1. HSBC Asset Management March 2004 HSBC Asset Management (Hong Kong) Limited 15/F Citibank Tower, 3 Garden Road, 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. HKBU27E_HC02 HSBC Asset Management 2 Agenda Investment performance Market outlook Factors for consideration before switching

3. HSBC Asset Management HKBU27E_HC02 3 Investment performance

4. HKBU27E_HC02 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 : January 2004 (in HKD terms)

5. HKBU27E_HC02 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: 3 months to December 2003 (in HKD terms)

6. HKBU27E_HC02 HSBC Asset Management 6 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 December 2003 (in HKD terms)

7. HKBU27E_HC02 HSBC Asset Management 7 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

8. HKBU27E_HC02 HSBC Asset Management 8 Source: HSBC Asset Management Past performance is not necessarily a guide to future performance Investment performance: January 2004

9. HKBU27E_HC02 HSBC Asset Management 9 Investment performance: 6 months to December 2003 Source: HSBC Asset Management, Watson Wyatt Managed Fund Report Past performance is not necessarily a guide to future performance

10. HKBU27E_HC02 HSBC Asset Management 10 Investment performance: January to December 2003 Source: HSBC Asset Management, Watson Wyatt Managed Fund Report Past performance is not necessarily a guide to future performance

11. HKBU27E_HC02 HSBC Asset Management 11 (3/99) Investment performance since inception (March 1998 to January 2004) Source: HSBC Asset Management Past performance is not necessarily a guide to future performance

12. HKBU27E_HC02 HSBC Asset Management 12 Equities Hong Kong30.032.224.026.717.017.710.011.7 Japan12.010.59.07.86.55.04.02.8 Other Asia Pac.12.014.19.010.46.57.64.05.1 N. America18.016.014.013.410.08.66.05.6 Europe18.018.314.015.010.010.26.07.1 Total90.091.170.073.350.049.130.032.30.0 Bonds US Bonds1.61.15.74.37.413.610.0 Non US Bonds5.45.019.319.333.246.446.6 Total7.06.125.023.645.040.660.056.60.0 Cash3.02.85.03.15.010.310.011.1100.0 Equities Hong Kong30.032.224.026.717.017.710.011.7 Japan12.010.59.07.86.55.04.02.8 Other Asia Pac.12.014.19.010.46.57.64.05.1 N. America18.016.014.013.410.08.66.05.6 Europe18.018.314.015.010.010.26.07.1 Total90.091.170.073.350.049.130.032.30.0 Bonds US Bonds1.61.15.74.37.413.610.0 Non US Bonds5.45.019.319.333.246.446.6 Total7.06.125.023.645.040.660.056.60.0 Cash3.02.85.03.15.010.310.011.1100.0 HKBUHKBUHKBU HKBUHKBU GMF High GrowthGrowthBalancedStableHKD / USD BmkFundBmkFundBmkFundBmkFundFund (%)(%)(%)(%)(%)(%)(%)(%)(%) Asset allocation – 31 January 2004

13. HSBC Asset Management HKBU27E_HC02 13 Market outlook

14. HKBU27E_HC02 HSBC Asset Management 14 US –Q4 GDP growth was slightly weaker than expected, but growth should remain well above trend for the next two to three quarters. –As the inventory cycle turns strongly positive and consumers benefit from further tax cuts in 1H2004, 5-6% growth rates in first half of 2004 are expected before slowing. –Monetary policy should remain accommodative; interest rates at around 3% by mid 2005. –We expect earnings growth has peaked even though Q4 earnings have been slightly better than expected, growing by 24%. –The strong run since March 2003 has pushed valuations to slightly expensive, the market is looking for earnings strength to drive further gains. Outlook –US - Moderate underweight –GDP growth forecast for 2004 (+4.8%); 2005 (+3.6%) Data as at 3 February 2004

15. HKBU27E_HC02 HSBC Asset Management 15 Europe Euroland –Expect continued industrial recovery and supporting investment spending (German Industrial Production rose by 2.35% in 4Q 2003). –Exports remain a positive growth contributor despite the rising Euro. –Steady economic improvement is expected in 2004, taking GDP growth back to slightly above trend at 2.2%. –Market reasonably valued at a forward PE ratio of 15x and looks cheap if economic growth remains strong. UK –Consumer confidence and spending remain resilient. –Prospect of more rate hikes and a rising currency are not beneficial for larger and more globally exposed stocks, but valuations are still supportive (12x of 2004 earnings). Outlook –Euroland - Moderate overweight; UK - Neutral –GDP growth forecast for 2004 and 2005: Euroland (+2.2%, +2.5%); UK (+3.0%, +2.4%) Data as at 3 February 2004

