Hang Seng Mandatory Provident Fund — SuperTrust Plus

Hang Seng Mandatory Provident Fund – SuperTrust Plus

Annual Report

For the year ended 30 June 2018

Hang Seng Mandatory Provident Fund — SuperTrust Plus

30 June 2018

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Hang Sang Mandatory Provident Fund — SuperTrust Plus Year ended 30 June 2018

Contents Page(s)

Directory of parties 1 - 2

Scheme report 3 - 7

Investment report 8 - 54

Independent auditor's report on the financial statements 55 - 58

Scheme

Statement of changes in net assets available for benefits 59

Statement of net assets available for benefits 60

Cash flow statement 61

Constituent funds

Statement of comprehensive income 62 - 64

Statement of assets and liabilities 65 - 67

Statement of changes in net assets attributable to members 68 - 70

Notes to the financial statements 71 -100

Independent auditor's assurance report 101 - 104

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Hang Seng Mandatory Provident Fund — SuperTrust Plus Year ended 30 June 2018

Directory of parties

Sponsor

Hang Seng Bank Limited 83 Des Voeux Road Central Hong Kong

Trustee and Custodian

HSBC Provident Fund Trustee (Hong Kong) Limited HSBC Main Building 1 Queen's Road Central Hong Kong

Investment Managers

HSBC Investment Funds (Hong Kong) Limited (for the approved pooled investment funds (except for the MPF Guaranteed Fund itself which is an approved pooled investment fund in the form of insurance policy) directly or indirectly invested by the constituent funds except the Hang Seng Index Tracking Fund) HSBC Main Building 1 Queen's Road Central Hong Kong

Hang Seng Investment Management Limited (for the approved Index-Tracking Collective Investment Schemes directly or indirectly invested by the Hang Seng Index Tracking Fund only) 83 Des Voeux Road Central Hong Kong

HSBC Global Asset Management (Hong Kong) Limited (for the insurance policy of the Guaranteed Fund only) HSBC Main Building 1 Queen's Road Central Hong Kong

Investment Adviser

HSBC Global Asset Management (Hong Kong) Limited (for the approved pooled investment funds (except for the MPF Guaranteed Fund itself which is an approved pooled investment fund in the form of insurance policy) directly or indirectly invested by the constituent funds except the Hang Seng Index Tracking Fund) HSBC Main Building 1 Queen's Road Central Hong Kong

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Directory of parties (continued)

Administrator

HSBC Life (International) Limited 18th Floor, Tower 1, HSBC Centre 1 Sham Mong Road, Kowloon Hong Kong

Investment Agent

(for the Hang Seng Index Tracking Fund only) Hang Seng Investment Management Limited 83 Des Voeux Road Central Hong Kong

Insurer

(for the insurance policy of the Guaranteed Fund only) HSBC Life (International) Limited 18th Floor, Tower 1, HSBC Centre 1 Sham Mong Road, Kowloon Hong Kong

Legal Adviser

Baker & McKenzie 14th Floor, Hutchison House 10 Harcourt Road, Central Hong Kong

Auditor

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

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Scheme report

The Trustee has pleasure in submitting the scheme report together with the audited financial statements of Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme") for the year ended 30 June 2018.

1. The Scheme

The Scheme is a master trust scheme set up for the purpose of providing benefits to members in accordance with the Hong Kong Mandatory Provident Fund Schemes Ordinance ("the MPF Ordinance"). The Scheme was established under a trust deed dated 31 January 2000 between Hang Seng Bank Limited as the Sponsor and HSBC Provident Fund Trustee (Hong Kong) Limited as the Trustee. The Scheme is registered under section 21 of the MPF Ordinance.

The Trust Deed of the Scheme was amended on 18 May 2016 due to the Scheme restructuring. With effect from 1 July 2016, Hang Seng Mandatory Provident Fund —SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

The Trust Deed of the Scheme was amended on 12 December 2016 due to the establishment of the Default Investment Strategy effective from 1 April 2017.

The Trust Deed of the Scheme was amended on 23 June 2017 mainly due to changes in relation to certain powers of the Sponsor and the Administrator and some clerical tidy-ups. The amendments were mainly due to the re-alignment of certain powers of the Sponsor and the Administrator under the Trust Deed of the Schemes to enable the Trustee to discharge its fiduciary duties in administering and operating the Schemes more efficiently and effectively.

Other than the above, there was no change in the governing rules of the Scheme since the last year ended 30 June 2017.

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Scheme report (continued)

2. Financial development (Expressed in Hong Kong dollars)

Total subscriptions

for the year ended

30 June 2018 $'000

Total subscriptions

for the year ended

30 June 2017 $'000

Net assets as at

30 June 2018 $1000

Net assets as at

30 June 2017 $1000

MPF Conservative Fund(2) 5,930,045 7,090,658 8,397,010 7,156,147 Guaranteed Fund(2) 1,440,147 2,834,671 3,427,762 3,238,049 Core Accumulation Fund(1) 1,083,862 711,451 2,417,860 1,897,580 Balanced Fund(2) 867,372 3,791,094 6,228,175 5,976,644 Growth Fund(2) 1,190,430 4,704,936 8,542,656 8,238,225 Hang Seng Index Tracking

Func12) 4,801,069 8,276,687 13,149,873 12,132,436 North American Equity

Fund 661,948 621,123 1,374,512 1,259,433 European Equity Fund 317,932 258,760 831,008 841,027 Asia Pacific Equity Fund 878,893 729,411 3,325,835 3,251,584 Hong Kong and Chinese

Equity Fund 1,290,587 824,920 4,038,369 3,688,669 Global Bond Fund 1,097,399 596,296 1,094,825 684,854 Age 65 Plus Fund1) 453,486 195,016 521,455 272,790 Stable Fund 845,484 241,053 822,043 395,895 Chinese Equity Fund 1,752,877 873,774 2,609,000 2,096,321

(1) Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund - SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund -SuperTrust were transferred to the Scheme on 1 July 2016.

3. Directory of parties

Details of those parties engaged by the Trustee for the purposes of the Scheme for the year ended 30 June 2018 are set out on pages 1 to 2.

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4. Directors

The directors of HSBC Provident Fund Trustee (Hong Kong) Limited during the year and up to the date of this report are as follows:

Sai Kit HEUNG Mark Ivan BOYNE Elaine Yuen Man LO Sau Ling TSE Horace Kwan Hor CHAU Daniel Gareth HANKINSON Jayant RIKHYE Anthony James BLOOMFIELD

The business address of these directors is:

HSBC Main Building 1 Queen's Road Central Hong Kong

(appointed on 19 December 2017) (appointed on 29 January 2018) (resigned on 25 July 2017) (resigned on 29 January 2018)

5. Particulars of parties associated with the Trustee

HSBC Life (International) Limited

The directors of HSBC Life (International) Limited during the financial year are as follows:

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Benny Man Bun TSE Kevin Ross MARTIN Kathleen Chieh Huey GAN Gregory Thomas HINGSTON Sebastian Richmond HORN Bryce Leslie JOHNS Terence Man Chung CHIU Edward Charles Lawrence MONCREIFFE Siew Boi TAN Babak NIKZAD ABBASABADI Derek Ho Fai CHEUNG Peter Kin Yu LUK Robert Sui Yuen LYNN

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(appointed on 13 September 2017) (appointed on 27 September 2017) (appointed on 5 January 2018) (appointed on 15 January 2018) (retired on 29 June 2018) (retired on 29 June 2018) (retired on 29 June 2018)

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Hang Seng Mandatory Provident Fund — SuperTrust Plus Veer ended 30 June 2018

Scheme report (continued) it

5. Particulars of parties associated with the Trustee (continued)

Hang Seng Bank Limited

The directors of Hang Seng Bank Limited during the financial year are as follows:

Raymond Kuo Fung CH'IEN Louisa Wai Wan CHEANG John Cho Chak CHAN Nixon Lik Sang CHAN Lai Yuen CHIANG Margaret Wing Han KWAN Irene Yun Lien LEE Sarah Catherine LEGG Eric Ka Cheung LI Vincent Hong Sui LO Kenneth Sing Yip NG Peter Tung Shun WONG Michael Wei Kuo WU Rose Wai Mun LEE Andrew Hau Chung FUNG Fred Zuliu HU Henry Kar Shun CHENG Richard Yat Sun TANG

(resigned on 1 July 2017) (resigned on 4 July 2017) (resigned on 9 May 2018) (retired on 10 May 2018) (retired on 10 May 2018)

HSBC Global Asset Management (Hong Kong) Limited

The directors of HSBC Global Asset Management (Hong Kong) Limited during the financial year are as follows:

Stuart Glenn BERRY Guillermo Eduardo MALDONADO-CODINA Kevin Ross MARTIN Pedro Augusto BOTELHO BASTOS Stephen Chun Pong TAM Helen Pik Kuen WONG Rudolf Eduard Walter APENBRINK

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I Hang Seng Mandatory Provident Fund — SuperTrust Plus

Year ended 30 June 2018


5. Particulars of parties associated with the Trustee (continued)

HSBC Investment Funds (Hong Kong) Limited

The directors of HSBC Investment Funds (Hong Kong) Limited during the financial year are as follows:

Stuart Glenn BERRY Guillermo Eduardo MALDONADO-CODINA Pedro Augusto BOTELHO BASTOS Stephen Chun Pong TAM Joanne Ka Yin LAU

Hang Seng Investment Management Limited

The directors of Hang Seng Investment Management Limited during the financial year are as follows:

Pui Shan LEE Dave Man Kit NGAN Wing Lok LEUNG Sridhar CHANDRASEKHARAN Margaret Wing Han KWAN Ivy Shuk Pui CHAN Sai Kit LEE Eunice Cheuk Yee LEUNG Katie Kay Chun YIP Sai Lung LUK

(appointed on 15 November 2017) (appointed on 15 November 2017) (appointed on 15 November 2017) (appointed on 15 November 2017) (resigned on 22 June 2018)

6. Further information

Members can obtain further information about the Scheme and its operation from Mr Phillip Bretnall, Head of Pensions Oversight, HSBC Securities Services, Asia Pacific, on 3663 7066.

On behalf of the Trustee

Hong Kong, 17 December 2018

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Investment report for the year ended 30 June 2018

1. Statement of investment objective and policies

As at 30 June 2018 and during the year, Hang Seng Mandatory Provident Fund — SuperTrust Plus (the "Scheme") is a master trust scheme and offering the following constituent funds:

1. MPF Conservative Fund 2. Guaranteed Fund 3. Core Accumulation Fund 4. Balanced Fund 5. Growth Fund 6. Hang Seng Index Tracking Fund 7. North American Equity Fund 8. European Equity Fund 9. Asia Pacific Equity Fund 10. Hong Kong and Chinese Equity Fund 11. Global Bond Fund 12. Age 65 Plus Fund 13. Stable Fund 14. Chinese Equity Fund

Each of the constituent funds has different investment objectives and policies, achieved through investing its assets into an approved pooled investment fund.

1.1 MPF Conservative Fund

The investment objective of the MPF Conservative Fund is to achieve a rate of return higher than that available for savings deposits. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — MPF Conservative Fund) comprised entirely of high grade Hong Kong dollars denominated monetary instruments such as treasury bills, bills of exchange, commercial paper, certificates of deposit or interbank deposits; and other ancillary investments as allowed under the General Regulation. Such investments will have an average portfolio remaining maturity of not more than 90 days.

The purchase of a unit in the MPF Conservative Fund is not the same as placing funds on deposit with a bank or deposit-taking company. There is no obligation to redeem units at the offer value and the MPF Conservative Fund (or the approved pooled investment fund it is invested in) is not subject to the supervision of the Hong Kong Monetary Authority.

The approved pooled investment fund held by this MPF Conservative Fund may not acquire financial futures contracts and financial option contracts, may not engage in securities lending nor enter into repurchase agreements as defined in the General Regulation.

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Investment report for the year ended 30 June 2018 (continued)

1. Statement of investment objective and policies (continued)

1.1 MPF Conservative Fund (continued)

The MPF Conservative Fund does not guarantee the repayment of capital.

The MPF Conservative Fund is established to comply with section 37 of the General Regulation.

Fees and charges of an MPF Conservative Fund can be deducted from either (i) the assets of the fund or (ii) members' account by way of unit deduction. This fund uses method (i) and, therefore, its unit prices, net asset value (NAV) or fund performance quoted have reflected the impact of fees and charges.

There was no change in the statement of investment objective and policies during the period of this report that will materially affect the risk attached to the investments of the fund.

1.2 Guaranteed Fund

The investment objective of the Guaranteed Fund is to achieve long-term capital growth with low volatility whilst ensuring that the Guarantee is met. This Fund shall be invested in an approved pooled investment fund in form of an insurance policy (MPF Guaranteed Fund), which in turn invests in an approved pooled investment fund in form of a unit trust (HSBC MPF "A" — Mixed Asset Fund). Through such underlying investments, this Fund invests in a diversified portfolio that normally comprises global bonds, equities and cash, and the investments shall be heavily weighted in cash and/or short-term bank deposits from time to time if the Investment Manager considers it prudent to do so.

Around zero percent to 50 percent of this Fund will be indirectly invested in equities while around 20 percent to 100 percent will be indirectly invested in bonds and around zero percent to 80 percent will be indirectly held in cash. The intended asset allocation aforesaid is for indication only and may be changed as and when the Investment Manager considers appropriate.

For efficient portfolio management, the portfolio of the approved pooled investment fund held by this Fund (directly or indirectly, as the case may be) may acquire financial futures contracts and financial option contracts, engage in securities lending, enter into repurchase agreements, and invest in other investments as allowed under the General Regulation.

The investment held by this Fund (directly or indirectly) is subject to the applicable investment restrictions from time to time, including, but not limited to, the relevant investment and borrowing restrictions as described in Schedule 1 of the General Regulation.

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1.2 Guaranteed Fund (continued)

There is a dilution of performance due to the guarantee structure of the Guaranteed Fund and its insurance policy, and a guarantee fee is payable to the Insurer.

Members investing in the Guaranteed Fund who do not hold their investments until the date or events where one of the Guarantee Conditions set out in the "Principal Brochure" is met are subject to market fluctuations and investment risks.

The Guaranteed Fund invests in an insurance policy which includes a guarantee. The insurance policy is issued by the Insurer, HSBC Life (International) Limited.

Investments in the insurance policy are held as the assets of HSBC Life (International) Limited. In the event where HSBC Life (International) Limited is liquidated, you may not have access to your investments temporarily, or their value may be reduced, and the guarantee may not be available.

Before you invest in this Fund, you should consider the risk posed by the Insurer (referred to as "credit risk") under the circumstances set out above and, if necessary, seek additional information or advice.

Details of the terms and conditions of the guarantee are set out in the Principal Brochure.


1.3 Core Accumulation Fund

The investment objective of the Fund is to provide capital growth to Members by investing in a globally diversified manner. The Fund shall invest in an approved pooled investment fund (HSBC MPF "A" — Core Accumulation Fund) which in turn invests in two or more underlying approved pooled investment fund(s) and/or Index-Tracking Collective Investment Scheme(s) ("ITCIS(s)") as allowed under the General Regulation.

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1.3 Core Accumulation Fund (continued)

The HSBC MPF "A" — Core Accumulation Fund adopts an active investment strategy so that the investment adviser of the HSBC MPF "A" — Core Accumulation Fund may, subject to the limits of asset allocation, allocate the assets among different underlying approved pooled investment fund(s) and/or ITCIS(s) in such proportions as it shall, at its discretion, determine in response to various factors within the market environment for the best interest of the unitholders of the HSBC MPF "A" — Core Accumulation Fund. The underlying approved pooled investment fund(s) and/or ITCIS(s) may be actively managed or may adopt a passive management style against an index. There is no constraint restricting the investment adviser from investing in underlying collective investment schemes with any particular investment strategy. The investment adviser(s) of the underlying approved pooled investment fund(s) and/or ITCIS(s) in which the HSBC MPF "A" — Core Accumulation Fund invests in may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

The Fund, through its underlying investments, will hold 60 percent of its net assets in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global bonds and money market instruments). The asset allocation to Higher Risk Assets may vary between 55 percent and 65 percent due to differing price movements of various equity and bond markets.

For efficient portfolio management, the portfolio of the underlying approved pooled investment fund may acquire financial futures contracts and financial option contracts (for hedging purposes only if acquired directly by the underlying approved pooled investment fund), engage in securities lending, enter into repurchase agreements, and invest in other investments, as allowed under the applicable laws and regulations.

The Fund will, through the investment of HSBC MPF "A" — Core Accumulation Fund maintain a minimum Hong Kong currency exposure of 30 percent, as prescribed by the General Regulation.

The risk profile of the Fund is medium. The risk profile is determined by the Sponsor and the Trustee taking into account relevant factors including price volatility, asset allocation and liquidity. The risk profile is for reference only and will be reviewed periodically. The Fund aims to achieve a return corresponding to the return of the Reference Portfolio applicable to the Fund.

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1.4 Balanced Fund

The investment objective of the Balanced Fund is to achieve medium-high capital growth with medium volatility. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Balanced Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests in a diversified portfolio that normally comprises global bonds and equities with heavier weighting in equities.

The Investment Adviser of the approved pooled investment fund in which the Balanced Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

Around 55 percent to 85 percent of the portfolio of this Fund will be indirectly invested in equities and equity related investments. The remainder of the assets will be invested in deposits, debt securities and other investments as allowed under the General Regulation. The intended asset allocation aforesaid is for indication only and may be changed as and when the Investment Manager considers appropriate.

For efficient portfolio management, the portfolio of the approved pooled investment fund held by this Fund (directly or indirectly, as the case may be) may acquire financial futures contracts and financial option contracts, may engage in securities lending, enter into repurchase agreements, and invest in other investments to the extent permitted by the General Regulation.

Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in global bonds and equities. As a result of a heavier weighting in equities, the volatility of this Fund is higher than investments spread equally between global bonds and equities.


