1. HSBC Asset Management September 2004 HSBC Asset Management (Hong Kong) Limited Level 22, HSBC Main Building, 1 Queen’s Road Central, Hong Kong Telephone: +852 2284 1111 Facsimile: +852 2845 0226 Web site: www.assetmanagement.hsbc.com.hk Hong Kong Baptist University 1998 Superannuation Fund Investment review

2. hkbu28e_wh08 HSBC Asset Management 2 Agenda Investment performance Market outlook and investment strategy Factors for consideration before switching

3. hkbu28e_wh08 HSBC Asset Management 3 Investment performance

4. hkbu28e_wh08 HSBC Asset Management 4 Currencies Bonds * Equities ** *Bonds: Citigroup World Government Bond Indices **Equities:USA (S&P 500), UK (FTSE-100), Germany (DAX), Japan (Nikkei 225), Hong Kong (HSI), Australia (All Ordinaries), Malaysia (KLSE Composite), Singapore (STI) Source: Thomson Financial Datastream Market statistics: July 2004 (YTD, in HKD terms)

5. hkbu28e_wh08 HSBC Asset Management 5 Currencies Bonds * Equities ** *Bonds: Citigroup World Government Bond Indices **Equities:USA (S&P 500), UK (FTSE-100), Germany (DAX), Japan (Nikkei 225), Hong Kong (HSI), Australia (All Ordinaries), Malaysia (KLSE Composite), Singapore (STI) Source: Thomson Financial Datastream Market statistics: 1 year to July 2004 (in HKD terms)

6. hkbu28e_wh08 HSBC Asset Management 6 More suitable for risk tolerant staff Balanced Fund More suitable for risk averse staff High Growth Fund Growth Fund Risk (short-term volatility) Global Money Funds (HKD/USD) High Low High Stable Fund Long-term potential return Risk profile of various investment options

7. hkbu28e_wh08 HSBC Asset Management 7 Investment performance: January to July 2004 Source: HSBC Asset Management Past performance is not necessarily a guide to future performance

8. hkbu28e_wh08 HSBC Asset Management 8 Investment performance: 1 year to July 2004 Source: HSBC Asset Management Past performance is not necessarily a guide to future performance

9. hkbu28e_wh08 HSBC Asset Management 9 (3/99) Investment performance since inception (March 1998 to July 2004) Source: HSBC Asset Management Past performance is not necessarily a guide to future performance

10. hkbu28e_wh08 HSBC Asset Management 10 Source: HSBC Asset Management, Watson Wyatt Managed Fund Report Past performance is not necessarily a guide to future performance Investment performance: 1Q 2004 Peer group comparison

11. hkbu28e_wh08 HSBC Asset Management 11 Source: HSBC Asset Management, Watson Wyatt Managed Fund Report Past performance is not necessarily a guide to future performance Investment performance: 2Q 2004 Peer group comparison

12. hkbu28e_wh08 HSBC Asset Management 12 Asset allocation – 31 July 2004 Equities Hong Kong30.031.324.024.717.017.210.09.9 Japan12.013.99.010.56.57.44.05.2 Other Asia Pac.12.012.19.08.96.57.04.04.2 N. America18.016.614.012.410.08.66.04.7 Europe18.016.714.012.910.09.16.05.3 Total90.090.670.069.450.049.330.029.3 Bonds US Bonds1.60.85.73.510.36.013.68.7 Non US Bonds5.44.619.319.534.734.846.448.1 Total7.05.425.023.045.040.860.056.8 Cash3.04.05.07.65.09.910.013.9100.0 Equities Hong Kong30.031.324.024.717.017.210.09.9 Japan12.013.99.010.56.57.44.05.2 Other Asia Pac.12.012.19.08.96.57.04.04.2 N. America18.016.614.012.410.08.66.04.7 Europe18.016.714.012.910.09.16.05.3 Total90.090.670.069.450.049.330.029.3 Bonds US Bonds1.60.85.73.510.36.013.68.7 Non US Bonds5.44.619.319.534.734.846.448.1 Total7.05.425.023.045.040.860.056.8 Cash3.04.05.07.65.09.910.013.9100.0 HKBUHKBUHKBU HKBUHKBU GMF High GrowthGrowthBalancedStableHKD / USD BmkFundBmkFundBmkFundBmkFundFund (%)(%)(%)(%)(%)(%)(%)(%)(%)

13. hkbu28e_wh08 HSBC Asset Management 13 Market outlook

14. hkbu28e_wh08 HSBC Asset Management 14 US –Slowdown in second quarter of 2004 GDP growth and worse than expected consumption –Residential and business investment remained strong –Falling unemployment, and rising household income –Budget deficit could be slightly lower than expected due to increased revenues –But geopolitical issues and strong oil price weigh on markets –Margins at 40-year highs, earnings may come under pressure –Valuations are looking more attractive –Balance sheet repair makes meaningful increases in dividends possible Outlook –US - Moderate Underweight –GDP growth forecast for 2004 (+4.3%); 2005 (+3.6%) Data as at 4 August 2004

15. hkbu28e_wh08 HSBC Asset Management 15 Europe Euroland –Recovery continues although at a gradual pace –Sluggish domestic demand; but growth driven by exports –Earnings growth revised upwards on higher forecast revenues, not cost cutting –More attractive valuations but oil price concern still lingers UK –Annualised second quarter of 2004 growth at 3.7%, fastest seen in four years –Impact of higher interest rates on consumption is key –Generally strong earnings report, but profit-taking to continue in the short term –Valuations not stretched Outlook –Europe - Neutral; UK - Neutral –GDP growth forecast for 2004 and 2005: Europe (+2.0%, +2.4%); UK (+3.5%, +2.4%) Data as at 4 August 2004

