principal central provident fund...1 addendum to the principal brochure of principal central...

Principal Central Provident FundPrincipal Brochure

Principal Central Provident Fund

Exclusive Distributor

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PRINCIPAL CENTRAL PROVIDENT FUND (“PRINCIPAL CPF”)

NOTICE TO PARTICIPATING EMPLOYERS AND MEMBERS (COLLECTIVELY, “SCHEME PARTICIPANTS”)

This notice is important and requires your immediate attention. If you are in any doubt about the contents of this notice, you should seek independent professional financial advice. This notice should be read by all Scheme Participants of the Principal CPF.

Principal Trust Company (Bermuda) Limited (“PTC (Bermuda)”, the “Existing Trustee” or “we”) accepts responsibility for the information contained in this notice having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

Terms used in this notice have the same meaning as in the latest version of the principal brochure (6 October 2017 edition) of the Principal CPF (the “Principal Brochure”) unless otherwise defined.

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1. INTRODUCTION

PTC (Bermuda) writes to inform you that certain changes (the “Changes”) will take place in relation to the Principal CPF with effect from 1 August 2018 (the “Effective Date”). In summary, with effect from the Effective Date, the following Changes will take place:

(a) PTC (Bermuda) will cease to be the trustee of the Principal CPF, and Principal Trust Company (Asia) Limited (“PTC (Asia)” or the “New Trustee”) will be the New Trustee of the Principal CPF (the “Replacement of Trustee”) and, correspondingly, Principal Trust Company (Hong Kong) Limited (“PTC (Hong Kong)”) will cease to be the Hong Kong representative; and

(b) as a result of the Replacement of Trustee, PTC (Asia) will continue the function as the administration manager of the Principal CPF but in its capacity as the New Trustee; accordingly, the appointment of PTC (Asia) as the administration manager of the Principal CPF will be terminated.

The details of the above changes are as follows.

2. REPLACEMENT OF TRUSTEE

2.1. By resolution of the board of Principal Insurance Company (Hong Kong) Limited (“PIC”), PTC (Bermuda) will cease to be the trustee of the Principal CPF, and PTC (Asia) will be appointed as the New Trustee, with effect from the Effective Date. Such Replacement of Trustee will be effected by a deed of appointment and removal of trustee in relation to the Principal CPF pursuant to clause 8(b) of the trust deed of the Principal CPF (the “Trust Deed”). PIC works with the trustee of the Principal CPF on strategic and product direction

Principal Trust Company (Bermuda) Limited

30/F, Millennium City 6392 Kwun Tong Road,Kwun Tong, Kowloon, Hong KongFax: (852) 2263-0833Customer Service Hotline: (852) 2802-2812 / 2885-8011Website: www.principal.com.hk

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of the Principal CPF, inclusive of, in particular, product design, service enhancement and strategic endeavours.

2.2. The Replacement of Trustee will help streamline the trusteeship service of Principal Group’s entities in Hong Kong1 so that PTC (Asia), which is the trustee of other SFC authorised pooled investment funds, will be the sole trustee for all pooled retirement funds operated and administered by the Principal Group in Hong Kong.

2.3. PTC (Asia) is a company incorporated in Hong Kong in 1997. It is a trustee of certain MPF (Mandatory Provident Fund) and ORSO (Occupational Retirement Schemes Ordinance) schemes. PTC (Asia) provides one-stop shop services on retirement scheme management, including corporate trustee, fund and scheme administration services. In addition, PTC (Asia) is engaged in the provision of unit trust administration and registration services to unit trust investors.

2.4. With PTC (Asia) taking up the provision of trustee and custodial services to the Principal CPF, this will mean greater economies of scale can be achieved and ensuing increase in operational efficiency and overall cost-effectiveness will benefit all Scheme Participants.

2.5. Unlike PTC (Bermuda) which is a Bermuda entity, PTC (Asia) is a Hong Kong incorporated entity. As such, the appointment of PTC (Asia) as the New Trustee will mean that the role of PTC (Hong Kong) as the Hong Kong representative of the Existing Trustee can be dispensed with. Accordingly, with the replacement of PTC (Bermuda) with PTC (Asia) as the New Trustee, PTC (Hong Kong) will cease to be the Hong Kong representative from the Effective Date.

2.6. The address of the New Trustee, postal address for submission of cheques and remittance statements for contribution payments as well as administration forms, customer service counters and customer service email address will be the same as the present one, i.e. 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong. In particular, the payee name of the contributions payment will continue to be “Principal Trust Company (Hong Kong) Limited – ORSO” (while the payee name in the Chinese language will be “信安信託（香港）有限公司－公積金”). PTC (Hong Kong) will be the delegate to PTC (Asia) for the purposes of receiving contributions payment.

3. REMOVAL OF ADMINISTRATION MANAGER

PTC (Asia) is currently the administration manager of the Principal CPF. With effect from the Effective Date, PTC (Asia) will continue to provide its administrative services to the Principal CPF but in its capacity as the New Trustee. As such, effective from the appointment of the New Trustee from the Effective Date, the appointment of PTC (Asia) as the administration manager of the Principal CPF will be terminated.

4. IMPACTS OF THE CHANGES AND ALTERNATIVE TO SCHEME PARTICIPANTS

4.1. PTC (Bermuda) has been working closely with the relevant stakeholders involved in the Changes to ensure a smooth transition and confirms that the Changes will not have any adverse impact on the Principal CPF or the interests of the Scheme Participants. PTC (Bermuda) and PTC (Asia) will ensure that the Changes will be in the interests of the Scheme Participants and the interests of the Scheme Participants will be adequately protected and will not be prejudiced in this exercise.

1 “Principal Group” means PTC (Asia), together with its holding company, subsidiaries and associated companies (whether direct or indirect) from time to time.

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4.2. In addition, all costs and expenses associated with the Changes will be borne by PTC (Bermuda) and PTC (Asia), to be agreed among themselves, and will not be borne by the Principal CPF, the investment options under the Principal CPF, the underlying investment vehicles in which the investment options invest or the Scheme Participants.

4.3. Having said the above, if any participating employer does not wish to be involved in the Changes, it may transfer out of the Principal CPF to another retirement scheme arrangement, including any pooling agreement or MPF scheme (collectively, “another retirement scheme”) free of charge by submitting to the existing administration manager, PTC (Asia), at 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong:

• a written termination notice (given in accordance with the Principal Brochure) and an “Attachment to Schedule to Deed of Adoption”, both duly executed by the participating employer; and

• a “Request and Release Form” duly executed by each member under the participating scheme of the participating employer.

However, members will not be entitled to transfer out of the Principal CPF unless their participating employers elect to do so.

4.4. While PTC (Bermuda) will use its best endeavours to effect any transfer instructions as soon as possible with a view to completing them before the Effective Date, any transfer to another retirement scheme will be subject to the cooperation of the transferee trustee of another retirement scheme, and, where necessary, the consent of the members and/or participating employers and in some cases, regulatory approval from the Mandatory Provident Fund Schemes Authority. In addition, PTC (Bermuda) may only effect any transfer out instructions of a member when there is no outstanding contribution attributable to the member. As such, it is possible that a transfer out instruction may only be completed after the Effective Date.

4.5. No fees or penalty, bid/offer spread or transfer fee will be imposed on the Scheme Participants for any transfer. Scheme Participants should review all terms and conditions under the Principal CPF before making any decision.

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If, for whatever reason (e.g. typhoon number 8 being hoisted), 1 August 2018 is not a business day, the Effective Date will be postponed to the next business day (the “New Effective Date”) and each reference to “Effective Date” in this notice will therefore be deemed to be construed to mean the New Effective Date.

From the Effective Date, the Changes will be reflected in the updated Principal Brochure, which will be available on the New Trustee’s website at www.principal.com.hk or upon request by contacting the Customer Service Hotline at 2802 2812 or 2885 8011.

If you have any queries in relation to the above changes, please contact the Customer Service Hotline.

Principal Trust Company (Bermuda) Limited15 June 2018

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Addendum to the Principal Brochure of Principal Central Provident Fund (the “Principal Brochure”)

This Addendum should be read in conjunction with and forms part of the Principal Brochure (6 October 2017 edition).

By this Addendum, the Principal Brochure shall be amended as follows with effect from 1 August 2018:

Front page

1. The information beneath the text box for the section “IMPORTANT INFORMATION” on the front page of the Principal Brochure shall be amended by the replacement of “Principal Trust Company (Bermuda) Limited” with “Principal Trust Company (Asia) Limited”.

Page 2

2. The diagram in Section 2 “Structure of the Principal CPF” shall be amended by the replacement of “Principal Trust Company (Bermuda) Limited with Principal Trust Company (Hong Kong) Limited as the representative in Hong Kong” in the box titled “Trustee” with “Principal Trust Company (Asia) Limited”.

3. The notes to the diagram in Section 2 “Structure of the Principal CPF” shall be amended by the replacement of note (1) with the following:

“(1) In order to participate in the Principal CPF, an employer needs to execute a deed of adoption (including the schedule thereto) with Principal Trust Company (Asia) Limited, the trustee to the Principal CPF (the “Trustee” or “PTC (Asia)”). By entering into the deed of adoption (including the schedule thereto), the employer will be bound by the terms and conditions (as amended from time to time) of the master trust deed which constituted the Principal CPF (the “Trust Deed”).”

Page 4

4. Section 4 “Parties Involved in the Management of the Principal CPF” shall be amended by the replacement of “Principal Trust Company (Bermuda) Limited” under the sub-section titled “Trustee of the Principal CPF” with “Principal Trust Company (Asia) Limited”.

Page 23

5. Section 8 “General Information” shall be amended by the replacement of “Principal Trust Company (Bermuda) Limited” in the second paragraph under the sub-section titled “MPF Exemption” with “Principal Trust Company (Asia) Limited”.

Page 24

6. Section 9 “Addresses” on page 24 shall be amended by:

(a) the replacement of the sub-section entitled “Trustee” with the following:

“TrusteePRINCIPAL TRUST COMPANY (ASIA) LIMITED30/F, Millennium City 6,392 Kwun Tong Road, Kwun Tong,Kowloon, Hong Kong”;

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(b) the deletion of the sub-sections titled “Representative of the Trustee in Hong Kong” and “Administration Manager” and the information in these sub-sections;

(c) the deletion of the registered addresses that are stated to be valid before 16 October 2017 and the words “Before 16 October 2017” from each of the sub-sections titled “Insurer of the underlying policies in which the Relevant Investment Options invest” and “Investment Advisor of Principal CPF”; and

(d) the deletion of the words “On and after 16 October 2017” from each of the sub-sections titled “Insurer of the underlying policies in which the Relevant Investment Options invest” and “Investment Advisor of Principal CPF”.

Except as amended by this Addendum, the Principal Brochure remains in full force and effect.

* * *

Principal Trust Company (Bermuda) Limited1 August 2018

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Principal Trust Company (Bermuda) Limited (“PTC (Bermuda)”, the “Trustee” or “we”) accepts responsibility for the information contained in this notice having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

Terms used in this notice have the same meaning as in the latest version of the principal brochure (effective 6 October 2017) of the Principal CPF (the “Principal Brochure”) and the notice to participating employers and members dated 1 September 2017 (the “Notice”), unless otherwise defined.

We refer to paragraph 2.6 of the Notice. We wish to clarify that:

(a) for the International Equity Fund (renamed from AXA Unit Trusts – Global Fund) and International Bond Fund (renamed from AXA Unit Trusts – Currency and Bond Fund), these two investment options are denominated in USD, while their respective corresponding underlying investment vehicles are denominated in HKD; and

(b) for the other investment options (including the Asia Pacific Equity Fund (renamed from AXA Unit Trusts – Pacific Fund)), these investment options are denominated in the same currency as their corresponding underlying investment vehicles.

In addition, in respect of the investment option Principal – RCM Hong Kong Fund Policy, the names of the unit trust which this investment option invests through an insurance policy and the investment manager of the unit trust have been changed as follows:

Old name Current name

Unit trust RCM Choice Fund – RCM Hong Kong Fund

Allianz Global Investors Choice Fund – Allianz Choice Hong Kong Fund

Investment manager of unit trust RCM Asia Pacific Limited Allianz Global Investors Asia Pacific Limited


30/F, Millennium City 6392 Kwun Tong Road,Kwun Tong, Kowloon, Hong KongFax: (852) 2263-0833Customer Service Hotline: (852) 2802-2812 / 2885-8011Website: www.principal.com.hk

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Accordingly, any references to the old names in the table above in the Principal Brochure and the marketing materials (e.g. fund fact sheets) should be construed to mean their respective current names. If you have any queries in relation to the above, please contact our Customer Service Hotline at 2802 2812 or 2885 8011.

Principal Trust Company (Bermuda) Limited23 November 2017

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Principal Trust Company (Bermuda) Limited (“PTC (Bermuda)”, the “Trustee” or “we”) accepts responsibility for the information contained in this notice having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

Terms used in this notice have the same meaning as in the latest version of the principal brochure (1 September 2015 edition) of the Principal CPF (the “Principal Brochure”) unless otherwise defined.

***1. INTRODUCTION

PTC (Bermuda) writes to inform you that certain restructuring (the “Restructuring”) will take place in relation to the Principal CPF with effect from 6 October 2017 (the “Effective Date”). In summary, with effect from the Effective Date (save for the change of address as detailed in the section “5. MISCELLANEOUS MATTERS” which will take effect from 16 October 2017), the following Restructuring will take place:

(a) the existing underlying investment vehicles in which the investment options as set out in the following table (collectively, the “Revamped Investment Options”, and each, a “Revamped Investment Option”) under the Principal CPF invest will be replaced by the new underlying investment vehicles respectively (“Changes of Underlying Investment Vehicles”):

Revamped Investment Option

Existing underlying investment vehicle

New underlying investment vehicle

International Equity Fund (to be renamed from AXA Unit Trusts - Global Fund)#

AXA Unit Trusts - Global Fund

Principal Life Style Fund - Principal International Equity Fund

Asia Pacific Equity Fund (to be renamed from AXA Unit Trusts - Pacific Fund)#

AXA Unit Trusts - Pacific Fund

Principal Prosperity Series - Principal Asia Pacific High Dividend Equity Fund

International Bond Fund (to be renamed from AXA Unit Trusts - Currency and Bond Fund)#

AXA Unit Trusts - Currency and Bond Fund

Principal Life Style Fund - Principal International Bond Fund

# These investment options will also be subject to name changes; please refer to the section “3. NAME CHANGES OF THE INVESTMENT OPTIONS” for details.


30/F, Millennium City 6392 Kwun Tong Road,Kwun Tong, Kowloon, Hong KongFax: (852) 2263-0833Customer Service Hotline: (852) 2802-2812Website: www.principal.com.hk

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As a result, there will be changes to: (i) their investment objectives and strategies; (ii) the key operators; and (iii) trustee, custodian and administration fee.