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1.5 Growth Fund

The investment objective of the Growth Fund is to achieve investment returns that maximise long-term capital growth potential with medium-high volatility. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Growth Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests in a diversified portfolio that normally comprises global equities, with an emphasis on Asian markets.

The Investment Adviser of the approved pooled investment fund in which the Growth Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

The investment portfolio indirectly held by this Fund will comprise mainly of equities and equity-related investments. The portfolio may also include deposits, debt securities and other permitted investments up to 30 percent of the net asset value of this Fund. The intended asset allocation aforesaid is for indication only and may be changed as and when the Investment Manager considers appropriate.


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in global equities. As a result of an emphasis on Asian markets, the volatility of this Fund is higher than investments spread more evenly in global equities.


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1.6 Hang Seng Index Tracking Fund

The investment objective of the Hang Seng Index Tracking Fund is to match as closely as practicable the performance of the Hang Seng Index by investing directly in an approved ITCIS (Hang Seng Index ETF) with a similar investment objective or investing indirectly in an approved ITCIS with a similar investment objective through an approved pooled investment fund.

For efficient portfolio management, the approved ITCIS directly or indirectly held by the Hang Seng Index Tracking Fund may gain exposure to the Hang Seng Index or its constituent stocks through investing in financial instruments, engaging in borrowings, securities lending and entering into repurchase agreements, as

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There was no change in the statement of investment objective and policies during

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1.7 North American Equity Fund

The investment objective of the North American Equity Fund is to achieve long-term capital growth. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — American Equity Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests in a portfolio of carefully selected shares traded on stock exchanges in North America.

The Investment Adviser of the approved pooled investment fund in which the North American Equity Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.


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Investment report 1, for the year ended 30 June 2018 (continued)


1.7 North American Equity Fund (continued)


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in North American securities. The volatility of this regional Fund is higher than that of global security investments.


1.8 European Equity Fund

The investment objective of the European Equity Fund is to achieve long-term capital growth. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — European Equity Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests in a portfolio of carefully selected shares traded on any of the eligible markets in the United Kingdom and in other continental European countries.

The Investment Adviser of the approved pooled investment fund in which the European Equity Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the FISBC Group as well as non-HSBC Group entities.


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1.8 European Equity Fund (continued)


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in European securities. The volatility of this regional Fund is higher than that of global security investments.


1.9 Asia Pacific Equity Fund

The investment objective of the Asia Pacific Equity Fund is to achieve long-term capital growth. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Asia Pacific Equity Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests in a portfolio of carefully selected quoted securities on regulated stock exchanges in Asia Pacific, excluding Japan.

The Investment Adviser of the approved pooled investment fund in which the Asia Pacific Equity Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

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1.9 Asia Pacific Equity Fund (continued)


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in Asian securities. The volatility of this regional Fund is higher than that of global security investments. In addition, the risks inherent in the Asian markets are higher than that of the developed markets.


1.10 Hong Kong and Chinese Equity Fund

The investment objective of the Hong Kong and Chinese Equity Fund is to achieve long-term capital growth. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Hong Kong and Chinese Equity Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund primarily invests in a portfolio of carefully selected securities listed on the Stock Exchange of Hong Kong, which may comprise of those Hong Kong listed Chinese equities (including H shares, red-chips and securities issued by companies deriving a preponderant part of their income and/or assets from China) and other securities listed on the Stock Exchange of Hong Kong. A portion of the investment portfolio indirectly held by this Fund may hold securities issued by companies deriving a preponderant part of their income and/or assets from Hong Kong and/or China that are listed on other stock exchanges. For the purpose of the investment objectives of the Hong Kong and Chinese Equity Fund, China means the People's Republic of China, excludes Hong Kong, Macau and Taiwan. Li

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1.10 Hong Kong and Chinese Equity Fund (continued)

The Investment Adviser of the approved pooled investment fund in which the Hong Kong and Chinese Equity Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

The investment portfolio indirectly held by this Fund will comprise mainly of equities and equity-related investments. The portfolio may also include deposits, debt securities and other permitted investments up to 30 percent of the net asset value of this Fund. It is expected that within the portfolio's equity and equity-related investments, around 10 percent to 75 percent may invest in Chinese equities and around 25 percent to 90 percent may invest in other equities listed in Hong Kong and/or deriving a preponderant part of their income and/or assets from Hong Kong. The intended asset allocations aforesaid are for indication only and may be changed as and when the Investment Manager considers appropriate.


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in Hong Kong securities. The volatility of this single country Fund is higher than that of global or regional security investments.


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1.11 Global Bond Fund

The investment objective of the Global Bond Fund is to achieve stable capital growth with low volatility. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Global Bond Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund primarily invests in a portfolio of carefully selected global fixed income securities. The investment adviser(s) and investment sub-adviser(s) appointed to manage the investments of the approved pooled investment fund(s) held by this Fund directly or indirectly are members of the HSBC Group.

The investment portfolio indirectly held by this Fund will comprise mainly of fixed and floating rate debt securities (up to around 10 percent of debt securities with maturity period of one year or less and the remaining debt securities with maturity period over one year). The portfolio may also include deposits and other permitted investments up to 30 percent of the net asset value of this Fund. The intended asset allocation aforesaid is for indication only and may be changed as and when the Investment Manager considers appropriate.


Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with debt securities. Generally, the prices of debt securities fall when interest rates rise. Change in the credit worthiness of the underlying investments may also adversely affect the value of this Fund.


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1.12 Age 65 Plus Fund

The investment objective of the Fund is to provide stable growth for the retirement savings to Members by investing in a globally diversified manner. The Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" —Age 65 Plus Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation.

The HSBC MPF "A" — Age 65 Plus Fund adopts an active investment strategy so that the investment adviser of the HSBC MPF "A" —Age 65 Plus Fund may, subject to the limits of asset allocation, allocate the assets among different underlying approved pooled investment fund(s) and/or ITCIS(s) in such proportions as it shall, at its discretion, determine in response to various factors within the market environment for the best interest of the unitholders of the HSBC MPF "A" — Age 65 Plus Fund. The underlying approved pooled investment fund(s) and/or ITCIS(s) may be actively managed or may adopt a passive management style against an index. There is no constraint restricting the investment adviser from investing in underlying collective investment schemes with any particular investment strategy. The investment adviser(s) of the underlying approved pooled investment fund(s) and/or ITCIS(s) in which the HSBC MPF "A" — Age 65 Plus Fund invests in may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

The Fund, through its underlying investments, will hold 20 percent of its assets in Higher Risk Assets (such as global equities), with the remainder investing in Lower Risk Assets (such as global bonds and money market instruments). The asset allocation to Higher Risk Assets may vary between 15 percent and 25 percent due to differing price movements of various equity and bond markets.

For efficient portfolio management, the portfolio of the underlying approved pooled investment fund may acquire financial futures contracts and financial option contracts (for hedging purposes only if acquired directly by the underlying approved pooled investment fund), engage in securities lending, enter into repurchase agreements, and invest in other investments, as allowed under the applicable laws and regulations.

The Fund will, through the investment of HSBC MPF "A" — Age 65 Plus Fund maintain a minimum Hong Kong currency exposure of 30 percent, as prescribed by the General Regulation.

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1.12 Age 65 Plus Fund (continued)

The risk profile of the Fund is low. The risk profile is determined by the Sponsor and the Trustee taking into account relevant factors including price volatility, asset allocation and liquidity. The risk profile is for reference only and will be reviewed periodically. The Fund aims to achieve a return corresponding to the return of the Reference Portfolio applicable to the Fund.

1.13 Stable Fund

The investment objective of the Stable Fund is to achieve stable capital growth with low volatility. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Stable Fund), which in turn invests in two or more underlying approved pooled investment fund(s) and/or ITCIS(s) as allowed under the General Regulation. Through such underlying investments, this Fund invests

I in a diversified portfolio that normally comprises global bonds and equities with heavier weighting in bonds.

The Investment Adviser of the approved pooled investment fund in which the Stable Fund invests is responsible to allocate the assets to the underlying investments in such proportions as it shall, at its discretion, determine. The investment adviser(s) of the underlying approved pooled investment fund(s) may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund(s), and such investment sub-advisers may include members of the HSBC Group as well as non-HSBC Group entities.

Around 55 percent to 85 percent of the portfolio of this Fund will be indirectly invested in debt securities, bonds and deposits. The remainder of the assets will be invested in equities and other investments as allowed under the General Regulation. The intended asset allocation aforesaid is for indication only and may be changed as and when the Investment Manager considers appropriate.

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Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in global bonds and equities.


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1.14 Chinese Equity Fund

The investment objective of the Chinese Equity Fund is to achieve long-term capital growth. This Fund shall be invested in an approved pooled investment fund (HSBC MPF "A" — Chinese Equity Fund) which in turn invests in an underlying approved pooled investment fund that primarily invests in a portfolio of carefully selected shares issued by companies deriving a preponderant part of their income and/or assets from China and listed on the Stock Exchange of Hong Kong, including but not limited to H shares and red-chips. Up to 30 percent of the non-cash assets of the underlying approved pooled investment fund may include securities issued by companies deriving a preponderant part of their income and/or assets from China that are listed on other stock exchanges. For the purpose of the investment objectives of the Chinese Equity Fund, China means the People's Republic of China, excludes Hong Kong, Macau and Taiwan.

The investment adviser of the underlying approved pooled investment fund may appoint one or more investment sub-advisers to manage the investment of the underlying approved pooled investment fund, and such investment sub-advisers are members of the HSBC Group.



Investments in this Fund are subject to market fluctuations and investment risks, in particular, the risks associated with investments in securities exposed to the Chinese economy. The volatility of this single country Fund is higher than that of global or regional security investments. In addition, the risks inherent in Chinese equities are higher than that of the developed markets.


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2. Market review and outlook for the year ended 30 June 2018

Let's start with fixed income. How has the environment impacted fixed income assets so far in 2018?

This year, we have reached an inflection point where, after several years of extreme liquidity, we are now heading toward monetary policy normalisation. Reversing the trend is taking us into somewhat uncharted territory, leading to renewed volatility and uncertainty.

In particular, spreads have been impacted by the two most influential economies for bond markets, namely the US and Germany, where full employment and steadily rising or normalising inflation have opened the door to interest rate rises.

Despite the Fed's consistent communication that normalisation will remain gradual and data-dependent, there is a growing narrative among market participants that inflation may force the monetary institution to increase the pace of tightening. Accordingly, the US curve flattened over the last six months with the US 2-year treasury yield breaching the 2.5% bar.

What are the key opportunities you see in fixed income for the rest of this year?

We continue to prefer local-currency emerging-market debt and higher-yielding segments such as US high-yield and emerging-market debt. In the current environment, we also like asset-backed securities, which deliver illiquidity and complexity premia coupled with strong diversification. Given the greater uncertainty on rates, we also believe that total return strategies present opportunities.

Finally, green finance and environmental, social and govemance (ESG) issues are emerging as a secular shift, supported by investors and regulators alike. This is creating opportunities we want to seize, and risks we want to mitigate. In our view, it is not currently expensive to adjust allocations more significantly into sustainable assets, whereas we think ESG-related risks, climate change notably, will be increasingly priced in, eventually penalising investors.

1

23



2. Market review and outlook for the year ended 30 June 2018 (continued)

And what are the key risks to this outlook?

In line with our macro views developed above, the key risk to our outlook is that of an inflation shock. Our core scenario is that, for now, cyclical growth has overcome secular stagnation forces — long-term deleveraging, demographics, and environmental change. Yet those forces are still at play and are capping the economy's long-term growth potential. Should they recede further however, inflationary pressures would grow, forcing the Fed to increase its pace of tightening, with a higher risk of overshooting.

Other key risks we see are heightened geopolitical tensions, combined or leading to trade barriers. The most adverse scenario would be one where a lower growth potential coincides with more pronounced monetary tightening.

Can you give us an overview of global equity markets so far this year?

Last year's "Goldilocks" scenario, characterised by synchronised global growth, low inflation and low rates across much of the developed and developing world, was very positive for risk assets in general, and equities in particular. Yet despite their strong run in 2017, global equities remained cheap at the beginning of this year, and the pick-up in corporate earnings growth showed little sign of abating, providing a solid backdrop for the asset class.

As expected, however, some of these supportive external factors have changed since the start of the year. Global growth has moderated somewhat, and inflation and interest rates have picked up slightly, creating a "less than Goldilocks" macro environment compared with last year. Meanwhile, volatility has become a key preoccupation for many global investors amidst rising geopolitical uncertainties — trade tensions in particular —involving some of the world's largest economies. Another factor that has weighed on investor sentiment is the stronger US dollar, although we believe further gains are now somewhat capped, particularly against a number of emerging market currencies. Consequently, after a promising start to 2018, the performance of equities has been lacklustre in recent months.

The good news is that the other catalysts for equity markets are still in place. Valuations remain relatively attractive for emerging market equities and some late-cycle markets such as Japan and Europe (on a currency-hedged basis for the latter two). Moreover, current valuations have not factored in any significant earnings growth in the short term, whilst we expect the cyclical pick-up in corporate profitability to persist over the medium term, continuing the trend that began last year. In our view, this means equities in many major markets remain relatively inexpensive, and backed by solid fundamentals. This allows us to have a positive outlook on the asset class for the rest of 2018.

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Hang Seng Mandatory Provident Fund - SuperTrust Plus Year ended 30 June 2018



What are some of the key investment opportunities you see in the second half of 2018?

Despite increased market noise, our primary focus remains on identifying companies which are attractively valued for their given level of sustainable profitability. Following this disciplined approach, we see some very attractive companies in Europe, Japan and select emerging markets, particularly in Asia. We don't expect these companies' fundamentals to be materially affected by most of the external factors currently preoccupying the markets so, for long-term investors like us, market moves that improve these companies' valuations are a buying opportunity. Oil prices are the only notable exception, as their increase will have a measurable impact on economies and companies. However, the effects of rising oil prices can vary vastly, particularly among emerging markets, which reinforces the importance of being selective when analysing emerging-market opportunities.

Figure 10: Asia ex Japan equities still trading at an attractive discount vs. US

0%

-10%

-20%

-30%

-40%

-50%

-60% Current discount: 48.3%

-70% Average discount: 39.0%

-80%

-90% Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17

—MSCI AC Asia ex-JP - Trailing PB rel to US - - average

Source: Credit Suisse, MSCI data as of May 2018. Past performance is not an indication of future performance.

25

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What are some of the key investment opportunities you see in the second half of 2018? (continued)

We believe consumption is a key investment theme across markets, supported by global growth — which remains decent — and ongoing pick-up in demand. In our view, this creates opportunities which extend beyond traditional consumer sector companies. In China, for example, e-commerce, technology, travel and tourism, and pharmaceuticals are all benefitting from the prevalent trend of consumption shifts toward higher-end products and services.

Asia is the key force driving global consumption growth, as a combination of rising incomes and technological innovation spurs spending in markets across the region. Asia is also seeing healthy growth in corporate profits across sectors and markets beyond consumption. As an illustration, whilst South Korea is one of the more developed markets in the region, thereby posting somewhat lower GDP growth, its corporate earnings are nonetheless forecast to grow by 13% in 2018. Meanwhile, alongside relatively high GDP growth, developing markets such as India and China are experiencing a surge in earnings growth (15% to 19% according to Bloomberg and MSCI data).

In addition to offering exposure to higher earnings growth than most regions, we also find that Asia ex-Japan equities remain substantially cheaper than other equity markets (Figure 10).

What are the key risks to your central scenario?

US-China trade tensions will likely continue to be an overhang, as we expect a protracted period of complex negotiations before any sort of resolution can be reached. We don't anticipate these tensions to escalate to the point of derailing global growth, and the actual impact of any potential tariffs or bans may not be significant. Yet investors are closely following developments, and tensions will continue weighing on market sentiment.

Although it is not our central scenario, the key risk to our outlook stems from the recent inflationary pressures. Beyond rising US inflation, a few emerging markets such as India have begun to feel similar pressures amidst a sharp increase in oil prices and, after largely ignoring them last year, investors have started to factor an inflation pick-up into their market expectations. The main risk associated with faster than expected inflation is the higher potential for policy errors. Major central banks have fared well so far, staying the course without any major missteps or policy interference, but there is always a risk that they will fall behind the curve, or become more assertive than required if inflation picks up more meaningfully, and we remain mindful of these risks.

For the latest market outlook, please visit https://www.assetmanagement.hsbc.com.hk

26

Guaranteed Fund Launch date: 01 December 2000 Benchmark FER Adjusted - 5% FTSE MPF Hong Kong Index (excluding Bank of Communications, Hang Seng Bank & HSBC) + 38% Markit iboxx HKD Bond Index + 57% 1-month HIBOR Deviation from the benchmark Trustee's commentary on performance



3. Trustee's commentary on fund performance against benchmark set by trustee

Annualized return (in terms of %) Since

1 year 5 years 10 years Launch MPF Conservative Fund Launch date: 01 December 2000 Benchmark MPF Prescribed Savings Rates for Cap Preservation Deviation from the benchmark Trustee's commentary on performance

0.00 0.05 0.16 1.14

0.01 0.01 0.01 0.48 -0.01 0.04 0.15 0.66

The fund is in line with the above benchmark in 1 year and 5 years given the steady Prescribed Savings Rate over the period. The fund outperformed benchmark performance in 10 years and since launch.

-1.46 -0.60 -0.39 0.07

1.16 1.85 2.48 3.99 -2.62 -2.45 -2.87 -3.92

The fund underperformed the above benchmark in 1 year, 5 years, 10 year and since launch.

During the past financial period ended 30 June 2018, asset allocation was negative. The overweight in Health Care was the largest positive contributor while the underweight in Technology was the main detractor. Stock selection within sectors also dragged fund performance. Stock selection within Financials, and Consumer Goods detracted fund value the most over the period.

For the bond sleeve, the major detractor was from credit as a result of credit spread widening. Moreover, currency also had a negative contribution.