16. hkbu28e_wh08 HSBC Asset Management 16 Japan –June data pointed to a slowing pace of growth –Official view still positive; consensus for 2004 GDP growth forecasts increased slightly to 4.2% –Deflation continues to ease, consensus predicts zero inflation in 2005 –Good quarterly earnings, but cautious company guidance due to higher energy and materials costs –Market is becoming more sensitive to potential risks –Valuation is reasonable with markets trading at 18 times of price earning Outlook –Japan - Neutral –GDP growth forecast for 2004 (+4.0%) and 2005 (+2.0%) Data as at 4 August 2004

17. hkbu28e_wh08 HSBC Asset Management 17 Asia (ex-Japan) –Trade and retail data still indicate that Asia, including China, is heading for a soft landing –Moderation in growth momentum expected in second half of 2004 following US slowdown –However, growth still remains strong driven by domestic consumption –Despite rising oil prices, inflationary pressures still benign –Recent market weakness was due to sector specific issues –Investors are concerned about earnings growth next year –Due to overcapacity, Technology drags the market most –Asia still seems cheap, in both relative and absolute terms Outlook –Asia (ex-Japan) – Moderate Overweight Data as at 4 August 2004

18. hkbu28e_wh08 HSBC Asset Management 18 Asia (ex-Japan) Hong Kong (moderate overweight) –Falling unemployment rate, easing deflationary and strong retail sales –Upward earnings revisions to resume with positive management guidance –Successful property launches rejuvenate the sagging property sector –Market consolidation may continue in the coming month –Remain sanguine on the Hong Kong on a 12-month view Korea (underweight) –Market unlikely to turn around in near future despite historical low market valuations –Suffering from high crude oil prices –Negatives: second half of 2004 export growth might decline, earnings forecast reductions, struggling local consumption Taiwan (underweight) –Market still lacks catalysts –Negatives: PC seasonality trend yet to confirm, earnings downgrades, weak investor confidence –Valuation becomes more attractive Data as at 4 August 2004

19. hkbu28e_wh08 HSBC Asset Management 19 Bond market outlook US –Economy retains a strong underlying momentum despite soft data –Expect 0.5% of rate hikes in 3 months, and 2% total over 12 months Euroland –Improving domestic economic activity prompts Central Bank to reduce policy stimulus –Expect the European Central Bank to commence tightening monetary policy in 12 months Japan –No policy changes within the next 3 or 12 months –Possible measured reduction in quantitative stimulus should current economic recovery continue Data as at 4 August 2004

20. hkbu28e_wh08 HSBC Asset Management 20 US, Japan Europe, UK Australia, GEM, Canada, Europe, UK Australia, GEM, Canada, Asset class rating : HSBC Asset Management Investment Strategy Fixed income: Equity: Market preference : Underweight Moderate Underweight Neutral Moderate Overweight Hong Kong, Asia, GEM Europe, UK, Japan, Canada US, Australia Underweight Bonds Neutral Equities Overweight Cash Data as at 4 August 2004

21. hkbu28e_wh08 HSBC Asset Management 21 Factors for consideration before switching

22. hkbu28e_wh08 HSBC Asset Management 22 Principles of retirement investment 3 major types of investment instruments Equities –Ownership of companies –Returns from dividends & capital appreciation –High short term volatility Bonds –Debt instruments issued by governments/corporations –Returns from interest payments –Short term volatility lower than equities Cash –very low short term volatility

23. hkbu28e_wh08 HSBC Asset Management 23 Do not time / chase markets! Please remember Identify personal factors –Establish risk / return profile –Understand investment choices –Make investment decisions using a long-term approach

24. hkbu28e_wh08 HSBC Asset Management 24 Different people have different needs!! A guide to investing Factors to consider –Years to retirement –Other personal assets –Planned uses for retirement assets –Financial and other personal circumstances

25. hkbu28e_wh08 HSBC Asset Management 25 Therefore Different people have different needs Investment choices are provided for different risk profiles Range of investment choices

26. hkbu28e_wh08 HSBC Asset Management 26 Explanatory notes and disclaimers The document is confidential and is supplied to you solely for your information. This document should not be reproduced or further distributed to any person or entities, whether in whole or in part, for any purpose. Please also note that investment involves risk and past performance is not indicative of future performance. The opinions expressed herein should not be considered to be a recommendation by HSBC Asset Management (Hong Kong) Limited to any reader of this material to buy or sell securities, commodities, currencies or other investments referred to herein. HSBC Asset Management (Hong Kong) Limited, its ultimate and intermediate holding companies, subsidiaries, affiliates, clients, directors and/or staff may, at any time, have a position in the markets referred to herein, and may buy or sell securities, currencies, or any other financial instruments in such markets. HSBC Asset Management (Hong Kong) Limited has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC Asset Management (Hong Kong) Limited and the HSBC Group make no guarantees, representations or warranties and accept no responsibility or liability as to its accuracy or completeness. Information in this report is subject to change without notice.

27. hkbu28e_wh08 HSBC Asset Management 27 HSBC Asset Management (Hong Kong) Limited