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Positive return has been recorded on Capital Preservation Funds (CPF) since the inception of the MPF System in December 2000, the Mandatory Provident Fund Schemes Authority (MPFA) announced today (Thursday, 30 September 2004).

A spokesperson for the MPFA pointed out that since the introduction of the MPF System, the CPF has recorded an accumulative return of 3.9 per cent.

"The CPF is required to invest in either short-term bank deposits or high quality bonds with an average investment period not exceeding 90 days.  In practice, these bonds normally will hold till maturity, and scheme members will get principal and interest.  In so doing, the capital is preserved.

"As bonds are valued at market value, market fluctuation will affect the value of CPF fund."

The MPFA has been working with the industry to review the valuation methodology to reflect the actual practice, and to review the statutory investment restrictions on CPF.

The spokesperson added that the Authority is well aware of and understands the concern of scheme members about the CPF, and has been launching education and publicity programmes through the media and other channels to explain to members the features of CPF.

"Education efforts will be stepped up and we will work in partnership with various stakeholders to help the public to better understand the CPF."

End/Thursday, 30 September 2004