

In theevent that theHangSeng Index is terminated,ceases tooperateor isnotavailable, theInvestmentManagermaysubject to theapprovalof theAuthorityandtheCommission, seekareplacementof theHangSeng Indexwithanother index that itdeemsappropriateas suitablebenchmarkrepresentingtheoverallperformanceoftheHongKongstockmarket.Ifnosuitableindex is found, subject to the approval of the Commission and theAuthority, the BEAHongKongTracker Fundmaybe terminated.Unless otherwise agreedwith theCommissionand theAuthority,theTrusteewillgivenotlessthanonemonth’snoticeofanychangeintheunderlyingindex.

78

Disclaimer of Index Provider

TheHangSengChinaEnterprisesIndexandtheHangSengIndex(the"Index(es)")arepublishedand compiled byHang Seng Indexes Company Limited pursuant to a licence fromHang SengDataServicesLimited.Themark(s)andname(s)HangSengChinaEnterprisesIndexandtheHangSeng Index are proprietary to Hang SengData Services Limited. Hang Seng Indexes CompanyLimitedandHangSengDataServicesLimitedhaveagreedto theuseof,andreferenceto, theIndex(es)bytheTrusteeinconnectionwiththeMasterTrust,BUT NEITHER HANG SENG INDEXES COMPANY LIMITED NOR HANG SENG DATA SERVICES LIMITED WARRANTS OR REPRESENTS OR GUARANTEES TO ANY BROKER OR HOLDER OF THE MASTER TRUST OR ANY OTHER PERSON (i) THE ACCURACY OR COMPLETENESS OF ANY OF THE INDEX(ES) AND ITS COMPUTATION OR ANY INFORMATION RELATED THERETO; OR (ii) THE FITNESS OR SUITABILITY FOR ANY PURPOSE OF ANY OF THE INDEX(ES) OR ANY COMPONENT OR DATA COMPRISED IN IT; OR (iii) THE RESULTS WHICH MAY BE OBTAINED BY ANY PERSON FROM THE USE OF ANY OF THE INDEX(ES) OR ANY COMPONENT OR DATA COMPRISED IN IT FOR ANY PURPOSE, AND NO WARRANTY OR REPRESENTATION OR GUARANTEE OF ANY KIND WHATSOEVER RELATING TO ANY OF THE INDEX(ES) IS GIVEN OR MAY BE IMPLIED.Theprocessandbasisofcomputationandcompilationof any of the Index(es) and any of the related formula or formulae, constituent stocks andfactorsmayatanytimebechangedoralteredbyHangSengIndexesCompanyLimitedwithoutnotice. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO RESPONSIBILITY OR LIABILITY IS ACCEPTED BY HANG SENG INDEXES COMPANY LIMITED OR HANG SENG DATA SERVICES LIMITED (i) IN RESPECT OF THE USE OF AND/OR REFERENCE TO ANY OF THE INDEX(ES) BY THE TRUSTEE IN CONNECTION WITH THE MASTER TRUST; OR (ii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES OR ERRORS OF HANG SENG INDEXES COMPANY LIMITED IN THE COMPUTATION OF ANY OF THE INDEX(ES); OR (iii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES, ERRORS OR INCOMPLETENESS OF ANY INFORMATION USED IN CONNECTION WITH THE COMPUTATION OF ANY OF THE INDEX(ES) WHICH IS SUPPLIED BY ANY OTHER PERSON; OR (iv) FOR ANY ECONOMIC OR OTHER LOSS WHICH MAY BE DIRECTLY OR INDIRECTLY SUSTAINED BY ANY BROKER OR HOLDER OF THE MASTER TRUST OR ANY OTHER PERSON DEALING WITH THE MASTER TRUST AS A RESULT OF ANY OF THE AFORESAID, AND NO CLAIMS, ACTIONS OR LEGAL PROCEEDINGS MAY BE BROUGHT AGAINST HANG SENG INDEXES COMPANY LIMITED AND/OR HANG SENG DATA SERVICES LIMITED in connectionwith theMaster Trust in anymannerwhatsoever byanybroker,holderorotherpersondealingwith theMasterTrust.Anybroker,holderorotherpersondealingwiththeMasterTrustdoessothereforeinfullknowledgeofthisdisclaimerandcanplacenoreliancewhatsoeveronHangSengIndexesCompanyLimitedandHangSengDataServices Limited. For the avoidance of doubt, this disclaimer does not create any contractualor quasi-contractual relationship between any broker, holder or other person andHang SengIndexesCompanyLimitedand/orHangSengDataServicesLimitedandmustnotbeconstruedtohavecreatedsuchrelationship.

MembersinvestingintheBEAChinaTrackerFundandtheBEAHongKongTrackerFundwillberegarded as having acknowledged, understood and accepted thedisclaimer above andwill beboundbyit.TheleveloftheHangSengChinaEnterprisesIndexatanytimeforthepurposesoftheBEAChinaTrackerFundandtheleveloftheHangSengIndexatanytimeforthepurposesof theBEAHongKongTrackerFund, respectively,willbe the levelas calculatedbyHangSengIndexesCompanyLimitedinitssolediscretion.


FIRST ADDENDUM TOTHE EXPLANATORY MEMORANDUM DATED DECEMBER, 2016

This First Addendum should be read in conjunction with and forms part of the Explanatory Memorandum for the BEA (MPF) Master Trust Scheme (the “Master Trust”) dated December, 2016. All capitalised terms herein contained shall have the same meaning in this First Addendum as in the Explanatory Memorandum, unless otherwise stated. The Sponsor and the Trustee accept responsibility for the information contained in this First Addendum as being accurate as at the date of publication.

You may visit our website http://www.hkbea.com for the Explanatory Memorandum of the Master Trust or obtain a copy of the Explanatory Memorandum at the offices of the Trustee at 32nd Floor, BEA Tower, Millennium City 5, 418 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong.

With effect from 1st April, 2017 (being the commencement date of the MPF default investment strategy), the Explanatory Memorandum shall be amended as follows:

MPF DEFAULT INVESTMENT STRATEGY

1. The “Important” section shall be amended by adding the following bullet points after the fourth bullet point:

“• You should consider your own risk tolerance level and financial circumstances before investing in the DIS. You should note that the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund may not be suitable for you, and there may be a risk mismatch between the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund and your risk profile (the resulting portfolio risk may be greater than your risk preference). You should seek financial and/or professional advice if you are in doubt as to whether the DIS is suitable for you, and make the investment decision most suitable for you taking into account your circumstances.

• You should note that the implementation of the DIS may have an impact on your MPF investments and benefits. You should consult with the Trustee if you have doubts on how you are being affected.”

2. Page 2 - The following new definitions shall be added to the section headed “DEFINITIONS” in the appropriate alphabetical order:

““Higher Risk Assets” has the meaning given to it in the MPF Ordinance”

““Lower Risk Assets” means those assets not being Higher Risk Assets, including without limitation global bonds and money market instruments”

““Reference Portfolio” means, in respect of each of the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund, the MPF industry developed reference portfolio adopted for the purpose of DIS to provide a common reference point for the performance and asset allocation of the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund (as the case may be)”

““Specific Investment Instruction” means:

(I) subject to (II) below, an instruction for investment allocations which meets the following requirements:

– each investment allocation is in a multiple of 10%; and

– the aggregate (or in the case of any switching instruction, the switch-in total) of which is 100%; or

(II) where the instruction is to invest in DIS, an instruction to invest 100% of: (A) existing accrued benefits and/or (B) future contributions and accrued benefits transferred from another scheme in the DIS; or

(III) any confirmation (whether through hard copy submission, cyberbanking, mobile apps or IVRS (interactive voice recording system)) by a Member with regard to any investment arrangements of the existing accrued benefits and/or future contributions and accrued benefits transferred from another scheme.

Any investment mandate, change of investment mandate or switching instruction must meet the requirements for a “Specific Investment Instruction”.”

3. Page 29 - The following paragraphs shall be inserted after the sub-section headed “Instructions to Change Investment” under the section headed “CONTRIBUTIONS”:-

“MPF Default Investment Strategy (“DIS”)

DIS is a ready-made investment arrangement mainly designed for those MPF scheme members who are not interested or do not wish to make an investment choice, and is also available as an investment choice itself for Members who find it suitable for their own circumstances. For those Members who do not make an investment choice, their contributions and accrued benefits transferred from

1

another scheme will be invested in accordance with the DIS. The DIS is required by law to be offered in every MPF scheme and is designed to be substantially similar in all MPF schemes.

Asset Allocation

The DIS aims to balance the long term effects of risk and return through investing in two Constituent Funds, namely BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, according to the pre-set allocation percentages at different ages. The BEA (MPF) Core Accumulation Fund will invest around 60% in Higher Risk Assets (Higher Risk Assets generally mean equities or similar investments) and 40% in Lower Risk Assets (Lower Risk Assets generally mean bonds or similar investments) of its net asset value whereas the BEA (MPF) Age 65 Plus Fund will invest around 20% in Higher Risk Assets and 80% in Lower Risk Assets. Both Constituent Funds adopt globally diversified investment principles and use different classes of assets, including global equities, fixed income, money market and cash, and other types of assets allowed under the MPF legislation.

De-risking of the DIS

Accrued benefits invested through the DIS will be invested in a way that adjusts risk depending on a Member’s age. The DIS will manage investment risk exposure by automatically reducing the exposure to Higher Risk Assets and correspondingly increasing the exposure to Lower Risk Assets as the Member gets older. Such de-risking is to be achieved by way of reducing the holding in BEA (MPF) Core Accumulation Fund and increasing the holding in BEA (MPF) Age 65 Plus Fund throughout the prescribed time span as detailed below. Diagram 1 below shows the target proportion of investment in riskier assets over time. The asset allocation stays the same up until 50 years of age, then reduces steadily until age 64, after which it stays steady again.

Diagram 1: Asset Allocation between Constituent Funds in the DIS

Note : The exact proportion of the portfolio in Higher Risk Assets /Lower Risk Assets at any point in time may deviate from the target glide path due to market fluctuations.

The above de-risking is to be achieved by annual adjustments of asset allocation gradually from BEA (MPF) Core Accumulation Fund to BEA (MPF) Age 65 Plus Fund under the DIS. Save for the circumstances set out in this section “De-risking of the DIS”, switching of the existing accrued benefits among BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will be automatically carried out each year on a Member’s birthday and according to the allocation percentages as shown in the DIS De-risking Table as shown in Diagram 2 below. If the Member’s birthday is not on a Business Day, then the investments will be moved on the next available Business Day. Alternatively, if the Member’s birthday falls on the 29th of February and in the year which is not a leap year, then the investments will be moved on 1st of March or the next available Business Day. If there is any exceptional circumstance, e.g. market closure or suspension of dealing, on the Member’s birthday which makes it impossible for the investments to be moved on that day, the investments will be moved on the next available Business Day.

