Addendum to the Principal Brochure of Sun Life Rainbow ORSO Scheme (the "Plan")

Transcription

1 Addendum to the Principal Brochure of Sun Life Rainbow ORSO Scheme (the "Plan") IMPORTANT NOTES: 1. This Addendum forms part of and should be read in the context of and together with the Principal Brochure of the Plan. Definitions of the terms used in this Addendum have the same meanings as prescribed to them in the Principal Brochure, unless this Addendum specifies otherwise. 2. This Addendum is only applicable to those participating employers and scheme members who are participating in the Plan as at 27 June 2010 and who continue to have their existing and, if any, future contributions invested in the Deposit Administration Fund (the "D.A. Fund"). 3. The D.A. Fund is being provided in the form of an insurance policy issued by Sun Life Hong Kong Limited (the "Sponsor"). The guarantee under the D.A. Fund is also given by the Sponsor. Your investment in the D.A. Fund is therefore subject to the credit risks of the Sponsor. The guarantee provided under the D.A. Fund is subject to the terms and conditions set out in this Addendum. 4. No participating employer or scheme member has any right or ownership over any underlying funds / assets in relation to the D.A. Fund. This Addendum shall take effect from 28 June Investors 1.1 The D.A. Fund is closed to scheme members and participating employers joining the Plan on or after 28 June Each of the scheme members and participating employers who participate in the Plan as at 27 June 2010 is entitled to continue to have their relevant balances invested in the D.A. Fund. However, if such scheme member or participating employer (as the case may be) decides to invest in any of the Investment Choices as set out in the Principal Brochure, the scheme member or participating employer (as the case may be) must switch the entirety of the balances held in the D.A. Fund attributable to the scheme member or participating employer (as the case may be) into the elected Investment Choice(s) and have all the new contributions (including any new transfer-in amounts) by or in respect of the scheme member or all balances in respect of the participating employer (as the case may be) invested in the elected Investment Choice(s) and not in the D.A. Fund. 2. Investment objective and policy 2.1 The D.A. Fund is within the Sponsor's Class G Long Term Business Fund established pursuant to the Insurance Companies Ordinance. The D.A. Fund seeks to achieve a positive return as may be declared by the Sponsor at its sole discretion subject to a capital guarantee and a guarantee of 5% per annum on capital on a year-on-year basis before the deduction of any fees and charges (including management fees). With effect from 1 January 2011, a management fee of 4% per annum on the balances of the relevant account of each of the relevant scheme members and participating employers will be charged, after crediting the declared interest, at the end of each Scheme Year. If no discretionary investment return is declared by the Sponsor above the guarantee of 5% per annum, from 1 January 2011 onwards, the return net of management fee of the D.A. Fund will be less than 1% per annum on capital. 2.2 The "capital" referred to in 2.1 means:

2 (a) (b) the actual amount invested in the D.A. Fund, together with any declared returns (less any fees and charges including management fees - see item 5 below), accumulated up to the end of the preceding Scheme Year, plus the actual amount invested in the D.A. Fund in the current Scheme Year. A "Scheme Year" means each period of 12 months ending on 31st December or such other date as the Sponsor may determine. The declared interest is credited to each relevant account of the relevant scheme member or participating employer before the deduction of any fees and charges (including management fees - see item 5 below). Accordingly, the actual return on the D.A. Fund is essentially the declared interest less any fees and charges (including management fees - see item 5 below). 2.3 The D.A. Fund invests in various assets with emphasis in debt instruments and bonds. However, the D.A. Fund will not be invested in unquoted securities or unauthorised unit trusts nor acquire assets which assume unlimited liability. The range of asset allocation of the investment of the D.A. Fund is as follows: INVESTMENT RANGE AS % OF MARKET VALUE OF THE PORTFOLIO % Fixed rate debt instruments or time deposits with term to maturity exceeding 12 months but with interest rate fixed Floating rate debt instruments or time deposits (other than the above) Convertible bonds 0-20 Others (including equities, precious metal or other commodities, warrants, options and rights)* 0 2.5

