1.	How are expense ratios computed?
2.	What is the relevant reporting period that fund managers have to submit the audited expense ratios as to be in compliance with the cap on expense ratio with effect from 1 Jan 2008?
3.	What will be the treatment if the fund’s audited expense ratio is found to exceed the expense ratio cap?
4.	Can the fund resume accepting CPF monies once the fund’s TER meets the cap subsequently?
5.	How frequently will CPF Board assess whether a fund can or cannot take in CPF monies?
6.	Will the fund be excluded from CPFIS due to not meeting the TER cap subsequent to the inclusion?
7.	What will be the treatment for funds that meet the TER cap and undergo voluntary re-evaluation prior to 1 Jan 2008?
8.	What will be the treatment for a fund that does not meet the TER cap and undergoes voluntary re-evaluation prior to 1 Jan 2008?
9.	Will a fund which currently meets the expense ratio cap be automatically placed in List A?
10.	CPF Board has mentioned in the FAQs attached to press release of 28 Dec 2006 that top quartile funds will be given an additional year to comply with the TER cap by 1 Jan 2009.  CPF Board has also communicated to the industry that the method to determine compliance with the TER cap will be the fund’s TER based on audited financial statements in 2008.  Does this mean that CPF Board will use a top quartile fund’s TER, based on audited financial statements in 2009, to determine compliance with the TER cap?
EXISTING FUND - TAKING IN NEW CPF MONIES IN 2008
11.	My company has already implemented cost-cutting measures to reduce our funds’ TERs, so that our funds can continue taking in new CPF monies in 2008.  The funds’ audited TER based on full financial year (FY) will be above the TER cap. However, we are confident that the audited TER based on only the last 6 months of the funds’ FY will be below the cap. In view of this, will the Board consider using the funds’ audited TER based on the last 6 months of the funds’ FY, to determine compliance with the TER cap in 2008?
EXISTING FUND - UPGRADE TO LIST A
12.	My company has capped the TERs of our existing CPFIS funds. These funds have been evaluated by the Board’s Investment Consultant to be in top quartile. However, they are not upgraded to List A because their latest 12 month audited TER does not meet the TER cap. Will the Board consider using their 6 month audited TER instead, to determine compliance with the TER cap?
NEW FUND – INCLUSION UNDER LIST A
13.	My company would like to apply for our new fund to be included under CPFIS. The fund is top quartile. However, its latest available audited TER does not meet the TER cap set by the Board. Would the Board allow this fund to be included under List A, if my company undertakes to cap the TER of the fund with effect from the date the fund is launched for CPF subscription?

1.	How are expense ratios computed?
	Guidelines on the computation of expense ratio can be found in the Investment Management Association of Singapore website (IMAS). In addition, ongoing administrative or policy fees for investment-linked insurance policies (ILPs) should also be included in the computation of TER, as per Q1 of the FAQ issued by CPF Board dated 30 Apr 2007.
2.	What is the relevant reporting period that fund managers have to submit the audited expense ratios as to be in compliance with the cap on expense ratio with effect from 1 Jan 2008?
	As communicated earlier, these measures to cap TER take effect from 1 Jan 2008 in general and the compliance with the TER cap for each fund will be based on the audited report for the last financial year of the fund. The implementation date for the TER cap for a fund will be one day after the deadline of the submission of the audited report for the fund. However FMCs/Insurers must factor in the period required for settling the purchase transactions and thus the last purchase date must be at least five working days before the implementation date. This means that after the last purchase date, if a CPF member buys a fund that does not meet the TER cap, FMCs/ Insurers should not channel the subscriptions into that fund. FMCs/Insurers should assess early whether their funds can meet the TER cap. If the funds cannot meet the TER cap, FMCs/ Insurers should communicate the consequence clearly to their unitholders/ policyholders, before the last purchase date. The details are as follows:
	Financial year end of fund Deadline for submitting audited financial statements, including audited TERs and auditor’s report to CPF Board Last purchase date (i.e. purchases after this date cannot be accepted, if the fund’s audited TER exceeds TER cap.) Implementation date (i.e. date when the fund ceases to accept CPF monies if the audited TER exceeds TER cap) Authorised Fund (i.e. fund incorporated in Singapore)1 X (for example, 31 Dec 2007) X + 3 months (31 Mar 2008) Implementation date - 5 working days (25 Mar 2008) X + 3 months + 1 day (1 Apr 2008) Recognised Fund (i.e. offshore fund)2 X (for example, 31 Dec 2007) X + 4 months (30 Apr 2008) Implementation date - 5 working days (24 Apr 2008) X + 4 months + 1 day (1 May 2008)
	1 a) For Fund Management Companies only: Deadline for submission of annual auditor’s report for Authorised Fund is stated in the Code of Collective Investment Schemes (CIS) issued by the Monetary Authority of Singapore (MAS). b) For Insurance Companies only: Deadline for submission of annual audited report to Policyholders is stated in MAS Notice 307 issued by the MAS. 2 Deadline for submission of auditor’s report is the timeframe as permitted by the laws of the place of incorporation of the CIS (for example, four months from the close of the financial year for Luxembourg and Ireland funds). This is not applicable to Insurance Companies.