For details, please refer to the section “2. CHANGES OF UNDERLYING INVESTMENT VEHICLES” and Appendices 1 and 2 to this notice;

(b) certain investment options will be given new names - for details, please refer to the section “3. NAME CHANGES OF THE INVESTMENT OPTIONS”; and

(c) management charges in respect of the investment options set out in the following table will be reduced (although there will be an increase in the maximum total fees and charges (inclusive of the maximum total fees and charges at both the investment option and underlying investment vehicle levels) for the investment options marked with “$” against them. Please refer to section 2.5 and Appendix 1 for details) (the “Fee Structure Change”):

Investment option

Current management charge (inclusive of the management fee at the

investment option and the underlying investment

vehicle levels)

(of net asset value of the underlying investment

vehicle)

New management charge (inclusive of the management fee at the


vehicle levels)


vehicle)

International Equity Fund$ 1.25% p.a. 1.2% p.a.

Asia Pacific Equity Fund$ 1.25% p.a. 1.15% p.a.

$ For these investment options, there will be a reduction in the management charge (inclusive of the management fee at the investment option and the underlying investment vehicle levels) but an increase in the maximum total fees and charges (inclusive of the maximum total fees and charges at both the investment option and underlying investment vehicle levels). Please refer to section 2.5 and Appendix 1 for further details.

For details, please refer to the section “4. FEE STRUCTURE CHANGE”.

(d) certain miscellaneous changes with regard to address of the Principal Group’s entities in Hong Kong - for details, please refer to the section “5. MISCELLANEOUS MATTERS”.

PTC (Bermuda) is of the view that the Restructuring would enhance the competitiveness of the Principal CPF and streamline its product offerings. In addition, no bid-offer spread at both the investment option level and underlying investment vehicle level will be imposed on the Scheme Participants for the Restructuring, and all costs of the Restructuring will be borne by PTC (Bermuda). As such, PTC (Bermuda) considers that the Restructuring will not create any adverse impact on the services currently enjoyed by the Scheme Participants.

2. CHANGES OF UNDERLYING INVESTMENT VEHICLES

2.1. The Revamped Investment Options set out in the table below will have their respective underlying investment vehicles changed. The table below sets out the existing underlying investment vehicle in which each Revamped Investment Option is currently investing and the new underlying investment vehicle in which each Revamped Investment Option will invest from the Effective Date.

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Revamped Investment Option

Existing underlying investment vehicle

New underlying investment vehicle

International Equity Fund (to be renamed from AXA Unit Trusts - Global Fund)#


Principal Life Style Fund - Principal International Equity Fund

Asia Pacific Equity Fund (to be renamed from AXA Unit Trusts - Pacific Fund)#


Principal Prosperity Series - Principal Asia Pacific High Dividend Equity Fund

International Bond Fund (to be renamed from AXA Unit Trusts - Currency and Bond Fund)#

AXA Unit Trusts - Currency and Bond Fund

Principal Life Style Fund - Principal International Bond Fund

# These investment options will also be subject to name changes; please refer to the section “3. NAME CHANGES

OF THE INVESTMENT OPTIONS” for details.

2.2. As a result of the Changes of Underlying Investment Vehicles, there will be changes to the investment objectives and strategies as well as the key operators in respect of each Revamped Investment Option. We set out in Appendix 2 to this notice the key features of the existing and new underlying investment vehicles of each Revamped Investment Option. The investment objective and policy and risk and return profile of each Revamped Investment Option will remain similar or materially the same following the Changes of Underlying Investment Vehicles.

2.3. The Changes of Underlying Investment Vehicles will take place on the Effective Date and effected in the following manner:

• PTC (Bermuda) as the Trustee will redeem the investments made on behalf of the Revamped Investment Options in the respective corresponding existing underlying investment vehicles (the “Redemption Proceeds”) on the Effective Date;

• PTC (Bermuda) as the Trustee will utilise the Redemption Proceeds* to subscribe for units of the respective corresponding new underlying investment vehicles on the Effective Date.

* Note: AXA Unit Trusts - Global Fund and AXA Unit Trusts - Currency and Bond Fund (collectively, “AXA

UTs”) are denominated in US dollars while Principal Life Style Fund - Principal International Equity Fund

and Principal Life Style Fund - Principal International Bond Fund (the “PLSF Funds”), the new underlying

investment vehicles that are to replace the AXA UTs respectively, are denominated in Hong Kong dollars. As

such, the Redemption Proceeds from the AXA UTs will be converted into Hong Kong dollars at the exchange

rate (as determined by the trustee or manager of the PLSF Funds from time to time) for subscription of units

in the respective PLSF Funds.

2.4. The Redemption Proceeds will be the value of the contributions invested in the Revamped Investment Options as at the Effective Date, taking into account any investment returns and losses. The value of holdings of the Scheme Participants investing in each Revamped Investment Option immediately before the Changes of Underlying Investment Vehicles on the Effective Date will be the same as the value of holdings of the Scheme Participants investing in it immediately after the Changes of Underlying Investment Vehicles on the Effective Date.

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2.5. The Changes of Underlying Investment Vehicles will help offer better operational efficiency because, thereafter, the underlying investment vehicle of each Revamped Investment Option will be managed by Principal Asset Management Company (Asia) Limited (“PAM”), which is part of the Principal Group.

The maximum total fees and charges (inclusive of the fees and charges at both the investment option and underlying investment vehicle levels) in respect of the Revamped Investment Options after the Changes of Underlying Investment Vehicles will be higher than the maximum total fees and charges in respect of these investment options before the Changes of Underlying Investment Vehicles. However, the actual total fees and charges (inclusive of the fees and charges at both the investment option and underlying investment vehicle levels) in respect of the Revamped Investment Options (other than the investment option Asia Pacific Equity Fund (to be renamed from AXA Unit Trusts - Pacific Fund)# will be reduced after the Changes of Underlying Investment Vehicles. There will also be certain changes to the trustee, custodian and administration fee at the underlying investment vehicle level of the Revamped Investment Options. Please refer to Appendix 1 to this notice for further details on the fee arrangements in relation to the Revamped Investment Options.1

# These investment options will also be subject to name changes; please refer to the section “3. NAME CHANGES

OF THE INVESTMENT OPTIONS” for details.

2.6. In addition, the investment options (including the Revamped Investment Options) will be denominated in the same currency as their corresponding underlying investment vehicle level.2 For those investment options which underlying investment vehicles are denominated in foreign currency, PTC (Bermuda) will effect the conversion at such currency exchange rate as it may from time to time determine.

2.7. On a related note, with regard to the Asia Pacific Equity Fund (to be renamed from AXA Unit Trusts – Pacific Fund), the Principal Brochure will be amended to include a new risk factor, i.e. concentration risk, which is essentially the risk of potentially higher volatility and significant divergence in direction and degree from the overall global stock market performance associated with investments in a single country or region, as compared to a well diversified fund. For details of this risk factor, please refer to the amended Principal Brochure.

3. NAME CHANGES OF THE INVESTMENT OPTIONS

Certain investment options will be given new names with effect from the Effective Date.

Investment options

Existing name New name

AXA Unit Trusts - Global Fund International Equity Fund#

AXA Unit Trusts - Pacific Fund Asia Pacific Equity Fund#

AXA Unit Trusts - Currency and Bond Fund International Bond Fund#

# For each investment option marked with the hashtag in the above table, its underlying investment vehicle will also

be changed. Please refer to the section “2. CHANGES OF UNDERLYING INVESTMENT VEHICLES” for details.

1 The fees and charges referred to in this paragraph do not include any out-of-pocket expenses which are not calculated by reference to the net asset value of the underlying investment vehicles. Such out-of-pocket expenses are chargeable to both the existing and new underlying investment vehicles.

2 From the Effective Date, the underlying investment vehicle that is denominated in foreign currency is Principal Prosperity Series - Principal Asia Pacific High Dividend Equity Fund (which is denominated in US dollars).

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4. FEE STRUCTURE CHANGE

4.1. With effect from the Effective Date, the management charge of certain investment options will be reduced. The table below sets out the details:

Investment option

Current management charge (inclusive of the management fee at the


vehicle levels)


vehicle)

New management charge (inclusive of the management fee at the


vehicle levels)


vehicle)

International Equity Fund$ 1.25% p.a. 1.2% p.a.

Asia Pacific Equity Fund$ 1.25% p.a. 1.15% p.a.

$ For these investment options, there will be a reduction in the management charge (inclusive of the

management fee at the investment option and the underlying investment vehicle levels) but an increase in

the maximum total fees and charges (inclusive of the maximum fees and charges at both the investment

option and underlying investment vehicle levels). Please refer to section 2.5 and Appendix 1 for further

details.

5. MISCELLANEOUS MATTERS

5.1. We would also like to take this opportunity to inform the Scheme Participants of the following miscellaneous matters:

• the registered address of certain Principal entities will be changed to 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong with effect from 16 October 2017 - the affected Principal entities are: (i) the Trustee, i.e. PTC (Bermuda), (ii) the representative of the Trustee, i.e. Principal Trust Company (Hong Kong) Limited, (iii) the administration manager, i.e. Principal Trust Company (Asia) Limited (“PTC (Asia)”), (iv) the insurer of the underlying policies in which the Relevant Investment Options invest, i.e. Principal Insurance Company (Hong Kong) Limited; and (v) the investment advisor of the Principal CPF, i.e. Principal Asset Management Company (Asia) Limited;

• the provision on long service payment / severance payment offset will be removed from the Principal Brochure, amid the potential abolition of the offsetting mechanism between the benefits attributable to employer’s contributions and the long service payment / severance payment;

• the Trust Deed will be amended to: (i) rectify the references to the wording “National Mutual” appearing in the Trust Deed by replacing it with “Principal Insurance Company (Hong Kong) Limited” and (ii) remove the specific reference to the address at which scheme participants may obtain a copy of the Trust Deed to enhance the flexibility as to the avenue through which a copy of the Trust Deed can be obtained (in any event, scheme participants may obtain such a copy by contacting the Customer Service Hotline at 2802 2812 or 2885 8011).

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6. TRANSITION ARRANGEMENTS

6.1. No suspension of dealings will be required at the investment option level to effect the Restructuring.

6.2. However, in order for the following instructions to be completed before the Effective Date, they must be received by the administration manager, PTC (Asia), at 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong by the relevant cut-off deadlines set out below:

Instruction Cut-off deadlines

Contribution payment / transfer-in benefits to be processed and allocated to any

investment option according to the latest valid investment mandate

11:00 a.m. (Hong Kong time) on 22 September 2017

Claim, withdrawal and transfer-out of benefits instructions

11:00 a.m. (Hong Kong time) on 22 September 2017

6.3. Valid instructions described in the table above which are duly completed and received (including receipt of cleared funds, if applicable) on or before the respective cut-off deadlines set out above will be processed in the usual manner and completed before the Effective Date.

6.4. Instructions described in the table above and received after the respective cut-off deadlines set out in the table above will be processed in the normal business manner. However, if such instructions cannot be effected before the Effective Date, they will be carried out as soon as practicable after the Effective Date.

7. ALTERNATIVE TO SCHEME PARTICIPANTS

7.1. A Scheme Participant who does not wish to be involved in the Restructuring may:

(a) switch their existing investments out of the affected investment options referred to in these sections to other investment option(s) under the Principal CPF, and/or

(b) change its / his / her investment mandate in respect of new contributions and transfer-in benefits,

in each case of (a) and (b), free of charge, by sending to the administration manager, PTC (Asia), a completed “Change in Investment Form” (please refer to section 7.4 below for further details).

7.2. However, the choices of the investment options, and therefore the right to switch existing investments out of the existing investment options, are subject to the arrangement agreed between the Trustee and each participating employer under the Principal CPF. As such, as far as members are concerned, the right to switch existing investments to other investment options and change investment mandate in respect of new contributions and transfer-in benefits only applies to:

• the members who currently have the right to decide in which investment options they may invest; and

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• (in respect of those participating schemes where the participating employers decide which investment options are to be offered to their employees) those members whose participating employers agree to offer new investment options to their employees.

The right to switch existing investments to other investment options and change investment mandate in respect of new contributions and transfer-in benefits will not be offered to members who currently do not have the right to decide in which investment options they may invest; in such case, the members’ investments in the relevant investment options may be switched to other investment option(s) under the Principal CPF if their participating employers decide to do so.

7.3. Any valid and completed “Change in Investment Form” must be sent to the administration manager, PTC (Asia), at 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong by 22 September 2017 at 11:00 a.m. (Hong Kong time) in order for the instruction to be effected by the Effective Date. The value of holdings of a scheme participant in the switched-out investment option(s) before the switch-out will be the same as the value of holdings of the scheme participant in the switched-in investment option(s) immediately after the switch-in.

7.4. Also, a participating employer may transfer out of the Principal CPF to another retirement scheme arrangement, including any pooling agreement or MPF scheme (collectively, “another retirement scheme”) free of charge by submitting to the administration manager, PTC (Asia), at 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong:

• a written termination notice and an “Attachment to Schedule to Deed of Adoption”, both duly executed by the participating employer; and

• a “Request and Release Form” duly executed by each member under the participating scheme of the participating employer.

However, members will not be entitled to transfer out of the Principal CPF unless their participating employers elect to do so.

7.5. While PTC (Bermuda) will use its best endeavours to effect any transfer instructions as soon as possible with a view to completing them before the Effective Date, any transfer to another retirement scheme will be subject to the cooperation of the transferee trustee of another retirement scheme, and, where necessary, the consent of the members and/or participating employers and in some cases, regulatory approval from the Mandatory Provident Fund Schemes Authority. In addition, PTC (Bermuda) may only effect any transfer out instructions of a member when there is no outstanding contribution attributable to the member. As such, it is possible that a transfer out instruction may only be completed after the Effective Date.

7.6. No fees or penalty, bid/offer spread, switching fee or transfer fee will be imposed on the Scheme Participants for any transfer or switching. Scheme Participants should review all terms and conditions under the Principal CPF before making any decision.

***

If, for whatever reason (e.g. typhoon number 8 being hoisted), 6 October 2017 is not a business day, the Effective Date will be postponed to the next business day (the “New Effective Date”) and each reference to “Effective Date” in this notice will therefore be deemed to be construed to mean the New Effective Date.

All costs and expenses associated with the Restructuring will be borne by PTC (Bermuda) and will not be borne by the Principal CPF, the investment options under the Principal CPF, the underlying investment vehicles in which the investment options invest or the Scheme Participants.

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PTC (Bermuda) has been working closely with the relevant stakeholders involved in the Restructuring to ensure a smooth transition and confirms that the Restructuring will not have any adverse impact on the Principal CPF or the interests of the Scheme Participants. PTC (Bermuda) will ensure that the Restructuring will be in the interests of the Scheme Participants and the interests of the Scheme Participants will be adequately protected and will not be prejudiced in this exercise. From the Effective Date, the Restructuring will be reflected in the updated Principal Brochure, which will be available on the Trustee’s website at www.principal.com.hk or upon request by contacting the Customer Service Hotline at 2802 2812 or 2885 8011.

If you have any queries in relation to the above changes, please contact the Customer Service Hotline.


1 September 2017

9

APPENDIX 1 – Table of fees and charges in relation to each Revamped Investment Option

Revamped

Investment

Option

Existing fees and charges

(of the net asset value (“NAV”) of the relevant underlying investment vehicle)

New fees and charges

(of the NAV of the relevant underlying investment vehicle)

International

Equity Fund

(to be renamed

from AXA

Unit Trusts -

Global Fund)#

Management charge

(inclusive of the management fee at the

investment option and the underlying

investment vehicle levels):

At the underlying investment vehicle

level3:

Existing underlying investment vehicle:


Management charge

(inclusive of the

management fee at the

investment option and

the underlying investment

vehicle levels):

At the underlying investment vehicle level:

New underlying investment vehicle:

Principal Life Style Fund -

Principal International Equity Fund

Trustee fee (including custodian and

administration fee):Trustee fee: Custodian fee:

Administration

fee:

1.25% p.a.