If the relevant Member notifies the Trustee of his / her updated birthday, then the Trustee will, as soon as practicable, and in any case within 2 weeks, after being so notified, adjust the allocation between the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund according to his / her updated birthday, and effect the de-risking in the future years according to the DIS de-risking table in Diagram 2 below and his / her updated birthday. When one or more of the specified instructions (including but not limited to subscription, redemption, switching or withdrawal instructions) are being received prior to or on the annual date of de-risking for a relevant Member and being processed on that date, the annual de-risking may be deferred and will only take place after completion of these specified instructions. The smallest amount of Units of each of the BEA (MPF) Age 65 Plus Fund and/or the BEA (MPF) Core Accumulation Fund that can be issued in the annual de-risking under the DIS shall be a fraction of not less than one-thousandth of a Unit.

Please refer to the section headed “Contributions” for details regarding the handling procedures for subscription, redemption and switching respectively.

Members should be aware that the above de-risking will not apply where the Member chooses BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund as individual fund choices (rather than as part of the DIS).

Lower risk assets (mainly global bonds)

Higher risk assets (mainly global equities)

Perc

enta

ge o

f to

tal a

sset

s

BEA (MPF) Core Accumulation Fund BEA (MPF) Age 65 Plus Fund

Under 50 50 - 64 65+ Age

40%

60%

20%

80%

2

In summary, under the DIS:

- when a Member is below the age of 50, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested in the BEA (MPF) Core Accumulation Fund;

- when a Member is between the ages of 50 and 64, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested according to the allocation percentages between BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund as shown in the DIS De-risking Table below. The de-risking on the existing accrued benefits will be automatically carried out as described above;

- when a Member reaches the age of 64, all existing accrued benefits and all contributions and accrued benefits transferred from another scheme will be invested in BEA (MPF) Age 65 Plus Fund;

- if the relevant Member has reached 60 years of age before 1st April, 2017, unless the Member has given a Specific Investment Instruction, the Member’s accrued benefits (including new contributions and accrued benefits transferred from another scheme) will be invested in the same manner as at 31st March, 2017;

- For a deceased Member, de-risking will cease once the Trustee has received proof of the death of the Member to the Trustee’s satisfaction. If de-risking has already been taken place between the death of the Member and the time at which the Trustee received the satisfactory proof of such death, such de-risking will not be undone, although no further de-risking will take place in respect of the deceased Member.

If the Trustee does not have the full date of birth of the relevant Member:

- If only the year and month of birth is available, the annual de-risking will use the last calendar day of the birth month, or if it is not a Business Day, the next available Business Day;

- If only the year of birth is available, the annual de-risking will use the last calendar day of the year, or if it is not a Business Day, the next available Business Day;

- If no information at all on the date of birth, Member’s accrued benefits will be fully invested in BEA (MPF) Age 65 Plus Fund with no de-risking applied.

Diagram 2: DIS De-risking Table

Age BEA (MPF) Core Accumulation Fund BEA (MPF) Age 65 Plus Fund

Below 50 100.0% 0.0%

50 93.3% 6.7%

51 86.7% 13.3%

52 80.0% 20.0%

53 73.3% 26.7%

54 66.7% 33.3%

55 60.0% 40.0%

56 53.3% 46.7%

57 46.7% 53.3%

58 40.0% 60.0%

59 33.3% 66.7%

60 26.7% 73.3%

61 20.0% 80.0%

62 13.3% 86.7%

63 6.7% 93.3%

64 and above 0.0% 100.0%

Note: The above allocation between BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund is made at the point of annual de-risking and the proportion of BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund in the DIS portfolio may vary during the year due to market fluctuations.

The investment allocation of each relevant Member between BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will be rounded off to one decimal place.

The Trustee will, to the extent practicable, issue a notice to the relevant Member at least 60 days prior to his/her 50th birthday informing him/her of the commencement of the de-risking process. Also, a confirmation statement will be sent to the relevant Member no later than 5 Business Days after the de-risking process has been completed.

Please refer to the section “Investment Objectives and Policies” for the investment policies and objectives and the other pages of this section “MPF Default Investment Strategy” for the specific operational arrangements of the Constituent Funds which are under the DIS.

3

Switching in and out of the DIS

Members can switch into or out of the DIS at any time, subject to the rules of the Master Trust. Members should, however, bear in mind that the DIS has been designed as a long-term investment arrangement. Where the relevant Member’s existing investment is under the DIS, he/she may only switch out of the DIS if he/she elects to have both the accrued benefits and new contributions and accrued benefits transferred from another scheme under all sub-accounts invested outside of the DIS. Conversely, where the relevant Member wishes to transfer into the DIS, he/she can elect to have either (i) the accrued benefits, or (ii) new contributions and accrued benefits transferred from another scheme invested in the DIS. If a Member only elects to switch the existing accrued benefits outside of the DIS without providing a new Specific Investment Instruction, new contributions and accrued benefits transferred from another scheme will still be invested in the DIS. Also, Members may change their investment mandate to invest in the DIS at any time.

Circumstances for Accrued Benefits to be Invested in the DIS

(i) New accounts set up on or after 1st April, 2017:

(a) When a Member (including a Member who is a Special Voluntary Contribution Account Member) joins the Master Trust or sets up a new account in the Master Trust, they have the opportunity to give a Specific Investment Instruction for their future contributions and accrued benefits transferred from another scheme. They may choose to invest their future contributions and accrued benefits transferred from another scheme into:

(I) the DIS; or

(II) one or more Constituent Funds of their own choice from the list under the section headed “Constituent Funds” above (including the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund) and according to their assigned allocation percentage(s) to relevant fund(s) of their choice;

(b) Upon enrolment, a Member who is an employee member may give a Specific Investment Instruction for employer’s mandatory and voluntary contributions and a different Specific Investment Instruction for employee’s mandatory and voluntary contributions. Subsequent to enrolment, such a Member may however give different Specific Investment Instructions to different types of contributions; to illustrate, a Specific Investment Instruction may be given to a Member’s employer’s mandatory contributions and a different Specific Investment Instruction may be given to the Member’s employer’s voluntary contributions;

(c) Members should note that, if investments/benefits in BEA (MPF) Core Accumulation Fund or BEA (MPF) Age 65 Plus Fund are made under the Member’s Specific Investment Instructions for investment in such fund (as a standalone fund choice rather than as part of the DIS offered as a choice) (“standalone investments”), those investments/benefits will not be subject to the de-risking process. If a Member’s accrued benefits are invested in any combination of (i) BEA (MPF) Core Accumulation Fund and/or BEA (MPF) Age 65 Plus Fund as standalone investments and (ii) the DIS (no matter by default or by a Specific Investment Instruction), accrued benefits invested under (i) will not be subject to the de-risking mechanism whereas for accrued benefits under (ii) will be subject to the de-risking process. In this connection, Members should pay attention to the different on-going administration arrangements applicable to accrued benefits invested in (i) and (ii). In particular, Members will, when giving a fund switching instruction, be required to specify to which part of the benefits (namely, under (i) or (ii)) the instruction relates;

(d) If a Member opts for (a)(II) above, the investment instruction must meet the requirements for a Specific Investment Instruction.

The following table sets out the different investment instructions and the consequences of each investment instruction given upon enrolment being invalid:

Investment instruction Consequences

A. The total investment allocation is less than 100%.The remaining percentage of contributions and accrued benefits transferred from another scheme will be invested into DIS.

B. The total exceeds 100%.

The entire contributions and accrued benefits transferred from another scheme will be invested into DIS.

C. The investment allocation is not in a multiple of 10%.

D. The investment instruction is not legible and the Trustee is unable to process.

E. No investment allocation is given.

(e) If Members do not give Specific Investment Instructions, their future contributions and accrued benefits transferred from another scheme will be automatically invested in the DIS;

(f) Where a Member has multiple capacities under the same Master Trust (e.g. a Member being an employee member and a personal account holder), the investment arrangement applies to the accounts of the Member in each capacity individually. In other words, if a Member is an employee member and a personal account holder and wishes to switch his accrued benefits and contributions under the accounts related to his/her employee member status into DIS, such switching will only impact the accounts related to his/her employee member status and not the accounts related to his/her personal account holder status.

(ii) Existing accounts set up before 1st April, 2017:

There are special rules to be applied for accounts which exist or are set up before 1st April, 2017 (“Pre-existing Accounts”) and these rules only apply to Members who are under or becoming 60 years of age on 1st April, 2017:

4

(a) For a Member’s Pre-existing Account with all accrued benefits being invested according to the original default investment arrangement which was generally resulted from no investment instruction being given on the existing accrued benefits (such Member being a “DIA Member”):

If, as of 1st April, 2017, the accrued benefits in a Member’s Pre-existing Account are only invested in the original default investment arrangement of the Master Trust (i.e. BEA (MPF) Stable Fund), special rules and arrangements will be applied, in due course, to determine whether the accrued benefits in such account will be transferred to the DIS and whether the future contributions and accrued benefits transferred from another scheme for such account will be invested in DIS. If a Member’s Pre-existing Account is the one described above, a notice called the DIS Re-investment Notice (the “DRN”) may be sent to the DIA Member within 6 months from 1st April, 2017 explaining the impact on such account and giving the DIA Member an opportunity to give a specified investment instruction to the Trustee before the accrued benefits, future contributions and accrued benefits transferred from another scheme are invested into the DIS. If the Trustee is not aware of any contact details of the Member that enable the Trustee to give the DRN, the Trustee will proceed to locate the Member in the manner, and within the time limit, specified in the guidelines issued by the Authority. Members should note that the risk inherent in the arrangement, in particular, the risk of the original default investment arrangement under “Risk Factors” may be different from that of the DIS. They will also be subject to market risks during the redemption and reinvestment process. The following table summarises the risk levels of each of the original default investment arrangement, the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund:

Name of the constituent fund Risk level

BEA (MPF) Stable Fund Low to medium

BEA (MPF) Core Accumulation Fund Medium to high

BEA (MPF) Age 65 Plus Fund Low to medium

For details of the arrangement, Members should refer to the DRN.

(b) For a Member’s Pre-existing Account with part of the accrued benefits in the original default investment arrangement:

For a Member’s Pre-existing Account which accrued benefits are partly invested in the original default investment arrangement immediately before 1st April, 2017 (as a result of no valid investment instruction being given in respect of that part of the accrued benefits), unless the Trustee has received any Specific Investment Instructions, accrued benefits of a Member (including future contributions and accrued benefits transferred from another scheme) will be invested in the same manner as immediately before 1st April, 2017;

(c) For a Member’s Pre-existing Account which, as at 31st March, 2017, has all of the accrued benefits in it invested in Constituent Funds other than the original default investment arrangement for whatever reasons (e.g. as a result of switching instructions or accrued benefits from another account within the Master Trust being transferred to the Pre-existing Account) and no investment mandate has ever been given for the Pre-existing Account in respect of new contributions and accrued benefits transferred from another scheme, unless the Trustee has received any Specific Investment Instructions, the Member’s accrued benefits will be invested in the same manner as they were invested immediately before 1st April, 2017, while the new contributions and accrued benefits transferred from another scheme paid to the Member’s Pre-existing Account on or after 1st April, 2017 will be invested in the DIS.