27



3. Trustee's commentary on fund performance against benchmark set by trustee (continued)


1 year 5 years 10 years Launch* 6.91 (since

01 April 5.80 2017)

7.44 (since 01 April

6.31 2017) -0.53 (since

01 April -0.51 2017)

The fund underperformed the above Reference Portfolio (RP) in 1 year and since launch.

During the past financial period ended 30 June 2018, both the equity and bond portion added value to the fund at the asset allocation level. However, at stock selection level, both equity and bond portion contributed negatively to the fund, offsetting the positive effect of the asset allocation over the period. The cash drag factor also hurt the performance of the fund.

6.08 5.46 3.08 3.83

6.89 5.18 2.72 3.25 -0.81 0.28 0.36 0.58

The fund underperformed the above benchmark in 1 year, but it outperformed the benchmark in 5 year, 10 year and since launch.

During the past financial period ended 30 June 2018, asset allocation was positive driven mainly by the underweight position in global government bond, against the backdrop of a rising yield environment. On the other hand, the main detractor for fund performance in 1 year came from stock selection in areas like Hong Kong Equity, Asia Pacific and European equity markets, offsetting gains from asset allocation.

Core Accumulation Fund Launch date: 01 December 2000

Benchmark Wills Towers Watson MPF DIS Reference Portfolio — Core Accumulation Fund Deviation from the benchmark

Trustee's commentary on performance

Balanced Fund Launch date: 01 December 2000 Benchmark FER Adjusted - Willis Towers Watson MPF BM (Equity 60%-80%)^ Deviation from the benchmark Trustee's commentary on performance

1_

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Growth Fund Launch date: 01 December 2000 Benchmark FER Adjusted - Willis Towers Watson MPF BM (Equity > 80%)^

Deviation from the benchmark Trustee's commentary on performance

I

Hang Seng Mandatory Provident Fund — SuperTrust Plus

1 Year ended 30 June 2018


Fi I i



1 year 5 years 10 years Launch

7.47 6.55 3.36 3.98

8.71 6.58 3.12 3.50 -1.24 -0.03 0.24 0.48

The fund underperformed the above benchmark in 1 year and 5 years, but it outperformed the benchmark in 10 year and since launch.


15.19 9.51 5.01 6.01

15.15 9.55 4.94 5.48 0.04 -0.04 0.07 0.53

The fund underperformed the above benchmark in 5 year, while it has been outperforming the benchmark in 1 year, 10 year and since launch.

During the past financial period ended 30 June 2018, the fund's outperformance was 0.04%. The main contributors were due to the swing pricing impact, tracking difference of the underlying Hang Seng Index ETF and the cash drag factor. The swing pricing impact contributed positively to the tracking performance of the fund, while the tracking difference of the underlying Hang Seng Index ETF and the cash drag factor due to dividend reinvestment timing had a slightly negative impact to the fund. The overall effect is positive.

Hang Seng Index Tracking Fund Launch date: 01 December 2000 Benchmark FER Adjusted - Hang Seng Index Total Return (Net)"

Deviation from the benchmark Trustee's commentary on performance

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Hang Song Mandatory Provident Fund— SuperTrust Plus Year ended 30 June 2018




1 year 5 years 10 years Launch North American Equity Fund Launch date: 01 December 2000 Benchmark FER Adjusted - FTSE MPF North America (35% HKD Hedged)" Deviation from the benchmark Trustee's commentary on performance

European Equity Fund Launch date: 01 December 2000 Benchmark FER Adjusted - FTSE MPF Europe (35% HKD Hedged)" Deviation from the benchmark Trustee's commentary on performance

11.77 10.50 7.14 2.69

12.42 10.67 6.68 2.65 -0.65 -0.17 0.46 0.04

The fund underperformed the above benchmark in 1 year and 5 years but it outperformed the benchmark in 10 years and since launch.

During the past financial period ended 30 June 2018, fund exposures to quality and low Beta contributed to fund performance. Conversely, fund exposures to value, size and industry momentum weighed on fund performance. At sector level, the allocation in Consumer Services, Technology and Financials detracted fund performance the most over the period.

1.28 5.29 1.09 1.68

4.83 6.21 1.90 1.24 -3.55 -0.92 -0.81 0.44

The fund underperformed the above benchmark in 1 year, 5 years and 10 years but it outperformed the benchmark since launch.

During the past financial period ended 30 June 2018, the fund underperformed benchmark because of country allocation in France and Italy (political drama) that contributed negatively to the fund. The effect was partly offset by allocation in Netherlands which contributed positively to the fund. Overall, the country allocation was negative for the fund's relative performance.

30





1 year 5 years 10 years Launch Asia Pacific Equity Fund Launch date: 01 December 2000 Benchmark FER Adjusted - FTSE MPF Asia Pacific ex Japan (35% HKD Hedged)^ Deviation from the benchmark Trustee's commentary on performance

Hong Kong and Chinese Equity Fund Launch date: 01 December 2000 Benchmark FER Adjusted - FTSE MPF Hong Kong^ Deviation from the benchmark Trustee's commentary on performance

4.54 4.79 2.55 6.53

7.63 5.82 2.45 5.86 -3.09 -1.03 0.10 0.67

The fund underperformed the above benchmark in 1 year and 5 years but it outperformed the benchmark in 10 years and since launch.

During the past financial period ended 30 June 2018, stock selection in India, Hong Kong and Taiwan were the main detractors for underperformance. Moreover, high momentum stocks were in favour during the last 12 months (particularly Q3), which was a headwind for performance given our valuation discipline.

12.48 7.49 3.63 5.40

13.65 8.16 3.97 5.58 -1.17 -0.67 -0.34 -0.18

The fund underperformed the above benchmark in 1 year, 5 years, 10 years and since launch.

During the past financial period ended 30 June 2018, Stock selection is the main detractor for underperformance. It came from unfavorable stock selection in the Consumer Goods and Financial sectors. Guangzhou automobile group (GAC), a Chinese auto company, traded lower in 2018 as the company paid share dividend in June which diluted share price. Within Financial sector, our overweight positions in New China Life Insurance hurt performance the most as jump-start sales performance was weaker-than-expected.

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1 year 5 years 10 years Launch Global Bond Fund Launch date: 08 October 2009 Benchmark FER Adjusted - FTSE MPF WG131 (35% HKD Hedged)" Deviation from the benchmark


0.68 2.87 1.89

1.10 2.82 1.83

-0.42 0.05 - 0.06 The fund underperformed the above benchmark in 1 year but it slightly outperformed the benchmark in 5 year and since launch.

During the past financial period ended 30 June 2018, the on-going US monetary policy normalization weighed on bond performance. The combination of protectionism and political events caused the USD to appreciate against most currencies. Continued external volatility as well as increased Chinese defaults have weighed on risk sentiment, leading to widening Asian credit spreads. Asian bond portion of the fund detracted value over the period. Unhedged currency impact also weighed on the fund's performance as most currencies depreciated against the HKD.

Ll

Ll

Age 65 Plus Fund Launch date: 08 October 2009 Benchmark Willis Towers Watson MPF DIS Reference Portfolio - Age 65 Plus Fund Deviation from the benchmark


2.65 (since 01 April 2017)*

2.70 (since 01 April

2017) -0.05 (since

01 April 2017)

slightly underperformed the above Portfolio (RP) in 1 year and since

2.04

2.14

-0.10 The fund Reference launch.

Li During the past financial period ended 30 June 2018, both the equity and bond portion added value to the fund at the asset allocation level. However, at stock selection level, both equity and bond portion contributed negatively to the fund, offsetting the positive effect of the asset allocation over the period.

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1 year 5 years 10 years Launch LI if

Stable Fund Launch date: 08 October 2009 Benchmark FER Adjusted - Willis Towers Watson MPF BM (Equity 20%-40%)^ Deviation from the benchmark Trustee's commentary on performance

Chinese Equity Fund Launch date: 08 October 2009 Benchmark FER Adjusted - FTSE MPF China^ Deviation from the benchmark Trustee's commentary on performance

Data as at 30 June 2018

2.95 2.64 1.98

3.12 2.30 1.83 -0.17 0.34 0.15

The fund underperformed the above benchmark in 1 year but it outperformed the benchmark in 5 years and since launch.


18.09 9.88 5.28

15.76 8.67 3.70 2.33 1.21 1.58

The fund outperformed the above benchmark in 1 year, 5 years and since launch. Fund performances are satisfactory.

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A Benchmark performance is displayed on a FER adjusted basis. Refer to Appendix A for further details on the rationale of FER adjusted benchmark performance.

Cumulative performance for the Core Accumulation Fund and Age 65 Plus Fund since they launch as a constituent fund of DIS on 1 April 2017.

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4. Trustee's performance assessment framework and trustee's action, if any, to II increase efficiency of the scheme and investment return (value) for members

The Trustee works in collaboration with the Sponsor in the on-going monitoring of investment of funds with the setup of Investment Performance Committee with participation from the Sponsor, Trustee and Investment Manager to review performance on a regular basis:

[ Benchmark and peer group comparison would be conducted with comprehensive analysis to be provided to evaluate the factors contributing to out/underperformance

• Proposed actions and monitoring of those actions would be covered by the Committee to tackle the underperformance issues and for Investment Manager to explore alternative sources to improve fund performance including fund restructuring, adoption of new investment approach and etc.

The Trustee has also an Investment Committee represented by members of the Board of Directors of the Trustee to review the fund managers' fund performance on a regular basis. The criteria for assessment of the overall performance and capabilities of fund managers are:

• Compliance with Investment Objectives, tracking error from benchmark performance and benchmark asset allocation

• Breaches in investment restrictions and other regulations

• Quantitative assessment - Fund performance relative to benchmark, peer comparison and risk level

• Qualitative assessment - Fund manager snapshot in various factors based on the investment

Appendix A — FER-adjusted benchmark performance calculation methodology

The FER-adjusted benchmark performance is an annualized figure of the benchmark performance deducted by the Fund Expense Ratio (FER) in which the relevant Constituent Fund (CF) incurred in the captioned period.

For the years where FER data is not available (i.e. financial period ended 30 June 2005 and before), the earliest available FER data would be used as proxies for those years (earliest available FER for CFs in SuperTrust Plus Scheme is as of financial period ended 30 June 2006).

Same proxy applies to the first year of fund launch without FER, but on a pro rata basis from the relevant CF's launch date to the first financial year end (e.g. 1 Dec 2000 — 30 Jun 2001).

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C 1 Hang Seng Mandatory Provident Fund— SuperTrust Plus Year ended 30 June 2018


5. Distribution of constituent funds (Expressed in Hong Kong dollars)

As at 30 June 2018, 2017 and 2016, Net assets attributable to members of the Scheme's constituent funds are as follows:

Net asset value Fund 2018 2017 2016

[ 8'000 $'000 $'000 t I

MPF Conservative Fundlz 8,397,010 7,156,147 2,923,893 Guaranteed Fund(2) 3,427,762 3,238,049 1,150,060 Core Accumulation Fundll) 2,417,860 1,897,580 1,359,865 Balanced Fund(2) 6,228,175 5,976,644 2,048,201 Growth Fund(2) 8,542,656 8,238,225 3,049,432 Hang Seng Index Tracking Fund(2) 13,149,873 12,132,436 4,543,508

North American Equity Fund 1,374,512 1,259,433 869,919 European Equity Fund 831,008 841,027 632,197 Asia Pacific Equity Fund 3,325,835 3,251,584 2,278,874 Hong Kong and Chinese Equity Fund 4,038,369 3,688,669 2,785,169

Global Bond Fund 1,094,825 684,854 567,710 Age 65 Plus Fundo) 521,455 272,790 138,959 Stable Fund 822,043 395,895 249,224 Chinese Equity Fund 2,609,000 2,096,321 1,647,942 Scheme Level Adjustments 17,239 15,122 14,359

56,797,622 51,144,776 24,259,312

35



5. Distribution of constituent funds (continued)

% of Net assets attributable to constituent funds of the Scheme

Fund 2018 2017 2016

MPF Conservative Fund(2) 14.78 13.99 12.05 Guaranteed Fund(2) 6.03 6.33 4.74 Core Accumulation Fund') 4.26 3.71 5.61 Balanced Fund(2) 10.97 11.69 8.44 Growth Fund(2) 15.04 16.11 12.57 Hang Seng Index Tracking

Fund(2) 23.15 23.72 18.73 North American Equity Fund 2.42 2.46 3.59 European Equity Fund 1.46 1.65 2.61 Asia Pacific Equity Fund 5.86 6.36 9.39 Hong Kong and Chinese

Equity Fund 7.11 7.21 11.48 Global Bond Fund 1.93 1.34 2.34 Age 65 Plus Fund') 0.92 0.53 0.57 Stable Fund 1.45 0.77 1.03 Chinese Equity Fund 4.59 4.10 6.79 Scheme Level Adjustments 0.03 0.03 0.06

100.00 100.00 100.00


(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund -SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund - SuperTrust were transferred to the Scheme on 1 July 2016.

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6.

I

Performance

Cumulative Return Fund Period (%)+/(-)

11 II MPF Conservative Fund(2) 1 July 2017 to 30 June 2018 0.00%

Guaranteed Fund(2) 1 July 2017 to 30 June 2018 (1.46)% Core Accumulation Fund(1) 1 July 2017 to 30 June 2018 5.80% Balanced Fund(2) 1 July 2017 to 30 June 2018 6.08% Growth Fund(2) 1 July 2017 to 30 June 2018 7.47% Hang Seng Index Tracking Fund(2) 1 July 2017 to 30 June 2018 15.24% North American Equity Fund 1 July 2017 to 30 June 2018 11.77% European Equity Fund 1 July 2017 to 30 June 2018 1.36% Asia Pacific Equity Fund 1 July 2017 to 30 June 2018 4.54% Hong Kong and Chinese Equity Fund 1 July 2017 to 30 June 2018 12.48% Global Bond Fund 1 July 2017 to 30 June 2018 0.68% Age 65 Plus Fund(1) 1 July 2017 to 30 June 2018 2.13% Stable Fund 1 July 2017 to 30 June 2018 2.95% Chinese Equity Fund 1 July 2017 to 30 June 2018 18.17%

Cumulative return represents the percentage change in unit price (net asset value per unit) for the year.


(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

37

LJ

Net movement in unrealised gain/(loss) on

investments Vow

30,219 19,832 1,647

(41,281) (11,719) (7,937) 39,102 94,281

(40,668) 192,561 786,006

(158,040) 293,385

1,355,723 (339,002)

289,938 2,070,323 (924,105)

22,696 104,788 (6,514)

(32,245) 133,944 (80,901) (45,039) 627,646

(233,716) 129,852 683,223

(672,219) (11,700) (17,860)

29,804

Value of the Scheme Net gain/floss) on sale assets derived from

of investments investment Net asset value 8000 $,000 8'000

28,840 8,404,743 8,397,010 10,901 7,157,344 7,156,147 8,918 2,926,160 2,923,893

(9,817) 3,427,765 3,427,762 (6,397) 3,238,049 3,238,049 (4,776) 1,150,061 1,150,060 85,394 2,413934 2,417,860 29,794 1,898,351 1,897,580 11,229 1,360,872 1,359,865

223,292 6,231,932 6,228,175 80,866 5,981,231 5,976,644 20,911 2,049,641 2,048,201

398,486 8,547,830 8,542,656 131,984 8,244,887 8,238,225

30,330 3,051,703 3,049,432 1,244,344 13,000,119 13,149,873

267,858 11,948,568 12,132,436 (88,813) 4,445,347 4,543,508 129,721 1,375,334 1,374,512

57,399 1,260,144 1,259,433 22,665 870,352 869,919 49,659 831,511 831,008 11,530 841,485 841,027 3,214 632,509 632,197

221,738 3,327,869 3,325,835 47,892 3,253,329 3,251,584

(10,710) 2,279,941 2,278,874 364,876 4,040,844 4,038,369

73,669 3,690,731 3,688,669 9,152 2,786,537 2,785,169

14,958 1,095,356 1,094,825 4,871 685,173 684,854 5,430 567,939 567,710

Hang Seng Mandatory Provident Fund -SuperTnist Plus Year ended 30 June 2018


7. Financial summary (Expressed in Hong Kong dollars)

Net (deticit)/income excluding capital

appreciation or Fund Period Income depreciation

$'000 $'000

MPF Conservative Fund(2, 2018 (58,516) 2017 (30,274) 2016 (10,272)

Guaranteed Fundo 2018 (13) 2017 (27) 2016 (16)

Core Accumulation Fund01 2018 (11,731) 2017 (9,039) 2016 (11,503)

Balanced Fundo 2018 (49,221) 2017 (49,252) 2016 (17,194)

Growth Fundt2t 2018 (69,898) 2017 (70,068) 2016 (27,155)

Hang Seng Index Tracking Fund(?) 2018 411,578 317,427 2017 320,786 242,343 2016 158,746 128,806

North American Equity Fund 2018 (8,965) 2017 (6,828) 2016 (4,803)

European Equity Fund 2018 (5,815) 2017 (4,377) 2016 (3,903)

Asia Pacific Equity Fund 2018 (23,100) 2017 (16,820) 2016 (12,607)

Hong Kong and Chinese Equity Fund 2018 (27,962) 2017 (20,660) 2016 (17,030)

Global Bond Fund 2018 (5,066) 2017 (3352) 2016 (1,905)

38

Hang Sang Mandatary Provident Fund— SuperTrust Plus Year ended 30 June 2018


7. Financial summary (continued) (Expressed in Hong Kong dollars)

Net (deficityincome excluding capital Net movement in

appreciation or unrealised gain/(Io55)0n Net gain/(loss) on sale

Value of the Scheme assets

derived from 1 Fund Period Income depreciation investments of investments investment Net asset value

$'000 $'000 V000 /000 V000 V000 Age 65 Plus FundO 2018 - (2,110) 1,748 5,824 521,681 521,455

2017 - (1,033) 2,114 1,859 272,900 272,790 2016 - (1,005) 3,398 634 139,060 138,959

Stable Fund 2018 - (4,904) (11,004) 20,790 822,528 822,043 2017 5 (2,877) 15,335 3,550 396,204 395,895 2016 - (1,925) 3,365 15 249,413 249,224

Chinese Equity Fund 2018 - (17,470) 57,166 332,771 2,610,614 2,609,000 2017 125 (11,789) 353,568 37,195 2,097,494 2,096,321 2016 - (10,116) (427,073) (43,002) 1,648,889 1.647,942

01 Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

0 Wth effect from 1 July 2016, Hang Sang Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund —SuperTrust were transferred to the Scheme on 1 July 2016.