0.02% p.a. (for up to USD200 million of

NAV), and 0.01% p.a. (for over USD200

million of NAV)

1.2% p.a.0% p.a.

(maximum 1%)N/A N/A

Total Fee

chargeableUp to 1.27% p.a. of NAV of the fund

Actual: 1.2% p.a. of NAV of the fund

Maximum: Up to 2.2% p.a. of NAV of the fund

Asia Pacific

Equity Fund

(to be renamed

from AXA

Unit Trusts -

Pacific Fund)#

Management charge (inclusive of the

management fee at the investment option

and the underlying investment vehicle

levels):


level4:



Management charge

(inclusive of the




vehicle levels):



Principal Prosperity Series - Principal Asia Pacific High

Dividend Equity Fund



Administration

fee:

1.25% p.a.

0.02% p.a. (for up to USD200 million

of NAV), and 0.01% p.a. (for more than

USD200 million of NAV)

1.15% p.a.

0.125% p.a. (for

up to USD40

million of NAV),

and 0.08% p.a.

(for over USD40

million of NAV)

(maximum 1%)

N/A N/A

Total Fee

chargeableUp to 1.27% of NAV of the fund

Actual: Up to 1.275% p.a. of NAV of the fund

Maximum: Up to 2.15% p.a. of NAV of the fund

3 No trustee and administration fees are charged at the investment option level.4 No trustee and administration fees are charged at the investment option level.

10

Revamped

Investment

Option

Existing fees and charges

(of the net asset value (“NAV”) of the relevant underlying investment vehicle)

New fees and charges

(of the NAV of the relevant underlying investment vehicle)

International

Bond Fund

(to be renamed

from AXA

Unit Trusts -

Currency and

Bond Fund)#

Management charge (inclusive of the

management fee at the investment option

and the underlying investment vehicle

levels):


level5:


AXA Unit Trusts - Currency and Bond

Fund

Management charge

(inclusive of the




vehicle levels):



Principal Life Style Fund -

Principal International Bond Fund



Administration

fee:

1% p.a.

0.02% p.a. (for up to USD200 million

of NAV), and 0.01% p.a. (for more than

USD200 million of NAV)

1% p.a.

0% (maximum

1%) p.a. of NAV

of the fund

N/A N/A

Total Fee chargeable

Up to 1.02% of NAV of the fundActual: 1% p.a. of NAV of the fund

Maximum: Up to 2% p.a. of NAV of the fund

# These investment options will also be subject to name changes; please refer to the section “3. NAME CHANGES OF THE INVESTMENT OPTIONS” for details.

5 No trustee and administration fees are charged at the investment option level.

11

APPENDIX 2 – Table of the investment objective, investment strategy and key operators of the underlying investment vehicles of each Revamped Investment Option

Revamped Investment Option: International Equity Fund (to be renamed from AXA Unit Trusts - Global Fund)

Existing underlying investment vehicle New underlying investment vehicle

AXA Unit Trusts – Global Fund Principal Life Style Fund – Principal International Equity Fund

Investment Objective To seek long–term capital growth. To seek capital growth over the long term by investing in international equity markets.

Investment Strategy The fund invests at least 70% of its non-cash assets principally in shares of

companies in any sector of the stock markets of North America, Europe, Japan,

Australia and the Far East. Where considered appropriate for the protection of

the fund, the investment manager may retain all or part of the fund in cash, fixed

interest securities or short term money market instruments.

The fund seeks to achieve its objective by investing primarily in equity securities

selected from investment markets around the world. The fund may also hold cash

and short-term investments.

Key Operators Investment manager: AXA Financial Planning (Hong Kong) Limited (“AXA FP”)

Investment adviser: AXA Investment Managers Asia (Singapore) Ltd

Sub-investment advisers: AXA Investment Managers UK Limited and AXA

Rosenberg Investment Management LLC

Trustee: Cititrust Limited

Investment manager: Principal Asset Management Company (Asia) Limited (“PAM”)

Delegate of the investment manager: Principal Global Investors, LLC (“PGI US”)

Trustee: PTC (Asia)

12

Revamped Investment Option: Asia Pacific Equity Fund (to be renamed from AXA Unit Trusts - Pacific Fund)


AXA Unit Trusts – Pacific Fund Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund

Investment Objective To seek long-term capital growth by investing primarily in securities of companies

in the Pacific region.

To achieve high current income through investing in a diversified portfolio of listed

securities in the Asia Pacific region.

Investment Strategy The fund invests at least 70% of the non-cash assets in equity securities of

companies which are principally listed, domiciled or which have substantial

business in the Pacific region. The investment manager retains the flexibility

to exploit the opportunities which arise from different movements between one

stock market and another. There is no formal restriction on the proportion of the

assets that can be invested in any one market or currency.

The fund invests in a diversified portfolio of listed securities in the Asia Pacific

region, including but not limited to the following countries: Australia, China, Hong

Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea,

Taiwan and Thailand. The investment manager does not currently intend to invest in

Japan but may do so in the future if suitable investment opportunities arise. The fund

will focus on companies which demonstrate strong corporate fundamentals and offer

the potential for superior dividend yields. The fund will also seek to achieve capital

appreciation with relatively moderate to high volatility commensurate with investing

in equities. In addition, the fund may also on an ancillary basis from time to time

hold cash, deposits and instrument with floating or fixed rates such as certificates of

deposits, bankers’ acceptances and commercial paper.

Key Operators Investment manager: AXA FP

Investment adviser: AXA Rosenberg Investment Management Asia Pacific Limited


Investment manager: PAM

Delegate of the investment manager: PGI US

Sub-delegate of the investment manager: Principal Global Investors (Hong Kong)

Limited (“PGI HK”)

Trustee: PTC (Asia)

13

Revamped Investment Option: International Bond Fund (to be renamed from AXA Unit Trusts - Currency and Bond Fund)


AXA Unit Trusts – Currency and Bond Fund Principal Life Style Fund – Principal International Bond Fund

Investment Objective To seek long-term capital appreciation and yield. To protect and maximize real asset value in terms of international purchasing power.

Investment Strategy The fund invests at least 70% of its non-cash assets and principally in major

international currencies and international interest-bearing securities including in

emerging markets. Where considered appropriate for the protection of the fund,

the investment manager may retain all or part of the fund in cash, fixed interest

securities or short term money market instruments.

The fund will invest mainly in the global bond markets. The fund will primarily

invest in a portfolio of debt securities, both sovereign or non-sovereign, of varying

maturities and denominated in the world’s major currencies.

Key Operators Investment manager: AXA FP

Investment adviser: AXA Investment Managers Asia Limited

Sub-investment adviser: AllianceBernstein L.P.


Investment manager: PAM

Delegate of the investment manager: PGI US

Sub-delegate of the investment manager: Principal Global Investors (Europe) Limited

Trustee: PTC (Asia)

Principal Central Provident Fund

IMPORTANT INFORMATION

1. The Principal Central Provident Fund (the “Principal CPF”) is a master trust designed to comply with the Occupational Retirement Schemes Ordinance (“ORSO”) and the Securities and Futures Commission’s Code on Pooled Retirement Funds.

2. One of the investment options (the “Guaranteed Fund”) of the Principal CPF invests 100% in the Deposit Administration Guaranteed Fund Policy (the “China Life Policy”) issued by the China Life Insurance (Overseas) Company Limited (“China Life”). Your investments in the Guaranteed Fund are therefore subject to the credit risks of China Life. Please refer to the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure for details of investment return and fees and charges of the Guaranteed Fund and the guarantee features and conditions of the China Life Policy.

3. A few investment options (each, “Relevant Investment Options”) of the Principal CPF each invests 100% in the (a) Stable Fund Policy, (b) Balanced Fund Policy, (c) Growth Fund Policy; (d) Principal Stable Fund Policy, (e) Principal Balanced Fund Policy, (f) Principal Growth Fund Policy, and (g) Principal – RCM Hong Kong Fund Policy. Each of these underlying insurance policies was issued by Principal Insurance Company (Hong Kong) Limited (“PIC”). Your investments in these Relevant Investment Options are therefore subject to the credit risks of PIC. Each reference to “Insurer” in this Principal Brochure means either China Life or PIC, as the case may be, unless expressly specified otherwise.

4. You should consider your own risk tolerance level and financial circumstances before making any investment choices. When, in your selection of investment options, you are in doubt as to whether a particular investment option is suitable for you (including whether it is consistent with your investment objectives), you should seek independent financial and/or professional advice and choose the investment option(s) most suitable for you taking into account your circumstances.

5. You should read this Principal Brochure for further details including product features, fees and charges and risk factors. Investment involves risks, the value of the investment options may go up or down and you may suffer significant loss of your investment.


(Effective from 6 October 2017)


Principal Central Provident Fund exclusively distributed by AXA

Trustee

Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals – offering innovative ideas, investment expertise and real-life solutions to make financial progress possible.

Principal is a provider of investment and retirement solutions in Hong Kong. We combine our capabilities in global investment management, retirement leadership and asset allocation expertise to provide retirement and asset management services as well as award-winning mutual funds and investment products to businesses, individuals and institutional investors.


AXA is a world leading insurance and asset management group and is the No. 1 insurance brand in the world for 9 consecutive years*. We are proud to serve over 1 million customers in Hong Kong and Macau#. AXA Hong Kong is committed to continuously develop and enhance our life & savings, health, property & casualty and retirement solutions in order to satisfy the different needs of our individual and corporate customers. Our purpose is to empower people to live a better life.

“Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc, a member of the Principal Financial Group.”* Source: Interbrand Best Global Brand 2017 (by brand value).# Including customers of AXA China Region Insurance Company Limited, AXA China Region Insurance Company (Bermuda) Limited (incorporated

in Bermuda with limited liability), and AXA General Insurance Hong Kong Limited

TABLE OF CONTENTS

1. Benefits of Establishing an ORSO Scheme 1

2. Structure of the Principal CPF 2

3. Product Features of the Principal CPF 3

4. Parties Involved in the Management of 4 the Principal CPF

5. Investment Options 5

6. Administration 11

7. Charges 15

8. General Information 22

9. Addresses 24

APPENDIX 1 25Investment option: Guaranteed FundInvestment option: International Equity FundInvestment option: Asia Pacific Equity FundInvestment option: International Bond FundInvestment options: Stable Fund Policy, Balanced Fund Policy, Growth Fund PolicyInvestment options: Principal Stable Fund Policy, Principal Balanced Fund Policy, Principal Growth Fund PolicyInvestment option: Principal – RCM Hong Kong Fund Policy

1

1. Benefits of Establishing an ORSO Scheme

Taxation AdvantageAn occupational retirement scheme (“ORSO scheme”) registered or exempted under the Occupational Retirement Schemes Ordinance (ORSO) is a tax efficient form of retirement investments available in Hong Kong. Retirement schemes (each, a “participating scheme”) participating in the Principal CPF are eligible to be ORSO schemes registered or exempted (if applicable) under ORSO. There are certain tax advantages associated with an ORSO scheme registered or exempted under ORSO. In general,

• employer’s contributions of up to 15% of the total annual payroll are tax deductible;

• employer’s contributions are not treated as employee’s taxable income;

• lump sum benefits paid to employees upon retirement, death, incapacity, terminal illness or leaving service after 10 years or more, are exempt from salaries tax.

Participants in the Principal CPF should seek professional advice regarding their own particular tax circumstances.

2

2. Structure of the Principal CPF

Trustee

Principal Trust Company(Bermuda) Limited with Principal

Trust Company (Hong Kong) Limited as the representative in

Hong Kong

Investment Advisor(2)

Principal Asset Management Company (Asia) Limited

Employer(1)

Principal CPF

deed of adoption (including the schedule thereto)(1)

(1) In order to participate in the Principal CPF, an employer needs to execute a deed of adoption (including the schedule thereto) with Principal Trust Company (Bermuda) Limited, the trustee to the Principal CPF (the “Trustee” or “PTC (Bermuda)”). By entering into the deed of adoption (including the schedule thereto), the employer will be bound by the terms and conditions (as amended from time to time) of the master trust deed which constituted the Principal CPF (the “Trust Deed”). Principal Trust Company (Asia) Limited acts as the administration manager (the “Administration Manager”) of the Principal CPF.

(2) Principal Asset Management Company (Asia) Limited acts as the investment advisor of the Principal CPF (the “Investment Advisor”).

3

3. Product Features of the Principal CPF

The Principal CPF allows employers flexibility on the choice of benefit design of their own participating schemes. Participating employers in the Principal CPF may determine the following features of their own participating schemes to suit their particular circumstances and the personal circumstances of their employees under the participating schemes (the “members”): (i) eligibility of the employees to join the participating schemes; (ii) the retirement age which can be specified by the participating employer; (iii) the contribution rate applicable to the participating employer and the member; and (iv) benefits entitlement. These features are explained generally below.

(i) Eligibility of the employees to join the participating schemesAll full time employees of the participating employer in the Principal CPF are eligible to join the relevant participating scheme. However, each participating employer may specify such conditions of eligibility for membership in its participating scheme to fit its circumstances.

(ii) The retirement age which can be specified by the participating employerThe normal retirement age under the Principal CPF is 65 years old. However, each participating employer is entitled to specify another age as the retirement age.

(iii) The contribution rate of the participating employer and the membersThe contribution rate as a percentage of salary is usually between 5% and 15% for participating employer’s contributions and 5% for member’s contributions. Contributions shall be paid in Hong Kong dollars, unless the Trustee otherwise agrees with the relevant participating employer.

(iv) Benefits entitlementUpon retirement, death or permanent disability, benefits payable are the aggregate of the participating employer’s contributions and the member’s contributions adjusted by investment performance of the contributions. Benefits shall be paid in Hong Kong dollars, unless the Trustee otherwise agrees with the relevant participating employer.

On termination of employment in other circumstances, a cash lump sum equal to the sum of (i) the member’s contributions and (ii) a vesting percentage of the participating employer’s contributions, each of (i) and (ii) being adjusted by investment performance, will be payable. In computing such cash lump sum, the vesting percentage to be applied to the participating employer’s contributions varies depending on the number of years for which the member has completed service with that participating employer. Each participating employer may decide its own vesting scale and may have different vesting scales for different types of employees.

For a member who joins a participating scheme in the Principal CPF (which has been granted an MPF exemption certificate under the Mandatory Provident Fund Schemes (Exemption) Regulation (the “Exemption Regulation”)) after 1 December 2000, a certain part of the benefits of that member will have to be preserved in the participating scheme as minimum MPF benefits (as defined in the Exemption Regulation) until the occurrence of one of the circumstances specified in the Exemption Regulation in which minimum MPF benefits can be withdrawn (e.g. retirement at age 65, total incapacity, permanent departure from Hong Kong or death).

4

4. Parties Involved in the Management of the Principal CPF

Trustee of the Principal CPFPrincipal Trust Company (Bermuda) Limited is the Trustee of the Principal CPF. The Trustee is responsible for a number of functions, including: safekeeping the assets of the Principal CPF; keeping member records and establishing separate accounts for members in respect of their contributions; processing payment of contributions and benefits; effecting investment of contributions in constituent funds; and processing transfers.