(iii) Treatment of benefits transferred from a contribution account to a personal account

Where a Member ceases employment with a participating employer and:

(a) in the absence of his/her election to transfer such benefits as described in the sub-section headed “Transfers to Other Schemes or other account(s) within the Master Trust”, and his/her accrued benefits in respect of such employment are automatically transferred to a personal account under the Master Trust upon the expiry of the three months’ period after the Trustee has been notified of the termination of his/her employment; or

(b) the Member has given instruction to transfer the accrued benefits from such employment to a personal account and his/her accrued benefits are therefore transferred to the personal account,

the accrued benefits transferred from the Member’s contribution account to the Member’s personal account will be invested in the same manner immediately before the transfer, and, unless the Trustee receives a Specific Investment Instruction from the Member with regard to the Member’s personal account, any future contributions and accrued benefits from another scheme may be invested in the DIS.

Fees and Out-of-Pocket Expenses of the DIS

In accordance with section 34DD(4) and Schedule 11 of the MPF Ordinance, the aggregate of the payments for services specified in section 34DD(2) of the MPF Ordinance of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund must not, in a single day, exceed a daily rate (being 0.75% per annum of the net asset value of each of these two Constituent Funds divided by the number of days in the year).

The above aggregate payments for services (i.e. “management fees” as defined in 7A of the sub-section “DEFINITIONS” under the section headed “Fee Table”) include, but are not limited to, the fees paid or payable for the services provided by the Trustee, the Administrator, the Sponsor and/or the Investment Manager of the Master Trust and the underlying investment funds of each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, and any of the delegates from these parties and such fees are

5

calculated as a percentage of the net asset value of each of the Constituent Funds and its underlying investment fund(s), but does not include any out-of-pocket expenses incurred by each Constituent Fund and its underlying investment fund(s).

In addition, in accordance with section 34DD(4) and Schedule 11 to the MPF Ordinance, the total amount of all payments that are charged to or imposed on each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund or Members who invest in each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, for out-of-pocket expenses incurred by the Trustee on a recurrent basis in the discharge of the Trustee’s duties to provide services in relation to each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, shall not in a single year exceed 0.2% of the net asset value of each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund. For this purpose, out-of-pocket expenses include, for example, annual audit expenses, printing or postage expenses relating to recurrent activities (such as issuing annual benefit statements), recurrent legal and professional expenses, safe custody charges which are customarily not calculated as a percentage of the net asset value and transaction costs incurred by each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund in connection with recurrent acquisition of investments for each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund (including, for example, costs incurred in acquiring underlying funds) and annual statutory expenses (such as compensation fund levy where relevant) of each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund.

Members should note that out-of-pocket expenses that are not incurred on a recurrent basis may still be charged to or imposed on the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund. Such fees are not subject to the statutory caps mentioned in the preceding paragraphs.

For further details, please refer to the fee table “(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDS” under the section “Fee Table” of this Explanatory Memorandum.

Information on Performance of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund

The fund performance (including the definition and actual figures of the fund expense ratio) and Reference Portfolios of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will be published in the fund fact sheets (and one of which will be attached to annual benefit statement). Members can visit http://www.hkbea.com or call the customer service hotline for information. Members may also obtain the fund performance information at the website of the Authority (www.mpfa.org.hk).

The Reference Portfolio is adopted for the purpose of DIS. The fund performance will be reported against the Reference Portfolio published by the Hong Kong Investment Funds Association. Please visit www.hkifa.org.hk for further information regarding the performance of the Reference Portfolio.

The fund performance is calculated in Hong Kong dollar on NAV-to-NAV basis. Past performance is not indicative of future performance. There is no assurance that investment returns and members’ accrued benefits may not suffer significant loss. Members should regularly review the performance of the fund and consider whether the investments still suit their personal needs and circumstances.”

RISK FACTORS ASSOCIATED WITH THE DIS

4. Page 22 - The following paragraphs shall be inserted after the sub-section headed “Early Termination risk” under the section headed “Risk Factors”:-

“Principal risks of investing in DIS

Members should note that there are a number of attributes of the design of the DIS strategy as set out below, which affect the types of risks associated with the DIS.

Limitations on the strategy

(i) Age as the sole factor in determining the asset allocation under the DIS

As set out in more detail in “MPF Default Investment Strategy”, Members should note that the DIS adopts pre-determined asset allocation and automatically adjusts asset allocation based only upon a Member’s age. The DIS does not take into account factors other than age, such as market and economic conditions nor Member’s personal circumstances including investment objectives, financial needs, risk tolerance or likely retirement date. Members who want their MPF portfolio to reflect their own personal circumstances can make their own selection of funds from the range available in the Master Trust.

(ii) Pre-set asset allocation

Members should note that the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund have to follow the prescribed allocation between Higher Risk Assets and Lower Risk Assets at all times subject to a tolerance level of + or - 5%. The prescribed exposure between Higher Risk Assets and Lower Risk Assets of BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will limit the ability of the Investment Manager of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund to adjust asset allocations in response to sudden market fluctuations; for example through the adoption of either a more defensive asset allocation approach (being an approach which seeks to reduce Higher Risk Assets exposure), or alternatively a more aggressive asset allocation approach (being an approach which seeks to increase Higher Risk Assets exposure) even if, for some reason, the Investment Manager thought it appropriate to do so.

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(iii) Annual de-risking between the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund

Members should note that de-risking for each relevant Member will generally be carried out on a Member’s birthday, regardless of the prevailing market conditions. While the de-risking process aims at managing risks of the investments through reducing exposure to Higher Risk Assets, it may preclude the DIS from fully capturing the upside in rising equity markets during the de-risking process and therefore would underperform as compared with funds not adopting the de-risking process under the same market conditions.

It is possible that the de-risking process is done at a time which may result in Members reducing exposure to an asset class which outperforms and increasing exposure to an asset class which underperforms. The asset allocation changes gradually over a 15-year time period. Members should be aware that the de-risking operates automatically regardless of the wish of a Member to adopt a strategy which might catch market upside or avoid market downside.

Also, the de-risking process cannot insulate Members from “systemic risk”, such as broad-based recessions and other economic crises, which will affect the prices of most asset classes at the same time.

(iv) Potential rebalancing within each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund

In order to maintain the prescribed allocation between the Higher Risk Assets and Lower Risk Assets within each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, the investments of each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund may have to be continuously rebalanced. For example, when the Higher Risk Assets perform poorly, the BEA (MPF) Core Accumulation Fund’s or BEA (MPF) Age 65 Plus Fund’s asset allocation may fall outside the respective prescribed limit. In this case, each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will have to liquidate some of the better performing Lower Risk Assets in order to invest more in the Higher Risk Assets, even if the Investment Manager is of the view that the Higher Risk Assets might continue to perform poorly.

(v) Additional transaction costs

Due to (a) the potential rebalancing of Higher Risk Assets and Lower Risk Assets in the process of maintaining the prescribed allocation within each of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund and (b) the annual reallocation of accrued benefits for Members under the de-risking process, the DIS may incur greater transaction costs than a fund/strategy with more static allocation.

General investment risk related to DIS

Although DIS is a statutory arrangement, it does not guarantee capital repayment nor positive investment returns (in particular for those Members with only a short investment horizon before retirement). The two designated Constituent Funds for DIS are mixed asset funds investing in a mix of equities and bonds. Members should note that the DIS which invests in these Constituent Funds is subject to the general investment risks that apply to mixed asset funds. For general key risks relating to investment funds, please refer to the section headed “Risk Factors”.

Risk on early withdrawal and switching

Since the DIS has been developed having regard to the long-term balance between risks and likely returns, and assumes retirement at the age of 65, any cessation of the strategy (for example through early withdrawal of accrued benefits or switching into other funds) will affect that balance.

Impact on Members keeping benefits in the DIS beyond the age of 64

Members should note that the de-risking process will discontinue upon reaching the age of 64. Members should be aware that all accrued benefits (including accrued benefits transferred from another scheme)/on-going contributions, if any, will be invested in the BEA (MPF) Age 65 Plus Fund which holds around 20% of its assets in Higher Risk Assets which may not be suitable for all Members beyond the age of 64.”

BEA (MPF) CORE ACCUMULATION FUND AND BEA (MPF) AGE 65 PLUS FUND

5. Page 6 - The second paragraph under the section headed “CONSTITUENT FUNDS” shall be deleted in its entirety and replaced by the following:

“The Master Trust currently offers 18 Constituent Funds for investment, listed below:-

Name of Constituent Fund Fund Type Investment Structure

BEA (MPF) Growth Fund Mixed Assets Fund – Global – Maximum 90% in equity

Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) Balanced Fund Mixed Assets Fund – Global – Maximum 60% in equity


BEA (MPF) Stable Fund Mixed Assets Fund – Global – Maximum 40% in equity


BEA (MPF) Global Equity Fund Equity Fund – Global Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) European Equity Fund Equity Fund – Europe Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

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6. Page 16 - The following paragraphs shall be inserted after the sub-section headed “BEA (MPF) Conservative Fund” under the section headed “CONSTITUENT FUNDS”:-

“BEA (MPF) Core Accumulation Fund

Investment Objective: To provide capital growth to Members by investing in a globally diversified manner.

Investment Strategy: The BEA (MPF) Core Accumulation Fund adopts an active investment strategy. With this strategy, the investment manager of the BEA Union Investment Core Accumulation Fund may allocate the assets among the two underlying approved pooled investment fund(s) at its discretion, subject to the restrictions set out in the sub-paragraph “Asset Allocation” below.

Investment Policy: The BEA (MPF) Core Accumulation Fund will invest in an Approved Pooled Investment Fund, BEA Union Investment Core Accumulation Fund under the BEA Union Investment Capital Growth Fund, which in turn invests in two Approved Pooled Investment Funds as allowed under the General Regulation. The investment manager of the BEA Union Investment Core Accumulation Fund will from time to time rebalance the allocation between the two Approved Pooled Investment Funds, such that so far as practicable the asset allocation of the BEA Union Investment Core Accumulation Fund will be as set out in the sub-paragraph “Asset Allocation” below. Please refer to the following product structural chart illustrating the fund structure of the BEA (MPF) Core Accumulation Fund:

Asset Allocation: Subject to the discretion of the investment manager of the BEA Union Investment Core Accumulation Fund and through an active asset allocation strategy investing in the two Approved Pooled Investment Funds (which in turn adopt relevant active strategy in selecting particular global equities or global bonds), the BEA (MPF) Core Accumulation Fund will hold around 60% of its net asset value in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global bonds and money market instruments). The asset allocation to Higher Risk Assets may vary between 55% and 65% due to differing price movements of various equity and bond markets. There is no prescribed allocation for investments in any specific countries or currencies.