39

Hang Seng Mandatory Provident Fund- SuperTrust Plus Year ended 30 June 2018

(For management purposes only,)

Investment report

for the year ended 30 June 2018 (continued)

8. Performance table (Expressed in Hong Kong dollars)

MPF Conservative Fune 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value (5'000) 8,397,010 7,156,147 2,923,893 2,484,060 2,30Z 626 1,913,930 1,731,805 1,386,098 1,215,492 1,127,865

Net asset value per unit 12.61 12.61 12.61 12.61 12.56 12.50 12.46 12.42 12.38 12.37

Price record:

Highest issue price 12.62 12.62 12.62 12.61 12.56 12.51 12.46 12.43 12.39 12.37 Lowest redemption price 12.61 12.61 12.60 12.56 12.50 12.46 12.42 12.39 12.37 12.22

Net annualised investment return"' 0.0% 0.0% 0.0% 0.4% 0.5% 0.3% 0.3% 0.3% 0.1% 1.2%

Guaranteed Fune 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value (5'000) 3,427,762 3,238,049 1,150,060 1,041,126 963,045 854,950 801,562 666,392 576,881 492,588


Price record:


Net annualised investment return"' (1.5)% (0.6)% 1.2)% 0.2% 0.1% (1.0)% (0.5)% 0.5% 3.2% (2.9)%

40

r-

Hang Seng Mandatory Provident Fund - SuperTruse Plus

Year ended 30 June 2016 (For management purposes onM


8. Performance table (continued) (Expressed in Hong Kong dollars)

Core Accumulation Fund') 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 2,417,860 1,897,580 1,359,865 1,205,920 1,072,854 829,407 676,683 602,031 448,393 358,171


Price record:


Net annualised investment return"' 5.8% 7.6% (3.7% (0.7)% 10.8% 4.9% (6.7)% 15.1% 6.3% (12.3)%

Balanced Fundol 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 6,228,175 5,976,644 2,048,201 2,015,669 1,847,377 1,509,515 1,276,157 1,216,521 888,621 702,402


Price record:

Highest issue price 21.12 18.33 17.11 17.86 16.75 15.88 15.35 15.60 14.24 14.18 Lowest redemption price 18.16 15.64 14.39 15.92 14.75 1334 12.48 12.79 11.58 9.07

Net annualised investment return" 6.1% 15.8% (7.7)% 2.0% 12.8% 8.5% (9.8)% 18.3% 8.1% (17.1)%

41

Hang Sang Mandatory Provident Fund - SuperTrust Plus Year ended 30 June 2018

(For management purposes angl



Growth Pune 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value (5'000) 8,542,656 8,238,225 3,049.432 3,066,558 2,729,926 2,129,239 1,696,568 1,644,247 1,146,768 881,348


Price record:


Net annualised investment returnw 7.5% 20.9% (10.8)% 3.2% 14.9% 11.9% (13.2)% 21.7% 9.5% (21.7)%

Hang Seng Index Tracking rune 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value (5'000) 13,149,873 12,132,436 4,543,508 4,762,858 3,573,508 2,890,218 2,262,870 2,126,452 1,503,461 1,079,481


Price record:


Net annualised investment retumw 15.2% 26.4% (18.4)% 16.4% 13.9% 9.5% (10.6)% 12.3% 10.9% (15.1)%

42

J


(For management purposes one/



North America Equity Fund 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 1,374,512 1259,433 869,919 708,453 631,163 369,327 278,447 245,502 165,534 123,204

15.95 14.27 12.31 12.18 11.80 9.68 8.32 8.33 6.48 5.76 Net asset value per unit

Price record:


Net annualised investment reture 11.8% 15.9% 1.1% 3.2% 21.9% 16.3% (0.1)% 28.5% 12.5% (28.0)%

European Equity Fund 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 831,008 841,027 632,197 647,954 657,841 365,120 279,796 326,442 236,020 201,173


Price record:


Net annualised investment returni" 1.4% 21.8% (11.7)% (3.9)% 23.6% 20.0% (22.3)% 27.4% 6.1% (31.7)%

43

[ E ---- 1---

_

'

Hang Sang Mandatory Provident Fund- SuperTrust Plus Year ended .30 June 2018

(For management purposes 000



Asia Pacific Equity Fund 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 3,325,835 3,251,584 2,278,874 2,315,831 2,286,717 1,815,608 1,486,069 1,476,676 954,808 662,652


Price record:


Net annualised investment returre 4.5% 27.1% (11.5)% (5.9)% 14.1% 7.0% (15.4)% 28.1% 16.8% (24.9)%

Hong Kong and Chinese Equity Fund 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Total net asset value ($'000) 4,038,369 3,688,669 2,785,169 3,189,327 2,358,382 2,004,800 1,597,690 1,701,003 1,200,268 793,006


Price record:


Net annualised investment return'" 12.5% 25.5% (21.1)% 19.1% 8.3% 10.3% (19.0)% 15.8% 13.7% (15.4)%

44

1

Hang seng Mandatory Provident Fund - SuperTrust Plus Year ended 30 June 2018

(For management purposes onN)



Global Bond Fund

Year ended 30 June

Period from 12 October 2009

(date of commencement)

to 30 June 2010W 2018 2017 2016 2015 2014 2013 2012 2011

Total net asset value ($'000) 1,094,825 684,854 567,710 279,429 205,563 149,570 101,874 32,048 8,926

Net asset value per unit 11.88 11.80 12.05 11.12 10.93 10.30 10.59 10.48 9.82

Price record:

Highest issue price 12.21 12.19 12.05 11.35 10.93 10.88 10.89 10.55 10.26 Lowest redemption price 11.74 11.17 10.98 10.92 10.24 10.29 10.40 9.87 9.64

Net annualised investment return") 0.7% (2.1)% 8.4% 1.7% 6.1% (2.7)% 1.0% 6.7% (2.2)%

Age 65 Plus Fund(3) Period from

12 October 2009 (date of

commencement) Year ended 30 June to 30 June

2018 2017 2016 2015 2014 2013 2012 2011 2010t2,

Total net asset value ($'000) 521,455 272,790 138,959 99,230 76,736 49,482 29,270 14,207 4,426


Price record:


Net annualised investment return") 2.1% 1.4% 2.2% (0.2)% 4.9% 2.2% (0.7)% 3.7% (1.2)%

45

1

1


(For management purposes onAg



Stable Fund

Year ended 30 June



to 30 June 2018 2017 2016 2015 2014 2013 2012 2011 2010(2)

Total net asset value ($'000) 822,043 395,895 249,224 180,227 143,737 93,314 60,169 25,981 6,213


Price record:


Net annualised investment returnlli 2.9% 5.0% 0.0% (2.8)% 8.4% 1.3% (4.0)% 11.3% (3.7)%

46

=-1

Hang Seng Mandatory Provident Fund - SuperTrust Plus Year ended 30 June 201e

(For management purposes only)



Chinese Equity Fund

Year ended 30 June



to 30 June 2018 2017 2016 2015 2014 2013 2012 2011 2010(21

Total net asset value ($'000) 2,609,000 2,096,321 1,647,942 1,999,307 1,022,302 792,864 545,233 479,146 168,262


Price record:


Net annualised investment return111 18.2% 22.6% (23.9)% 31.2% 10.8% 6.5% (20.4)% 16.0% (0.6)%

11) The net annualised investment return represents the percentage change in unit price (net asset value per unit) for the year.

Percentage change = (Unit price at the end of the year - Unit price at the beginning of the year)/Unit price at the beginning of the year.

121 The percentage represents the percentage change in unit price (net asset value per unit) for the period specified.

Percentage change = (Unit price at the end of the period - Unit price at the beginning of the period)/Unit price at the beginning of the period.

131 Core Accumulation Fund and Age 65 Plus Fund were forrnedy known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

(41 With effect from 1 July 2016, Hang Seng Mandatory Provident Fund - SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund - SuperTrust were transferred to the Scheme on 1 July 2016.

47


(For management purpose only)


9. Investment portfolio as at 30 June 2018 (Expressed in Hong Kong dollars)

% of net

II Investments

(Trade date basis) Holdings Cost Market

value asset value

8'000 6'000 Collective investment schemes -

r

Hong Kong dollars

MPF Conservative Fund

HSBC MPF "A" — MPF Conservative Fund 650,385,950 8,338,781 8,404,743 100.09

Guaranteed Fund

MPF Guaranteed Fund 338,712,005 3,490,806 3,427,765 100.00

Core Accumulation Fund L

HSBC MPF "A" — Core Accumulation Fund 113,403,656 2,177,252 2,418,934 100.04

Balanced Fund

HSBC MPF "A" — Balanced Fund 269,359,643 5,034,398 6,231,932 100.06

Growth Fund

HSBC MPF "A" — Growth Fund 359,179,669 6,624,396 8,547,830 100.06

Hang Seng Index Tracking Fund

Hang Seng Index ETF 440,432,676 10,979,756 13,000,119 98.86

L.

iJ

48




9. Investment portfolio as at 30 June 2018 (continued) (Expressed in Hong Kong dollars)

% of net Investments Market asset

(Trade date basis) Holdings Cost value value $'000 $'000

c Collective investment schemes -

Hong Kong dollars (continued)

North American Equity Fund

HSBC MPF "A" —American Equity Fund 72,662,112 1,149,739 1,375,334 100.06

European Equity Fund

Ir

HSBC MPF "A" — European Equity

r Fund 52,305,479 755,797 831,511 100.06

Asia Pacific Equity Fund

HSBC MPF "A" — Asia Pacific I Equity Fund 92,730,059 2,763,650 3,327,869 100.06

Hong Kong and Chinese Equity Fund

L HSBC MPF "A" — Hong Kong and

Chinese Equity Fund 134,768,013 3,246,179 4,040,844 100.06

Global Bond Fund

HSBC MPF "A" — Global Bond Fund 85,409,239 1,091,161 1,095,356 100.05

Age 65 Plus Fund

HSBC MPF "A" —Age 65 Plus Fund 41,994,535 512,443 521,681 100.04

49




9. Investment portfolio as at 30 June 2018 (continued) (Expressed in Hong Kong dollars)

% of net Market asset

Holdings Cost value value $'000 $'000

Investments (Trade date basis)

II Collective investment schemes - Hong Kong dollars (continued)

Stable Fund

HSBC MPF "A" — Stable Fund 63,510,246 811,576 822,528 100.06

Chinese Equity Fund

HSBC MPF "A" — Chinese Equity Fund 153,882,352 2,319,892 2,610,614 100.06

(

L.

LI

I J 50




10. Statement of movements in portfolio holdings

% of net assets M at M at

30 June 2018 30 June 2017 MPF Conservative Fune

Collective investment schemes 100.09 100.02

Total investments 100.09 100.02 Other net liabilities (0.09) (0.02)

Total net assets 100.00 100.00

Guaranteed Fund(2)


Total investments 100.00 100.00


Core Accumulation Fund(1)

1 Collective investment schemes 100.04 100.04


i. Total net assets 100.00 100.00

Balanced Fund(2)

L Collective investment schemes 100.06 100.08


Total net assets 100.00 100.00 L.

51




10. Statement of movements in portfolio holdings (continued)

% of net assets As at As at

30 June 2018 30 June 2017 Growth Fund(2)




Hang Seng Index Tracking Fund(2)


Total investments 98.86 98.48 Other net assets 1.14 1.52


North American Equity Fund




European Equity Fund




.J

ILJ

LJ 52

i

I 1

17




11


% of net assets

7 30 June 2018 30 June 2017 As at As at









Global Bond Fund




Age 65 Plus Fund(1)



lu Total net assets 100.00 100.00

Li

53





% of net assets As at As at

30 June 2018 30 June 2017 Stable Fund




Chinese Equity Fund




Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

54

ki164461

Independent auditor's report to the Trustee of Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme")

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of the Scheme set out on pages 59 to 100, which comprise the statement of net assets available for benefits of the Scheme and the statement of assets and liabilities of each of its constituent funds as at 30 June 2018, and the statement of changes in net assets available for benefits and the cash flow statement of the Scheme, and the statement of comprehensive income and the statement of changes in net assets attributable to members of each of its constituent funds for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Scheme as at 30 June 2018, and of its financial transactions and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

Basis for Opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") and with reference to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Scheme in accordance with the HKICPA's Code of Ethics for Professional Accountants ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

I I L i

f !

55

Independent auditor's report to the Trustee of Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme") (continued)

Report on the Audit of the Financial Statements (continued)

Information Other than the Financial Statements and Auditor's Report Thereon

The Trustee of the Scheme is responsible for the other information. The other information comprises all the information included in the annual report, other than the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Trustee and Those Charged with Governance for the Financial

Statements

The Trustee of the Scheme is responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and for such internal control as the Trustee of the Scheme determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustee of the Scheme is responsible for assessing the Scheme's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustee of the Scheme either intends to liquidate the Scheme or to cease operations, or has no realistic alternative but to do so.

In addition, the Trustee of the Scheme is required to ensure that the financial statements have been properly prepared in accordance with sections 80, 81, 83 and 84 of the Mandatory Provident Fund Schemes (General) Regulation ("the General Regulation").

Those charged with governance are responsible for overseeing the Scheme's financial reporting process.

fl

56



Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an

I } auditor's report that includes our opinion. This report is made solely to you, in accordance with

section 102 of the General Regulation, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Scheme have been properly prepared, in all material respects, in accordance with sections 80, 81, 83 and 84 of the General Regulation.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

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

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

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

r

I

57



Auditor's Responsibilities for the Audit of the Financial Statements (continued)

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

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

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

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

(a) In our opinion, the financial statements have been properly prepared, in all material respects, in accordance with sections 80, 81, 83 and 84 of the General Regulation.

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

Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road Central, Hong Kong 17 December 2018

58

Hang Seng Mandatory Provident Fund — SuperTrust Plus Financial statements for the year ended 30 June 2018

Statement of changes in net assets available for benefits — Scheme for the year ended 30 June 2018 (Expressed in Hong Kong dollars)

Income Distribution income

1. Other income

IT Expenses t I

Administrator's fees

H Fund administration fees

i i Management fees Sponsor fees

r i Investment agency fees I I Trustee's fees

Valuation fees ,

I Auditor's remuneration Others

Net income before net investment gains II Net investment gains L,'

Profits and total comprehensive income for the year

Contributions received and receivable

Benefits paid and payable

Other capital receipts

Net increase in net assets available for benefits attributable to members

Net assets available for benefits attributable to members at the beginning of the year

Net assets available for benefits attributable to members at the end of the year

Note 2018 2017 $1000 $'000

411,578 320,785 26 138

411,604 320,923

7(a) (286,347) (244,181) 7(g) (14,691) 7(d) (11,171) (5,510) 7(f) (17,306) - 7(b) (27,183) (38,726) 7(c) (9,957) (3,177) 7(e) (102) (46)

(517) (867) (11,850) (12,824)

__________(379_,1241 _ p0 s33:0_

32,480 15,592

8 4,026,274 6,970,175

4,058,754 6,985,767

7(a),10 6,177,864 23,742,453

11 (4,588,129) (3,848,033)

13 4,357 5,277

5,652,846 26,885,464

51,144,776 24,259,312

56,797,622 51,144,776 Lj

Note: With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident

t_i

Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

The notes on pages 71 to 100 form part of these financial statements.

59

to 100 form part of these financial statements.

ilDirector

(

D ector

The notes on pages


Statement of net assets available for benefits — Scheme as at 30 June 2018 (Expressed in Hong Kong dollars)

ri Note 2018

$1000 2017 $'000

Assets Investments 5, 22 56,657,060 50,965,890 Distribution receivables 158,267 191,928 Contributions receivable 3,389 2,453 Amounts receivable from disposal of

investments 394,785 199,822 Other receivables 8,402 8,516 Cash and cash equivalents 19 41,789 42,560

57,263,692 51,411,169

i I Liabilities Amounts payable on purchase of investments 358,116 146,407 Benefits payable 63,080 81,866 Forfeitures payable 11 9,326 9,350

7(a),7(b), 7(c), 7(d), 7(e), 7(f),

Accrued expenses and other payables 7(g) 35,548 28,770

f 466,070 266,393

Net assets available for benefits attributable

F to members 56,797,622 51,144,776

Note: With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

The financial statements were approved by board of directors of HSBC Provident Fund Trustee (Hong Kong) Limited on 17 December 2018 and were signed on its behalf byt

60

IJ

LJ

ii Hang Seng Mandatory Provident Fund — SuperTrust Plus

Financial statements for the year ended 30 June 2018

Cash flow statement — Scheme for the year ended 30 June 2018 (Expressed in Hong Kong dollars)

Note 2018 2017 $'000 $1000

Operating activities

1 i Net expenses before distribution income and net investment gains (379,098) (305,193)

Decrease/(increase) in other receivables 114 (8,516) I Increase in accrued expenses and other payables 6,778 3,529

Net cash used in operating activities (372,206) ($10,180)

Investing activities

Distributions received 445,239 345,257 Payments for purchase of investments (22,845,123) (24,409,557) Proceeds from disposal of investments 21,196,973 21,998,382

Net cash used in investing activities 2,065,918

Financing activities

Contributions received 6,176,928 6,139,250 Transfers in from Hang Seng Mandatory Provident

Fund — SuperTrust(1) 32,468 Benefits paid (4,606,939) (3,775,536) Other capital receipts 4,357 5,277

Net cash generated from financing activities _1,574,346 ____2,401,459

Net (decrease)/increase in cash and cash equivalents (771) 25,361

Cash and cash equivalents at the beginning of the year 42,560 17,199

[ Cash and cash equivalents at the end of the year 19 41,789 42,560 i

With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

During the year ended 30 June 2017, investments of $17,462,574,000, distribution receivables of $115,555,000 and accrued expenses and other payables of $10,919,000 were transferred from Hang Seng Mandatory Provident Fund — SuperTrust to the Scheme which were non-cash transactions. Transfers in from Hang Seng Mandatory Provident Fund — SuperTrust amounting to $32,468,000 were settled in cash.