3.	What will be the treatment if the fund’s audited expense ratio is found to exceed the expense ratio cap?
	The company has to inform the CPF Board and the fund will cease taking in CPF monies from the implementation date as mentioned in Q2.
4.	Can the fund resume accepting CPF monies once the fund’s TER meets the cap subsequently?
	Yes, the fund could be allowed to take in CPF monies if its audited TER meets the cap subsequently.
5.	How frequently will CPF Board assess whether a fund can or cannot take in CPF monies?
	CPF Board will assess whenever the fund’s audited financial statements become available (i.e. yearly basis for most instances). A company that wishes to have its fund assessed more frequently could submit to CPF Board the fund’s semi-annual audited financial statements according to its accounting period. The company must ensure that all subsequent published TERs of its funds are also in line with the TER cap.
6.	Will the fund be excluded from CPFIS due to not meeting the TER cap subsequent to the inclusion?
	The fund will remain under CPFIS but it will not be allowed to take in CPF monies. Nevertheless, the company would need to provide options to hold, redeem and make free switches within 3 months from informing the CPF Board of not meeting TER cap under such circumstances.
7.	What will be the treatment for funds that meet the TER cap and undergo voluntary re-evaluation prior to 1 Jan 2008?
	For existing funds which meet the TER cap, they are automatically placed in List B and can continue to take in CPF monies. If a fund is evaluated to be in the top quartile in its global peer group, it will be placed in List A.
8.	What will be the treatment for a fund that does not meet the TER cap and undergoes voluntary re-evaluation prior to 1 Jan 2008?
	If the fund is evaluated to be in the top quartile in its global peer group, it will be given concession till 1 Jan 2009 to comply with the expense ratio cap and can continue to accept CPF monies in 2008. It will only be placed in List A once its expense ratio meets the cap. For those which fail to be in the top quartile, the fund will not be allowed to accept CPF monies as per the deadline described in Q2 above.
9.	Will a fund which currently meets the expense ratio cap be automatically placed in List A?
	No. The fund will have to undergo re-evaluation as to ascertain if it meets the more stringent criteria.
10.	CPF Board has mentioned in the FAQs attached to press release of 28 Dec 2006 that top quartile funds will be given an additional year to comply with the TER cap by 1 Jan 2009.  CPF Board has also communicated to the industry that the method to determine compliance with the TER cap will be the fund’s TER based on audited financial statements in 2008.  Does this mean that CPF Board will use a top quartile fund’s TER, based on audited financial statements in 2009, to determine compliance with the TER cap?
	Yes. The following table shows the relevant deadlines for top quartile funds:
	Financial year end of fund (FY) Deadline for submitting audited financial statements, including audited TERs and auditor’s report to CPF Board Last purchase date (i.e. purchases after this date cannot be accepted, if the fund’s audited TER exceeds TER cap.) Implementation date (i.e. date when the fund ceases to accept CPF monies if the audited TER exceeds TER cap) Authorised Fund (i.e. fund incorporated in Singapore)3 X (for example, 31 Dec 2008) X + 3 months (31 Mar 2009) Implementation date - 5 working days (25 Mar 2009) X + 3 months + 1 day (1 Apr 2009) Recognised Fund (i.e. offshore fund)4 X (for example, 31 Dec 2008) X + 4 months (30 Apr 2009) Implementation date - 5 working days (24 Apr 2009) X + 4 months + 1 day (1 May 2009)
	However, companies with these funds have to assess, based on audited FY 2008 TER and ongoing cost cutting measures (if any), whether the top quartile fund is likely to be able to comply with the TER cap for FY 2009. If not, the company will have to disclose this in notes to the expense ratio figure in the fund’s annual report (or include an insert to be sent with the annual report to CPFIS unit-holders or policyholders), to inform unit-holders or policyholders accordingly that if TER still exceeds the cap set in FY 2009, new CPF savings cannot be invested after implementation date and existing CPFIS unit or policy holders would be given options for switching at that time. This must be communicated to unitholders/ policyholders before the last purchase date.