Constituent fund level

Feeder fund

BEA Union Investment Core Accumulation

Fund

BEA (MPF) Core Accumulation Fund

Underlying Investment Fund Level

BEA Union Investment Capital Growth Fund

APIF1 Level

APIF2 Level

Investment manager: BEA Union Investment Management Limited

Approved PooledInvestment Fund




Name of Constituent Fund Fund Type Investment Structure

BEA (MPF) North American Equity Fund Equity Fund – North America Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) Asian Equity Fund Equity Fund – Asia ex-Japan Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) Greater China Equity Fund Equity Fund – Greater China Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) Japan Equity Fund Equity Fund – Japan Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) Hong Kong Equity Fund Equity Fund – Hong Kong Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA China Tracker Fund Equity Fund – China Investment in a single Approved Index-Tracking Fund

BEA Hong Kong Tracker Fund Equity Fund – Hong Kong Investment in a single Approved Index-Tracking Fund

BEA (MPF) Global Bond Fund Bond Fund – Global Investment in 2 or more Approved Pooled Investment Funds and/or Approved Index-Tracking Funds

BEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Money Market Fund – China and Hong Kong

Direct investment in a portfolio of mainly HK dollar and RMB deposits and HK dollar and RMB denominated debt instruments

BEA (MPF) Long Term Guaranteed Fund Guaranteed Fund – guarantee payable conditionally

Investment in a single Approved Pooled Investment Fund

BEA (MPF) Conservative Fund Money Market Fund – Hong Kong Direct investment in a portfolio of HK dollar deposits and HK dollar denominated debt instruments

BEA (MPF) Core Accumulation Fund Mixed Assets Fund – Global Investment in a single Approved Pooled Investment Fund

BEA (MPF) Age 65 Plus Fund Mixed Assets Fund – Global Investment in a single Approved Pooled Investment Fund”

8

Financial futures, options contracts and securities lending: The BEA (MPF) Core Accumulation Fund will not enter into currency forward contracts, financial futures and options contracts for any purposes. However, the BEA Union Investment Core Accumulation Fund may enter into currency forward contracts, financial futures and options contracts for hedging purposes to reduce risk and protect asset value, consistent with the investment objective of the BEA Union Investment Core Accumulation Fund.

The BEA Union Investment Core Accumulation Fund will not invest in any structured deposits or products, and will not enter into any securities lending, repurchase transactions or other similar transactions.

Hong Kong dollar currency exposure: Through the BEA (MPF) Core Accumulation Fund’s investment in the BEA Union Investment Core Accumulation Fund, at least 30% of the assets of the BEA (MPF) Core Accumulation Fund will be held in Hong Kong dollar currency investments as measured by effective currency exposure (determined in accordance with Schedule 1 of the General Regulation).

Risk and Return Profile: Investors should regard BEA (MPF) Core Accumulation Fund as a medium to high risk investment. The Sponsor and the Trustee, with the opinion from the Investment Manager determines the risk profile of the BEA (MPF) Core Accumulation Fund, which is for your reference only. The risk profile is based on relative exposure to equities/bonds and will be reviewed semi-annually. The Investment Manager expects the return of the BEA (MPF) Core Accumulation Fund over the long term to reflect movements between the global equity market and global bond market, with an emphasis on the asset allocation applicable to the BEA (MPF) Core Accumulation Fund, targeting to outperform the Reference Portfolio (as defined in Section 6.5A “MPF Default Investment Strategy”).

BEA (MPF) Age 65 Plus Fund

Investment Objective: To provide stable growth to scheme members by investing in a globally diversified manner.

Investment Strategy: The BEA (MPF) Age 65 Plus Fund adopts an active investment strategy. With this strategy, the investment manager of the BEA Union Investment Age 65 Plus Fund may allocate the assets among the two underlying approved pooled investment fund(s) at its discretion, subject to the restrictions set out in the sub-paragraph “Asset Allocation” below.

Investment Policy: The BEA (MPF) Age 65 Plus Fund will invest in an Approved Pooled Investment Fund, BEA Union Investment Age 65 Plus Fund under the BEA Union Investment Capital Growth Fund, which in turn invests in two Approved Pooled Investment Funds as allowed under the General Regulation. The investment manager of the BEA Union Investment Age 65 Plus Fund will from time to time rebalance the allocation between the two Approved Pooled Investment Funds, such that so far as practicable the asset allocation of the BEA Union Investment Age 65 Plus Fund will be as set out in the sub-paragraph “Asset Allocation” below. Please refer to the following product structural chart illustrating the fund structure of the BEA (MPF) Age 65 Plus Fund:

Asset Allocation: Subject to the discretion of the investment manager of the BEA Union Investment Age 65 Plus Fund and through an active asset allocation strategy investing in the two Approved Pooled Investment Funds (which in turn adopt relevant active investment strategy in selecting particular global equities or global bonds), the BEA (MPF) Age 65 Plus Fund will hold around 20% of its net asset value in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global bonds and money market instruments). The asset allocation to Higher Risk Assets may vary between 15% and 25% due to differing price movements of various equity and bond markets. There is no prescribed allocation for investments in any specific countries or currencies.

Financial futures, options contracts and securities lending: The BEA (MPF) Age 65 Plus Fund will not enter into currency forward contracts, financial futures and options contracts for any purposes. However, the BEA Union Investment Age 65 Plus Fund may enter into currency forward contracts, financial futures and options contracts for hedging purposes to reduce risk and protect asset value, consistent with the investment objective of the BEA Union Investment Age 65 Plus Fund.

The BEA Union Investment Age 65 Plus Fund will not invest in any structured deposits or products, and will not enter into any securities lending, repurchase transactions or other similar transactions.

Hong Kong dollar currency exposure: Through the BEA (MPF) Age 65 Plus Fund’s investment in the BEA Union Investment Age 65 Plus Fund, at least 30% of the assets of the BEA (MPF) Age 65 Plus Fund will be held in Hong Kong dollar currency investments as measured by effective currency exposure (determined in accordance with Schedule 1 of the General Regulation).

Risk and Return Profile: Due to its investments mainly in Lower Risk Assets (such as global bonds and money market instruments), investors should regard BEA (MPF) Age 65 Plus Fund as a low to medium risk investment. The Sponsor and the Trustee, with the

Constituent fund level

Feeder fund

BEA Union Investment Age 65 Plus Fund

BEA (MPF) Age 65 Plus Fund

Underlying Investment Fund Level

BEA Union Investment Capital Growth Fund

APIF1 Level

APIF2 Level






9

opinion from the Investment Manager determines the risk profile of the BEA (MPF) Age 65 Plus Fund, which is for your reference only. The risk profile is based on relative exposure to equities/bonds and will be reviewed semi-annually. The Investment Manager expects the return of the BEA (MPF) Age 65 Plus Fund over the long term to reflect movements between the global equity market and global bond market, with an emphasis on the asset allocation applicable to the BEA (MPF) Age 65 Plus Fund, targeting to outperform the Reference Portfolio (as defined in Section 6.5A “MPF Default Investment Strategy”).”

FEES AND CHARGES OF THE BEA (MPF) CORE ACCUMULATION FUND AND THE BEA (MPF) AGE 65 PLUS FUND

7. Page 32 - The sub-subsection entitled “Withdrawal by instalments” under the subsection “Payment of Benefits” under the section headed “BENEFITS” shall be amended by adding the following wording at the end of the second sentence of the fifth paragraph under that sub-subsection:

“ , provided that no such charge shall be charged to or imposed on a Member who has all or part of the accrued benefits invested in the BEA (MPF) Core Accumulation Fund and/or BEA (MPF) Age 65 Plus Fund as at the time when the Trustee receives the valid withdrawal request from the Member”

8. Page 39 - The subsection entitled “Sponsor’s Fees” under the section headed “CHARGES AND EXPENSES” shall be amended as follows:-

(a) The following new rows shall be added at the end of the table under the first paragraph:-

“BEA (MPF) Core Accumulation Fund 0.295%

BEA (MPF) Age 65 Plus Fund 0.295%”

(b) The second, third and fourth paragraphs under the subsection entitled “Sponsor’s Fees” under the section headed “CHARGES AND EXPENSES” shall be replaced in their entirety with the following:-

“Subject as provided above in relation to the BEA (MPF) Conservative Fund, BEA (MPF) Long Term Guaranteed Fund, BEA (MPF) Global Equity Fund, BEA (MPF) European Equity Fund, BEA (MPF) North American Equity Fund, BEA (MPF) Japan Equity Fund, BEA China Tracker Fund, BEA Hong Kong Tracker Fund, BEA (MPF) Global Bond Fund and BEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB), the Sponsor is entitled to receive a fee equal to 1.20% p.a. of the net asset value of each Constituent Fund other than those specified above and other than the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund. This fee is calculated and accrues on each Valuation Date and is payable monthly in arrears. The Sponsor’s fee is inclusive of the fees payable to the Trustee and the Investment Manager and the Sponsor will pay the fees of the Trustee and the Investment Manager out of its own fee. The fees payable to the Trustee are inclusive of administration and custody fees payable to the Trustee in its capacity as the Administrator and Custodian (but, exclusive of fees payable to sub-custodians which will be paid from the assets of the Master Trust).

The Sponsor may increase the rate of fee payable in respect of any Constituent Fund (other than BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund) (up to or towards a maximum rate of 3% p.a.) on giving not less than 3 months’ notice to affected Members.

The Sponsor does not currently intend to levy an offer spread or a bid spread on the issue or realisation of Units, although it has the power to levy (a) an offer spread on the issue of Units in each Constituent Fund (other than the BEA (MPF) Conservative Fund, BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund) of up to 5% of the issue price of such Units and (b) a bid spread on the realisation of Units in each Constituent Fund (other than the BEA (MPF) Conservative Fund, BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund) of up to 0.5% of the realisation price of such Units. The Sponsor will give not less than 3 months’ notice to Members of any change in such intention.”

9. Page 39 - The following shall be inserted after the subsection entitled “Sponsor’s Fees” under the section headed “CHARGES AND EXPENSES”:-

“Management Fees

In return for the Sponsor providing services related to product support, disseminating MPF marketing materials and product development activities, the Sponsor is entitled to receive a management fee of 0.75% (inclusive of the fees and charges payable at both the Constituent Fund level and underlying fund level) p.a. of the net asset value for the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund. The fee covers any other costs in relation to the abovementioned services. This fee is calculated and accrued on each Valuation Date and are payable monthly in arrears. The fee is inclusive of the fees payable to the Trustee and the Investment Manager and the Sponsor will pay the fees of the Trustee and the Investment Manager out of its own fee. The fees payable to the Trustee are inclusive of administration fees payable to the Trustee in its capacity as the Administrator. The fee breakdown of the management fees in respect of the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund is as follows:

Fees payable to: Current level (p.a.)