(1)

(2)

[.

61

--;

Hang Seng Mandatory Provident Fund - SuperTrust Plus Financtal statements for the year ended 30 June 2018

Statement of comprehensive income - Constituent funds for the year ended 30 June 2018 (Expressed in Hong Kong dollars)

MPF Conservative Fundy Guaranteed Fundo Core Accumulation Fundy) Balanced Fundy Growth Fund(2) Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

8000 $'000 $'000 $'000 $'000 $'000 $'000 $000 $•000 $•000 Income

Distribution income Other income

Expenses

Administrator's fees 7(a) (39,820) (23,508) (9,953) (8,474) (42.665) (47,356) (60,838) (67,512) Fund administration fees 7(g) (2,476) (302) - (2,072) - (2,865) Management fees 7(d) (11,171) (5,510) - - - Sponsor fees TM (2,064) (687) - (2,260) - (3,125) Investment agency fees 7(b) - - - Trustee's fees 7(c) (1,916) (294) (247) (92) (1,150) (446) (1,590) (600) Valuation fees 7(e) (102) (46) - - Auditor's remuneration (114) (76) (75) (36) (49) (120) (68) (166) Others (955) (886) (13) (27) (365) (391) (1,025) (1,330) (1,412) (1,790)

(58,516) (30,274) (13) (27) (11,731) (9,039) (49,221) (49,252) (69,898) (70,068)

Net (expenses)lincome before net Investment gains/(losses) (58,516) (30,274) (13) (27) (11,731) (9,039) (49,221) (49,252) (69,898) (70,068)

Net investment gains/(lossos) 8 59,059 30,733 (51,098) (18,116) 124,496 124,075 415,853 866,872 691,871 1,487,707

Profits/(losses) and total comprehensNe income for the year 543 459 (51,111) (18,143) 112,765 115,036 366,632 817,620 621,973 1,417,639

62

Hang Song Mandatory Provident Fund -SuperTrust Plus Financial slatements for the year ended 30 June 2018

Statement of comprehensive income - Constituent funds for the year ended 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Hang Seng Index Tracking Fundy North American Equity Fund European Equity Fund Asia Pacific Equity Fund


Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 5'000 $'000 $'000 $'000 $'000 $'000 $'000 $1000 $'000 $'000

Income

Distribution income 411,578 320,785 Other income 1

411,578 320,786

Expenses

Administrator's fees 7(a) (52,490) (33,194) (7,571) (6,447) (4,903) (4,115) (19,504) (15,857) (23,650) (19,535) Fund administration fees 7(g) (2,404) (438) (282) - (1,132) - (1,364) Management fees 7(d) - - - Sponsor fees 7(f) (4,007) (478) (306) (1,235) (1,488) Investment agency fees 7(b) (27,183) (38,726) - - - - - Trustee's fees 7(c) (2,441) (885) (242) (86) (158) (57) (630) (221) (755) (260) Valuation fees 7(e) - - - Auditor's remuneration (100) (243) (10) (23) (7) (18) (27) (72) (30) (79) Others (5,526) (5,395) (226) (272) (157) (187) (572) (670) (675) (786)

(94,151) (78,443) (8,965) (6,828) (5,815) (,377) (23,100) (16,820) (27,962) (20,660)

Net (expenses)/income before net investment gainsfilosses) 317,427 242,343 (,965) _ __(6,828) _ (5,815) (4,377) (23,100) (16,820) (27,962) (20,660)

Net investment gainsfilosses) 8 1,534,282 2,338,181 152,417 162,187 17,414 145,474 176,699 675,538 494,728 756,892

Profitsl(losses) and total comprehensive income for the year 1,851,709 2,580,524 143,452 155,359 11,599 141,097 153,599 658,718 466,766 736,232

63

71 -

Hang Seng Mandatory Provident Fund - SuperTrust Plus Financialstale:mulls for She year ended 30 June 2016

Statement of comprehensive income - Constituent funds for the year ended 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Global Bond Fund Age 65 Plus Fund' ) Stable Fund Chinese Equity Fund Scheme level adjustments The Scheme) Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

$'000 $'000 5'000 5'000 $'000 $•000 $•000 5'000 5'000 5'000 $'000 5'000 Income

Distribution income - - - 411,578 320,785 5 125 26 7 26 138 Other income

5 125 26 7 411,604 320,923

Expenses

Administrators fees 7(a) (4,261) (3,148) (1,792) (977) (4,178) (2,779) (14,722) (11,279) - (286,347) (244,181) Fund administration fees 7(g) (181) - (60) (240) (875) - (14,691) Management fees 7(d) - - (11,171) (5,510) Sponsor fees 7(f) (301) (136) (262) (955) (17,306) Investment agency fees 7(b) - - (27,183) (38,726) Trustee's fees 7(c) (176) (51) (49) (10) (125) (25) (478) (150) (9,957) (3,177) Valuation fees 7(e) - - - (102) (46) Auditors remuneration (6) (3) (11) (3) (5) (17) (26) - (517) (867) Others (141) (150) (62) (46) (96) (73) (423) (459) (202) (362) (11,850) (12,824)

(5,066) (3,352) (2,110) (1,033) (4,904) (2,882) (17,470) (11,914) (202) (362) (379,124) (305,331)

Net (expenses)/Income before net investment gains/(losses) (5,066) (352) (2,110) (1,033) (4,904) (2,877) (17,470) (11,789) (176) (355) 32,480 15,592

Net investment gainsl(losses) 8 3,258 (12,989) 7,572 3,973 9,786 18,885 389,937 390,763 - 4,026,274 6,970,175

Profits/(losses) and total comprehensive income for the year (1,808) (16,341) 5,462 2,940 4,882 16,008 372,467 378,974 (176 (355) 4,058,754 6,985,767

0) Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund - SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund - SuperTrust were transferred to me Scheme on 1 July 2016.

The notes on pages 71 to 100 font part of these financial statements.

64

Hang Song Mandatory Provident Fund - Superliner Plus Financial statements for the year ended 30 June 2018

Statement of assets and liabilities - Constituent funds as at 30 June 2018 (Expressed in Hong Kong dollars)

MPF Conservative Fund" Guaranteed Rine Con: Accumulation Fund0 Balanced Fund') Growth Pune Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

$'000 $'000 $•000 8'000 $'000 $•000 8'000 8'000 $•000 $•000 Assets

Investments 5, 22 8,404,743 7,157,344 3,427,765 3,238,049 2,418,934 1,898,351 6,231,932 5,981,231 8,547,830 8,244,887 Distribution receivables - - Contributions receivable - - - - - - - - - - Amounts receivable on subscription of units 111,607 47,528 28,990 10,768 6,713 6,046 3,887 3,984 11,464 5,614 Amounts receivable from disposal of investments 112,342 40,895 27,376 11,531 9,662 6,657 12,972 11,520 21,332 16,615 Other receivables - - - - - - - Cash and cash equivalents 19 - -

8,628,692 7,245,767 3,484,131 3,260,348 2,435,309 1,911,054 6,248,791 5,996,735 8,580,626 8,267,116

Liabilities

Amounts payable on purchase of investments 111,607 47,528 28,990 10,768 6,713 6,046 3,887 3,984 11,464 5,614 Benefits payable - - Forfeitures payable 11 - - - - - - - - - Amounts payable on redemption of units 112,343 40,895 27,376 11,531 9,662 6,657 12,972 11,520 21,332 16,615

7(a), 7(b), 7(c), 7(d), 7(e), 7(f),

Accrued expenses and other payables 7(g) 7,732 1,197 3 1,074 771 3,757 4,587 5,174 6,662

231,682 89,620 56,369 22,299 17,449 13,474 20,616 20,091 37,970 28,891

Net assets attributable to members 8,397,010 7,156,147 3,427,762 3,238,049 2,417,860 1,897,580 6,228,175 5,976,644 8,542,656 8,238,225

Number of units in issue 665,702,918 567,359,872 338,516,680 315,118,503 135,201,211 112,217,753 321,528,463 327,368,668 430,273,356 445,896,512

Net asset value per unite HK$ 12.61 HK$ 12.61 HK$ 10.13 HK$ 10.28 HK$ 17.88 HK$ 16.91 HK$ 19.37 HK$ 18.26 HK$ 19.85 HK$ 18.48

The net asset value per unit is calculated by dividing the exact net assets attributable to members by the exact number of units in issue.

65

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Hang Seng Mandatory Proveent Fund -SuperTrust Plus Financial statements Tor the year ended 30 June 2018

Statement of assets and liabilities - Constituent funds as at 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Hang Seng Index 7racking Hong Kong and Chinese Fund m North American Equity Fund European Equity Fund Asia Pacific Equity Fund Equity Fund

Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 $•000 $'000 $1000 $1000 $1/00 $•000 $1000 $1000 $•000 $'000

Assets

Investments 5, 22 13,000,119 11,948,568 1,375,334 1,260,144 831,511 841,485 3,327,869 3,253,329 4,040,844 3,690,731 Distribution receivables 158,267 191,928 - Contributions receivable - - - - - - - - - - Amounts receivable on subscription of units 111,005 29,872 7,443 5,108 2,800 4,954 4,510 6,108 19,113 6,079 Amounts receivable from disposal of investments 89,249 57,855 16,310 9,083 3,089 5,697 11,665 8,489 24,870 11,720 Other receivables - - - - _ - Cash and cash equivalents 19 1 13 - -

13,358,641 12,228,236 1,399,087 1,274,335 837,400 852,136 3,344,044 3,267,926 4,084,827 3,706,530

Liabilities

Amounts payable on purchase of investments 111,005 29,883 7,443 5,108 2,800 4,954 4,510 6,108 19,113 6,079 Benefits payable - - - - Forfeitures payable 11 - - - - - - - - Amounts payable on redemption of units 89,249 57,854 16,310 9,083 3,089 5,697 11,665 8,489 24,870 11,720

7(a), 7(b), 7(c), 7(d), 7(e), 7(t),

Accrued expenses and other payables 7(g) 8,514 8,063 822 711 503 458 2,034 1,745 2,475 2,062

208,768 95,800 24,575 14,902 6,392 11,109 18,209 16,342 46,458 19,861

Net assets attributable to members 13,149,873 12,132,436 1,374,512 1,259,433 831,008 841,027 3,325,835 3,251,584 4,038,369 3,688,669

Number of units in issue 471,444,057 501,060,516 86,214,212 88,284,772 61,969,702 63,553,531 109,330,555 111,735,563 160,091,736 164,451,751

Net asset value per unit* HK$ 27.90 HK$ 24.21 HK$ 15.95 HK$ 14.27 HK$ 13.41 HK$ 13.23 HK$ 30.42 HK$ 29.10 HK$ 25.23 HK$ 22.43

The net asset value per unit is calculated by dividing the exact net assets attributable to members by the exact number of units in issue.

66

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43302196

StrikeOut

r

Hang Sang Mandalow Provident Fund- SuperTrust Plus Financial statements forthe year ended 30 June 2018

Statement of assets and liabilities - Constituent funds as at 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Global Bond Fund Age 65 Plus Rine) Stable Fund Chinese Equity Fund Scheme level adjustments Elimination for switching The Schemen

Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 VOW $'000 $'000 V000 V000 V000 V000 5000 V000 V000 $000 V000 V000 V000

Assets

Investments 5.22 1,095,356 685,173 521,681 272,900 822,528 396.204 2,610,614 2,097,494 - - 56557,060 50.965590 Distribution receivables - - - 158.267 191,928 Contributions receivable - - • - 3.389 2,453 3,389 2,453 Amounts receivable on subscription of units 12,748 4,054 7,860 2,691 10.671 2,469 19,305 11,121 (11562) (15,096) (346.454) (131,300) Amounts receivable from disposal of Investments 14,235 2,688 3,441 1.467 13,415 1,947 34,827 13,658 - 394,785 199,822 Other receivables - - 8,402 8,516 8,402 8,516 Cash and cash equivalents 19 1 1 1 1 1 1 - - 41 785 42,544 - 41,789 42,560

1.122,340 691,916 532,983 277,059 846,615 400.621 2 664 746 2,122.273 41,914 38,417 (346,454) (131,300) 57,263,692 51.411 169

Liabilities

Amounts payable on purchase of investments 12,748 4,054 7,860 2,691 10,671 2,469 19,305 11,121 - 358,116 146.407 Benefits payable - - 63,080 81,866 - 63,080 81.666 Forfeitures payable 11 - 9,326 9,350 - 9,326 9,350 Amounts payable on redemption of units 14234 2,688 3,441 1,467 13,415 1,947 34,827 13,658 (48,331) (68,521) (346.454) (131,300) -

7(a), 7(b), 7(c). 7(d),

Accrued expenses and other payables 7(e), 7(Q ,7(g) 533 320 227 111 486 310 1.614 1,173 600 600 - 35 548 28 770

27,515 7.062 11,528 4,269 24,572 4.726 55,746 25,952 24.675 23,295 (346,454) (131,300) 466,070 266,393

Net assets attributable to members 1,094,625 684.854 521,455 272,790 822,043 395,895 2,609,000 2.096,321 17.239 15,122 - 56,797,622 51,144,776

Number of units in Issue 92,122,196 58,043,561 45.239.632 24,152.187 69.253,725 34,322,503 166,514,743 158,043,810

Net asset value per unit' HK$ 11.88 HK$ 11.80 HK$ 11.53 HK$ 11.29 HK$ 11.87 HK$ 11.53 HK$ 15.67 HK$ 13.26

▪ The net asset value per unit is calculated by dividing the exact net assets attributable to members by the exact number of units in Save.

O, Core Accumulation Fund and Age 65 Plus Fund were forrnedy known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

With effect from 1 July 2018, Hang Seng Mandatory Provident Fund -SuperTrusl was merged with the Scheme and all members end their accrued benefits under Hang Seng Mandatory Provident Fund -SuperTrust were transferred to the Scheme on 1 July 2016.

The financial statements were approved by board of directors of HSBC Provident Fund Trustee (Hong Kong) Limited on 17 December 201E1 and were signed on its behalf by!

Director

The notes on pages 71 to 1 part of these financial statements.

67

L_


Statement of changes in net assets attributable to members — Constituent funds for the year ended 30 June 2018 (Expressed in Hong Kong dollars)

MPF Conservative Rine Guaranteed Fundy Core Accumulation Fund' ) Balanced Fund2) Growth Fundo) Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

V000 $.000 V000 V000 V000 V000 V000 $1000 V000 $'000

Net assets brought forward 7,156,147 2,923,893 3,238,049 1,150,060 1,897,580 1,359,865 5,976,644 2,048,201 8,238,225 3,049,432

Add: Subscriptions 7(a), 10 5,930,045 7,090,658 1,440,147 2,834,671 1,083,862 711,451 867,372 3,791,094 1,190,430 4,704,936 Less' Redemptions 11 (4,689,727) (2,858,863) (1,199,323) (728,539) (676,347) (288,772) (982,473) (680,271) (1,507,977) (933,782)

8,396,465 7,155,688 3,478,873 3,256,192 2,305,095 1,782,544 5,861,543 5,159,024 7,920,678 6,820,586 Other capital receipts 13 2 - - 5 -

8,396,467 7,155,688 3,478,873 3,256,192 2,305,095 1,782,544 5,861,543 5,159,024 7,920,683 6,820,586 Profits/(losses) and total comprehensive income for

the year 543 459 (51,111) (18,143) 112,765 115,036 366,632 817,620 621,973 1,417,639

Net assets carried forward 8,397,010 7,156,147 3,427,762 3,238,049 2,417,860 1,897,580 6,228,175 5,976,644 8,542,656 8,238,225

Units in issue

Units brought forward 567,359,872 231,824,595 315,118,503 111,254,619 112,217,753 86,534,490 327,368,668 129,882,556 445,896,512 199,411,201 Units issued 470,166,919 562,239,573 140,375,130 274,782,222 60,830,440 43,283,718 44,113,285 237,433,877 59,093,119 301,511,787 Units redeemed (371,823,873) (226,704,296) (116,976,953) (70,918,338) (37,846,982) (17,600,455) (49,953,490) (39,947,765) (74,716,275) (55,026,476)

Units carried fonvard 665,702,918 567,359,872 338,516,680 315,118,503 135,201,211 112,217,753 321 528,463 327,368,668 430,273,356 445,896,512

68

Hang sang Mandatary Provident Fund - SuperTnaf Plus Financial stalemenis !bribe year ended 30 June 2016

Statement of changes in net assets attributable to members — Constituent funds for the year ended 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Hang Seng Index Tracking Fundy North American Equity Fund European Equity Fund Asia Pacific Equity Fund


Note 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 8'000 $'000 $•000 $•000 $•000 $•000 $•000 $•000 $•000 $•000

Net assets brought forward 12,132436 4,543,508 1,259,433 869,919 841,027 632,197 3,251,584 2,278,874 3,688,669 2,785,169

Add: Subscriptions 7(a), 10 4,801,069 8,276,687 661,948 621,123 317,932 258,760 878,893 729,411 1,290,587 824,920 Less' Redemptions 11 (5,635,343) (3,268,283) (690,326) (386,968) (339,558) (191,028) (958,242) (415,420) (1,407,654) (657,653)

11,298,162 9,551,912 1,231,055 1,104,074 819,401 699,929 3,172,235 2,592,865 3,571,602 2,952,436 Other capital receipts 13 2 5 - 8 1 1 1 1 1