Investment Advisor of the Principal CPFPrincipal Asset Management Company (Asia) Limited (“PAM”) is the Investment Advisor of the Principal CPF, appointed by the Trustee. PAM is licensed to carry on Type 4 (advising in securities) and Type 9 (asset management) regulated activities under Part V of the Securities and Futures Ordinance. PAM advises the Trustee generally in relation to the investments in the Principal CPF.

PAM is a wholly-owned subsidiary of the Principal Financial Group, Inc. (“The Principal”) which is a Fortune 500 company listed on the New York Stock Exchange. The Principal specialises in investment management and it offers individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies.

Investment managers and their delegates of the underlying investment vehiclesPAMPAM, who is the Investment Advisor of the Principal CPF, is the investment manager of some of the underlying investment vehicles of the investment options under the Principal CPF as set out in the table below in section 5 “INVESTMENT OPTIONS”.

PAM has delegated its investment management function in respect of the underlying investment vehicles for which it acts as the investment manager to its affiliates (collectively “Principal Global Investors”). Details of the delegation arrangements for the relevant underlying investment vehicles are set out in Appendix 1.

The investment capabilities of Principal Global Investors encompass a range of equity, fixed income and real estate investments, as well as specialized expertise in preferred securities, currency management, asset allocation, stable value management and other structured investment strategies. Principal Global Investors, LLC (“PGI US”) is registered with the Securities and Exchange Commission under the USA regime. Principal Global Investors (Hong Kong) Limited (“PGI HK”) is licensed and regulated by the Securities and Futures Commission. Principal Global Investors (Europe) Limited (“PGI Europe”) is registered in the United Kingdom and is authorised and regulated by the Financial Conduct Authority.

PAM and Principal Global Investors have extensive experience in the MPF and ORSO investment management space, collectively currently managing over HK$50 billion (as at the end of June 2016) in MPF/ORSO schemes related assets.

RCM Asia Pacific LimitedRCM Asia Pacific Limited is the manager of the RCM Choice Fund. The Principal – RCM Hong Kong Fund Policy currently invests into the RCM Hong Kong Fund, which is one of the sub-funds of the RCM Choice Fund. RCM Asia Pacific Limited is part of RCM, a global specialist equity manager of Allianz Global Investors. RCM Asia Pacific Limited, in its capacity as the manager of the RCM Choice Fund, has the ability to appoint other members of Allianz Group to act as investment adviser(s) to the RCM Hong Kong Fund.

5

5. Investment Options

Investment OptionsEach investment option under the Principal CPF is structured in the form of a feeder fund investing 100% in an underlying insurance policy or unit trust (each, an “underlying investment vehicle”).

Each participating employer will agree with the Trustee the investment arrangement of the participating employer’s and members’ contributions applicable to its participating scheme; for instance, a participating employer may allow members to decide which investment option to invest both the participating employers’ contributions and member’s contributions or simply the member’s contributions. Also, a member’s contributions can be invested in one or more investment options whilst a participating employer’s contributions can be invested in the same or other investment options. The investment options and their respective underlying investment vehicles are set out in the two tables as follows and details of which are set out in Appendix 1:

Investment option

Name of underlying

policy/ unit trust

Investment Structure

Investment manager#/ investment

advisor* of the

underlying policy/unit

trust

Investment manager##/

sub-investment manager** of the

underlying fund into which the underlying

policy invests

Stable Fund Policy

Stable Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Stable Fund

Nil Principal Asset Management Company (Asia) Limited##

Principal Global Investors, LLC** and Principal Global Investors (Hong Kong) Limited**

Balanced Fund Policy

Balanced Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Balanced Fund



Growth Fund Policy

Growth Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Growth Fund



6

Investment option

Name of underlying

policy/ unit trust

Investment Structure

Investment manager#/ investment

advisor* of the

underlying policy/unit

trust

Investment manager##/

sub-investment manager** of the

underlying fund into which the underlying

policy invests

Principal Stable Fund Policy

Principal Stable Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Stable Fund



Principal Balanced Fund Policy

Principal Balanced Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Balanced Fund



Principal Growth Fund Policy

Principal Growth Fund Policy^

Invest solely in the Principal MPF Fund – Principal MPF Growth Fund



Principal – RCM Hong Kong Fund Policy

Principal – RCM Hong Kong Fund Policy^

Invest solely in the RCM Choice Fund – RCM Hong Kong Fund

Nil RCM Asia Pacific Limited##

^ The respective underlying policies were issued by Principal Insurance Company (Hong Kong) Limited.

7

Investment option

Underlying investment

vehicle

Investment structure of underlying investment vehicle

Investment manager at


vehicle level (for details of

sub-delegation please refer to

Appendix 1):

Guaranteed Fund China Life Policy^ Invest solely in a unit trust authorized by the Securities and Futures Commission under the Code on Unit Trusts and Mutual Funds of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products

Nil

International Equity Fund

Principal Life Style Fund – Principal International Equity Fund

Direct investment in underlying assets

PAM

Asia Pacific Equity Fund

Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund


PAM

International Bond Fund

Principal Life Style Fund – Principal International Bond Fund


PAM

^ This underlying policy was issued by China Life.

Risk FactorsInvestments involve risks. Because each investment option is structured in the form of a feeder fund investing in the relevant underlying investment vehicle, the performance of the underlying investment vehicles, and therefore, the investment options, will be affected by a number of key risk factors, including the following:

(i) Political, economic and social risks — Changes in political, economic and social conditions in any country in which the underlying investment vehicles may invest could adversely affect the value of investments.

(ii) Interest rate risk — As the underlying investment vehicles may invest in fixed income securities/debt securities whose value is driven significantly by changes in interest rates, the underlying investment vehicles are subject to interest rate risk. When interest rates rise, the value of previously issued debt securities will normally fall because new debt securities issued will pay a higher rate of interest. In contrast, if interest rates fall, then the value of the previously issued debt securities will normally rise.

8

(iii) Market risk — Factors such as changes in economic environment, consumption pattern and investors’ expectation etc. may have significant impact on the value of investments. The value of holdings may go down as well as up. In particular, dividend yields from the investments of certain underlying investment vehicles, such as the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, may fluctuate up or down as a result of changes in the dividend policy of the underlying companies in which the underlying investment vehicle is invested. Such changes will impact the level of dividend available for distribution by the underlying investment vehicle. Investors need to be aware of and be prepared for any extreme volatility in the markets. Options, warrants and derivatives in the underlying investment vehicle may also expose the underlying investment vehicle significantly to the fluctuations in the market. Market movement may therefore result in substantial fluctuation in the net asset value (“NAV”) per unit of the underlying investment vehicle.

(iv) Currency risk — Where the denomination of the relevant underlying investment vehicle differs from the denomination of the underlying assets in which it ultimately invests, the performance of the underlying investment vehicle will have exposure to movements in the exchange rate between the currency in which the underlying investment vehicle is denominated and the currency in which the assets are held such that there may be a consequential reduction in the investment value. The underlying investment vehicle may, in part, seek to offset the risks associated with such exposure through foreign exchange transactions. The markets in which foreign exchange transactions are effected are highly volatile, highly specialised and highly technical. Significant changes, including changes in liquidity and prices, can occur in such markets within very short periods of time, often within minutes. Foreign exchange trading risks include, but are not limited to, exchange rate risk, interest rate risk and potential interference by foreign governments through regulation of local exchange markets, foreign investment, or particular transactions in foreign currency. As a result, the underlying investment vehicle/investors may be adversely impacted. Repatriation of capital invested may be hampered by changes in regulations applicable to foreign investors which may have an adverse impact on the underlying investment vehicle’s performance.

(v) Securities risk — Each company has its unique factors affecting the value of its securities. These factors include the company’s management capability, capital structure, liquidity position, product composition and others.

(vi) Credit risk — If the issuer of any of the fixed interest securities/debt securities in which the underlying investment vehicles are invested defaults, such securities may become worthless and the performance of the underlying investment vehicles will be adversely affected. The issuer’s default or insolvency can result in a drop in the value of the underlying investment vehicles.

(vii) Counterparty risk — Investments in deposits, bonds and other financial instruments and currency hedging which involve a counterparty are subject to the credit risk or default risk of the counterparty. The investments of the underlying investment vehicles will also be exposed to counterparty risk on parties with whom they trade and when placing cash on deposits.

(viii) Downgrading risk — There is a risk of downgrading of securities in which the underlying investment vehicles are invested, i.e. securities ratings getting downgraded by rating agencies which may cause the value of the securities to drop significantly. Any downgrading of such securities can thereby adversely affect the performance of the underlying investment vehicles.

(ix) Liquidity risk — Under normal circumstances, the securities invested by the underlying investment vehicles can be easily bought or sold in the market. However, there may be times when the liquidity in the markets may dry up, making it difficult for the relevant investment manager of the underlying investment vehicle to realise an investment. Further, the realization of an investment in these circumstances may be subject to a discount to its market value.

9

(x) Concentration risk – Certain underlying investment vehicles, such as the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, invest in a single country or region. Compared with a well-diversified fund, the concentration risk is relatively high and hence they might be more volatile than a well-diversified fund. Also, the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund’s investments may be concentrated in the markets of smaller economies and the investment performance is sensitive to movements in these markets. Therefore, the performance of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, which is the underlying investment vehicle of Asia Pacific Equity Fund, may differ significantly in direction and degree from the overall global stock market performance. As a result, the underlying investment vehicles/investors may be adversely impacted.

(xi) Emerging markets risk — Underlying investment vehicles may invest in emerging markets, where the risks mentioned above are usually more common or significant than in more developed markets. The securities markets of some of the emerging countries in which the underlying investment vehicle’s assets may be invested are not yet fully developed which may, in some circumstances, lead to a potential lack of liquidity. Usually, emerging markets tend to be more volatile than developed markets and may experience substantial price volatility. There may also be other risks from investing in emerging markets, including but not limited to the following risks:

(a) Legal and regulatory risks – The laws and regulations in emerging market economies may be less defined than those in developed countries and accounting, auditing and financial reporting standards may be less stringent than international requirements, such that less protection may be afforded to investors and investment decisions may be required to be made on less complete information than is customarily available in developed markets. The issuers and stock exchanges and other market participants may be subject to a level of regulation which is lower than that in developed countries. Investments may also be affected by changes in law and government policy which may result in restrictions on foreign investments and/or repatriation of monies;

(b) Less developed infrastructure – The banking and telecommunications systems in emerging market economies may be less efficient and may give rise to delays in payments. Procedures currently in place for custody, settlement, clearing and registration of securities transactions in developing countries may be less developed than those in place in developed countries and may increase settlement risk or result in delay in realising securities, and thus may adversely affect prices. The liquidity of the securities markets in emerging market economies may also be much lower than that in developed countries which means that it may at times be difficult to sell securities at desirable prices.

(xii) Risk relating solely to investment in the Guaranteed Fund – The Guaranteed Fund invests in the China Life Policy. Accordingly, the guarantee under, and the value of, the China Life Policy is subject to the risk of China Life not being able to meet the guarantee conditions. Investments in the China Life Policy are held as the assets of China Life. In the event where China Life is liquidated or otherwise in default of its payment obligations under the China Life Policy, investors may not be able to recover in full their investments in the China Life Policy, or its value may be reduced, and the guarantee may not be available. Investors may only claim against China Life indirectly through the Trustee who, as the policyholder of the China Life Policy, only has a contractual right to claim the amount representing the benefits payable under the China Life Policy from China Life. In the worst case scenario, investors may suffer a total loss to their investments. Please refer to the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure for details of the investment return and fees and charges of the Guaranteed Fund and the guarantee features and conditions of the China Life Policy.

10

The China Life Policy only came into effect on 4 January 2017. Therefore, as at 4 January 2017, China Life has not declared any Declared Rate of Return (as defined in the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure). As such, the information on the Declared Rate of Return declared by China Life for the preceding years are not available. In any event, Declared Rates of Return declared by China Life in the future are provided for information purposes only. Investment involves risk. Past performance should not be taken as indication of future performance.

Each investment option and its corresponding underlying investment vehicle are subject to market fluctuations and to the risks inherent in all investments. The price of units of the investment options and their corresponding underlying investment vehicles may go down as well as up.

Valuation and Redemption of InvestmentsThe unit price and performance of the Guaranteed Fund is determined by making reference to the Guaranteed Rate of Return at the China Life Policy level (as defined in the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure) and management charge chargeable by the Trustee at the Guaranteed Fund level, calculated on a daily basis.

The unit price and performance of each investment option (other than the Guaranteed Fund) under the Principal CPF is determined on the basis of the unit price and performance of the relevant underlying investment vehicle.

The constitutive document or policy document for each relevant underlying investment vehicle sets out provisions for the suspension of the determination of the NAV of its portfolio of investments in certain circumstances. These circumstances include, but are not limited to (i) where there is a closure of or the restriction or suspension of trading on any securities market on which the investments maintained by the relevant underlying investment vehicle is normally traded; (ii) where the determination of the value of an investment maintained by the relevant underlying investment vehicle is suspended, or otherwise cannot be reasonably, promptly, accurately and fairly ascertained. In circumstances such as those, the issue and realisation of units of the relevant investment option will be suspended, and investment of contributions in, and payment of benefits from, the relevant investment option will be delayed.

The constitutive document or policy document for the relevant underlying investment vehicles also has provisions to limit the number of units of the underlying investment vehicles realised to 10% of the total number of units in issue in respect of the underlying investment vehicle on any valuation date.

Investment SwitchingSubject to the arrangement agreed between the Trustee and the relevant participating employer in the Principal CPF, switching among investment options may be performed up to the agreed number of times (if any) per year at no additional cost. Where a participating employer wishes to carry out switching in addition to the agreed number per year, the Trustee may in its discretion allow such switching, and may, in such circumstance, charge a switching fee (the “Switching Fee”) for such switching. Please refer to section 7 “CHARGES” for details of the Switching Fee.

At the time when the request for switching is made, the Trustee will redeem the relevant investments in the original investment option(s) and apply the redemption proceeds from such redemption to subscribe for units in the new investment option(s) as soon as practicable.

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6. Administration

Administration SystemThe Trustee has specially developed a computer system which enables it to administer the participating employers’ participating schemes with flexibility, accuracy and efficiency.

Member’s AccountsThere are two separate accounts kept for each member under a participating scheme, namely:

(i) The Employee’s Accumulation AccountThis includes all employee’s contributions made by the member, adjusted by investment performance.

(ii) The Employer’s Accumulation AccountThis includes all participating employer’s contributions made by the participating employer in respect of the member, adjusted by investment performance and any distribution from the participating employer’s Reserve Account (as defined below).

Employer’s Reserve AccountWhere a member is not entitled to 100% of the balance in the Employer’s Accumulation Account (e.g. because the member has not completed the sufficient years of service for the balance to fully vest in the member), then the remaining balance in the Employer’s Accumulation Account will be credited to a reserve account (the “Reserve Account”) established for the participating employer. Monies in the Reserve Account can be:

• used to pay Administration Charges (as defined in section 7 “CHARGES”);

• used to pay the participating employer’s contributions;

• used to increase the benefits of members through distribution to the members’ Employer’s Accumulation Accounts; and/or

• refunded to the participating employer upon request.