Sponsor 0.295%

Trustee and Administrator 0.295%

Investment Manager 0.16%”

10. Page 40 - The first paragraph under the sub-section entitled “Trustee and Investment Management Fees” under the section headed “CHARGES AND EXPENSES” shall be replaced in its entirety with the following:-

10

“The Sponsor will pay the fees of the Trustee and the Investment Manager out of its own fee. The Trustee and the Investment Manager do not currently charge any fees to the Master Trust, although the Trustee is entitled to charge a fee of up to 3% p.a. of the net asset value of each Constituent Fund (other than the BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund) on giving not less than 3 months’ notice to affected Members. It is the present intention of the Sponsor that the total of the Sponsor’s fees, the Trustee’s fees (if any) and the Investment Manager’s fees (if any) charged to each Constituent Fund (except BEA (MPF) Core Accumulation Fund, BEA (MPF) Age 65 Plus Fund and BEA (MPF) Long Term Guaranteed Fund) will not exceed 1.20% p.a. of the net asset value of the Constituent Fund.”

11. Fee Table

(a) Page 42 - The fee table headed “(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS IN INDIVIDUAL MEMBER’S ACCOUNT” under the section headed “Fee Table” shall be deleted in its entirety and replaced by the following:-

(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS IN INDIVIDUAL MEMBER’S ACCOUNTType of fees & charges Name of Constituent Fund Current level Payable by

Contribution charge3

BEA (MPF) Growth Fund Nil N/ABEA (MPF) Balanced Fund Nil N/ABEA (MPF) Stable Fund Nil N/ABEA (MPF) Global Equity Fund Nil N/ABEA (MPF) European Equity Fund Nil N/ABEA (MPF) North American Equity Fund Nil N/ABEA (MPF) Asian Equity Fund Nil N/ABEA (MPF) Greater China Equity Fund Nil N/ABEA (MPF) Japan Equity Fund Nil N/ABEA (MPF) Hong Kong Equity Fund Nil N/ABEA China Tracker Fund Nil N/ABEA Hong Kong Tracker Fund Nil N/ABEA (MPF) Global Bond Fund Nil N/ABEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Nil N/A

BEA (MPF) Long Term Guaranteed Fund Nil N/ABEA (MPF) Conservative Fund N/ABEA (MPF) Core Accumulation Fund Nil N/ABEA (MPF) Age 65 Plus Fund Nil N/A

Offer spread4

BEA (MPF) Growth Fund Currently Waived N/ABEA (MPF) Balanced Fund Currently Waived N/ABEA (MPF) Stable Fund Currently Waived N/ABEA (MPF) Global Equity Fund Currently Waived N/ABEA (MPF) European Equity Fund Currently Waived N/ABEA (MPF) North American Equity Fund Currently Waived N/ABEA (MPF) Asian Equity Fund Currently Waived N/ABEA (MPF) Greater China Equity Fund Currently Waived N/ABEA (MPF) Japan Equity Fund Currently Waived N/ABEA (MPF) Hong Kong Equity Fund Currently Waived N/ABEA China Tracker Fund Currently Waived N/ABEA Hong Kong Tracker Fund Currently Waived N/ABEA (MPF) Global Bond Fund Currently Waived N/ABEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Currently Waived N/A

BEA (MPF) Long Term Guaranteed Fund Currently Waived N/ABEA (MPF) Conservative Fund N/ABEA (MPF) Core Accumulation Fund Currently Waived N/ABEA (MPF) Age 65 Plus Fund Currently Waived N/A

Bid spread5

BEA (MPF) Growth Fund Currently Waived N/ABEA (MPF) Balanced Fund Currently Waived N/ABEA (MPF) Stable Fund Currently Waived N/ABEA (MPF) Global Equity Fund Currently Waived N/ABEA (MPF) European Equity Fund Currently Waived N/ABEA (MPF) North American Equity Fund Currently Waived N/ABEA (MPF) Asian Equity Fund Currently Waived N/ABEA (MPF) Greater China Equity Fund Currently Waived N/ABEA (MPF) Japan Equity Fund Currently Waived N/A

11

(b) Page 44 - The table headed “(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDS” under the section headed “Fee Table” shall be replaced in its entirety with the following:-

(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDSType of charges & expenses


Management fees7, 7A BEA (MPF) Growth Fund 1.20% p.a. of NAV Relevant Constituent Fund assetsBEA (MPF) Balanced Fund 1.20% p.a. of NAV

BEA (MPF) Stable Fund 1.20% p.a. of NAVBEA (MPF) Global Equity Fund 1.175% p.a. of NAVBEA (MPF) European Equity Fund 1.175% p.a. of NAVBEA (MPF) North American Equity Fund

1.175% p.a. of NAV

BEA (MPF) Asian Equity Fund 1.20% p.a. of NAVBEA (MPF) Greater China Equity Fund

1.20% p.a. of NAV

BEA (MPF) Japan Equity Fund 1.175% p.a. of NAVBEA (MPF) Hong Kong Equity Fund 1.20% p.a. of NAVBEA China Tracker Fund 0.60% p.a. of NAVBEA Hong Kong Tracker Fund 0.60% p.a. of NAVBEA (MPF) Global Bond Fund 0.99% p.a. of NAVBEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

0.79% p.a. of NAV


up to 1.50% p.a. of NAV

BEA (MPF) Core Accumulation Fund 0.75% p.a. of NAVBEA (MPF) Age 65 Plus Fund 0.75% p.a. of NAV

BEA (MPF) Conservative Fund 0.79% p.a. of NAVRelevant Member’s account by Unit deduction

(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS IN INDIVIDUAL MEMBER’S ACCOUNTType of fees & charges Name of Constituent Fund Current level Payable by

Bid spread5

BEA (MPF) Hong Kong Equity Fund Currently Waived N/ABEA China Tracker Fund Currently Waived N/ABEA Hong Kong Tracker Fund Currently Waived N/ABEA (MPF) Global Bond Fund Currently Waived N/ABEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Currently Waived N/A

BEA (MPF) Long Term Guaranteed Fund Currently Waived N/ABEA (MPF) Conservative Fund N/ABEA (MPF) Core Accumulation Fund Currently Waived N/ABEA (MPF) Age 65 Plus Fund Currently Waived N/A

Withdrawal charge6

BEA (MPF) Growth Fund Nil N/ABEA (MPF) Balanced Fund Nil N/ABEA (MPF) Stable Fund Nil N/ABEA (MPF) Global Equity Fund Nil N/ABEA (MPF) European Equity Fund Nil N/ABEA (MPF) North American Equity Fund Nil N/ABEA (MPF) Asian Equity Fund Nil N/ABEA (MPF) Greater China Equity Fund Nil N/ABEA (MPF) Japan Equity Fund Nil N/ABEA (MPF) Hong Kong Equity Fund Nil N/ABEA China Tracker Fund Nil N/ABEA Hong Kong Tracker Fund Nil N/ABEA (MPF) Global Bond Fund Nil N/ABEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is denominated in HKD only and not in RMB)

Nil N/A

BEA (MPF) Long Term Guaranteed Fund Nil N/ABEA (MPF) Conservative Fund N/ABEA (MPF) Core Accumulation Fund Nil N/ABEA (MPF) Age 65 Plus Fund Nil N/A

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(c) Page 45 - The fee table headed “(D) FEES AND CHARGES PAYABLE OUT OF THE UNDERLYING FUNDS” under the section headed “Fee Table” shall be replaced in its entirety with the following:-

(D) FEES AND CHARGES PAYABLE OUT OF THE UNDERLYING FUNDS



Management fees7,7A BEA (MPF) Growth Fund 0-1.1% p.a. of NAV

Relevant underlying fund assets

BEA (MPF) Balanced Fund 0-1.1% p.a. of NAV

BEA (MPF) Stable Fund 0-1.1% p.a. of NAV

BEA (MPF) Global Equity Fund 0-1.0% p.a. of NAV

BEA (MPF) European Equity Fund Up to 1.0% p.a. of NAV

BEA (MPF) North American Equity Fund

Up to 1.0% p.a. of NAV

BEA (MPF) Asian Equity Fund 0-1.1% p.a. of NAV

BEA (MPF) Greater China Equity Fund

0-1.1% p.a. of NAV

BEA (MPF) Japan Equity Fund Up to 1.1% p.a. of NAV

BEA (MPF) Hong Kong Equity Fund 0-1.1% p.a. of NAV

BEA China Tracker Fund 0.6% p.a. of NAV

BEA Hong Kong Tracker Fund Up to 0.1% p.a. of NAV

BEA (MPF) Global Bond Fund 0-1.1% p.a. of NAV

BEA (MPF) Core Accumulation Fund N/A

BEA (MPF) Age 65 Plus Fund N/A

Guarantee charge8 BEA (MPF) Long Term Guaranteed Fund

1% p.a. of NAV

Other expenses Each underlying fund may bear its costs and operating expenses (e.g. establishment cost of the underlying fund, indemnity insurance, auditor’s fees and legal charges). Such expenses are summarized in point (vii) of the Explanatory Notes.

Relevant underlying fund assets

(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDSType of charges & expenses


Other expenses

The Constituent Funds will bear the operating expenses of the Master Trust (e.g. compensation fund levy (if any), indemnity insurance, auditor’s fees and legal charges) in proportion to their respective net asset values or in such other manner as the Trustee shall consider fair. Such expenses are summarized in point (vi) of the Explanatory Notes.

Certain recurrent expenses relating to the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund are subject to a statutory annual limit of 0.20% of the net asset value of each of those Constituent Funds and will not be charged to or imposed on the Constituent Fund in excess of that amount. Please refer to the sub-section “Fees and out-of-pocket expenses of the DIS” under Section 6.5A “MPF Default Investment Strategy” for details.

The establishment costs and payments incurred in the establishment of each of the following Constituent Funds are estimated as follows:

• BEA (MPF) North American Equity Fund – HKD117,000;• BEA China Tracker Fund – HKD138,000;• BEA Hong Kong Tracker Fund – HKD138,000; • BEA (MPF) RMB & HKD Money Market Fund (this Constituent Fund is

denominated in HKD only and not in RMB) – HKD198,000;• BEA (MPF) Core Accumulation Fund - HKD78,000; and• BEA (MPF) Age 65 Plus Fund - HKD78,000.

Such costs and payments will be borne by these Constituent Funds (other than the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund) and amortised over the first 5 years following their launch.

In the case of the BEA (MPF) Core Accumulation Fund and the BEA (MPF) Age 65 Plus Fund, such establishment costs and payments will be borne by these Constituent Funds and amortised over a period of 5 years, commencing from the first anniversary of the formation of the respective Constituent Fund.