16. HKBU27E_HC02 HSBC Asset Management 16 Japan –The economy is experiencing an export led recovery with positive investment. –Recent better than expected unemployment figures would lead to an improvement in overall income growth, setting a more positive trend in future consumption. –Further USD weakness will be a concern despite supports from the BoJ. –Earnings estimates have been downgraded recently due to currency rise. –Valuations reasonable but change to earnings expectations and a decreasing impact from foreign buying may hold the market back. Outlook –Japan - Neutral –GDP growth forecast for 2004 (+2.3%) and 2005 (+1.6%) Data as at 3 February 2004

17. HKBU27E_HC02 HSBC Asset Management 17 Asia (ex-Japan) –The actual impact on Asian economies of avian flu is relatively benign as growth momentum remains on track driven by both exports and private consumption. –Thailand’s 2004 GDP could be reduced by as much as 1% on the back of avian flu, but growth is still expected to be around 4.5 to 5%. –While avian flu serves as an excuse for short term profit taking in Asian equities, we remain positive over the medium term due to the region’s economic and corporate growth stories. –Cash calls from companies and fund flows should be monitored closely (new equity issues/placements by companies in Hong Kong) –Reporting season in markets such as Hong Kong and China is likely to be a catalyst for market sentiment. Outlook –Asia (ex-Japan) - Moderate overweight Data as at 3 February 2004

18. HKBU27E_HC02 HSBC Asset Management 18 Asia (ex-Japan) Hong Kong (overweight) –Fundamentals stay firm : better employment conditions and lower deflationary pressure –Earnings revision remains upbeat, and positive management guidance in the forthcoming reporting season would be the key to trigger another round of earnings upgrades –Risks are increased cash calls, and avian flu, though likely to be contained, that may provide excuse for profit taking in the short term Korea (moderate overweight) –The potential resolution of LG Card issue may gradually increase retail investors’ risk appetite. –More optimistic outlook for consumer spending and strong export will increase the possibility of positive fixed capital formation in second half of 2004. –Nevertheless, major risks include the potential MSCI re-weighting; potential margin erosion on rising commodity prices and the Won appreciation. Taiwan (neutral) –Macro conditions still positive - expect pick up in domestic consumption to be another growth factor. –Potential MSCI re-weighting would drive the market positively. –Political noises in the run up to the election remain a concern. –Factors like corporate IT spending and the TWD rise are to be carefully monitored. Data as at 3 February 2004

19. HKBU27E_HC02 HSBC Asset Management 19 Bond market outlook –U.S.: We retain our central expectation of unchanged policy over 3 months, but a cumulative tightening of 1% over next 12 months. Fed’s evolution of policy rhetoric towards an eventual tightening will continue to challenge bond yields, particularly following the recent rally. –Euroland: Despite the improvement in some business surveys, the general strength of the Euro and the lack of meaningful follow-through lessen the need for the ECB to follow the Fed and MPC in tightening policy. We do not expect ECB to start its tightening cycle over the next 3 or 12 months. However, the general drift towards higher global bond yields is likely to lead to rising bond yields across Europe. We therefore adopt a short duration position. –Japan: Although economic outlook continues to improve, there is little prospect of an increase in official interest rates until inflation turns and remains in positive territory. While signals are more positive in Japan then in a number of other markets, the global backdrop, low absolute yields and concern over increasing supply make us unwilling to adopt a more positive position. Data as at 3 February 2004

20. HKBU27E_HC02 HSBC Asset Management 20 Asset class rating : US, Australia, Canada UK, Japan, Equity market rating : Europe, HK Asia (ex JP/HK), GEM Most preferred market(s) NeutralUnderweightOverweightModerate Overweight Moderate Underweight Overweight Neutral Equities, Bonds, Cash Neutral Equities, Bonds, Cash Underweight Least preferred market(s) HSBC Asset Management Investment Strategy Data as at 3 February 2004

21. HKBU27E_HC02 HSBC Asset Management 21 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.

22. HKBU27E_HC02 HSBC Asset Management 22 HSBC Asset Management (Hong Kong) Limited

23. HSBC Asset Management HKBU27E_HC02 23 Factors for consideration before switching

24. HKBU27E_HC02 HSBC Asset Management 24 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

25. HKBU27E_HC02 HSBC Asset Management 25 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

26. HKBU27E_HC02 HSBC Asset Management 26 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

27. HKBU27E_HC02 HSBC Asset Management 27 Therefore Different people have different needs Investment choices are provided for different risk profiles Range of investment choices