Transfer from Existing Retirement SchemesIf the relevant participating employer has a retirement scheme other than a participating scheme of the Principal CPF, subject to the terms of the constitutive documents governing that retirement scheme, employees’ benefits under that retirement scheme may be transferred to the Principal CPF. The transferred benefits from that retirement scheme will be credited to the Employee’s Accumulation Account and Employer’s Accumulation Account (as appropriate) of each relevant member under the Principal CPF.

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Daily Operations(I) For the participating employer

For the purposes of setting up a participating scheme, the Trustee will:

• help in preparing scheme documents; and

• apply for approvals from the relevant Government authorities.

For on–going administration, the Trustee will:

• assign an experienced officer for coordinating administrative matters relating to the participating scheme;

• keep records of members’ data and data changes;

• provide monthly billings and supporting statements;

• maintain participating employer’s Reserve Account;

• prepare and file the necessary compliance documentation for continual approvals of Government authorities; and

• provide up–to–date information on employee benefits matters through periodic newsletters.

(II) For members,The Trustee will:

• provide member’s booklets and benefit illustrations;

• conduct member enrolment meetings;

• issue member’s benefit statements showing member’s account balance and entitlements as at each annual report date of the relevant participating scheme; and

• process benefit payments when members’ benefits become payable under the relevant participating scheme.

Contributions PaymentContributions should be made by cheque to Principal Trust Company (Hong Kong) Limited – ORSO at 30/F, Millennium City 6, 392 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong.

Benefits PaymentUnder normal circumstances, when a member’s benefits under the relevant participating scheme become payable, payment will be made within two weeks from the date of the receipt of an employee changes and termination report. For the avoidance of doubt, no interest is payable on any benefit.

Other ServicesOptional services such as on-line enquiry facility, electronic data transfer may also be available upon request. Additional charge(s) may be imposed for subscription of any of these or other optional services, which will be separately notified to the relevant participating employers. The provision of any of these optional services is conditional upon the charge(s) being agreed by the relevant participating employer.

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Applicable Laws and RegulationsThe Principal CPF, the Trustee and/or the Principal Company (as defined below) may from time to time be required to comply with any “Applicable Laws and Regulations” which mean: (a) any tax reporting and withholding related treaty, law, regulation, or other official guidance enacted in any jurisdiction, or relating to an intergovernmental agreement or any other agreement between the governments or regulatory authorities of two or more jurisdictions; (b) any tax reporting and withholding related agreement with any government or tax authority in any jurisdiction according to or in consequence of (a); and (c) any rules, codes of practice, and/or guidelines of a binding nature in any jurisdiction.

Applicable Laws and Regulations include the Foreign Account Tax Compliance Act 2010 (“FATCA”) enacted by the U.S. government, which impose a new due diligence regime effective 1 July 2014. Under FATCA, a foreign financial institution (“FFI”) is required to report to the U.S. Internal Revenue Service (“IRS”) certain information on U.S. persons that hold accounts with that FFI outside the U.S. and to obtain their consent to the FFI passing that information to the IRS. An FFI which does not sign or agree to comply with the requirements of an agreement with the IRS (the “FFI Agreement”) in respect of FATCA and/or who is not otherwise exempt from doing so will face a 30% withholding tax on all “withholdable payments” (as defined under FATCA) derived from U.S. sources (initially including dividends, interest and certain derivative payments). The U.S. and Hong Kong have entered into an inter–governmental agreement (the “IGA”) to facilitate compliance by FFIs in Hong Kong with FATCA and which creates a framework for Hong Kong FFIs to rely on streamlined due diligence procedures to (i) identify U.S. indicia, (ii) seek consent for disclosure from the Consenting Persons (as defined below) and (iii) report relevant tax information of the Consenting Persons to the IRS. FATCA applies to the Trustee and the Principal CPF. The Principal CPF and the Trustee have each registered on the IRS FATCA registration website as either participating foreign financial institutions (the “PFFI”) or as a reporting FFIs under an applicable IGA and each is obligated to comply with FATCA.

For the purpose of complying with the Applicable Laws and Regulations including FATCA by the Principal CPF, the Trustee and/or the Principal Company, any participating employer (including its substantial owners and controlling person), member, nominated beneficiary and other recipient of any benefits, payments or entitlements from, or any rights under, the Principal CPF (each, a “Consenting Person”) is required to provide to the Trustee within such time, in such form and in such manner, as it may from time to time reasonably require, the Tax Information (as defined below) (and any update to any such Tax Information) in respect of itself, himself, herself or any other Consenting Person(s). “Tax Information” includes without limitation any documentation or information relating, directly or indirectly, to the tax status of each Consenting Person such as a Consenting Person’s name, date and place of birth (if applicable), residence and citizenship (if applicable), residential address (or registered address and address of the place of business), mailing address, place of incorporation or formation, tax identification number and tax residency.

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For the purposes of complying with the Applicable Laws and Regulations by the Principal CPF, the Trustee and/or the Principal Company, and to the extent not prohibited by law, the Trustee or any of its delegates within the Principal Company may:

• process, transfer and/or disclose to any judicial, administrative or regulatory body, any government, or public or government agency, instrumentality or authority, any domestic or foreign tax, revenue, fiscal or monetary or other authorities, court or law enforcement body, or any agents thereof, having jurisdiction over any Principal Company the Tax Information and the account information in respect of any Consenting Person (e.g. account balance, account value, account number, contributions paid to account, and amounts withdrawn or paid from account, attributable to the account through which a Consenting Person may receive or claim benefits or payments from the Principal CPF); and

• in good faith and on reasonable grounds, take such actions necessary for the Principal CPF, the Trustee and/or the Principal Company to comply with the Applicable Laws and Regulations, if the relevant Consenting Person fails to provide the Tax Information in respect of any Consenting Person as the Trustee may reasonably require; or the Tax Information is inaccurate, incomplete or not promptly updated to the extent that the Trustee reasonably forms a view that the Tax Information it has may not be sufficient for the Principal CPF, the Trustee and/or the Principal Company to comply with the Applicable Laws and Regulations; or the Trustee is for whatever reason prevented from disclosing any Tax Information and Account Information reasonably required by the Trustee to disclose for the Principal CPF, the Trustee and/or the Principal Company to comply with the Applicable Laws and Regulations.

Each participating employer and member must, before providing the Tax Information of any other Consenting Person (not being the participating employer or member (as the case may be) itself/himself/herself) to the Trustee: (i) inform that Consenting Person of the Trustee’s powers and the obligations of each Consenting Person given under this sub-section “Applicable Laws and Regulations” in this section 6 “Administration”) in this Principal Brochure upon collection of that Consenting Person’s Tax Information; or (ii) obtain that Consenting Person’s consent to the Trustee’s powers under the first bullet point of the preceding paragraph.

“Principal Company” means the Trustee, any of its holding companies, subsidiaries, subsidiary under takings, associated or affiliated companies (whether direct or indirect) from time to time.

The Trustee intends that the Trustee and the Principal CPF will comply with the Applicable Laws and Regulations. If the Principal CPF does not comply with the Applicable Laws and Regulations, the Principal CPF may be subject to certain withholding taxes, deductions and/or penalties on certain types of payments received by the Principal CPF. The application of withholding taxes, deductions and/or penalties due to any non–compliance with the Applicable Laws and Regulations may cause the Principal CPF to suffer a material loss.

It is important for each participating employer and member to understand the Trustee’s powers, and each Consenting Person’s obligations, under the Principal CPF. Each Consenting Person should consult with its/his/her own tax advisors as to the potential impact of the Applicable Laws and Regulations in its/his/her own tax situation or on its/his/her investment in the Principal CPF.

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7. Charges

(A) At the Principal CPF level1. Administration ChargeThe administration charge (the “Administration Charge”) is an annual fee chargeable under the Principal CPF. The Administration Charge for a participating scheme is a percentage (the “Administration Charge Rate”) of annual contributions (including both the participating employer’s and members’ contributions) payable in respect of the participating scheme (the “Annual Contributions”). The Administration Charge Rate is the lower of 7.5% and the percentage determined as follows:

Contribution Charge + Flat Charge+ Membership Charge X 100%

Annual Contributions

The following table shows the charge rates for each of the Contribution Charge, Flat Charge and Membership Charge:

(i) Contribution Charge

Annual Contributions HK$ Contribution Charge (as % of the Annual Contributions)

First 100,000 4.00%

Next 100,000 3.00%

Next 300,000 2.00%

Next 500,000 1.00%

Excess 0.75%

(ii) Flat Charge HK$500 per participating employer per annum

(iii) Membership Charge HK$30 per member per annum

The charges in the table above may not be varied unless one (1) month’s prior written notice has been given to participating employers and members.

The Administration Charge and Administration Charge Rate will be determined at the beginning of each financial year of each participating scheme in the Principal CPF. Once they have been determined, they will remain unchanged until the expiration of the financial year of the participating scheme, regardless of any change to the number of members in the participating scheme during the financial year of the participating scheme for whatever reason. As soon as practicable after the determination of the Administration Charge and Administration Charge Rate, each participating employer (but not the members) will be issued with a notice informing it of the Administration Charge and the Administration Charge Rate so determined.

The participating employer may pay the Administration Charge from: (a) its own funds, (b) through deducting the Administration Charge from the participating employer’s Reserve Account (if the Reserve Account has sufficient funds), (c) through deducting the participating employer’s contributions, or (d) through deducting the participating employer’s contributions and members’ contributions.

No Administration Charge is chargeable on any amounts transferred from another retirement scheme to the relevant participating scheme under the Principal CPF for the entire investment period.

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EXAMPLE of Charges (for illustration only)By way of example, assuming the annual contributions by and in respect of each member is HK$8,000, the total Administration Charges for different number of members are shown in the table below:

No. of Members

Annual Contributions

Contribution Charge

Membership Charge

Flat Charge

Total Administration Charge Payable

(A) (B) (C) (D) (E) (F) (G)

B = (HK$8,000

x A)

(a variable charge

depending on amount of annual

contributions)

(HK$30 per member per

annum)

(HK500 per participating employer per

annum)

(F=C+D+E)G=

[(C+D+E)/B] x 100%

(HK$) (HK$) (HK$) (HK$) (HK$)As a % of

Annual Contribution

1 8,000 320 30 500 600** 7.50**

10 80,000 3,200 300 500 4,000 5.00

50 400,000 11,000 1,500 500 13,000 3.25

100 800,000 16,000 3,000 500 19,500 2.44

250 2,000,000 25,500 7,500 500 33,500 1.68

** There is a cap of 7.5% on the Administration Charge Rate. Accordingly, while the percentage calculated per the formula in column (G) above for a participating scheme with only one member is 10.625% (i.e. [HK$(320 +30 + 500)/8,000] x 100%), the applicable Administration Charge Rate is capped at 7.5%. The amount of Administration Charge payable in respect of this participating scheme which has only one member is therefore HK$600 (ie. HK$8,000 x 7.5%) instead of HK$850 (i.e. HK$8,000 x 10.625%).

2. Special Contribution Levy (if applicable)Where an amount of contribution (the “Special Contribution”) is made in addition to the contribution required to be made under the schedule to the deed of adoption (entered into by the participating employer at the time of joining the Principal CPF), a special contribution levy (the “Special Contribution Levy”), which is 1% of the Special Contribution, will be levied on the Special Contribution. The Special Contribution will not be subject to the Administration Charge. Also, no Special Contribution Levy is chargeable on any amounts transferred from another retirement scheme to the relevant participating scheme under the Principal CPF for the entire investment period.

The participating employer may pay the Special Contribution Levy from its own funds.

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3. Switching FeeAt present, the Switching Fee chargeable for every switching exceeding the number of switching per year agreed between the Trustee and the relevant participating employer is as follows:

Switching Fee chargeable for every switching exceeding

the agreed number of switching per year

Switching performed for not more than 20 members under the participating scheme

HK$1,000

Switching performed for more than 20 members under the participating scheme

HK$50 per member

The Switching Fee is payable by the participating employer to the Trustee in the form of a cheque.

4. Occupational Retirement Schemes Ordinance (ORSO) ChargesCertain charges are payable with regard to compliance with ORSO and explained as follows:

First Year HK$2,000 (inclusive of HK$1,200 ORSO re-registration fee)

There are also other fees such as solicitors’ fee, auditors’ fee, fee payable to the Mandatory Provident Fund Schemes Authority for applying for the approval of the appointment of a trustee, etc.. These fees are not within the control of the Trustee. These fees are payable by the participating employer to the Trustee, who will in turn directly pay them in whole to the relevant parties charging those fees

Starting from the second year HK$800 (exclusive of ORSO periodic fee which is payable by the participating employer directly to the Mandatory Provident Fund Schemes Authority)

5. Termination ChargeShould the participating employer withdraw its participating scheme’s participation in the Principal CPF, and request that the benefits under its participating scheme be paid to members under its participating scheme or transferred to another retirement scheme, a termination charge (the “Termination Charge”) shall apply. The Termination Charge is determined as a percentage of the total amount of assets under the relevant participating scheme as at the date of termination according to the following scale:

Number of years the participating employer has joined the Participating

Scheme in the Principal CPF

Percentage of the total amount of assets under the participating

scheme as at the date of termination

0 complete year 5%

1 complete year 4%

2 complete years 3%

3 complete years 2%

4 complete years 1%

5 or more complete years 0%

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(B) In relation to the investment optionsThe fees and charges in respect of each investment option are set out below:

Investment option Fees and charges (of the NAV of the relevant underlying investment vehicle)Note 1

Guaranteed Fund

Management charge (inclusive of the management

fee and, where applicable, investment charge,

at the investment option and the underlying


Trustee, custodian and administration fee

(at the underlying investment vehicle level):

Up to a maximum of 2.35% p.a. comprising:

Underlying investment vehicle: China Life Policy

There is no trustee, custodian or administration fee at the China Life Policy level. However, a Guarantee Charge is chargeable at the China Life Policy level. Note 2

Also, fees and charges are payable at the underlying unit trust in which the China Life Policy invested.

• management charge of up to 1.35% p.a.

(investment option (Guaranteed Fund) level)

• investment charge of 1% p.a. (the “Investment Charge”)

(underlying policy (China Life Policy) level)

Total fees and charges

Actual: Up to 2.35% p.a. plus a chargeable Guarantee Charge

and other fees and charges payable at the underlying investment vehicle level

International Equity Fund



at the investment option and the underlying investment

vehicle levels):



1.2% p.a.

Underlying investment vehicle:Principal Life Style Fund – Principal International Equity Fund

Trustee fee: 0% (maximum 1%) p.a.

Custodian fee: N/A

Administration fee: N/A


Actual: 1.2% p.a.

Maximum: Up to 2.2% p.a.

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Asia Pacific Equity Fund







1.15% p.a.

Underlying investment vehicle:Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund

Trustee fee:• 0.125% p.a. (for up to USD40

million of NAV), and• 0.08% p.a. (for over USD40

million of NAV) (maximum 1%)

Custodian fee: N/A



Actual: Up to 1.275% p.a.


International Bond Fund







1% p.a.

Underlying investment vehicle:Principal Life Style Fund – Principal International Bond Fund

Trustee fee: 0% (maximum 1%) p.a. of NAV of the fund

Custodian fee: N/A



Actual: 1% p.a.

Maximum: Up to 2% p.a.