11,298,164 9,551,912 1,231,060 1,104,074 819,409 699,930 3,172,236 2,592,866 3,571,603 2,952,437 Profits/(losses) and total comprehensive income

for the year 1,851,709 2,580,524 143,452 155,359 11,599 141,097 153,599 658,718 466,766 736,232

Net assets carried forward 13,149,873 12,132,436 1,374,512 1,259,433 831,008 841,027 3,325,835 3,251,584 4,038,369 3,688,669

Units in issue

Units brought forward 501,060,516 237,169,454 88,284,772 70,658,011 63,553,531 58,227,786 111,735,563 99,547,630 164,451,751 155,851,059 Units issued 171,079,168 413,581,043 42,502,595 46,414,904 22,858,728 21,175,245 27,902,880 28,033,279 50,097,372 40,879,403 Units redeemed (200,695,627) (149,689,981) (44,573,155) (28,788,143) (24,442,557) (15,849,500) (30,307,888) (15,845,346) (54,457,387) (32,278,711)

Units carried forward 471,444,057 501,060,516 86,214,212 88,284,772 61,969,702 63,553,531 109,330,555 111,735,563 160,091,736 164,451,751

69

117-9 :1112

Hang Seng Mandatory Provident Fund - SuperTrust Plus Financial slatements for Me year ended 30 June 2018

Statement of changes in net assets attributable to members - Constituent funds for the year ended 30 June 2018 (continued) (Expressed in Hong Kong dollars)

Note Gbh& Bond Fund

2018 2017 Stoo

Age 65 Plus Fund' ) 2018 2017 V000 $,000

Stable Fund 2018 2017 5'000 8.000

Chinese Equity Fund 2018 2017

5'000 8'000

Scheme level adjustments 2018 2017

6'000 8'000

Elimination for switching

2018 2017 8'000 $000

The Scheme)

2018 2017 8'000 8'000

Net assets brought tonvard 684,854 567,710 272,790 138,959 395,895 249,224 2,096,321 1,647,942 15,122 14,359 51,144,776 24,259,312

Add: Subscriptions 7(a), 10 1,097,399 596,296 453,486 195,016 845,484 241,053 1,752,877 873,774 (35,861) (14,480) (16,397,806) (7,992,917) 6,177,864 23,742,453 Less: Redemptions 11 (685,620) (462,811) (210,283) (64125) (424.218) (110 390) (1 612,665) (804,370) 33,821 10,325 16,397,806 7,992,917 (4,588,129) (3,848,033)

1,096,633 701,195 515,993 269,850 817,161 379.887 2,236,533 1,717,346 13,082 10,204 52,734,511 44,153,732 Other capital receipts 13 1 4,333 5,273 4,357 5,277

1,096,633 701,195 515,993 269,850 817,161 379,887 2,236,533 1,717,347 17,415 15,477 - 52,738,868 44,159,009 Profitsfilosses) and total comprehensive ncome for

the year (1,808) (16,341) 5,462 2,940 4,882 16,008 372,467 378,974 (176) (355) - 4.058.754 6.985.767

Net assets carded forward 1,094,825 684.854 521,455 272,790 822,043 395,895 2,609,000 2,096,321 17,239 15,122 - 56.797,622 51,144,776

Units in issue

Units brought forward 58,043,561 47,132,213 24,152,187 12,480,987 34,322,503 22,687,714 158,043,810 152,259,491 Units issued 91,227,314 50,667,385 39,328,186 17,419,0131 70,141,575 21,549,015 108.289,702 71,727,233 Units redeemed (57,148,679) (39,756,037) (18,240,741) (5,747,881) (35,210,353) (9,914,226) (99,818,769) (65,942,914)

Units carded forward 92,122,196 58,043,561 45,239,632 24,152,187 69,253,725 34,322,503 166,514,743 158,043,810

Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Fled-Managed Fund respectively prior to 1 April 2017.

With effect from 1 July 2016, Hang Seng Mandatory Provident Fund -SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund - SuperTrust were transferred to the Scheme on 1 July 2016.


70


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

1 The Scheme

Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme") is a scheme established under a trust deed dated 31 January 2000 ("the Trust Deed") between Hang Seng bank Limited ("the sponsor') and HSBC Provident Fund Trustee (Hong Kong) Limited ("the Trustee"). The Trust Deed was subsequently amended by deeds of variation dated 29 November 2000, 8 January 2002, 15 August 2002, 4 July 2003, 14 September 2006, 5 May 2011, 18 October 2012, 9 April 2015, 27 August 2015, 22 December 2015, 18 May 2016, 12 December 2016 and 23 June 2017 between the Sponsor and the Trustee. The Scheme is registered under section 21 of the Hong Kong Mandatory Provident Fund Schemes Ordinance ("the MPF Ordinance").

Under the Trust Deed as subsequently amended, the Trustee is required to establish and maintain separate constituent funds into which contributions may be invested. The constituent funds are only available for investment by members of the Scheme.

The Scheme had fourteen constituent funds as at 30 June 2018:

- MPF Conservative Fund

- Guaranteed Fund

- Core Accumulation Fund

Balanced Fund

- Growth Fund

- Hang Seng Index Tracking Fund

- North American Equity Fund

- European Equity Fund


- Hong Kong and Chinese Equity Fund

- Global Bond Fund

S - Age 65 Plus Fund

tJ - Stable Fund

II Chinese Equity Fund

L I 71

(a)

r Li

r' Hang Seng Mandatory Provident Fund — SuperTrust Plus

r Financial statements for the year ended 30 June 2018

1 The Scheme (continued)

Except for Hang Seng Index Tracking Fund which invests in Hang Seng Index ETF, all constituent funds invest in MPF Guaranteed Fund or sub-funds of HSBC MPF Fund Series "A" which are approved pooled investment funds.

The Scheme is generally funded by contributions from the participating employers and members. Under section 7A of the MPF Ordinance, each of the participating employers and members is required to contribute 5% of relevant income to the Scheme on a monthly basis. The contribution was subject to a maximum amount of $1,500 prescribed by section 10 and schedule 3 of the MPF Ordinance According to section 9 and schedule 2 of the MPF Ordinance, members with monthly salary of less than the minimum level of $7,100 are exempted from contributions. Such exemption is not applicable for their employers.

The Employee Choice Arrangement ("the ECA") has been launched by the Hong Kong Mandatory Provident Fund Schemes Authority ("the Authority") with effect from 1 November 2012. The ECA allows members to opt to transfer the member's portion of mandatory contributions and investment returns (i.e. the accrued benefits) in their contribution accounts of the original mandatory provident fund scheme to another mandatory provident fund scheme of their own choice once a year. Alternatively, members do not have to make any change. They can retain the accrued benefits in the original mandatory provident fund scheme selected by their employers.

With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme. All members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

The Scheme may be terminated on the occurrence of one or more events as specified in clause 21 of the Trust Deed as subsequently amended.

2 Significant accounting policies

Statement of compliance

The financial statements of the Scheme have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ("HKFRSs"), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting principles generally accepted in Hong Kong, the relevant disclosure provisions of the Trust Deed dated 31 January 2000 as subsequently amended, the MPF Ordinance, the Hong Kong Mandatory Provident Fund Schemes (General) Regulation ("the General Regulation"), the Hong Kong Code on MPF Investment Funds ("the MPF Code") and other relevant guidelines issued by the Authority. Significant accounting policies adopted by the Scheme are disclosed below.

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Scheme. Note 3

II provides information on any changes in accounting policies resulting from initial L application of these developments to the extent that they are relevant to the Scheme for

the current and prior accounting periods reflected in these financial statements.

(-1

72

,


2 Significant accounting policies (continued)

(b) Basis of preparation of the financial statements

The functional and presentation currency of the Scheme is the Hong Kong dollar and reflects transactions which have been processed by the Trustee into the constituent funds.

The financial statements are prepared on a fair value basis for financial assets and liabilities at fair value through profit or loss. Other financial assets and financial liabilities are stated at amortised cost or redemption amount.

The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revisions affect only that period, or in the period of the revisions and future periods if the revisions affect both current and future periods.

The accounting policies have been applied consistently by the Scheme and are consistent with those used in the previous year except as stated in note 3 below.

(c) Recognition of distribution income

Distribution income from listed investments is recognised when the share price of the investment goes ex-dividend.

(d) Subscription for and redemption of units of the constituent funds

Subscription for and redemption of units of the constituent funds are accounted for on an accrual basis.

(e) Other expenses

Other expenses are accounted for on an accrual basis.

(f) Financial instrument

(i) Classification

All of the Scheme's investments are designated as financial assets or financial liabilities at fair value through profit or loss upon initial recognition as all investments are managed and their performance is evaluated on a fair value basis in accordance with the Scheme's documented investment strategy, and the information internally provided to the relevant parties of the Scheme is on a fair value basis.

73

r' Hang Seng Mandatory Provident Fund — SuperTrust Plus Financial statements for the year ended 30 June 2018


(0 Financial instruments (continued)

(i) Classification (continued)

Financial assets that are classified as loans and receivables include distribution receivables, contributions receivable, amounts receivable from disposal of investments, other receivables and amounts receivable on subscription of units.

Financial liabilities that are not at fair value through profit or loss include amounts payable on purchase of investments, benefits payable, forfeitures payable, accrued expenses and other payables, amounts payable on redemption of units and financial liabilities arising on redeemable units.

(ii) Recognition

The Scheme recognises financial assets and financial liabilities on the date they become a party to the contractual provisions of the instruments.

The purchase of financial assets is recognised using trade date accounting. From this date any gains and losses arising from changes in fair value of the financial assets or financial liabilities are recorded.

Financial liabilities are not recognised unless one of the parties has performed their obligations under the contract or the contract is a derivative contract not exempted from the scope of HKAS 39.

(Hi) Measurement

Financial instruments are measured initially at fair value (transaction price). Transaction costs of financial assets and financial liabilities at fair value through profit or loss are expensed immediately.

Subsequent to initial recognition, all instruments classified at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the statement of changes in net assets available for benefits of the Scheme and the statement of comprehensive income of the constituent funds.

Financial assets classified as loans and receivables are carried at amortised cost using the effective interest method, less impairment losses, if any.

Financial liabilities, other than those at fair value through profit or loss, are measured at amortised cost using the effective interest method.

(iv) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Scheme has access at that date. The fair value of a liability reflects its non-performance risk.

74

Hang Seng Mandatory Provident Fund— SuperTrust Plus Financial statements for the year ended 30 June 2018



(iv) Fair value measurement (continued)

When applicable, the Scheme measures the fair value of an instrument using the quoted price in an active market for that instrument provided such price is within the bid-ask spread. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. In circumstances where quoted price is not within the bid-ask spread, the Trustee will determine the points within the bid-ask spread that are most representative of the fair value.

When there is no quoted price in an active market, the Scheme uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction.

Investments in open-ended investment funds are recorded at the net asset value per unit as reported by the managers of such funds.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Scheme determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in the statement of changes in net assets available for benefits of the Scheme and the statement of comprehensive income of the constituent funds on an appropriate basis over the life of the instrument but no later than when the valuation is supported wholly by observable market data or the transaction is closed out.

Realised and unrealised gains and losses are included in the statement of changes in net assets available for benefits of the Scheme and the statement of comprehensive income of the constituent funds. Realised gains or losses include net gains or losses on contracts which have been settled or for which offsetting contracts have been entered into.

(v) Impairment

Financial assets that are stated at cost or amortised cost are reviewed at each reporting date to determine whether there is objective evidence of impairment. If any such indication exists, an impairment loss is recognised in the statement of changes in net assets available for benefits of the Scheme and the statement of comprehensive income of the constituent funds as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

75




(v) Impairment (continued)

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the statement of changes in net assets available for benefits of the Scheme and the statement of comprehensive income of the constituent funds.

(vi) Derecognition

The Scheme derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or they transfer the financial asset and the transfer qualifies for derecognition in accordance with HKAS 39.

The Scheme uses the weighted average method to determine realised gains and losses on derecognition.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

(vii) Offsetting

Financial assets and financial liabilities are offset and the net amount is reported in the statement of net assets available for benefits attributable to members of the Scheme and the statement of assets and liabilities of the constituent funds when the Scheme has a legally enforceable right to set off the recognised amounts and the transactions are intended to be settled on a net basis or simultaneously, e.g. through a market clearing mechanism.

(g) Foreign currency translation

Foreign currency transactions during the year are translated into Hong Kong dollars at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Hong Kong dollars at the foreign exchange rates ruling at the reporting date. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are recognised in the statement of comprehensive income of the relevant constituent funds. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the reporting currency of the Scheme and its constituent funds using the foreign exchange rates ruling at the dates on which the fair values were determined.

-J 76

LI



(h) Related parties

(a) A person, or a close member of that person's family, is related to the Scheme if that person

(i) has control or joint control over the Scheme;

(ii) has significant influence over the Scheme; or

(iii) is a member of the key management personnel of the Scheme or the Scheme's parent.

(b) An entity is related to the Scheme if any of the following conditions applies

(i) The entity and the Scheme are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of an entity related to the Scheme.

(vi) The entity is controlled or jointly-controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Scheme or to the Scheme's parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity

Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Scheme has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

77



Provisions and contingent liabilities (continued)

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(I) Contributions

Contributions are accounted for on an accruals basis.

(k) Benefits

Benefits are accounted for on an accruals basis.

(I) Transfers in/out

Transfer-in amounts are recognised when the right to receive payment is established. Transfer-out amounts are accounted for when the obligation to make payment is established.

(m) Forfeitures

Forfeitures are the amounts forfeited when member's employment is terminated before the voluntary contributions vest. Forfeitures may be refunded to the employers or re-invested to the Scheme upon the request from the employers.

(n) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, demand deposits with banks and other financial institutions with original maturities of three months or less from the date of placement, and short-term, highly liquid investments that are readily convertible into known amounts of cash which are subject to an insignificant risk of changes in value.

(o) Units in issue

The Scheme classifies financial instruments issued as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments.

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

78

Hang Seng Mandatory Provident Fund — SuperTrusi Plus Financial statements for the year ended 30 June 2018


(o) Units in issue (continued)

- it entitles the holder to a pro rata share of the Scheme's net assets in the event of its liquidation;

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

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

apart from the contractual obligation for the Scheme to repurchase or redeem the instrument for cash or another financial asset, the instrument does not include any other features that would require classification as a liability; and

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

In addition to the instrument having all the above features, the Scheme must have no other financial instrument or contract that has:

total cash flows based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Scheme; and

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

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

3 Changes in accounting policies

The HKICPA has issued several amendments to HKFRSs that are first effective for the current accounting period of the Scheme.

Amendments to HKAS 7 Statements of cash flows "Disclosure initiative"

The amendments require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. These amendments did not have any significant impact on the Scheme's and its constituent funds' financial statements.

Li

L.,

79


3 Changes in accounting policies (continued)

Amendments to HKAS 7 Statements of cash flows "Disclosure initiative" (continued)

There are no other standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2017 that would be expected to have a material impact to the Scheme and its constituent funds. The Scheme and its constituent funds have not applied any new standard or interpretation that is not yet effective for the current accounting period.

4 Income tax

The Scheme is registered under the MPF Ordinance and is therefore a recognised scheme for Hong Kong Profits Tax purposes. The policy of the Hong Kong Inland Revenue Department ("IRD"), as set out in IRD Practice Note No. 23, is that "recognised retirement schemes and their trustees are not considered to be subject to profits tax on their investment income". Accordingly, no provision for Hong Kong Profits Tax has been made in the Scheme's financial statements.

80


5 Investments

2018 2017 8'000 8'000

r-7 Hang Seng Mandatory Provident Fund — SuperTrust

Plus !--, ! ; ! Investments in constituent funds:

MPF Conservative Fund(2) 8,397,010 7,156,147 Guaranteed Fund(2) 3,427,762 3,238,049

[ Core Accumulation Fundel) 2,417,860 1,897,580 Balanced Fund (2) 6,228,175 5,976,644 Growth Fund(2) 8,542,656 8,238,225 Hang Seng Index Tracking Fund(2) 13,149,873 12,132,436 North American Equity Fund 1,374,512 1,259,433 European Equity Fund 831,008 841,027

11 Asia Pacific Equity Fund 3,325,835 3,251,584 ! ( Hong Kong and Chinese Equity Fund 4,038,369 3,688,669

Global Bond Fund 1,094,825 684,854 Age 65 Plus Fund(1) 521,455 272,790 Stable Fund 822,043 395,895 Chinese Equity Fund 2,609,000 2,096,321

f I Other liabilities (123,323) (163,764)

! ! Investments at fair value 56,657,060 50,965,890

2018 2017 8'000 8'000

Constituent funds

MPF Conservative Fundo) i 8,404,743 7,157,344 HSBC MPF "A" — MPF Conservative Fund

Guaranteed FundO) ti MPF Guaranteed Fund 3,427,765 3,238,049

! Core Accumulation Fundo) HSBC MPF "A" — Core Accumulation Fund 2,418,934 1,898,351

Balanced Fund(2) HSBC MPF "A" — Balanced Fund 6,231,932 5,981,231

81


5 Investments (continued)

2018 2017 $'000 $'000

Constituent funds (continued)

Growth Fund') HSBC MPF "A" — Growth Fund 8,547,830 8,244,887

Hang Senq Index Tracking Fund°) Hang Seng Index ETF 13,000,119 11,948,568

North American Equity Fund HSBC MPF "A" — American Equity Fund 1,375,334 1,260,144

European Equity Fund HSBC MPF "A" — European Equity Fund 831,511 841,485

Asia Pacific Equity Fund MPF "A" —Asia Pacific Equity Fund 3,327,869 3,253,329

Hong Kong and Chinese Equity Fund HSBC MPF "A" — Hong Kong and Chinese Equity Fund 4,040,844 3,690,731

Global Bond Fund HSBC MPF "A" — Global Bond Fund 1,095,356 685,173

Age 65 Plus Fundo) HSBC MPF "A" —Age 65 Plus Fund 521,681 272,900

Stable Fund HSBC MPF "A" — Stable Fund 822,528 396,204

Chinese Equity Fund HSBC MPF "A" — Chinese Equity Fund 2,610,614 2,097,494

t I

(1) Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable

1_

Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

ri LJ

II

82

I !

r",

43302196

StrikeOut


6 Involvement with unconsolidated structured entities

The Scheme has concluded that collective investment schemes in which its constituent funds invest, but that they do not consolidate, meet the definition of structured entities because:

- the voting rights in the collective investment schemes are not dominant rights in deciding who controls them as they relate to administrative tasks only;

- each collective investment scheme's activities are restricted by its prospectus; and

- the collective investment schemes have narrow and well defined objectives to provide investment opportunities to investors.