	3 a) For Fund Management Companies only: Deadline for submission of annual auditor’s report for Authorised Fund is stated in the Code of Collective Investment Schemes (CIS) issued by the Monetary Authority of Singapore (MAS). b) For Insurance Companies only: Deadline for submission of annual audited report to Policyholders is stated in MAS Notice 307 issued by the MAS. 4 Deadline for submission of auditor's report is the timeframe as permitted by the laws of the place of incorporation of the CIS (for example, four months from the close of the financial year for Luxembourg and Ireland funds). This is not applicable to Insurance Companies.
EXISTING FUND - TAKING IN NEW CPF MONIES IN 2008
11.	My company has already implemented cost-cutting measures to reduce our funds’ TERs, so that our funds can continue taking in new CPF monies in 2008.  The funds’ audited TER based on full financial year (FY) will be above the TER cap. However, we are confident that the audited TER based on only the last 6 months of the funds’ FY will be below the cap. In view of this, will the Board consider using the funds’ audited TER based on the last 6 months of the funds’ FY, to determine compliance with the TER cap in 2008?
	The Board has noted companies’ feedback that their funds’ audited TER based on full financial year may not reflect the cost-cutting measures that companies have implemented. We are pleased to inform that the Board would exercise flexibility in determining compliance with the TER cap in 2008, i.e. the Board would use either audited TER based on full financial year, or audited TER based on any 6 consecutive months, as long as these 6 consecutive months fall within the 9 months period prior to Submission Date5. However, this 6 months audited TER must be submitted to the Board no later than 3 months after the fund’s financial year end. The Board would also require the company to provide a Letter of Undertaking to state that the company would also cap their TER for the next financial year and ensure compliance thereafter. This is to ensure that there is continuity in the actions taken by the company to reduce their funds’ expenses that would be reflected in their audited reports. The sample of the Letter of Undertaking is as follows:
	FMCs Insurers UT Existing Funds to use 6 mths TER (0.02MB) ILP Existing Funds to use 6 mths TER (0.02MB)
	The 6 month audited TER concession above does not apply to top quartile funds that have to comply with the TER cap from 2009. Top quartile funds have to show that their 12 month audited TERs are below the TER cap, so as to continue taking in new CPF monies in 2009.
	5 This refers to the deadline for the Company to submit the fund's audited expense ratio to the Board, as mentioned in Q2.
EXISTING FUND - UPGRADE TO LIST A
12.	My company has capped the TERs of our existing CPFIS funds. These funds have been evaluated by the Board’s Investment Consultant to be in top quartile. However, they are not upgraded to List A because their latest 12 month audited TER does not meet the TER cap. Will the Board consider using their 6 month audited TER instead, to determine compliance with the TER cap?
	Similar to Q11, the Board will use the funds’ audited TER based on 6 consecutive months, as long as:
	a) these 6 consecutive months fall within the 9 months period prior to Submission Date; and b) the Company provides a Letter of Undertaking to the Board (see attached).
	FMCs Insurers UT Upgrade of existing fund to List A (0.02MB) ILP Upgrade of existing fund to List A (0.02MB)
NEW FUND – INCLUSION UNDER LIST A
13.	My company would like to apply for our new fund to be included under CPFIS. The fund is top quartile. However, its latest available audited TER does not meet the TER cap set by the Board. Would the Board allow this fund to be included under List A, if my company undertakes to cap the TER of the fund with effect from the date the fund is launched for CPF subscription?
	Yes. Please provide to the Board the letter of undertaking as attached:
	FMCs Insurers UT Inclusion of new fund under List A (0.02MB) ILP Inclusion of new fund under List A (0.02MB)

For a summary of the criteria, please refer to Annex A. (0.02MB)