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Stable Fund Policy Note3

Balanced Fund Policy Note3

Growth Fund Policy Note3

Principal StableFund Policy Note3

Principal BalancedFund Policy Note3

Principal Growth Fund Policy Note3







1.97% p.a.

Underlying investment vehicle for Stable Fund Policy and Principal Stable Fund Policy Note 4:Principal MPF Fund – Principal MPF Stable Fund

Underlying investment vehicle for Balanced Fund Policy and Principal Balanced Fund Policy Note 4:Principal MPF Fund – Principal MPF Balanced Fund

Underlying investment vehicle for Growth Fund Policy and Principal Growth Fund Policy Note 4:Principal MPF Fund – Principal MPF Growth Fund

Trustee fee: 0% (maximum 0.5%) p.a.

Custodian fee: N/A

Administration fee: US$850 per month (maximum 0.5% p.a.)


Actual: 1.97% p.a. plus administration fee at the underlying investment vehicle level


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Principal – RCM Hong Kong Fund

Policy







1.93% p.a.

Underlying investment vehicle:RCM Choice Fund, RCM Hong Kong Fund

Trustee fee: 0.07% (up to a maximum of 0.25%)

Custodian fee: N/A



Actual: 2% p.a.


Note 1: Other than the fees and charges set out in the above table, there may be other out-of-pocket fees and charges incurred in connection with or with regard to each underlying investment vehicle. Such fees and expenses include but are not limited to:

• fees and charges payable to regulators/exchange operators/related bodies

• insurance premiums• licence fees• transaction fees and costs (e.g. stamp duties, taxes,

government charges, brokerage commission, foreign exchange costs and transfer fees and expense)

• registrar’s fees and expenses• valuation costs

• audit and legal and tax advisors and other professional fees

• sub-custodian fees• cost of convening meetings of unitholders• cost of preparing and translating printing and

distribution of documents, forms, reports or other information relating to the underlying investment vehicle

Note 2: For the China Life Policy, if the Underlying Fund Return (as defined in section 3.2 of the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure) (after deduction of the Investment Charge, audit fees, legal fees (if any) and such other disbursement (e.g. printing and postage expenses) (if any) which arises from time to time pursuant to the provisions of the China Life Policy level, collectively, the “Relevant Charges and Expenses”) exceeds the Guaranteed Rate of Return (as defined in section 3.1 of the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure), China Life is entitled to charge a guarantee charge (the “Guarantee Charge”) on the excess part which is up to a maximum of 1% per annum of the NAV of the Policy Account (as defined in the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure) as at the commencement of that particular year. The Declared Rate of Return (as defined in the section entitled “Investment option: Guaranteed Fund” in Appendix 1 to this Principal Brochure) to be declared by China Life, however, will be net of this charge.

Note 3: The fees set out in this row are for each of the Stable Fund Policy, Balanced Fund Policy, Growth Fund Policy, Principal Stable Fund Policy, Principal Balanced Fund Policy and Principal Growth Fund Policy.

Note 4: The underlying investment vehicles for each of the Stable Fund Policy, Balanced Fund Policy, Growth Fund Policy, Principal Stable Fund Policy, Principal Balanced Fund Policy and Principal Growth Fund Policy referred to in this cell are the unit trusts in which the underlying insurance policies in which these investment options invest respectively.

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8. General Information

How to participateTo participate in the Principal CPF, an employer simply has to:

• complete a deed of adoption;

• complete a schedule to deed of adoption (specifying the contribution rates, vesting scale etc.);

• complete an authorised officer declaration (specifying names and signatures of those able to sign on behalf of the employer);

• complete documents required for registration/exemption under ORSO; and

• have each new employee joining its participating scheme complete an application for membership.

The participating employer will be given copies of:

• the completed documents described in the preceding paragraph;

• the Trust Deed;

• an administration guide (containing details of day–to–day administration matters); and

• appropriate forms for benefits payments etc.

Governing LawThe governing law of the Principal CPF is the laws of Hong Kong. The parties concerned have the right to bring legal actions in a Hong Kong court as well as in any court elsewhere which has a relevant connection with the Principal CPF.

Borrowing PowersThe Trust Deed gives the Trustee the power to borrow on behalf of the Principal CPF. It is expected that this power would be used only in exceptional circumstances and on a temporary basis to provide liquidity and to meet obligations to pay benefits.

The Principal CPF is also subject to the provisions on investment standards under the Exemption Regulation.

RebatePAM and its delegates may have soft commission arrangements with various brokers. The arrangements specify that a certain percentage of the commission received by the brokers for dealing in the assets will be rebated in the form of goods and services; e.g. research materials, data and quotation services. Other delegates may or may not have any soft commission arrangements with their brokers from time to time. For those who do, commission credits generated by account transactions are used to obtain research-related and/or brokerage-related goods and/or services. Determinations are regularly made by such delegates that a given good or service provides lawful and appropriate assistance to the investment management process and that the costs of such good or service bears a reasonable relationship to the value of the good or service being provided.

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Notwithstanding the above, neither PAM, its delegates, nor any of their respective connected persons or delegates may retain cash or other rebates from a broker or dealer in consideration of directing transactions in the investments of the Principal CPF to such broker or dealer, save that goods and services (soft dollars) may be retained if:

(a) the goods and services to be provided pursuant thereto are of demonstrable benefits to the members of the Principal CPF;

(b) the transaction executed is consistent with the best execution standard and the brokerage rates are not in excess of customary institutional full–service brokerages rates; and

(c) adequate prior disclosure is made in the Principal Brochure of the Principal CPF.

For the avoidance of doubt, research and advisory services, economic and political analysis, portfolio analysis (including valuation and performance measurement), market analysis, data and quotation services, computer hardware and software incidental to the above goods and services, clearing and custodian services and investment–related publications may be considered as of such benefit to the members of the Principal CPF. Such goods and services may not include travel, accommodation, entertainment, general administrative goods or services, general office equipment or premises, membership fees, employee salaries, or direct payments.

TerminationA participating employer may withdraw its participation from the Principal CPF by giving one month’s written notice to the Trustee. Please note that the Termination Charge may be applied. For further information, please refer to the sub-section “Termination Charge” in section 7 “Charges” above.

If all participating employers under the Principal CPF agree, the Trustee shall terminate the Principal CPF in accordance with the provisions of the Trust Deed.

AuthorisationThe documentation of the Principal CPF has been authorised by the Securities and Futures Commission.

The Securities and Futures Commission’s authorization is not a recommendation or endorsement of the Principal CPF and the investment options under it nor does it guarantee the commercial merits of the Principal CPF and the investment options or their performance. It does not mean the Principal CPF and the investment options are suitable for all investors nor is it an endorsement of their suitability for any particular investor or class of investors.

MPF ExemptionThe Trust Deed of the Principal CPF has been amended in accordance with the Exemption Regulation to provide employers with the flexibility to apply for exemption under the Exemption Regulation. Should a participating employer elect to have its participating scheme exempted under the Exemption Regulation, upon granting of the exemption certificate by the Mandatory Provident Fund Schemes Authority, the relevant participating employer and members can then be exempted from Part III of the Mandatory Provident Fund Schemes Ordinance (e.g. contributions to an MPF scheme) but their participation in the Principal CPF shall be subject to the Exemption Regulation.

Principal Trust Company (Bermuda) Limited accepts responsibility for the accuracy of the information contained herein.

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Trustee

PRINCIPAL TRUST COMPANY (BERMUDA) LIMITED(Registered Address)Canon’s Court22 Victoria StreetHamilton HMBermuda

(Principal place of business in HK)Before 16 October 2017Unit 1001-1003 Central Plaza18 Harbour RoadWanchaiHong Kong

On and after 16 October 201730/F, Millennium City 6,392 Kwun Tong Road, Kwun Tong,Kowloon, Hong Kong

Representative of the Trustee in Hong Kong

PRINCIPAL TRUST COMPANY (HONG KONG) LIMITED(Registered Address)Before 16 October 2017Unit 1001-1003 Central Plaza18 Harbour RoadWanchaiHong Kong


Administration Manager

PRINCIPAL TRUST COMPANY (ASIA) LIMITED(Registered Address)Before 16 October 2017Unit 1001-1003 Central Plaza18 Harbour RoadWanchaiHong Kong


Insurer of the underlying policies in which the Relevant Investment Options invest

PRINCIPAL INSURANCE COMPANY (HONG KONG) LIMITED(Registered Address)Before 16 October 2017Unit 1001-1003 Central Plaza18 Harbour RoadWanchaiHong Kong


Insurer of the China Life Policy in which the Guaranteed Fund invests

THE CHINA LIFE INSURANCE (OVERSEAS) COMPANY LIMITED(Registered Address)22/F CLI Building313 Hennessy RoadWanchaiHong Kong

Investment Advisor of Principal CPF

PRINCIPAL ASSET MANAGEMENT COMPANY (ASIA) LIMITED(Registered Address)

Before 16 October 2017Unit 1001-1003 Central Plaza18 Harbour RoadWanchaiHong Kong


9. Addresses

2525

APPENDIX 1

The information contained in Appendix 1 to this Principal Brochure are in respect of each investment option and its corresponding underlying investment vehicle.

The investment restrictions applicable to the underlying investment vehicles are subject to ORSO and (as applicable) the Mandatory Provident Fund Schemes (Exemption) Regulation.

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Investment option: Guaranteed FundUnderlying investment vehicle: China Life Policy

1. General structureThe Guaranteed Fund invests 100% in the China Life Policy. The guarantee under the China Life Policy is given by China Life. Your investments in the Guaranteed Fund are therefore subject to the credit risks of China Life. China Life, registered in the People’s Republic of China, is an authorized insurer under the Insurance Companies Ordinance, Cap. 41 of the laws of Hong Kong.

The China Life Policy, in turn, invests 100% in an underlying unit trust authorized by the Securities and Futures Commission under the Code on Unit Trusts and Mutual Funds of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products* (the “Underlying Fund”).

* Such authorization does not imply official recommendation by the SFC.

The investments of the participating employers and members in the Guaranteed Fund will be unitized.

2. Summary of the entitlement at the Guaranteed Fund levelAny contributions made in respect of or by a member for the subscription of units in the Guaranteed Fund will receive, through investing in the China Life Policy:

(a) a capital guarantee;

(b) a minimum net investment return of 1.5% p.a. for the first five years commencing from 4 January 2017;

(c) if applicable, additional investment return by way of bonus units (as more particularly described in section 4.2 below).

The entitlement to the capital guarantee in (a) and minimum net investment return in (b) is not subject to any condition.

The minimum net investment return of 1.5% p.a. for the first five years from 4 January 2017 is the resultant of the Guaranteed Rate of Return at the China Life Policy level (as more particularly described in section 3.1 below) less the management charge chargeable by the Trustee at the Guaranteed Fund level. For the first five years from 4 January 2017, the Guaranteed Rate of Return at the China Life Policy level will be at a minimum 2.5% p.a. and the management charge chargeable by the Trustee at the Guaranteed Fund level will be up to a maximum of 1.35% p.a. The minimum Guaranteed Rate of Return and the maximum management charge chargeable by the Trustee at the Guaranteed Fund level will not be applied at the same time so that, in any event, for the first five years from 4 January 2017, the minimum net investment return will be 1.5% p.a.

3. Details of the guarantee at the China Life Policy levelContributions applied to subscribe for units in the Guaranteed Fund will solely be invested in the China Life Policy. China Life maintains a policy account (the “Policy Account”) in the name of the Trustee for its investments in the China Life Policy.

3.1 Minimum guarantee entitlementAt the China Life Policy level, China Life provides:

(a) a capital guarantee;

(b) a guaranteed rate of return on the aggregate of the premiums together with the declared interest and return (compounded annually on a simple interest basis) (the “Guaranteed Rate of Return”).

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The Guaranteed Rate of Return is at a minimum 2.5% p.a. for each of the first five years commencing from 4 January 2017.

The Guaranteed Rate of Return will not be reduced below 2.5% p.a. by China Life for a period of five years commencing from 4 January 2017. However, upon the expiry of this five years’ period, China Life reserves the right to vary the Guaranteed Rate of Return by giving not less than 6 months’ prior written notice to the Trustee, and the new Guaranteed Rate of Return shall only be effective after the expiry of the said five years’ period. For the avoidance of doubt, unless and until this 6 months’ prior written notice is given to the Trustee, the applicable Guaranteed Rate of Return after the expiry of the said five years’ period shall be the same as that immediately before the expiry of such period.

3.2 Declaration of the rate of returnWithin two calendar weeks after the end of each calendar year, China Life will declare a rate of return (the “Declared Rate of Return”), which must not be less than the Guaranteed Rate of Return (as described in section 3.1 above), on the Capital~ for that calendar year, after deduction of:

(i) the Investment Charge (i.e. 1% p.a. on the NAV of the Policy Account)*,

(ii) Guarantee Charge, if applicable (as described in Note 2 under sub-section “(B) At the investment option/underlying level” in section 7 “Charges” in the Principal Brochure),

(iii) smoothing provision#, if applicable, and

(iv) audit fees, legal expenses (if any) and other disbursement (e.g. printing and postage expenses) (if any) which arises from time to time pursuant to the provisions of the China Life Policy.

Capital~, in respect of (or during) a calendar year, means

(a) the actual amount of premiums invested in the China Life Policy, less redemption by the Trustee as policyholder of the China Life Policy in (or during) that calendar year, plus

(b) the actual amount of premiums invested in the China Life Policy, together with the declared return at the applicable Declared Rate of Return on those premiums, less redemptions by the Trustee as policyholder of the China Life Policy, accumulated up to and including 31 December of the preceding calendar year.

* There will be certain charges and fees chargeable at the Underlying Fund level. Such charges and fees at the Underlying Fund level may impact the return of the underlying assets, and thus members’ entitlement to the bonus units (as more particularly described in section 4.2 “Bonus unit entitlement” below). However, notwithstanding such charges and fees at the Underlying Fund level, there will be a minimum net investment return of 1.5% p.a. of the Guaranteed Fund for the first five years from 4 January 2017.

# China Life may, at its sole discretion, if the actual net investment return of the China Life Policy from the Underlying Fund (the “Underlying Fund Return”), after deduction of the Relevant Charges and Expenses and Guarantee Charge, for any particular year shall exceed the Guaranteed Rate of Return, set aside an amount under the China Life Policy as a smoothing provision for the purpose of smoothing market fluctuations and contingency at any time and to provide the guarantee for the China Life Policy, provided that the amount shall not exceed 1% p.a. of the NAV of the Policy Account as at 31 December of that year. The smoothing provision is deducted at the beginning of the following financial year of the China Life Policy prior to the declaration of the Declared Rate of Return. The smoothing provision is retained at the China Life Policy level and belongs to the Trustee as policyholder of the China Life Policy. On the termination of the China Life Policy, the smoothing provision will be returned to the Trustee as policyholder and form part of the assets of the Guaranteed Fund. The smoothing provision is not unitized. Please refer to section 3.4 “Where the Net Return is less than the Guaranteed Rate of Return” for the utilization of the smoothing provision.