The table below describes the types of structured entities that the constituent funds do not consolidate but in which they hold an interest.

Interest held by the Type of structured entity Nature and purpose constituent funds

Collective investment schemes

To manage assets on behalf of third party investors and generate fees for the investment manager

Investment in units issued by the collective investment schemes

I

These vehicles are financed through the issue of units to investors

The table below sets out interests held by the constituent funds in unconsolidated structured entities. The maximum exposure to loss is the carrying amount of the financial assets held by the constituent funds.

30 June 2018

Number of collective

investment Carrying Investment in collective investment schemes amount included

schemes invested Total net assets in "Investments"

E._ $'000 $'000

MPF Conservative Fund

ii - Approved pooled investment fund 36,054,416 8,404,743

Guaranteed Fund

it - Approved pooled investment fund 1 13,967,667 3,427,765

Core Accumulation Fund - Approved pooled investment fund 1 11,108 284 2,418,934

83

it

6

II r I


Involvement with unconsolidated structured entities (continued)

30 June 2018 (continued)



schemes invested Total net assets in "Investments" $'000 $'000

Balanced Fund

r

- Approved pooled investment fund

Growth Fund

1 27,082,062 6,231,932

i

t

- Approved pooled investment fund

Hang Seng Index Tracking Fund

1 36,709,940 8,547,830

- Approved index tracking fund 1 53,306,822 13,000,119

North American Equity Fund - Approved pooled investment fund 1 5,692,093 1,375,334

European Equity Fund - Approved pooled investment fund 1 3,322,475 831,511

Asia Pacific Equity Fund - Approved pooled investment fund 1 11,895,855 3,327,869


- Approved pooled investment fund 1 15,383,510 4,040,844

Global Bond Fund - Approved pooled investment fund 1 4,895,630 1,095,356

Age 65 Plus Fund - Approved pooled investment fund 1 2,282,929 521,681

Stable Fund - Approved pooled investment fund 3,583,946 822,528

Chinese Equity Fund - Approved pooled investment fund 1 9,383,551 2,610,614

LL 84


6 Involvement with unconsolidated structured entities (continued)

30 June 2017



schemes invested Total net assets in "Investments" $'000 $'000

MPF Conservative Fund(2) - Approved pooled investment fund 34,922,837 7,157,344

Guaranteed Pune - Approved pooled investment fund 13,374,635 3,238,049

Core Accumulation Fund(1) - Approved pooled investment fund 8,495,548 1,898,351

Balanced Fund(2) - Approved pooled investment fund 26,264,281 5,981,231

Growth Fundo - Approved pooled investment fund 35,615,877 8,244,887

Hang Seng Index Tracking Fund(2) - Approved index tracking fund 49,690,323 11,948,568

North American Equity Fund - Approved pooled investment fund 5,134,135 1,260,144

European Equity Fund - Approved pooled investment fund 3,342,450 841,485

Asia Pacific Equity Fund - Approved pooled investment fund 11,728,250 3,253,329


- Approved pooled investment fund 14,385,988 3,690,731

Global Bond Fund - Approved pooled investment fund 3,317,534 685,173

Age 65 Plus Fund(1) - Approved pooled investment fund 1.251.637 272,900

Stable Fund - Approved pooled investment fund 1 2,015,630 396,204

85


6 Involvement with unconsolidated structured entities (continued)

30 June 2017 (continued)

Investment in collective investment schemes

Chinese Equity Fund - Approved pooled investment fund


investment schemes invested Total net assets

$'000

Carrying amount included in "Investments"

$'000

1 7,735,627 2,097,494


(2) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was ri merged with the Scheme and all members and their accrued benefits under Hang Seng

Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

During the year, except for the amounts invested in the collective investment schemes, the Scheme does not provide financial support to the collective investment schemes and had no intention of providing financial or other support.

The constituent funds can redeem units in the collective investment schemes on a trade day basis.

7 Transactions with related parties

In addition to the transactions and balances disclosed elsewhere in these financial statements, the Scheme entered into the following material related party transactions for the year. All such transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) Administrator's fees

The Scheme is administered by HSBC Life (International) Limited ("the Administrator") which receives a fee for the administrative functions. Effective 1 December 2017, the administrator's fees are charged from 0.410 percent to 0.545 percent per annum of the net asset value ("NAV") of each relevant constituent fund with the exception of the Guaranteed Fund. Prior to 1 December 2017, the fees were charged from 0.30 percent to 0.90 percent per annum of the NAV of each relevant constituent fund. The charges has been reflected in the daily unit price of each relevant constituent fund. The Administrator has waived the administrator's fees for the Guaranteed Fund. Administrator's fees incurred during the year amounted to $286,347,000 (2017: $244,181,000). The amount due to this related party in respect of administrator's fees at the year end amounted to $24,045,000 (2017: $20,775,000).

During the year, $119,881,000 (2017: $117,697,000) was contributed by the Administrator as a rebate to the members of the Scheme. The amount was included in contributions received and receivable in the statement of changes in net assets available for benefits of the Scheme and subscriptions in the statement of changes in net assets attributable to members of the constituent funds.

L.1 86

ri I !

L.i


7 Transactions with related parties (continued)

(b) Investment agency fees

The Hang Seng Index Tracking Fund invests in Hang Seng Index ETF, which is managed by Hang Seng Investment Management Limited ("HSIM"). HSIM is appointed by the Trustee as its agent to perform duties relating to the investment by the Hang Seng Index Tracking Fund, including subscription and redemption of units.

Effective 1 December 2017, investment agency fees are charged by HSIM at 0.10 percent per annum of the NAV of the Hang Seng Index Tracking Fund. This has been reflected in the daily unit price of the constituent fund. Prior to 1 December 2017, investment agency fees were charged by HSIM at 0.35 percent per annum of the NAV of the Hang Seng Index Tracking Fund.

The investment agency fees incurred during the year amounted to $27,183,000 (2017: $38,726,000). The amount due to this related party in respect of the investment agency fees at the year end amounted to $1,111,000 (2017: $3,496,000).

(c) Trustee's fees

The Trustee and Custodian of the Scheme is HSBC Provident Fund Trustee (Hong Kong) Limited. The Trustee receives trustee's fees for valuation and other services from the relevant constituent funds. Effective 1 December 2017, the fees are charged at 0.018 percent to 0.025 percent per annum of the NAV of each relevant constituent fund with the exception of the Guaranteed Fund, and this has been reflected in the daily unit price of each relevant constituent fund. Prior to 1 December 2017, the fees were charged at 0.008 percent per annum of the NAV of each relevant constituent fund and this has been reflected in the daily unit price of each relevant constituent fund, except that the trustee's fees of Core Accumulation Fund and Age 65 Plus Fund are paid out of the administrator's fees with effect from 1 April 2017. No trustee's fees were charged to Guaranteed Fund. Trustee's fees incurred during the year amounted to $9,957,000 (2017: $3,177,000). The amount due to this related party in respect of trustee fees at the year end amounted to $1,229,000 (2017: $248,000).

(d) Management fees

The management fees were charged at 0.15 percent per annum of the NAV of MPF Conservative Fund ("MCF") for the investment management fees paid to the investment manager of the underlying approved investment fund — HSBC MPF "A" — MPF Conservative Fund. The investment manager of HSBC MPF "A" — MPF Conservative Fund is HSBC Investment Funds (Hong Kong) Limited ("HIFH") which is the fellow subsidiary of the Administrator and the Trustee. During the year ended 30 June 2018, the management fees for MCF deductible under section 37 of the General Regulation amounted to $11,171,000 which was deducted from the assets of the MCF (2017: $5,510,000). The amount due to HIFH in respect of the management fees at the year end was $1,444,000 (2017: $193,000).

87

r, Hang Seng Mandatory Provident Fund — SuperTrust Plus Financial statements for the year ended 30 June 2018

7 Transactions with related parties (continued)

(e) Valuation fees

With effect from 1 April 2017 up to 1 December 2017, Core Accumulation Fund and Age 65 Plus Fund utilise the fund administration and valuation services of HSBC Institutional Trust Services (Asia) Limited ("HTHK"), which is a fellow subsidiary of the Trustee within the HSBC Group. The valuation fees were charged at a standard fee rate per valuation as set out in the table below based on the previous month end NAV of each relevant constituent fund. The service has ceased effective 1 December 2017 with charging of Trustee's fees (see note 7(c)). Valuation fees incurred during the year amounted to $102,000 (2017: $46,000). There was no amount due to this related party in respect of valuation fees at the year end (2017: $34,000).

Fee Rate

For NAV smaller than $400 million For NAV $400 million — below $1.3 billion For NAV $1.3 billion — below $2 billion For NAV $2 billion or more

(0 Sponsor fees

Waived $250 per valuation $800 per valuation

$1,200 per valuation

The Sponsor of the Scheme is Hang Seng Bank Limited. Effective 1 December 2017, the sponsor receives sponsor fees which were paid out from the constituent funds for sponsoring the Scheme. Except for Guaranteed Fund, the fees are charged at 0.05 percent to 0.06 percent per annum of the NAV of all constituent funds. No Sponsor fees were charged to Guaranteed Fund. During the year ended 30 June 2018, $17,306,000 were paid out from the constituent funds to the Sponsor (2017: Nil).

Prior to 1 December 2017, the sponsor fees were charged at 0.05 percent per annum of the NAV of all constituent funds and paid out of administrator's fees. During the year ended 30 June 2018, $11,113,000 was paid out of administrator's fees to the Sponsor (2017: $14,200,000).

As at 30 June 2018, the amount due to this related party in respect of the sponsor fees amounted to $2,477,000 (2017: Nil).

Fund administration fees

Effective 1 December 2017, the Trustee is entitled to fund administration fees, calculated each valuation date and payable monthly in arrears, based on 0.022 percent to 0.055 percent per annum of the NAV of the constituent funds with exception of the Guaranteed Fund whereby no fund administration fees were charged. Prior to 1 December 2017, no fund administration fees were charged for all constituent funds. The fund administration fees earned by the Trustee for the year was $14,691,000 (2017: Nil). As at 30 June 2018, the amount due to the Trustee was $2,120,000 (2017: Nil).

(h) The transactions with related parties stated in notes 7(a) to 7(g), 9, 13 and 19 are identical to transactions with associates in accordance with the MPF Ordinance and the "Guidelines on Annual Statements of Registered Schemes" Annex C section I(D)(2) issued by the Authority.

88

(g)

LI

Hang Seng MandataryProvident Fund - SuperTrust Plus Financial statements for the year ended 30 June 2018

8 Net investment gains/losses)

MPF Conservative Fund' ) Guaranteed Fund" Core Accumulation Fundy, Balanced Fund'' Growth Fund" Hang Seng Index Tracking Fund"

North American Equity Fund European Equity Fund

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 $'000 $000 V000 $'000 ENO V000 $'000 V000 $T100 S'000 V000 $'000 V000 V000 $,000 V000

Realised gains/(losses) on disposal of investments 28,840 10,901 (9,817) (6,397) 85,394 29,794 223,292 80,866 398.486 131.984 1,244,344 267,858 129,721 57,399 49,659 11.530

Movement of unrealised gains or losses on investments 30,219 19,832 (41,281) (11,719) 39,102 94,281 192,561 785.006 293,385 1.355,723 289,938 2,070,323 22,696 104,788 (32,245) 133,944

59,059 30,733 (51,098) (18,116) 124.496 124,075 415,853 866.872 691.871 1,487,707 1,534,282 2,338,181 152,417 162,187 17,414 145.474

Asia Pacific Equity Fund Hong Kong and Chinese

Equity Fund Global Bond Fund Age 65 Plus Fund" Stable Fund Chinese Equity Fund The Scheme" 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

V000 S000 S000 V000 VODO $'000 V000 Vacio V000 8'000 $1100 V000 GT100 $'000

Realised gains/gosses) on disposal of Investments 221,738 47,892 364,876 73,669 14,958 4,871 5,824 1,859 20,790 3,550 332,771 37,195 3,110,876 752,971 Movement of unrealised gains or losses on investments (45,039) 627,646 129,852 683,223 (11,700) (17,860) 1,748 2,114 (11,004) 15,335 57,166 353,568 915,398 6,217,204

176,699 675,536 494,728 756,892 3,258 (12,989) 7,572 3,973 9,786 18,865 389,937 390,763 4,026,274 6,970,175

Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively odor lo 1 April 2017.

With effect from 1 July 2016, Hang Seng Mandatory Provident Fund - SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund - SuperTrust were transferred to the Scheme on 1 July 2016.

(11

(21

89


9 Capital preservation fees

The capital preservation fees are payable to the Administrator and deductible from the MPF Conservative Fund when net investment return exceeds the prescribed savings rate. These fees were deducted from the assets of the MPF Conservative Fund.

The capital preservation fees for the year ended 30 June 2018 amounting to $58,516,000 (2017: $30,274,000) were deducted from the assets of the MPF Conservative Fund.

10 Contributions received and receivable

Contributions received and receivable in the statement of changes in net assets available for benefits of the Scheme are derived from the following:

From members - Mandatory - Additional voluntary

The Scheme 2018 $'000

1,886,798 17,375

2017 $'000

1,362,162 590,535

From employers - Mandatory 2,460,732 2,474,914 - Additional voluntary 1,189,398 1,049,709

5,554,303 5,477,320

[1:1

Transfers in ! - From Hang Seng Mandatory Provident Fund —

SuperTrusto) 17,599,678 - From other schemes 500,752 588,460

lJ 500,752 18,188,138

Contributions surcharge 2,927 2,354

Other capital movements 119,882 74,641

6,177,864 23,742,453

( 1 ) With effect from 1 July 2016, Hang Seng Mandatory Provident Fund — SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund — SuperTrust were transferred to the Scheme on 1 July 2016.

I I

L J

90

LJ


11 Benefits paid and payable

Benefits paid and payable in the statement of changes in net assets available for benefits of the Scheme are derived from the following:

The Scheme 2018 2017 $'000 $'000

Benefits 1,352,915 1,185,045 Transfers out 3,207,995 2,643,668 Forfeitures 18,087 19,320 Other capital movements 9,132

4,588,129 3,848,033

Forfeitures may be refunded to the employers or reinvested to the Scheme upon the request from the employers.

As at 30 June 2018, forfeitures amounted to $9,255,000 were reinvested in the constituent funds (2017: $9,350,000 (of which $6,483,000 was transferred from Hang Seng Mandatory Provident Fund — SuperTrust on 1 July 2016)).

12 Capital management

The capital of the constituent funds is represented by the net assets attributable to members. Subscription and redemption of units during the year are shown in the statement of changes in net assets attributable to members of the respective constituent funds. The amount of net assets attributable to members can change significantly on a daily basis as the constituent funds are subject to daily subscriptions and redemptions at the discretion of members. The constituent funds' objective when managing capital is to safeguard their ability to continue as a going concern in order to provide retirement benefits to members and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the constituent funds.

For capital management purpose, the Trustee performs the following:

- monitor the level of daily subscriptions and redemptions relative to the liquid assets; and

redeem and issue units of the constituent funds in accordance with the Trust Deed as subsequently amended and the rules of the Scheme.

13 Other capital receipts

The other capital receipts are the dealing gains as a result of timing difference in processing member's unit transactions and the guaranteed benefits to members which they are entitled under the insurance policies of MPF Guaranteed Fund, which Guaranteed Fund invested in.

i I

LI

Li

91


14 Soft commission arrangements

During the year ended 30 June 2018, the constituent funds have no soft commission arrangements (2017: Nil).

15 Security lending arrangements

During the year ended 30 June 2018, the constituent funds did not enter into any security lending arrangements (2017: Nil).

16 Negotiability of assets

As at 30 June 2018, there were no statutory or contractual requirements restricting the negotiability of the assets of the constituent funds (2017: Nil).

17 Contingent liabilities and capital commitments

As at 30 June 2018, there were no contingent liabilities or capital commitments outstanding (2017: Nil).

18 Marketing expenses

No marketing expenses have been deducted from the constituent funds during the year ended 30 June 2018 (2017: Nil).

19 Cash and cash equivalents

As at 30 June 2018, the Scheme maintained bank balance of $41,789,000 (2017: $42,560,000) with The Hongkong and Shanghai Banking Corporation Limited, which is a group company of the Trustee, Custodian and Administrator of the Scheme. These amounts are mainly related to contributions received from members by the Administrator which have not yet been allocated according to the members' instructions due to cheques awaiting clearance and/or incomplete information provided by employers.

20 Maintenance of adequate insurance

During the year ended 30 June 2018, the Trustee maintained adequate insurance coverage in respect of the Scheme. The insurance coverage indemnifies the members and the ultimate beneficiaries of the Scheme against any losses arising from any risk prescribed in section 8 of the General Regulation. The insurance policies can only be terminated by the insurer giving not less than 30 days' written notice in advance.

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21 Bank loans and other borrowings

As at 30 June 2018, there were no bank loans or other borrowings (2017: Nil).

22 Financial instruments and associated risks

The Scheme is exposed to various risks which are discussed below.

(a) Market risk

Market risk embodies the potential for both losses and gains and includes currency risk, interest rate risk and other price risk.