Relevant Constituent Fund assets (Other expenses of BEA (MPF) Conservative Fund are deducted from relevant Member’s account by Unit deduction.)

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(d) Page 46 - The Fee Table headed “(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICES” shall be amended by adding the following words at the end of the second column of the second row under the item headed “Payment of benefits from mandatory or voluntary contributions (as the case may be) by withdrawal by instalments, if applicable”:

“Note: Such charge is not applicable to a Member who has all or part of the accrued benefits invested in the BEA (MPF) Core Accumulation Fund and/or BEA (MPF) Age 65 Plus Fund as at the time when the Trustee receives the valid withdrawal request from the Member.”

(e) Page 49 - The following new definition 7A shall be added immediately after the definition of “Management fees” in the sub-section “DEFINITIONS” under the section headed “Fee Table”:-

“7A. “Management fees” in respect of each of BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund, mean the fees paid to the Trustee, the Administrator, the Investment Manager (including fees based on fund performance, if any) and the Sponsor of the Master Trust and any of their delegates can only (subject to certain exceptions in the MPF Ordinance) be charged as a percentage of the net asset value of the fund. These management fees are also subject to a statutory daily limit equivalent to 0.75% per annum of the net asset value of the constituent fund which applies across both the constituent fund and underlying funds. Out of the 0.75%, 0.16% is for the fees payable to the Investment Manager, 0.295% is for the fees payable to the Sponsor, and 0.295% is for the fees payable to the Trustee and the Administrator. Services to be provided for the charging of payment of services by the Sponsor are related to product support, dissemination of MPF marketing materials and product development activities.”

(f) Page 50 - Paragraph ii. in the “EXPLANATORY NOTES” under the section headed “Fee Table” shall be deleted in its entirety and replaced with the following:

“The BEA (MPF) Long Term Guaranteed Fund, BEA (MPF) Growth Fund, BEA (MPF) Balanced Fund, BEA (MPF) Stable Fund, BEA (MPF) Global Equity Fund, BEA (MPF) European Equity Fund, BEA (MPF) North American Equity Fund, BEA (MPF) Asian Equity Fund, BEA (MPF) Greater China Equity Fund, BEA (MPF) Japan Equity Fund, BEA (MPF) Hong Kong Equity Fund, BEA China Tracker Fund, BEA Hong Kong Tracker Fund, BEA (MPF) Global Bond Fund, BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will, indirectly, bear the fees, charges and expenses of the underlying fund in which they invest. Where a Constituent Fund invests in an underlying fund managed by the Investment Manager and where the Trustee acts as trustee, no fee for investment manager or trustee will be charged on such underlying fund.”

(g) Page 50 - Paragraph vii. in the “EXPLANATORY NOTES” under the section headed “Fee Table” shall be deleted in its entirety and replaced with the following:-

“Each underlying fund may bear its costs and operating expenses to the extent permitted by the MPF Ordinance which may include but not limited to the fees and expenses (calculated not by reference to net asset value of the underlying fund) of custodians, sub-custodians, auditors, legal fees, the costs incurred in connection with any listing or regulatory approval, the costs incurred in the preparation and printing of any explanatory memorandum and the license fee (if any) (applicable to the underlying Approved Index-Tracking Funds in which the constituent funds invest).”

(h) Page 50 - The following paragraph shall be inserted after paragraph viii. in the “EXPLANATORY NOTES” under the section headed “Fee Table”:-

“ix. The rate of the management fees for BEA (MPF) Core Accumulation Fund and BEA (MPF) Age 65 Plus Fund will not exceed the statutory requirement for DIS.”

The Bank of East Asia, Limited and Bank of East Asia (Trustees) Limited12th December, 2016

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SECOND ADDENDUM TOTHE EXPLANATORY MEMORANDUM DATED DECEMBER, 2016

This Second Addendum should be read in conjunction with and forms part of the Explanatory Memorandum for the BEA (MPF) Master Trust Scheme (the “Master Trust”) dated December, 2016, as amended by a First Addendum dated 12th December, 2016 (collectively referred to as the “Explanatory Memorandum”). All capitalised terms herein contained shall have the same meaning in this Second Addendum as in the Explanatory Memorandum, unless otherwise stated. The Sponsor and the Trustee accept responsibility for the information contained in this Second Addendum as being accurate as at the date of publication.

With effect from 1st April, 2017 (being the commencement date of the MPF default investment strategy), the Explanatory Memorandum shall be amended as follows:

1. The “TABLE OF CONTENTS” shall be amended by inserting the words “MPF Default Investment Strategy (“DIS”)” immediately below the sub-section headed “INSTRUCTIONS TO CHANGE INVESTMENT” under the section headed “CONTRIBUTIONS”.

2. Risk Factors

(a) Page 17 - The following paragraphs shall be inserted after the sub-section headed “China market risk” under the section headed “Risk Factors”:-

“Equity investment risk and volatility risk

A Constituent Fund or its underlying fund(s) may invest directly or indirectly in equities and are thus, subject to the risks generally associated with equity investment, namely, the market value of the stocks may go down as well as up. Factors affecting the stock values are numerous, including but not limited to changes in investment sentiment, political environment, economic environment, issuer-specific factors such as issuers’ financial soundness and issuers’ financial statements as well as the business and social conditions in local and global marketplace.

Securities exchanges typically have the right to suspend or limit trading in any security traded on the relevant exchange; a suspension will render it impossible to liquidate positions and can thereby expose the Constituent Funds or its underlying fund(s) to losses.

The fundamental risk associated with any equity portfolio is the risk that the value of the investments it holds might unexpectedly and sharply decrease in value. Where equity markets are extremely volatile, the net asset value of a Constituent Fund and/or its underlying fund(s) may fluctuate substantially and Members may suffer substantial loss.”

(b) Page 18 - The sub-section headed “Credit risk” under the section headed “Risk Factors” shall be renamed “Credit risk and credit rating risk”, and the following paragraphs shall be inserted at the end of the sub-section:-

“A Constituent Fund or its underlying fund(s) may invest directly or indirectly in bonds, fixed interest securities or other debt securities and thus, subject to credit risk (i.e. the risk that an issuer of securities will be unable to pay principal and interest when due, or that the value of a security will fall because the market believes that the issuer is less able to pay). If the issuer defaults, the performance of a Constituent Fund or its underlying fund(s) can be adversely affected as the Constituent Fund or its underlying fund(s) may be unable to recover any amount due from the issuer.

This is broadly gauged by the credit ratings of the securities in which a Constituent Fund or its underlying fund(s) invest. Credit ratings may however not always be an accurate or reliable measure of the creditworthiness of the debt securities being invested in. Where such credit ratings prove inaccurate or unreliable, losses may be incurred by the Constituent Fund or its underlying fund(s).

Further, the credit rating of the debt security directly or indirectly held by a Constituent Fund or its underlying fund(s) may be downgraded. This usually leads to drops in the price of the debt security which may surpass those caused by general market fluctuations. A lowering of the credit rating of a debt security may also adversely affect the debt security’s liquidity, making it more difficult to sell.”

(c) Page 19 - The first paragraph under the sub-section headed “Currency risk” under the section headed “Risk Factors” shall be deleted in its entirety and replaced by the following:-

“A Constituent Fund or its underlying fund(s) that invests in securities denominated in currencies other than the Constituent Fund’s base currency (i.e. Hong Kong dollars) may be exposed to currency exchange risk. Fluctuations in exchange rates between these currencies and the base currency may cause the value of such securities in terms of the base currency to diminish or increase. If the currency in which a Constituent Fund’s or its underlying fund(s) portfolio security is denominated depreciates against the base currency of the Constituent Fund’s or its underlying fund(s), the value of the security in terms of the base currency will decrease and the net asset value of the Constituent Fund or its underlying fund(s) will be affected unfavourably.”

1

(d) Page 19 - The paragraph under the sub-section headed “Interest rates risk” under the section headed “Risk Factors” shall be deleted in its entirety and replaced by the following:-

“The prices of fixed income securities tend to vary inversely with market interest rates. The value of such securities is likely to decline in times of rising interest rates. Conversely, when rates fall, the value of these investments is likely to rise. The longer the time to maturity the greater such variations. To the extent a Constituent Fund or its underlying fund(s) hold long-term debt securities, its respective net asset value will be subject to a greater degree of fluctuation than if it held debt securities of a shorter duration.”

(e) Page 19 - The following paragraphs shall be inserted after the sub-section headed “Emerging market risk” under the section headed “Risk Factors”:-

“Further, all markets are subject to volatility based on prevailing economic conditions. Securities in “emerging” or “developing” markets may involve a higher degree of risk due to the small current size of the markets for securities of “emerging” or “developing” market issuers and the currently low or non-existent volume of trading, which could result in price volatility. Certain economic and political events in “emerging” or “developing” economies, including changes in foreign exchange policies and current account positions, could also cause greater volatility in exchange rates.

Market practices in certain emerging markets in relation to the settlement of securities transactions and custody of assets may increase the risk of settlement default. The clearing, settlement and registration systems available to effect trades on emerging markets may be significantly less developed than those in more mature world markets which can result in delays and other material difficulties in settling trades and in registering transfers of securities. Such delays could result in substantial losses for a Constituent Fund or its underlying fund(s) if investment opportunities are missed or if they are unable to acquire or dispose of securities as a result. Therefore, problems of settlement in these markets may affect the value of a Constituent Fund or its underlying fund(s).”

(f) Page 19 - The following paragraphs shall be inserted after the sub-section headed “Market / liquidity risk” under the section headed “Risk Factors”:-

“Hedging risk

The Investment Manager may acquire financial futures contracts and financial option contracts for hedging purposes. The Investment Manager is permitted, but not obliged, to use hedging techniques to attempt to offset currency and market risks. There is no guarantee that hedging techniques will achieve their desired result. If the techniques and instruments employed by the Investment Manager are incorrect, or the counterparty for such instruments default, the relevant Constituent Fund or its underlying fund(s) may suffer a substantial loss.

Counterparty risk

Counterparty risk involves the risk that a counterparty or third party will not fulfil its obligations to a Constituent Fund or its underlying fund(s). A Constituent Fund may be exposed to the risk of a counterparty through investments such as bonds, deposits, financial futures and options. To the extent that a counterparty defaults on its obligations and a Constituent Fund or its underlying fund(s) is delayed in exercising or prevented from exercising their respective rights with respect to the investment in their respective portfolio, the net asset value of a Constituent Fund or its underlying fund(s) may be adversely affected due to a decline in the value of the security, loss of income and incurring costs associated with their respective rights attached to the security.