The Declared Rate of Return is determined by China Life at its absolute discretion by reference to the Underlying Fund Return, for the calendar year in respect of which the Declared Rate of Return is declared. Where the period to which the Declared Rate of Return is related (the “relevant period”) is less than a calendar year, the Declared Rate of Return for the relevant period will be pro-rated on the basis of the duration of the relevant period bears to the entire calendar year. To the extent that the Declared Rate of Return is higher than the Guaranteed Rate of Return (the excess being the “Excess Rate”), the Excess Rate on the Capital~ will be credited to the Policy Account at the end of each relevant calendar year.

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3.3 Where the Underlying Fund Return (after deduction of the Relevant Charges and Expenses) exceeds the Guaranteed Rate of Return

If the Underlying Fund Return (after deduction of the Relevant Charges and Expenses) (the “Net Return”) exceeds the Guaranteed Rate of Return, China Life is entitled to charge a Guarantee Charge on the excess part which is up to a maximum of 1% p.a. of the NAV of the Policy Account as at the commencement of that particular year.

3.4 Where the Net Return is less than the Guaranteed Rate of ReturnIf the Underlying Fund Return (before deduction of the Relevant Charges and Expenses) (the “Gross Return”) is less than the Guaranteed Rate of Return, then the credit balance (if any) of the smoothing provision or a sufficient part of such credit balance may be drawn and applied by China Life to make up the shortfall (i.e. the difference between the Gross Return and the Guaranteed Rate of Return). However, if the credit balance of the smoothing provision is insufficient to make up the shortfall, China Life shall make up the difference (i.e. the difference between the credit balance of the smoothing provision and the shortfall) out of its own monies and resources.

Where the Gross Return is more than the Guaranteed Rate of Return but the Net Return is less than the Guaranteed Rate of Return, China Life will make up the shortfall (i.e. the difference between the Net Return and the Guaranteed Rate of Return) from its own monies and resources.

In any case, an Investment Charge will be deducted from the China Life Policy even when this section 3.4 applies.

4. Members’ entitlement at the Guaranteed Fund level4.1 Calculation of unit priceAt the Guaranteed Fund level, the unit price per unit in the Guaranteed Fund on each particular day will be calculated as follows:

Unit Price (T) = Unit Price (T-1) * (1 + (Guarantee Rate of Return – Management Charge chargeable by the Trustee at the Guaranteed Fund level))^(1/number of calendar days in the year)

4.2 Bonus unit entitlementWhere the Declared Rate of Return for a calendar year (the “Relevant Calendar Year”) exceeds the Guaranteed Rate of Return, an amount equivalent to the Excess Rate on the Capital~ will, on a date (the “Declared Rate Credit Day”) soon after the declaration of the Declared Rate of Return (normally within a week after such declaration), be credited to the notional accounts of the members investing in the Guaranteed Fund as at 31 December of the Relevant Calendar Year by way of bonus units. The number of bonus units will be calculated by using the fund price at the beginning of the calendar year immediately following the Relevant Calendar Year according to the following formula:

Daily Bonus Amount on Day (n) = Capital~ on Day (n-1) x Excess Rate (%) x (1/number of calendar days per year)

For the avoidance of doubt, if a member ceases his/her investment in the Guaranteed Fund before the Declared Rate Credit Day, such member’s notional account will be terminated and therefore no bonus units will be credited in respect of such member.

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5. Illustrative example of the guarantee entitlement of a member investing in the Guaranteed Fund

Numerical Illustrative Example for the Guarantee MechanismThe following is an illustrative example to show, as described above, how the Guaranteed Fund is unitized and how its fund price is calculated for the account of a member.

Please note that the figures used in and the assumptions adopted for the example are hypothetical and are used only for illustrative purposes.

The illustrative example assumes the following:

• As the guarantee mechanism is operated on a calendar year basis, by way of a simple illustration, the first contribution to the Guaranteed Fund is assumed to take place on the 7th last day of a calendar year so that there are only seven days (Day 1 to Day 7) to operate the account in the example before the end of the calendar year. Day 7 and Day 8 are respectively the last day of the calendar year and the first day of the immediately following calendar year.

• As the purpose of the illustrative example is to illustrate calculations relevant to the last seven days of the calendar year only, the example only sets out figures relevant to that period – Fund price at Day 1: HK$10.0000

• Minimum net investment return at the Guaranteed Fund level: 1.5% p.a., being Guaranteed Rate of Return (i.e. 2.5% p.a. guaranteed by China Life at the China Life Policy level) – management charge (i.e. 1.0% p.a. chargeable by the Trustee at the Guaranteed Fund level)

• Declared Rate of Return: 3.6% p.a. (declared by China Life at the China Life Policy level) (after deducting, from the Underlying Fund Return, the Investment Charge of 1% p.a. of the NAV of the Policy Account, the Guarantee Charge of 1% p.a. of the NAV of the Policy Account and 1% p.a. of the NAV of the Policy Account as smoothing provision)

• Excess Rate: 1.1% p.a. (i.e. 3.6% p.a. – 2.5% p.a.)

• Date on which the Declared Rate of Return is declared: The 14th day of the immediately following calendar year (i.e. Day 21)

• Declared Rate Credit Day: The 7th day after the declaration of the Declared Rate of Return (i.e. Day 28)

• Member’s Transactions:

a) Contribution at Day 1: HK$10,000

b) Contribution at Day 5: HK$3,000.00

c) Redemption at Day 6: HK$1,000.00

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Calculation of unit price of the Guaranteed Fund (rounded down to 4 decimal places)

Year 1

Day 1: $10.0000 (initial fund price)

Day 2: $10.0000 X (1+(2.5% -1.0%)) ^ 1/365 (number of calendar days per that calendar year) = 10.0004






Year 2

Day 8: $10.0024 X (1+(2.5% -1.0%)) ^ 1/365 (number of calendar days per that calendar year) = 10.0028 (being the 1st day immediately following the end of that calendar year (of a 7-day period))

Day 21: $10.0076 X (1+(2.5% -1.0%)) ^ 1/365 (number of calendar days per that calendar year) = 10.0080 (being the 14th day after the end of that calendar year i.e. the date on which the Declared Rate of Return is declared)

Day 28: $10.0104 X (1+(2.5% -1.0%)) ^ 1/365 (number of calendar days per that calendar year) = 10.0108 (being the 7th day after the declaration of the Declared Rate of Return i.e. the Declared Rate of Return Credit Day)

Calculation and Crediting of Bonus Units at Guaranteed Fund Level(Unless stated otherwise, dollar amounts are rounded to 2 decimal places and units of the Guaranteed Fund (including bonus units) are rounded down to 4 decimal places).

As the Guaranteed Fund is unitized, for subscriptions (net of redemptions) on the day of transaction, the minimum net investment return at the Guaranteed Fund level (i.e. 1.5% p.a. for the first five years commencing from 4 January 2017) is reflected in the daily unit price per unit of the Guaranteed Fund as of the day immediately following the day of transaction. That means that the Guaranteed Rate of Return under the China Life Policy for Day 1 to Day 7 in the illustrative example will be reflected in the unit price of the Guaranteed Fund for Day 2 to Day 8.

The same principle applies to the calculation of the bonus amounts for the calendar year in the illustrative example, so that the bonus amounts for the period from Day 1 to Day 7, as calculated by applying the Excess Rate (i.e. 1.1% p.a., being the excess of the Declared Rate of Return over the Guaranteed Rate of Return) to the accumulated subscriptions (net of accumulated redemptions), will be reflected in Day 2 to Day 8 correspondingly. Therefore, the bonus amounts for the calendar year in the illustrative example as set out in the column titled “Bonus amounts” of the table below from Day 2 to Day 8 are calculated, in respect of a day, by applying the Excess Rate to the “Accumulated balance of subscription amount (net of accumulated redemption amount)” of the day immediately before that day (i.e. (“Accumulated balance of subscription amount (net of accumulated redemption amount”) of “Day (n-1)” x 1.1% x 1/number of calendar days per year)).

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The total bonus amounts of HK$2.32 at the bottom of the column indicates that HK$2.32 worth of bonus would be credited in respect of the 7-day period of the calendar year in this illustrative example. In terms of bonus units, 0.2319 unit (i.e. HK$2.32 (being the said total bonus amounts)/HK$10.0028 (i.e. fund price at Day 8 (being the fund price at the beginning of the immediately following calendar year))) would be credited to the account of the member on the Declared Rate Credit Day (see the column titled “No. of bonus units credited”) being the additional benefits to the eligible member for that calendar year (of a 7-day period).

Day Fund price per unit of the

Guaranteed Portfolio

(a)

Subscription amount/

redemption amount

(b)

Accumulated balance of

subscription amount (net of

accumulated redemption

amount) (i.e. Capital~)

(c)

No. of Unit subscribed/redeemed

(d)=((b)/(a))

Accumulated unit balance

(e)

NAV balance

(f)=(a)x(e)

Calculation and Crediting of Bonus Units at the Guaranteed Fund Level

Bonus amounts for the relevant

calendar year

(no rounding, until arriving at the total bonus amount which is rounded to 2 decimal places)

(g) = (c) at Day (n-1) x 1.1%*1/365 (number of

calendar days per that calendar year)

No. of bonus units credited

for the relevant calendar year

(f) = Total bonus amounts as

calculated under (g)/fund price at

Day 8

1 HK$10.0000 HK$10,000.00 HK$10,000.00 1000.0000 1,000.0000 HK$10,000.00

2 HK$10.0004 HK$10,000.00 1,000.0000 HK$10,000.40 HK$0.30136…

3 HK$10.0008 HK$10,000.00 1,000.0000 HK$10,000.80 HK$0.30136…

4 HK$10.0012 HK$10,000.00 1,000.0000 HK$10,001.20 HK$0.30136…

5 HK$10.0016 HK$3,000.00 HK$13,000.00 299.9520 1,299.9520 HK$13,001.60 HK$0.30136…

6 HK$10.0020 (HK$1,000.00) HK$12,000.00 (99.9800) 1,199.9720 HK$12,002.12 HK$0.39178…

7 HK$10.0024 HK$12,000.00 1,199.9720 HK$12,002.60 HK$0.36164…

8 HK$10.0028 HK$12,000.00 1,199.9720 HK$12,003.08 HK$0.36164...

Total: 2.32

Day 28 (Declared Rate Credit Day)

0.23190

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Investment option: International Equity FundUnderlying investment vehicle: Principal Life Style Fund – Principal International Equity FundInvestment manager: PAMDelegate of the investment manager: PGI US

1. ObjectiveThe International Equity Fund aims to seek capital growth over the long term by investing in international equity markets.

2. Investment strategyThe International Equity Fund invests directly in a single underlying investment vehicle, Principal Life Style Fund – Principal International Equity Fund, a unit trust authorized by the Securities and Futures Commission under the Code on Unit Trusts and Mutual Funds of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products^. Principal Life Style Fund – Principal International Equity Fund will invest primarily in equity securities selected from investment markets around the world. Principal Life Style Fund – Principal International Equity Fund may also hold cash and short-term investments.

^ Such authorization does not imply official recommendation by the SFC.

3. Asset allocation and geographical allocationThe target ranges of asset allocation and geographic allocation of the Principal Life Style Fund – Principal International Equity Fund are as follows:

Asset Allocation*

Equity Securities: 70% – 100%

Cash & Short-term Investments (e.g. bills and deposits): 0% – 30%

* Investors should note that the above ranges of asset allocations are for indication only and long-term allocations may vary in exceptional circumstances out of the control of the investment manager and/or its delegates such as where there is a market crash or a major crisis.

Geographic Allocation**

North America: 0% – 65% Middle East: 0% – 20%

Europe: 0% – 60% Africa: 0% – 20%

Asia: 0% – 50% Others: 0% – 20%

South America: 0% – 50%

** Investors should note that (i) the above ranges of geographic allocations are for indication only and long-term allocations may vary with changing market conditions; and (ii) the geographic allocation for equity investments (if any) is classified by the principal place of business of the issuers and the geographic allocation for debt investments (if any) is classified by their currency denomination.

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4. Financial futures and option contractsThe International Equity Fund will not enter into financial futures contracts and financial option contracts directly. However, it may, via the Principal Life Style Fund – Principal International Equity Fund, enter into financial futures contracts and financial option contracts for hedging purposes.

5. Risk profileThe risk profile of the International Equity Fund is generally regarded as high. In the long term, the return of the International Equity Fund is expected to exceed the inflation rates in Hong Kong.

The risk profile is determined by the investment manager of the Principal Life Style Fund – Principal International Equity Fund and is based on relative exposure to equities/bonds (including an assessment of historical performance/volatility of return). The risk profile will be reviewed annually. The risk profile is for your reference only.

6. Securities lendingThe investment manager of the Principal Life Style Fund – Principal International Equity Fund will not engage in securities lending.

7. Borrowing restrictionsThe investment manager of the Principal Life Style Fund – Principal International Equity Fund may borrow for the account of the Principal Life Style Fund – Principal International Equity Fund for liquidity purposes to meet realizations of units relating to the Principal Life Style Fund – Principal International Equity Fund and for other limited purposes to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation, including in limited circumstances to settle a transaction relating to the acquisition of securities or other investments in respect of the Principal Life Style Fund – Principal International Equity Fund. The assets of the Principal Life Style Fund – Principal International Equity Fund may be charged or pledged as security for any such borrowings to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation.

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Investment option: Asia Pacific Equity FundUnderlying investment vehicle: Principal Prosperity Series – Principal Asia Pacific High Dividend Equity FundInvestment manager: PAMDelegate of the investment manager: PGI USSub-delegate of the investment manager: PGI HK

1. ObjectiveThe Asia Pacific Equity Fund aims to achieve high current income through investing in a diversified portfolio of listed securities in the Asia Pacific region.

2. Investment strategyThe Asia Pacific Equity Fund invests directly in a single underlying investment vehicle, Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, a unit trust authorized by the Securities and Futures Commission under the Code on Unit Trusts and Mutual Funds of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products*. Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund will invest in a diversified portfolio of listed securities in the Asia Pacific region, including but not limited to the following countries: Australia, China, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. The investment manager of Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund does not currently intend to invest in Japan but may do so in the future if suitable investment opportunities arise. The investment manager of Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund will focus on companies which demonstrate strong corporate fundamentals and offer the potential for superior dividend yields. Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund may also seek to achieve capital appreciation with relatively moderate to high volatility commensurate with investing in equities. Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund may also on an ancillary basis from time to time hold cash, deposits and instruments with floating or fixed rates such as certificates of deposits, bankers’ acceptances and commercial paper.


3. Asset allocation and geographical allocationAsset AllocationThe target ranges of asset allocation of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund are as follows:

Asset Allocation*

Equity Securities: 70% – 100%


* Investors should note that the above ranges of asset allocations are for indication only and long-term allocations may vary in exceptional circumstances out of the control of the investment manager and/or its delegates such as where there is a market crash or a major crisis.

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Geographical AllocationPrincipal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund will invest in a diversified portfolio of listed securities in the Asia Pacific region, including but not limited to the following countries: Australia, China, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. The investment manager of Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund does not currently intend to invest in Japan but may do so in the future if suitable investment opportunities arise.

4. Financial futures and option contractsThe Asia Pacific Equity Fund will not enter into financial futures contracts and financial option contracts directly. However, it may, via the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, enter into financial futures contracts and financial option contracts for hedging or investment purposes, provided that financial option contracts, together with any financial warrant contracts, entered into for investment purposes must not constitute more than 15% of the NAV of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund.