Investments of the constituent funds comprise units in collective investment schemes. This is in accordance with the Scheme's investment policies. The underlying investment of the collective investment schemes directly or indirectly invest in a variety of financial instruments, which may expose the Scheme's investments to the market risk.

The Scheme's market price risk is managed through diversification of the investments made by the collective investment schemes.

(i) Currency risk

The Scheme is not subject to direct currency risk as all transactions of the Scheme are denominated in Hong Kong dollar. Investments of the Scheme comprise units in collective investment schemes. The underlying collective investment schemes may directly or indirectly invest in a variety of financial instruments denominated in currencies other than Hong Kong dollar, which may expose the Scheme's investments to indirect currency risk. The investment manager of the underlying collective investment schemes has policies and procedures to manage portfolios effectively and mitigate the currency risk. Details are provided in the financial statements of the underlying collective investment schemes.

(ii) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

The majority of the Scheme's financial assets and liabilities are non-interest bearing. Deposits with banks are placed under current accounts which are not subject to interest rate risk. Indirect interest rate risk from underlying collective investment schemes are managed by respective investment managers. As a result, the Scheme is not subject to significant direct interest rate risk exposure.

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22 Financial instruments and associated risks (continued)

(a) Market risk (continued)

(iii) Other price risk

Other price risk is the risk that value of investments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.

The Scheme is exposed to other price risk arising from changes in net assets of the underlying collective investment schemes.

The underlying collective investment schemes strive to invest in strong businesses with quality management and at sensible prices. Other price risk is mitigated and monitored by the investment manager of the underlying collective investment schemes on a regular basis by constructing a diversified portfolio of investments across different issuers, sectors and markets.

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Hang Seng Mandatory Provident Fund - SuperTmst Plus Financial statements forthe year ended 30June 2018


(a) Market risk (continued)

(iii) Other price risk (continued)

Sensitivity analysis

As at the reporting date, the investments in collective investment schemes held by each constituent fund were as follows. A 5% (2017:5%) increase in prices of the investments held by each constituent fund at the reporting date, with all other variables held constant, would have increased the net assets of the respective constituent fund and the changes in net assets attributable to members by the amount shown below. A 5% (2017:5%) decrease in prices would have an equal but opposite effect. The analysis is performed on the same basis for 2017.

As at 30 June 2018 Hang Seng

Index North Hong Kong Balanced Growth Tracking American European Asia Pacific and Chinese Gbbal Bond Age 65 Plus Chinese

Fund0 nuntra Fundy" Equity Fund Equity Fund Equity Fund Equity Fund Fund Fundm Stable Fund Equity Fund V000 V000 V000 V000 V000 V000

6,231,932 8,547,830 13,000,119 1,375,334 831,511$000 3,327;00690 4,040,844 1.095,356 5217801 822,52800 2,610S.600140 56,657,060

311,597 427,392 650,006 68,767 41,576 166,393 202,042 54,768 26,084 41,126 130,531 2,832,854

MPF Core Conservative Guaranteed Accumulation

Funds Fundy" Fundy ) V000 $,000 $'000

Investments 8,404,743 3,427,765 2,418,934 Increase in net assets and changes in

net assets attributable to members 420,237 171,388 120,947

The SchemeM

V000

As at 30 June 2017 Hang Seng

Index North Hong Kong Balanced Growth Tracking American European Asia Pacific and Chinese

Fund" Fund" Fund" Equity Fund Equity Fund Equity Fund Equity Fund V000 V000 V000 MCI V000 V000 8'000

5,981,231 8,244.887 11,948,568 1,260,144 841,485 3,253,329 3,690,731

299,062 412,244 597,428 63,007 42,074 162,666 184,537

Investments Increase in net assets and changes in

net assets attributable to members

MPF Conservable

Fund" $000

7,157,344

357,867

Core Guaranteed Accumulation

Fund'? Fund'" V000 V000

3,238,049 1,898,351

161,902 94,918

Global Bond Age 65 Plus Chinese The Fund Fundy) Stable Fund Equity Fund Scheme) V000 V000 V000 5'000 V000

685,173 272,900 396,204 2.097,494 50,965,890

34,259 13,645 19,810 104,875 2,548,294

CoreAccumulation Fund and Age 65 Plus Fund were remedy known as Stable Growth Fund and Fled-Managed Fund respectively prior to 1 April 2017.

With effect from 1 July 2016. Hang Seng Mandatory Provident Fund - SuperTrust was merged with the Scheme and all members and their accrued benefits under Hang Seng Mandatory Provident Fund -SuperTrust were transferred to the Scheme on 1 July 2016.

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(b) Credit risk

Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Scheme.

2018 $'000

2017 $'000

Investments 56,657,060 50,965,890 Distribution receivables 158,267 191,928 Contributions receivable 3,389 2,453 Amounts receivable from disposal of investments 394,785 199,822 Other receivables 8,402 8,516 Cash and cash equivalents 41,789 42,560

Total 57,263,692 51,411,169

Indirect credit risk from underlying collective investment schemes are managed by respective investment managers. The Trustee of the Scheme considers that the credit risk is not significant.

With respect to credit risk arising from the other financial assets of the Scheme, which comprise cash and cash equivalents and distribution receivables; the Scheme's exposure equal to the carrying amount of these instruments. The Authority requests the Scheme to place deposits with an authorised financial institution or an eligible overseas bank according to the requirement in Schedule 1 to the General Regulation. Distribution receivables represent distributions from Hang Seng Index ETF, listed in Hong Kong Stock Exchange, which is with low default risk. The credit risk is not considered to be significant.

As at 30 June 2018 and 2017, there were no significant concentrations of credit risk.

(c) Liquidity risk

Liquidity risk is the risk that the Scheme will encounter difficulty in meeting obligations associated with financial liabilities.

The Scheme's policy is to regularly monitor current and expected liquidity requirements to ensure that they maintain sufficient reserves of cash and readily realisable investments to meet benefit payments and other liquidity requirements in the short and longer term.

The Scheme invests all its assets in collective investment schemes that could be readily converted into cash to meet its liquidity requirement.

All financial liabilities disclosed in the statement of net assets available for benefits of the Scheme and the statement of assets and liabilities of the constituent funds mature within 6 months from the reporting date.

i n i At the reporting date, the Scheme is exposed to the following credit risk:

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(d) Fair value information

The major methods and assumptions used in estimating the fair values of financial instruments are disclosed in note 2(f)(iv).

The carrying amounts of all the Scheme's financial assets and financial liabilities at the reporting date approximated their fair values. For the quoted collective investment schemes, the fair value is based on their latest net asset value per unit at the reporting date. For other financial instruments, including distribution receivables, contributions receivable, amounts receivable from disposal of investments, other receivables, amounts receivable on subscription of units, amounts payable on purchase of investments, benefits payable, accrued expenses and other payables and amounts payable on redemption of units, the carrying amounts approximate fair value due to the immediate or short-term nature of these financial instruments.

23 Deferred expenses

In accordance with section 37 of the General Regulation, administrative expenses for the MPF Conservative Fund which have not been deducted in the respective months may be deducted in the following twelve months. As at 30 June 2018, the deferred administrative expenses amounting to $14,110,000 were deducted from the assets of the MPF Conservative Fund (2017: $26,781,000).

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24 Payments charged to default investments strategy constituent funds or scheme members who invest in the constituent funds

Core Accumulation fund and Age 65 Plus fund are designated as default investment strategy ("DIS") constituent funds with effect from 1 April 2017. Payment for services, out-of-pocket expenses and other payments charged to the DIS constituent funds are disclosed below. Payments for services and out-of-pocket expenses are those defined in the MPF Ordinance.

During the year ended 30 June 2018

Core Accumulation Age 65 Plus

Fund Fund $'000 6'000

Payments for services - Administrator's fees 9,953 1,792 - Fund administration fees 302 60 - Sponsor fees 687 136

fi - Trustee's fees 247 49

Total payments for services 11,189 2,037

Out-of-pocket expenses L,) - Valuation fees 102

- Auditor's remuneration 75 11 17 - Printing and advertising fees

- Insurance premium expenses 358

7 61 1

Total out-of-pocket expenses 542 73

ii

Total payments

Out-of-pocket expenses expressed as a percentage of net asset value of

11,731 2,110

the DIS constituent funds(1) 0.024% 0.017%

(1) The net asset value used for calculating the percentage is the average of the net asset value of the DIS constituent funds as at the last dealing day of each month during the year ended 30 June 2018.

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24 Payments charged to default investments strategy constituent funds or FT scheme members who invest in the constituent funds (continued)

During the period from 1 April 2017 to 30 June 2017

Core Accumulation

Fund(1) $'000

Age 65 Plus Fund' )

$'000 Payments for services

- Administrator's fees 1,811 247

Total payments for services 1,811 247

Out-of-pocket expenses - Valuation fees 47

r - Auditor's remuneration 7 - Printing and advertising fees 193 24 - Insurance premium expenses 5 1

Total out-of-pocket expenses 252 25

Other payments - Auditor's remuneration for DIS

implementation 9 1

Total other payments 9 1

Total payments(2) 2,072 273

Out-of-pocket expenses expressed as a percentage of net asset value of the DIS constituent funds(3) 0.014% 0.010%

Core Accumulation Fund and Age 65 Plus Fund were formerly known as Stable Growth Fund and Flexi-Managed Fund respectively prior to 1 April 2017.

Total payments include the payments during the period from 1 April 2017 to 30 June 2017 and hence do not tally with the total expenses in the statement of comprehensive income of the Constituent Funds.

The net asset value used for calculating the percentage is the average of the net asset value of the DIS constituent funds as at the last dealing day of each month during the period from 1 April 2017 to 30 June 2017.

(1)

(2)

(3)

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25 Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 30 June 2018

Up to the date of issue of these financial statements, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 June 2018 and which have not been adopted in these financial statements.

These include the following which may be relevant to the Scheme.

Effective for accounting periods

beginning on or after

HKFRS 9, Financial instruments 1 January 2018

HKFRS 15, Revenue from contracts with customers 1 January 2018

The Trustee is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far the Trustee has identified some aspects of the new standards which may have an impact on the financial statements. Further details of the expected impacts are discussed below. While the assessment has been substantially completed for HKFRS 9, the actual impacts upon the initial adoption of the standard may differ as the assessment completed to date is based on the information currently available to the Trustee, and further impacts may be identified before the standard is initially applied in the Scheme's and its constituent funds' financial statements for the year ending 30 June 2019. The Scheme and its constituent funds may also change their accounting policy elections, including the transition options, until the standards are initially applied in the financial statements.

HKFRS 9 Financial instruments

The Scheme and its constituent funds are required to adopt HKFRS 9 from 1 July 2018. HKFRS 9 replaces HKAS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from HKAS 39.

On adoption of HKFRS 9, the Scheme's and its constituent funds' investment portfolio will continue to be classified as fair value through profit or loss. Other financial assets which are held for collection will continue to be measured at amortised cost with no material impact expected from application of the new impairment model. As a result, the adoption of HKFRS 9 is not expected to have a material impact on the Scheme's and its constituent funds' financial statements.

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Independent auditor's assurance report to the Trustee of Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme")

We have audited the financial statements of the Scheme for the year ended 30 June 2018 in accordance with Hong Kong Standards on Auditing and with reference to Practice Note 860.1 (Revised), The Audit of Retirement Schemes (TN 860.1 (Revised)") issued by the Hong Kong

iI Institute of Certified Public Accountants ("HKICPA"), and have issued an unqualified auditor's report thereon dated 17 December 2018.

Pursuant to section 102 of the Mandatory Provident Fund Schemes (General) Regulation ("the General Regulation"), we are required to report whether the Scheme complied with certain requirements of the Mandatory Provident Fund Schemes Ordinance ("the MPF Ordinance") and the General Regulation.

Trustee's Responsibility

The General Regulation requires the Trustee to ensure that:

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

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

(c) the requirements under sections 34DB(1)(a), (b), (c) and (d), 34DC(1), 34DD(1) and (4), 34DI(1) and (2), 34DJ(2), (3), (4) and (5) and 34DK(2) of the MPF Ordinance are

I. I complied with; and

I (d) the Scheme assets are not subject to any encumbrance, otherwise than as permitted by 1.4 the General Regulation.

Our Independence and Quality Control

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

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

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Independent auditor's assurance report to the Trustee of Hang Seng Mandatory Provident Fund — SuperTrust Plus ("the Scheme") (continued)

Auditor's Responsibility

Our responsibility is to report solely to you, on the Scheme's compliance with the above requirements based on the results of the procedures performed by us, in accordance with section 102 of the General Regulation, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

i We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of

Il Historical Financial Information and with reference to PN 860.1 (Revised) issued by the HKICPA. We have planned and performed our work to obtain reasonable assurance on whether the Scheme has complied with the above requirements.

We have planned and performed such procedures as we considered necessary with reference to the procedures recommended in PN 860.1 (Revised), which included reviewing, on a test basis, evidence obtained from the Trustee of the scheme regarding the Scheme's compliance with the above requirements.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

Based on the foregoing:

(1) In our opinion:

(a) proper accounting and other records have been kept during the year ended 30 June 2018 in respect of the constituent funds of the Scheme, the Scheme assets and all financial transactions entered into in relation to the Scheme; and

(b) the requirements specified in the guidelines made by the Authority under section 28 of the MPF Ordinance with respect to forbidden investment practices and the requirements of sections 37(2), 51 and 52 and Part X of, and Schedule 1 to, the General Regulation have been complied with, in all material respects, as at 31 October 2017, 28 February 2018 and 30 June 2018; and

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1.1

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Opinion (continued)

Based on the foregoing: (continued)

(1) In our opinion: (continued)

(c) the requirements specified in the MPF Ordinance under sections 34DB(1)(a), (b), (c) and (d), 34DC(1) and 34D0(1) and (4)(a) with respect to the investment of accrued benefits and control of payment for services relating to Hang Seng Mandatory Provident Fund — SuperTrust Plus — Core Accumulation Fund and Hang Seng Mandatory Provident Fund — SuperTrust Plus — Age 65 Plus Fund have been complied with, in all material respects, as at 31 October 2017, 28 February 2018 and 30 June 2018; and

(d) the requirements specified in the MPF Ordinance under sections 34DI(1) and (2) with respect to the transfer of accrued benefits to an account and specified notice, and 34DJ(2), (3), (4) and (5) with respect to locating scheme members relating to Hang Seng Mandatory Provident Fund — SuperTrust Plus — Core Accumulation Fund and Hang Seng Mandatory Provident Fund — SuperTrust Plus—Age 65 Plus Fund have been complied with, in all material respects, during the period from 1 July 2017 to 30 June 2018; and

(e) the requirements specified in section 34DD(4)(b) of the MPF Ordinance with respect to the controls of out-of-pocket expenses of Hang Seng Mandatory Provident Fund — SuperTrust Plus — Core Accumulation Fund and Hang Seng Mandatory Provident Fund — SuperTrust Plus — Age 65 Plus Fund have been complied with, in all material respects, as at 30 June 2018.

(2) as at 30 June 2018, the Scheme assets were not subject to any encumbrance, otherwise than as permitted by the General Regulation.

Other Matter

The requirements specified in the MPF Ordinance under section 34DK(2) with respect to the transfer of accrued benefits to an account and specified notice relating to Hang Seng Mandatory Provident Fund — SuperTrust Plus — Core Accumulation Fund and Hang Seng Mandatory Provident Fund — SuperTrust Plus — Age 65 Plus Fund are not applicable to the Trustee during the year ended 30 June 2018 as the default investment arrangement of the Scheme prior to 1 April 2018 was not guaranteed funds. Accordingly, there is no reporting on this section.

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Intended Users and Purpose

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

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Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road Central, Hong Kong 17 December 2018

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HANG SENG

Fund Expense Ratio (%)

30-Jun-18

Hang Seng Mandatory Provident Fund Supertrust Plus

- MPF Conservative Fund 0.76 - Guaranteed Fund 2.22 - Hang Seng Index Tracking Fund 0.80 - Balanced Fund 1.51 - Growth Fund 1.60 - Core Accumulation Fund (1) 0.79 - Hong Kong and Chinese Equity Fund 1.50 - North American Equity Fund 1.40 - European Equity Fund 1.40 - Asia Pacific Equity Fund 1.48 - Global Bond Fund 0.76 - Age 65 Plus Fund (2) 0.80 - Stable Fund 1.33 - Chinese Equity Fund 1.46Hang Seng Mandatory Provident Fund ValueChoice

- MPF Conservative Fund 0.76 - Hang Seng Index Tracking Fund 0.79 - Global Bond Fund 0.76 - Core Accumulation Fund (3) 0.78 - ValueChoice Balanced Fund 0.93 - ValueChoice Asia Pacific Equity Fund 0.86 - ValueChoice European Equity Fund 0.92 - ValueChoice US Equity Fund 0.85 - Hang Seng China Enterprises Index Tracking Fund (5) 0.87 - Global Equity Fund 0.87 - Age 65 Plus Fund(4) 0.77

Remark

(1) Hang Seng MPF SuperTrust Plus Core Accumulation Fund was formerly known as Hang Seng MPF SuperTrust Plus Stable Growth Fund prior to 1 April 2017

(2) Hang Seng MPF SuperTrust Plus Age 65 Plus Fund was formerly known as Hang Seng MPF SuperTrust Plus Flexi-Managed Fund prior to 1 April 2017

(3) Hang Seng MPF ValueChoice Core Accumulation Fund was formerly known as Hang Seng MPF ValueChoice Stable Growth Fund prior to 1 April 2017

(4) Hang Seng MPF ValueChoice Age 65 Plus Fund launched on 1 April 2017

(5) Hang Seng MPF ValueChoice Hang Seng China Enterprises Index Tracking Fund was formerly known as Hang Seng MPF ValueChoice Hang Seng H-Share Index

Tracking Fund prior to 5 March 2018.

Hang Seng Mandatory Provident Fund — SuperTrust Plus

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