3 *Any financial derivative instrument would only be used for hedging purposes. The credit rating of any holding in the portfolio of the D.A. Fund must not in any circumstances be lower than Standard & Poor's BBB- or equivalent. 2.4 The investments of the D.A. Fund will also be in accordance with the investment requirements under section 27 of the ORSO. 2.5 The D.A. Fund has no borrowing power except to hedge against currency movement or to avoid converting existing investments to meet redemption payment and expenses in which event, the borrowing will not exceed 20% net asset value of the D.A. Fund. 3. Guarantee features 3.1 The guarantor of the D.A. Fund is the Sponsor. Investments in the D.A. Fund are therefore subject to the credit risks of the Sponsor. 3.2 No guarantee fee is separately charged by the Sponsor. The declared investment return of the D.A. Fund will not be entirely dependent on performance of its underlying investments. Subject to the terms and conditions constituting the D.A. Fund, the investment return of the D.A. Fund is declared entirely at the sole discretion of the Sponsor. Past performance of the D.A. Fund should not be taken as an indication of its future performance. 3.3 The Sponsor, at its sole discretion, has the right to retain investment income of the D.A. Fund in excess of that required to be set aside to meet the guaranteed interest and declared excess return (if any) provided by the D.A. Fund. 3.4 The Sponsor will declare an interest of at least 5% per annum on the capital (before deduction of any fees and charges including management fees - see item 5 below), compounded annually based on simple interest calculation at the end of each Scheme Year. The "capital" means: (a) (b) the actual amount invested in the D.A. Fund, together with any declared returns, accumulated up to the end of the preceding Scheme Year, plus the actual amount invested in the D.A. Fund in the current Scheme Year. The declared interest does not take into account the deduction of any fees and charges (including management fees - see item 5 below). The actual return on the D.A. Fund will be the declared interest less any fees and charges (including management fees - see item 5 below) at the end of each Scheme Year. From 1 January 2011 onwards, if no discretionary investment return is declared by the Sponsor above the guarantee of 5% per annum, the return net of management fee of the D.A. Fund will be less than 1% per annum on capital. 3.5 The declared interest will be declared, and credited to each relevant account in respect of each of the relevant scheme members and participating employers, annually at the end of each Scheme Year, following which, any applicable fees and charges (including the management fees - see item 5 below) will be deducted from each such account. As with the declared interest, deduction of fees and charges (including the management fees - see item 5 below) will take place once every Scheme Year. 3.6 The Sponsor may at its sole discretion declare an additional interest over and above 5% per annum at the end of each Scheme Year. In exercising the discretion, the Sponsor shall take into account the actual investment return, investment and operating expenses, cost of providing the guaranteed interest and amount set aside as reserve. Any additional interest will be credited (before the deduction of any fees and charges including the management fees - see item 5 below) to each relevant account of each relevant scheme member or participating employer (as the case may be).

4 4. Withdrawal 4.1 If a scheme member or participating employer withdraws their investment in the D.A. Fund before the end of a Scheme Year for any reason (including for the purposes of investment in one or more of the Investment Choices), the guarantee payable (before the deduction of any fees and charges including the management fees - see item 5 below) in respect of that scheme member's or participating employer's investment in the D.A. Fund during that Scheme Year will be calculated based on a return of 5% per annum on the assets of the D.A. Fund attributable to that scheme member or participating employer on a pro-rata basis from the beginning of that Scheme Year to the date of the cessation of investment in the D.A. Fund. That scheme member's or participating employer's entitlement under the D.A. Fund will therefore be the balance held in the relevant account as at the date of cessation of investment in the D.A. Fund plus the pro-rated guaranteed return on such balance less the applicable fees and charges including the pro-rated management fees (as determined in item 5.2 below). 5. Fees and charges 5.1 With effect from 1 January 2011, a management fee of 4% per annum on the balances of the relevant account of each of the relevant scheme members and participating employers will be charged, after crediting the declared interest, at the end of each Scheme Year. There is no additional management fee charged at the Plan level. 5.2 Should a scheme member or participating employer withdraw their investment in the D.A. Fund before the end of a Scheme Year, a pro-rated management fee from the beginning of that Scheme Year to the date of the cessation of investment in the D.A. Fund will be charged on the balance of the relevant account of such scheme member or participating employer as at the date of withdrawal. 6. The declared interest rates for the last 5 years Year Gross declared rate (% pa) Return net of management fee (%pa) Maximum Minimum Custodian and auditor 7.1 The Custodian and the auditor for the D.A. Fund are Citibank N.A. and KPMG respectively. The Custodian is responsible for the custody of the assets of the D.A. Fund in the name of the Sponsor. No participating employer or scheme member has any right or ownership over any underlying funds / assets in relation to the D.A. Fund.

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