5. Risk profileThe risk profile of the Asia Pacific Equity Fund is generally regarded as high.

The risk profile is determined by the investment manager of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund and is based on relative exposure to equities/bonds (including an assessment of historical performance/volatility of return). The risk profile will be reviewed annually. The risk profile is for your reference only.

6. Securities lendingThe investment manager of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund will not engage in securities lending.

7. Borrowing restrictionsThe investment manager of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund may borrow, for the account of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund, up to 25% of the latest available NAV of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund to acquire investments. The assets of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund may be charged or pledged as security for any such borrowings. In addition, the assets of the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund may be charged to secure a guarantee given in favour of unitholders in the Principal Prosperity Series – Principal Asia Pacific High Dividend Equity Fund.

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Investment option: International Bond FundUnderlying investment vehicle: Principal Life Style Fund – Principal International Bond FundInvestment manager: PAMDelegate of the investment manager: PGI USSub-delegate of the investment manager: PGI Europe

1. ObjectiveThe International Bond Fund aims to protect and maximise real asset value in terms of international purchasing power.

2. Investment strategyThe International Bond Fund invests directly in a single underlying investment vehicle, Principal Life Style Fund – Principal International Bond Fund, a unit trust authorized by the Securities and Futures Commission under the Code on Unit Trusts and Mutual Funds of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products*. Principal Life Style Fund – Principal International Bond Fund will invest mainly in the global bond markets. Principal Life Style Fund – Principal International Bond Fund will primarily invest in a portfolio of debt securities, both sovereign or non-sovereign, of varying maturities and denominated in the world’s major currencies.


3. Asset allocation and geographical allocationThe target ranges of asset allocation and geographic allocation of the Principal Life Style Fund – Principal International Bond Fund are as follows:

Asset Allocation*

Debt Securities: 70% – 100%


* Investors should note that the above ranges of asset allocations are for indication only and long-term allocations may vary in exceptional circumstances out of the control of the manager and/or its delegates such as where there is a market crash or a major crisis.

Geographic Allocation**

United States: 15% – 65% Italy: 0% – 50%

France: 0% – 50% Japan: 0% – 50%

Germany: 0% – 50% Canada: 0% – 20%

Hong Kong: 0% – 50% Other countries (each): 0% – 20%

** Investors should note that (i) the above ranges of geographic allocations are for indication only and long-term allocations may vary with changing market conditions; and (ii) the geographic allocation for equity investments (if any) is classified by the principal place of business of the issuers and the geographic allocation for debt investments (if any) is classified by their currency denomination.

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4. Financial futures and option contractsThe International Bond Fund will not enter into financial futures contracts and financial option contracts directly. However, it may, via the Principal Life Style Fund – Principal International Bond Fund, enter into financial futures contracts and financial option contracts for hedging purposes.

5. Risk profileThe risk profile of the International Bond Fund is generally regarded as moderate. In the long term, the return of the International Bond Fund is expected to be comparable to the inflation rates in Hong Kong.

The risk profile is determined by the investment manager of the Principal Life Style Fund – Principal International Bond Fund and is based on relative exposure to equities/bonds (including an assessment of historical performance/volatility of return). The risk profile will be reviewed annually. The risk profile is for your reference only.

6. Securities lendingThe investment manager of the Principal Life Style Fund – Principal International Bond Fund will not engage in securities lending.

7. Borrowing restrictionsThe investment manager of the Principal Life Style Fund – Principal International Bond Fund may borrow for the account of the Principal Life Style Fund – Principal International Bond Fund for liquidity purposes to meet realizations of units relating to the Principal Life Style Fund – Principal International Bond Fund and for other limited purposes to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation, including in limited circumstances to settle a transaction relating to the acquisition of securities or other investments in respect of the Principal Life Style Fund – Principal International Bond Fund. The assets of the Principal Life Style Fund – Principal International Bond Fund may be charged or pledged as security for any such borrowings to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation.

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Stable Fund PolicyBalanced Fund PolicyGrowth Fund Policy

EstablishmentStable Fund Policy, Balanced Fund Policy and Growth Fund Policy (collectively the “Lifestyle Fund Policies”, each a “Lifestyle Fund Policy”) were issued by Principal Insurance Company (Hong Kong) Limited (Insurer) in Hong Kong. Your investments in a Lifestyle Fund Policy, if any, are therefore subject to the credit risks of the Insurer.

Objectives

Stable Fund Policy Stable Fund Policy aims to achieve a stable long–term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Stable Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits. Normally around 15% to 45% of the assets will be invested in global equities and around 45% to 75% in global bonds. The remaining assets will be invested in deposits as appropriate.

The Stable Fund Policy has a medium risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Stable Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Stable Fund.

Balanced Fund Policy Balanced Fund Policy aims to achieve a long-term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Balanced Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits. Normally around 55% to 85% of the assets will be invested in global equities and around 10% to 40% in global bonds. The remaining assets will be invested in deposits as appropriate.

This Balanced Fund Policy has a medium to high risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Balanced Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Balanced Fund.

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Growth Fund Policy Growth Fund Policy aims to achieve significant long-term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Growth Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits, with heavier weighting in equities. Normally around 75% to 100% of the assets will be invested in global equities and up to 25% in global bonds. The remaining assets will be invested in deposits as appropriate.

This Growth Fund Policy has a high risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Growth Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Growth Fund.

The Insurer of the Stable Fund Policy, Balanced Fund Policy and Growth Fund Policy determines the risk profile of each of these policies and is for your reference only. The risk profiles are based on relative exposure to equities/bonds (including an assessment of historical performance/volatility) and will be reviewed on an annual basis.

Currently, the assets under each Lifestyle Fund Policy invest in the respective sub-fund of the Principal MPF Fund. Hence, each Lifestyle Fund Policy has the same investment objectives and strategies as the relevant sub-fund of the Principal MPF Fund, including the following investment restrictions related to securities lending, borrowing and financial futures contracts and options contracts:

Securities lendingThe manager of the Principal MPF Fund will not engage in securities lending.

Borrowing restrictionsThe manager of the Principal MPF Fund may borrow for the account of the relevant sub-fund of the Principal MPF Fund for liquidity purposes to meet realizations of units relating to such sub-fund and for other limited purposes to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation, including in limited circumstances to settle a transaction relating to the acquisition of securities or other investments in respect of the sub-fund. The assets of the relevant sub-fund may be charged or pledged as security for any such borrowings to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation.

Financial futures contracts and financial options contractsThe manager of the Principal MPF Fund may only enter into financial futures and options contracts on account of a sub-fund of the Principal MPF Fund for hedging purposes.

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OperationThe Lifestyle Fund Policies are denominated in Hong Kong dollars. The net asset value per unit of each policy is calculated by valuing the assets held in respect of each policy, deducting the liabilities attributable to each policy and dividing the resultant sum by the number of units of each policy in issue respectively. The bid price of a unit of each policy on a valuation date is the net asset value per unit rounded down to the nearest cent. The offer price of a unit of each policy on a valuation date is the aggregate of a preliminary charge and net asset value per unit rounded up to the nearest cent. Currently, this preliminary charge is waived for the Principal CPF.

Authorisation and Investment RestrictionThe Lifestyle Fund Policies, being part of the Principal CPF, are subject to the investment restrictions set out in Chapter 7 of the Code on Unit Trusts and Mutual Funds.

The Principal MPF Fund – Principal MPF Stable Fund, Principal MPF Fund – Principal MPF Balanced Fund and Principal MPF Fund – Principal MPF Growth Fund, the underlying funds in which the respective Lifestyle Fund Policies invest, have been authorised by the Securities and Futures Commission and approved by the Mandatory Provident Fund Schemes Authority. Such authorisations are not official recommendations or endorsements of a fund/scheme nor does it guarantee the commercial merits of a fund/scheme or its performance. It does not mean the fund/scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.

* Please note that the unit price may fall as well as rise. Market movements and currency movements may cause the value of the assets held in respect of the relevant Lifestyle Fund Policy to fall as well as rise.

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Principal Stable Fund PolicyPrincipal Balanced Fund PolicyPrincipal Growth Fund Policy

EstablishmentPrincipal Stable Fund Policy, Principal Balanced Fund Policy and Principal Growth Fund Policy (collectively the “Principal Lifestyle Fund Policies”, each an “Principal Lifestyle Fund Policy”) were issued by Principal Insurance Company (Hong Kong) Limited (Insurer). Your investments in a Principal Lifestyle Fund Policy, if any, are therefore subject to the credit risks of the Insurer.

Objectives

Principal Stable Fund Policy

Principal Stable Fund Policy aims to achieve a stable long-term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Stable Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits. Normally around 15% to 45% of the assets will be invested in global equities and around 45% to 75% in global bonds. The remaining assets will be invested in deposits as appropriate.

The Principal Stable Fund Policy has a medium risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Stable Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Stable Fund.

Principal Balanced Fund Policy

Principal Balanced Fund Policy aims to achieve a long-term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Balanced Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits. Normally around 55% to 85% of the assets will be invested in global equities and around 10% to 40% in global bonds. The remaining assets will be invested in deposits as appropriate.

The Principal Balanced Fund Policy has a medium to high risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Balanced Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Balanced Fund.

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Principal Growth Fund Policy

Principal Growth Fund Policy aims to achieve significant long-term capital growth. It pursues its investment objective by investing in the Principal MPF Fund – Principal MPF Growth Fund, which ultimately invests in a globally diversified portfolio of equities, bonds and deposits, with heavier weighting in equities. Normally around 75% to 100% of the assets will be invested in global equities and up to 25% in global bonds. The remaining assets will be invested in deposits as appropriate.

The Principal Growth Fund Policy has a high risk profile.

Principal Asset Management Company (Asia) Limited is the investment manager of the Principal MPF Fund – Principal MPF Growth Fund, and Principal Global Investors, LLC and Principal Global Investors (Hong Kong) Limited are the sub-investment managers of the Principal MPF Fund – Principal MPF Growth Fund.

The Insurer of the Principal MPF Fund – Principal Stable Fund Policy, Principal MPF Fund – Principal Balanced Fund Policy and Principal MPF Fund – Principal Growth Fund Policy determines the risk profile of each of these policies and is for your reference only. The risk profiles are based on relative exposure to equities/bonds (including an assessment of historical performance/volatility) and will be reviewed on an annual basis.

Currently, the assets under each Principal Lifestyle Fund Policy invest in the respective sub-fund of the Principal MPF Fund. Hence, each Principal Lifestyle Fund Policy has the same investment objectives and strategies as the relevant sub-fund of the Principal MPF Fund, including the following investment restrictions related to securities lending, borrowing and financial futures contracts and options contracts:

Securities lendingThe manager of the Principal MPF Fund will not engage in securities lending.

Borrowing restrictionsThe manager of the Principal MPF Fund may borrow for the account of the relevant sub-fund of the Principal MPF Fund for liquidity purposes to meet realizations of units relating to such sub-fund and for other limited purposes to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation, including in limited circumstances to settle a transaction relating to the acquisition of securities or other investments in respect of the sub-fund. The assets of the relevant sub-fund may be charged or pledged as security for any such borrowings to the extent permitted by the Mandatory Provident Fund Schemes (General) Regulation.

Financial futures contracts and financial options contractsThe manager of the Principal MPF Fund may only enter into financial futures and options contracts on account of a sub-fund of the Principal MPF Fund for hedging purposes.

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OperationThe Principal Lifestyle Fund Policies are denominated in Hong Kong dollars. The net asset value per unit of each policy is calculated by valuing the assets held in respect of each policy, deducting the liabilities attributable to each policy and dividing the resultant sum by the number of units of each policy in issue respectively. The bid price of a unit of each policy on a valuation date is the net asset value per unit rounded down to the nearest cent. The offer price of a unit of each policy on a valuation date is the aggregate of a preliminary charge and net asset value per unit rounded up to the nearest cent. Currently, this preliminary charge is waived for the Principal CPF.

Authorisation and Investment RestrictionThe Principal Lifestyle Fund Policies, being part of the Principal CPF, are subject to the investment restrictions set out in Chapter 7 of the Code on Unit Trusts and Mutual Funds.

The Principal MPF Fund – Principal MPF Stable Fund, Principal MPF Fund – Principal MPF Balanced Fund and Principal MPF Fund – Principal MPF Growth Fund, the underlying funds in which the respective Principal Lifestyle Fund Policies invest, have been authorised by the Securities and Futures Commission and approved by the Mandatory Provident Fund Schemes Authority. Such authorisations are not official recommendations or endorsements of a fund/scheme nor does it guarantee the commercial merits of a fund/scheme or its performance. It does not mean the fund/scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.

* Please note that the unit price may fall as well as rise. Market movements and currency movements may cause the value of the assets held in respect of the relevant Principal Lifestyle Fund Policy to fall as well as rise.

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Principal – RCM Hong Kong Fund Policy

EstablishmentThe Principal – RCM Hong Kong Fund Policy (RCM Policy) was issued by Principal Insurance Company (Hong Kong) Limited (the “Insurer”). Your investments in the RCM Policy, if any, is therefore subject to the credit risks of the Insurer.

ObjectivesThe RCM Policy aims to assist you in achieving long term capital growth by investing primarily in Hong Kong equities, including Chinese securities listed in Hong Kong. It pursues its investment objective by investing in the RCM Choice Fund – RCM Hong Kong Fund. The RCM Policy, via the RCM Hong Kong Fund, invests in a diversified portfolio of Hong Kong equities. Normally the assets remain fully invested in Hong Kong equities and where market conditions make it appropriate, cash or short term deposits may be held. Any holding of cash or short term deposits is to provide liquidity and/or for any other purpose as RCM Asia Pacific Limited, the investment manager of the RCM Choice Fund, considers appropriate.

The RCM Policy, due to its very high exposure to equities, has a high risk profile in terms of fluctuations in the value of the assets of the RCM Policy. The Insurer of the RCM Policy determines the risk profile of the RCM policy and is for your reference only. The risk profile is based on relative exposure to equities/cash/short term deposits (including an assessment of historical performance/volatility) and will be reviewed on an annual basis. Therefore, the return on the RCM Policy may fluctuate significantly, particularly in the short term. In the long term, however, its return is expected to be in line with its investment objective.

OperationThe RCM Policy is denominated in Hong Kong dollars. The net asset value per unit of the RCM Policy is calculated by valuing the assets held in the RCM Policy, deducting the liabilities of the RCM Policy and dividing the resultant sum by the number of units of the RCM Policy in issue. The bid price of a unit of the RCM Policy on a valuation date is the net asset value per unit rounded down to the nearest cent. The offer price of a unit of the RCM Policy on a valuation date is the aggregate of a preliminary charge and net asset value per unit rounded up to the nearest cent. Currently, this preliminary charge is waived for the Principal CPF.

Authorisation and Investment RestrictionThe RCM Policy, being part of the Principal CPF, is subject to the investment restrictions set out in Chapter 7 of the Code on Unit Trusts and Mutual Funds. The RCM Hong Kong Fund has been authorised by the Securities and Futures Commission and approved by the Mandatory Provident Fund Schemes Authority. Such authorisation is not an official recommendations or endorsements of a fund/scheme nor does it guarantee the commercial merits of a fund/scheme or its performance. It does not mean the fund/scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.

* Please note that the unit price may fall as well as rise. Market movements and currency movements may cause the value of the assets held in respect of the RCM Policy to fall as well as rise.

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