Eurozone risk

The performance of a Constituent Fund or its underlying fund(s) that invest(s) in Europe will be affected by the economic, political, regulatory, geopolitical, market, currency or other conditions in the region. In particular, for the exit of EU members from the Eurozone such as Brexit and the ongoing concerns on the sovereign debt risk of certain countries within the Eurozone, the investments in the region may be subject to higher volatility, liquidity, currency and default risks. Any adverse event, such as credit downgrade of a sovereign, may have a negative impact on the value of the Constituent Fund or its underlying fund(s).

Political, economic and social risk

The performance of a constituent fund or its underlying fund(s) and its ability to pay redemption proceeds may be affected by changes in economic conditions and uncertainties such as change in political conditions including strikes and curfew and government policies, the terrorist activities causing the suspension of stock exchange such as 911 attack, the imposition of restrictions on the transfer of capital and changes in laws or regulatory requirements. For example, in respect of the investments in securities issued or guaranteed by governments, in adverse situation, the sovereign issuers may not be able or willing to repay the principal and/or interest when due or may request the constituent fund or its underlying fund(s) to participate in restructuring such debts. The constituent fund or its underlying fund(s) may suffer significant losses when there is a default of sovereign debt issuers.”

(g) Page 22 - The following paragraph shall be inserted immediately before the sub-section headed “Principal risks of investing in DIS” (introduced by the First Addendum of the Explanatory Memorandum) under the section headed “Risk Factors”:-

“Valuation and accounting risk

A Constituent Fund or its underlying fund(s) intends to adopt Hong Kong Financial Reporting Standard (“HKFRS”) in drawing up its annual accounts. However, members should note that a Constituent Fund or its underlying fund(s) intends to amortise the preliminary expenses and costs of the Constituent Fund or its underlying fund(s) over the first 5 financial years of the fund

2

commencing on the close of the initial offer period or over such other period as the Trustee shall consider fair. This policy of amortisation is not in accordance with HKFRS and may accordingly result in either a different net asset value being reflected in the annual audited accounts or the auditors qualifying the Constituent Fund’s accounts. However, the Trustee believes that the policy of capitalizing and amortising preliminary costs is fairer and more equitable to the initial members.

Valuation of the Constituent Fund’s or its underlying fund(s)’ investment may involve uncertainties and judgmental determinations. For example, securities held by the Constituent Fund or its underlying fund(s) may subsequently become illiquid due to events relating to the issuer of the securities, market and economic conditions and regulatory sanctions. The market value of such securities may become more difficult or impossible to ascertain. Under this circumstance, the Investment Manager may in consultation with the Trustee apply valuation methods to ascertain the fair value of such securities in accordance with the Trust Deed. If such valuation turns out to be incorrect, this may affect the net asset value calculation of the Constituent Fund or its underlying fund(s).”

3. Establishment, Termination, Merger and Division of Constituent Funds

Page 24 - The second paragraph under the section headed “Establishment, Termination, Merger and Division of Constituent Funds” shall be deleted in its entirety and replaced by the following:-

“The Trustee may with the consent of the Sponsor terminate a Constituent Fund on giving not less than 1 month’s notice to Members and each participating employer (or such other period of notice as the Authority or the Commission may require). If a Constituent Fund is terminated, contributions will cease to be invested in such Constituent Fund and amounts invested in such Constituent Fund must be switched (free of charge) into another Constituent Fund chosen by the relevant Member. If the relevant Member fails to make a choice when requested to do so, the Member’s Units in the terminating Constituent Fund will be switched into DIS and future contributions by or on behalf of the Member which would otherwise be invested in the terminating Constituent Fund will be invested in DIS.”

4. MPF Default Investment Strategy

Page 28 - The first and second paragraphs under the sub-section headed “Mandates to Invest Contributions” under the section headed “Contributions” shall be deleted in its entirety and replaced by the following:-

“On becoming a member of the Master Trust, a Member will be given an opportunity to give an instruction in a form specified by the Trustee (a “Mandate”) setting out how contributions made by and on behalf of the Member are to be invested in the Constituent Funds. If a Member elects to invest in a particular Constituent Fund, then the Member’s total contributions must be invested in that Constituent Fund in a multiple of 10%. In the absence of a Mandate, the Trustee will invest the relevant contributions in DIS. Upon enrolment, a Member may give a specific investment instruction for employer’s mandatory and voluntary contributions and a different specific investment instruction for employee’s mandatory and voluntary contributions.

A Member can change the Member’s Mandate by giving a new Mandate to the Trustee. The Member’s Mandate applies to future contributions and not accrued benefits. A Member may give different Mandates to different types of contributions; to illustrate, a specific investment instruction may be given to a Member’s employer’s mandatory contributions and a different specific investment instruction may be given to the Member’s employer’s voluntary contributions. The new Mandate will apply with effect no later than the latest of: the Valuation Date falling on or immediately after the effective date specified in the Mandate (if any), a Valuation Date within 7 Business Days after receipt of the new Mandate by the Trustee, or receipt by the Trustee of any fee payable for changing the Mandate. The new Mandate will only apply to investment of contributions received by the Trustee on or after the Valuation Date on which the new Mandate takes effect. If any change of Mandate given after enrolment does not meet the requirements for a Specific Investment Instruction, then such change of Mandate will be rejected and the existing investment allocation (in respect of future contributions and accrued benefits transferred from another scheme) will remain unchanged.”

5. Switching instructions

Page 29 - The first paragraph under the sub-section headed “Instructions to Change Investment” under the section headed “Contributions” shall be deleted in its entirety and replaced by the following:-

“Members have the right (subject to any suspension in the determination of the net asset value of any relevant Constituent Fund) to switch all or (subject as provided below) part of the Units relating to a Constituent Fund credited to their account into Units relating to another Constituent Fund or Constituent Funds by giving an instruction in a form specified by the Trustee (a “Switching Instruction”). A Member may give different Switching Instructions to different types of accrued benefits; to illustrate, a Switching Instruction in respect of the accrued benefits attributable to a Member’s mandatory contributions can be different from a Switching Instruction given in respect of the accrued benefits attributable to the Member’s voluntary contributions. However, where a Member gives a Switching Instruction in respect of Units relating to the BEA (MPF) Long Term Guaranteed Fund, the Switching Instruction must be in respect of all such Units credited to the account of the relevant Member. Any Switching Instruction only applies to accrued benefits already in the relevant Member’s account and not future contributions. If any Switching Instruction given after enrolment does not meet the requirements for a Specific Investment Instruction, then such Switching Instruction will be rejected, and the existing investment (in respect of the existing accrued benefits) will remain unchanged.”

The Bank of East Asia, Limited and Bank of East Asia (Trustees) Limited12th December, 2016

3

This Third Addendum should be read in conjunction with and forms part of the Explanatory Memorandum for the BEA (MPF) Master Trust Scheme (the "Master Trust") dated December, 2016, as amended by the First Addendum and Second Addendum both dated 12th December, 2016 (collectively referred to as the "Explanatory Memorandum"). All capitalised terms herein contained shall have the same meaning in this Third Addendum as in the Explanatory Memorandum, unless otherwise stated. The Sponsor and the Trustee accept responsibility for the information contained in this Third Addendum as being accurate as at the date of publication.

The Explanatory Memorandum shall be amended as follows:

A. Changes to take effect from 31st January, 2018

1. Directory of Parties

Page 1 - The paragraph under the heading "Legal Advisers" under the section headed "DIRECTORY OF PARTIES" shall be deleted in its entirety and replaced by the following:

"Baker & McKenzie 14/F., Hutchison House 10 Harcourt Road Central, Hong Kong"

2. Sponsor's Asset Size

Page 25 - The second paragraph under the sub-section headed "Sponsor" under the section headed "MANAGEMENT AND ADMINISTRATION" shall be deleted in its entirety and replaced by the following:

"Incorporated in Hong Kong in 1918, the Bank is dedicated to providing comprehensive retail banking, commercial banking, wealth management, and investment services to its customers in Hong Kong and other major markets around the world. The Bank is the largest independent local bank in Hong Kong, with total consolidated assets of HK$788.5 billion (US$101.0 billion) as of 30th June, 2017. The Bank is listed on the Stock Exchange of Hong Kong and is one of the constituent stocks of the Hang Seng Index."

3. Cut-Off Time for Instructions to Change Investment

Page 29 - The following paragraph shall be inserted after the third paragraph under sub-section headed "Instructions to Change Investment" under the section headed "CONTRIBUTIONS".

"The Cut-off time for Switching Instruction is 4 p.m. on Business Day."

4. Charges for Withdrawal by Instalment

a) Page 32 - The fifth paragraph under the sub-subsection headed "Withdrawal by instalments" under sub-section headed "Payment of Benefits" under the section headed "BENEFITS" shall be deleted in its entirety and replaced by the following:

"In respect of withdrawal by instalments, the first 12 instalments (or such further number of instalments as determined by the Trustee) in any calendar year (the period from 1st January to 31st December in a year) will be paid free of charge (other than any necessary transaction costs permitted under the General Regulation). Thereafter, each additional withdrawal by instalment in the same calendar year is subject to a fee of HK$100, which shall be paid to a bank account designated by the Trustee as specified in the claim form. Please note that bank charges may apply to Members' banking accounts if Members choose to be paid the withdrawal amount directly to their bank account."

b) Page 33 - The second paragraph under the sub-subsection headed "Other points to note" under sub-section headed "Payment of Benefits" under the section headed "BENEFITS" shall be deleted in its entirety and replaced by the following:

"Save as disclosed above, no fees or financial penalties shall be charged or imposed for payment of benefits (in a lump sum or by instalments for the first 12 instalments in a calendar year) other than an amount representing the necessary transaction costs that are incurred, or reasonably likely to be incurred, by the Trustee in selling or purchasing investments in order to give effect to the payment and are payable to a party other than the Trustee. Such necessary transaction costs would include, but are not limited to, items such as brokerage commissions, fiscal charges and levies, government charges, bank charges, exchange fees, costs and commissions, registration fees and charges, collection fees and expenses, etc. Any amount of such fees and charges imposed and received must be used to reimburse the relevant Constituent Fund."

c) Page 47 and 48 - The phrase "first 4 instalments" whenever it appears in the fee table headed "(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICES" shall be deleted in its entirety and replaced by the words "first 12 instalments".


THIRD ADDENDUM TOTHE EXPLANATORY MEMORANDUM DATED DECEMBER, 2016

1

d) Page 49 - The phrase "first 4 instalments (or such other number of instalments as may be prescribed by the General Regulation)" appearing in the definition of "Bid spread" in the sub-section "DEFINITIONS" under the section headed "Fee Table" shall be deleted in its entirety and replaced by the words "first 12 instalments".

e) Page 49 - The phrase "first 4 instalments (or such other number of instalments as may be prescribed by the General Regulation)" appearing in the definition of "Withdrawal charge" in the sub-section "DEFINITIONS" under the section headed "Fee Table" shall be deleted in its entirety and replaced by the words "first 12 instalments".

