1. 2003 SINA Investment Forum Dr. Harry Huang Disclaimer: The views expressed herein do not represent those of either Barclays Global Investors nor Association of Chinese Finance Professionals. These are strictly personal views for information purposes only, and as such should not be construed as investment advice. Do not assume that this information is accurate or complete.

2. Challenges facing today’s investors: Stocks: in a three years bear market Stocks: in a three years bear market Bond: yields are near historical lows Bond: yields are near historical lows Real estate: How long will it last? Real estate: How long will it last?

3. Challenges facing today’s investors: Stocks: in a three years bear market Stocks: in a three years bear market Bond: yields are near historical lows Bond: yields are near historical lows Real estate: How long will it last? Real estate: How long will it last? My challenge: What many areas can I cover in detail in 15 minutes? What many areas can I cover in detail in 15 minutes?

4. What can be learned from pros? It’s very difficult to consistently outperform the market It’s very difficult to consistently outperform the market  Most investment managers underperform over a long run

5. What can be learned from pros? It’s very difficult to consistently outperform the market It’s very difficult to consistently outperform the market  Most investment managers underperform over a long run  The average mutual fund investor underperforms the average mutual fund

6. What can be learned from pros? It’s very difficult to consistently outperform the market It’s very difficult to consistently outperform the market  Most investment managers underperform over a long run  The average mutual fund investor underperforms the average mutual fund Are you confident that you can beat most pros? Are you confident that you can beat most pros?  Asset allocation  Diversification  Fees

8. You are your biggest enemy Have realistic expectations Have realistic expectations Are you as diversified as you think you are? Are you as diversified as you think you are? Fund/stocks shopping versus grocery shopping Fund/stocks shopping versus grocery shopping Overcome emotion factor in investing Overcome emotion factor in investing  consider a financial advisor  Force yourself to regularly reexamine your investment portfolio

9. To index or not to index, …… Indexed funds Indexed funds  unpleasant arithmetic of management fees  Beats most active fund managers Can an individual investor expect to beat the market? Can an individual investor expect to beat the market?

10. To index or not to index, ……? Indexed funds Indexed funds  unpleasant arithmetic of management fees  Beats most active fund managers Can an individual investor expect to beat the market? Can an individual investor expect to beat the market?  Market tends to overshoot one way or the other  But it can remain that way for quite a while  Manage your risk exposure according to your financial objectives

15. USA or Greater China?

16. How about both? How about both?

17. USA or Greater China? How about both? How about both? Several points to bear in mind: Several points to bear in mind:  Investors are just starting to realize the profound impact of 9/11 on the capital market  Greater China: source of global deflationary pressure?  Pay attention to China’s rapidly growing services industry, such as financial services  Don’t forget bonds: overvalued bonds are better investment than overvalued stocks