5. Hang Seng Index

Page 77 - The third and fourth paragraphs under sub-section "Hang Seng Index" under "APPENDIX 2 FURTHER INFORMATION ON THE INDICES" shall be replaced in their entirety with the following paragraphs:

"The Hang Seng Index currently comprises 50 constituent stocks which are representative of the Hong Kong stock market. The aggregate market value of these stocks accounts for about 56.54 per cent of the total market capitalisation of all stocks listed on the Main Board of SEHK. As at 29th September, 2017, the respective weightings of the top 10 largest constituent stocks of the Hang Seng Index are:

Stock Code Stock Name Weighting

700 Tencent Holdings Ltd. - Other HK-listed Mainland Co. 10.59%

5 HSBC Holdings plc - HK Ordinary 10.31%

939 China Construction Bank Corporation - H Share 8.05%

1299 AIA Group Ltd. - HK Ordinary 7.99%

941 China Mobile Ltd. - Red Chip 5.58%

1398 Industrial and Commercial Bank of China Ltd. - H Share 4.92%

2318 Ping An Insurance (Group) Co. of China Ltd. - H Share 3.59%

3988 Bank of China Ltd. - H Share 3.51%

1 CK Hutchison Holdings Ltd. - HK Ordinary 3.10%

388 Hong Kong Exchanges and Clearing Ltd. - HK Ordinary 2.82%

Real-time update of the Hang Seng Index can be obtained through the SEHK Teletext System, Thomson Reuters, Bloomberg and the website of HSIL at www.hsi.com.hk. The index rules and further information in relation to the Hang Seng Index are available at www.hsi.com.hk. As for other important news of the Hang Seng Index, HSIL will also make announcements through press releases and at www.hsi.com.hk."

B. Changes to take effect from 5th March, 2018

1. BEA China Tracker Fund

a) Each reference to "Hang Seng H-Share Index ETF" in the Explanatory Memorandum shall be replaced with "Hang Seng China Enterprises Index ETF";

b) Page 12 - The title of "Hang Seng H-Share Index ETF level" under the sub-subsection headed "Tracking of the Hang Seng China Enterprises Index" under the sub-section headed "Investment Objectives and Policies" under the section "CONSTITUENT FUNDS" shall be replaced with "Hang Seng China Enterprises Index ETF level".

c) Page 22 - A new risk factor will be added immediately following the existing risk factor "Risk in relation to Investments in Index-Tracking Funds" in the sub-section "Risk Factors" under the section "CONSTITUENT FUNDS"

"Risks associated with investments in the Hang Seng China Enterprises Index ETF, the Approved Index-Tracking Fund in which the BEA China Tracker Fund invests

(i) Concentration and Mainland market risk

The Hang Seng China Enterprises Index ETF is subject to concentration risk as a result of tracking the performance of a single geographical region (i.e. the People's Republic of China (PRC) including the Mainland and Hong Kong). The value of the Hang Seng China Enterprises Index ETF may be more volatile than that of an investment fund having a more diverse portfolio of investments. The constituent stocks of the underlying index of the Hang Seng China Enterprises Index ETF are securities of companies which are listed on the Stock Exchange of Hong Kong Limited (the "SEHK") and have major business exposure to the Mainland market, an emerging market. Investments of the Hang Seng China Enterprises Index ETF may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks / control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility.

(ii) PRC tax risk

Currently, the manager of the Hang Seng China Enterprises Index ETF (the "Underlying ITCIS Manager") does not make any

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tax provision on realised gains derived from trading of H-shares by the Hang Seng China Enterprises Index ETF and does not have any intention to make any tax provision on realised gains derived from trading of Red-chips and P-chips. However, the Underlying ITCIS Manager reserves the right to make any provision for taxes or withhold any tax for the account of the Hang Seng China Enterprises Index ETF.

There are still uncertainties as to the application of the laws, rules and / or regulations on PRC Corporate Income Tax and PRC Value-Added Tax and surtaxes. It is also uncertain as to whether the Hang Seng China Enterprises Index ETF may be subject to other taxes imposed in the PRC. It is possible that the current tax laws, rules, regulations and practice in the Mainland and / or the current interpretation or understanding thereof may change in the future and such change(s) may have retrospective effect. Where no provision is made by the Underlying ITCIS Manager in relation to all or part of the actual taxes levied by the relevant PRC tax authorities in future, investors should note that net asset value of the Hang Seng China Enterprises Index ETF may be lowered, as the Hang Seng China Enterprises Index ETF will ultimately have to bear the full amount of tax liabilities. In this case, such amount of tax liabilities will impact units in the Hang Seng China Enterprises Index ETF at the relevant time, and the then existing unitholders and subsequent unitholders of the Hang Seng China Enterprises Index ETF will be disadvantaged."

2. Hang Seng China Enterprises Index

Page 76 - The first three paragraphs under sub-section "Hang Seng China Enterprises Index" under "APPENDIX 2 FURTHER INFORMATION ON THE INDICES" shall be replaced in their entirety with the following paragraphs:

"The Hang Seng China Enterprises Index is the major index that tracks the performance of: (i) H-shares, which are shares in Mainland incorporated enterprises that are listed on the SEHK and primarily traded in Hong Kong; (ii) Red-chips, which are securities of companies that are incorporated outside of the PRC that are listed on the SEHK have more than 50% of their sales revenue (or profits or assets, if more appropriate) derived from Mainland and are directly or indirectly controlled by organisations or enterprises that are owned by the state, province or municipalities of the PRC; (iii) P-chips, which are securities of companies that are incorporated outside of the PRC that are listed on the SEHK and have more than 50% of their sales revenue (or profits or assets, if more appropriate) derived from Mainland but are not H-shares or Red-chips. The list of constituent stocks which comprise the Hang Seng China Enterprises Index is reviewed on a quarterly basis.

The universe of the Hang Seng China Enterprises Index includes all H-share companies that have their primary listing on the Main Board of the SEHK. The number of H-share constituents is 40 whereas the total number of Red-chips and P-chips constituents is 10. The aggregate market value of these stocks accounts for about 58 per cent# of the total market capitalisation of all Hong Kong listed Chinese enterprises of all H-shares listed on the Main Board of SEHK, the Red-chips and the P-chips.

# Simulated figures based on 12-month average market capitalisation of 2016.

As at 29th September, 2017, the respective weightings of the top 10 largest constituent stocks of the Hang Seng China Enterprises Index were as follows:

Stock Code Stock Name Weighting

1398 Industrial and Commercial Bank of China Ltd. - H Share 10.12%

2318 Ping An Insurance (Group) Co. of China Ltd. - H Share 9.87%

3988 Bank of China Ltd. - H Share 9.72%

939 China Construction Bank Corporation - H Share 9.61%

2628 China Life Insurance Co. Ltd. - H Share 6.07%

386 China Petroleum & Chemical Corporation - H Share 5.23%

3968 China Merchants Bank Co., Ltd. - H Share 3.76%

857 PetroChina Co. Ltd. - H Share 3.66%

1288 Agricultural Bank of China Ltd. - H Share 3.39%

2601 China Pacific Insurance (Group) Co., Ltd. - H Share 2.78%

The top 10 largest constituent stocks and their respective weightings of the Hang Seng China Enterprises Index may vary once the

Hang Seng China Enterprises Index has commenced to track not only the performance of H-shares but also the performance of Red-chips and P-chips from 5th March, 2018. We will update the above table periodically.

Real-time update of the Hang Seng China Enterprises Index can be obtained through the SEHK Teletext System, Thomson Reuters, Bloomberg and the website of HSIL at www.hsi.com.hk. The index rules and further information in relation to the Hang Seng China Enterprises Index are available at www.hsi.com.hk. As for other important news of the Hang Seng China Enterprises Index, HSIL will also make announcements through press releases and at www.hsi.com.hk."

The Bank of East Asia, Limited and Bank of East Asia (Trustees) Limited31st January, 2018

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On-Going Cost Illustrations ForBEA (MPF) Master Trust Scheme

Issue Date : 29th September, 2017

About This IllustrationThis is an illustration of the total effect of fees, expenses and charges on each HK$1,000 contributed in the funds named below. The fees, expenses and charges of a fund are one of the factors that you should consider in making investment decisions across funds. You should however also consider other important information such as the risks of the fund, the nature of the fund, the attributes of relevant parties, the range and quality of services being offered and, most importantly, your own personal circumstances and expectations. The information about fees, expenses and charges set out in this table is intended to help you compare the cost of investing in one constituent fund with the cost of investing in other constituent funds.

The Illustration has been prepared based on some assumptions that are the same for all funds. The Illustration assumes the following:

(a) a gross contribution of HK$1,000 is made in the respective constituent fund now and, being eligible to do so, you withdraw all of your accrued benefits arising from this contribution at the end of each time period indicated;

(b) for the purpose of this illustration only, the contribution has a 5% gross return each year [It is important that you note that the assumed rate of return used in this document is for illustrative and comparative purposes only. The return is neither guaranteed nor based on past performance. The actual return may be different.]; and

(c) the expenses of the funds (expressed as a percentage called the ‘fund expense ratio’ below) remain the same for each fund for all the periods shown in this illustration.

Based on the above assumptions, your costs on each HK$1,000 contributed are illustrated in the following table. Please note that the actual costs will depend on various factors and may be different from the numbers shown below.

Name of constituent fundFund expense ratio for financial period ended March 2017

Cost on each HK$1,000 contributedAfter 1 year

(HK$)After 3 years

(HK$)After 5 years

(HK$)

BEA (MPF) Growth Fund 1.44% 15 47 81

BEA (MPF) Balanced Fund 1.39% 15 45 78

BEA (MPF) Stable Fund 1.35% 14 44 76

BEA (MPF) Global Equity Fund 1.31% 14 43 74

BEA (MPF) European Equity Fund 1.86% 20 60 104

BEA (MPF) North American Equity Fund 1.26% 13 41 71

BEA (MPF) Asian Equity Fund 1.41% 15 46 79

BEA (MPF) Greater China Equity Fund 1.34% 14 44 76

BEA (MPF) Japan Equity Fund 1.81% 19 59 101

BEA (MPF) Hong Kong Equity Fund 1.32% 14 43 74

BEA China Tracker Fund 1.30% 14 42 73

BEA Hong Kong Tracker Fund 0.77% 8 25 44

BEA (MPF) Global Bond Fund 1.08% 11 35 61

BEA (MPF) RMB & HKD Money Market Fund 0.78% 8 26 45

BEA (MPF) Long Term Guaranteed Fund 2.50% 26 81 138

Note :1. The example does not take into account any fee rebates that may be offered to certain members of the scheme.2. No figures are available for the following new constituent funds, which were launched after the end of the scheme’s

relevant financial period (i.e. after 31st March, 2017): i) BEA (MPF) Core Accumulation Fund ii) BEA (MPF) Age 65 Plus Fund

TR 144 (09/2017)