June 2001

UBS May01.ppt

Presentation to

- 2 -

Agenda

1.Portfolio Overview

2.Market Review

3.Performance Review

4. Investment Outlook

- 3 -

Market Value % of Total

Growth HK$387,008

33

Balanced HK$289,014 25

Capital Stable HK$159,406 14

Guaranteed HK$115,397 10

Capital Preservation HK$210,957 18

HK$1,161,783 100.0

Hong Kong Baptist UniversityPortfolio Overview – As at 30 April 2001

No of MPF member enrolment: 759

- 4 -

Review of Market Performance – Jan to April 2001

-14.4

-9.3

-8.1

-6.0

-3.4

-1.9

0.2

-20.0 -15.0 -10.0 -5.0 0.0 5.0

NASDAQ

Europe (FT)

Hong Kong (FT)

North America (FT)

Global Bonds (SSB)

Japan (FT)

Other Asia (MSCI)

Returns in HKD (%)

Source: Datastream

- 5 -

Market Review

Equity markets were weak in Q1 but started to rebound in April on under valuation and continual rate cuts.

Bonds outperformed equities in Q1 due to continual rate cuts and defensive nature but underperformed since April as equities rebounded.

- 6 -

Performance Review

Fund

Net Returns in HKD (%)

From Feb 26 to April 30

2001

From

Feb 26 to May 25

2001

Inception Date**

Growth -5.0% -2.3% 26 Feb 01

Balanced -3.5% -1.6% 26 Feb 01

Capital Stable -2.0% -1.8% 26 Feb 01

Guaranteed* -0.1% 0.2% 26 Feb 01

Capital Preservation 0.6% 0.9% 26 Feb 01

*A guaranteed rate of 4.5% p.a. on qualifying events

**Initial cash inflows date of HKBU

Source: INVESCO

- 7 -

INVESCO Strategic MPF Scheme Performance Review

Fund

Net Returns in HKD (%)

INVESCO**

Jan to April, 2001

Industry Average Jan to April, 2001

Growth -9.4 -7.3

Balanced -6.4 -5.9

Capital Stable -3.0 -3.1

Guaranteed* -0.8 0.3

Capital Preservation 1.3 1.2

*A guaranteed rate of 4.5% p.a. on qualifying events**Performance of T Class used for comparable track record

Source: INVESCO, Lipper/Watson Wyatt/FTSE

- 8 -

INVESCO Strategic MPF Scheme Performance Review

Fund

Net Returns in HKD (%)

INVESCO**

Jan to May, 2001

Industry Average Jan to May, 2001

Growth -6.7 -5.4

Balanced -4.6 -4.3

Capital Stable -2.8 -2.9

Guaranteed* -0.5 0.6

Capital Preservation 1.6 1.5

*A guaranteed rate of 4.5% p.a. on qualifying events**Performance of T Class used for comparable track record

Source: INVESCO, Lipper/Watson Wyatt/FTSE

- 9 -

Performance Attribution Analysis Jan to April 2001

Returns in HKDPortfolio Return

Benchmark Return

Index Name

(%) (%)

Hong Kong/China Equities -6.5 -8.7 FT Hong Kong (90%) + HSBC (10%)

US Equities -1.8 -6.0 FT North America

Japan Equities -9.6 -1.9 FT Japan

Europe Equities -19.8 -9.3 FT Europe

Other Asia Pacific Equities -1.9 +0.1 MSCI AC Pacific free ex Japan ex HK x China

Global Bonds -1.1 -3.4 SSB WGBI (unhedged)

HKD Bonds 3.2 3.6 HSBC HKD Bond

- 10 -

Performance Analysis

Positive

US stock selection positive as we held a “balanced” portfolio throughout HK stock selection positive as we diversified into mid caps Our overweight in corporate bonds added value to the bond portfolio

Negative

European stock selection underperformed due to the portfolio’s bias towards growth stocks (e.g. Nokia, Ericsson) relative to benchmark index

Japanese stock selection also underperformed due to the growth bias (e.g. Fujitsu, NTT DoCoMo) relative to benchmark index

Performance in Asia was undermined by our underweighting in Australia (more defensive) and stock selection in Korea

- 11 -

Investment Outlook

- 12 -

World Economy Slowing Down

Source: Datastream

1994 1995 1996 1997 1998 1999 2000 2001-2

-1

0

1

2

3

4

5

6

7

-30

-20

-10

0

10

20

30

40

50

60% YoY

OECD LEI Brtfwd 3mths

(LHS)

World SemiconductorSales (RHS)

OECD IIP(LHS)

- 13 -

Fed Cuts Rates to Avoid Recession

Source: Datastream

1995 1996 1997 1998 1999 2000 20012

3

4

5

6

7

8

9

2

3

4

5

6

7

8

9%

Long Bond Yield

Fed Funds Target

- 14 -

Global Economic Outlook

US – Slowdown is broadening to other sectors. Fed has cut rates by 2.5%. We do not expect a protracted downturn.

Europe – Economy slowing but will be relatively buoyant than US. Interest rates have been cut in both the Eurozone & UK.

Japan – Economy remains weak. Recent BoJ policy shift to quantitative easing is a move in the right direction. Changes to the government provides some hope of much needed reforms in economy.

Asia ex Japan – Economic growth to be dragged down by global slowdown. Liquidity outlook is stable to positive.

- 15 -

Global Equity Outlook

Equity markets were weak in Q1, but rebounded in April & May on undervaluation & continual rate cuts. A lot of bad news on global slowdown and decelerating earnings growth has been discounted.

US – Market is trading at more attractive valuation. Have been averaging down investments on dips. Maintain OVERWEIGHT.

Europe – Revisions in earnings trailing the US. Cautious on the impact to the markets. Maintain NEUTRAL. Look to increase when earnings downgrades have been fully discounted in valuations.

Japan – Market has rebounded on rate cut and on appointment of new prime minister. May surprise on upside due to undemanding valuation and potential positive developments. Move to NEUTRAL.

HK – HK equities have become less interest rate sensitive. We prefer growth sensitive stocks but have also diversified into other sectors given that growth sensitive stocks are scarce. SLIGHT UNDERWEIGHT TO NEUTRAL.

Asia – Continue to overweight Korea & Singapore. Remain UNDERWEIGHT as we have no exposure to most ASEAN markets. Will benefit from improvement in global liquidity.

- 16 -

Global Bond Outlook

Bonds outperformed in 2000 and Q1 2001 due to rate cuts and their defensive nature but underperformed equities in April and May.

We continue to be positive on corporate bonds.

European bonds are relatively more attractive than USD bonds on further rate cuts.

On total exposures, we are underewight in the US Dollar Bloc, overweight in Europe, neutral in UK, underweight in Japan and neutral in HK.

Overall remain UNDERWEIGHT in bonds.

- 17 -

CapitalCPF Stable Balanced Growth Guaranteed

Fund (%) Fund (%) Fund (%) Fund (%) Fund (%)

HK Equities - 11 (10) 25 (25) 32 (35) -

Japan Equities - 4 (4) 8 (8) 11 (12) -

Asian Equities - 4 (4) 8 (9) 11 (13) -

Europe Equities - 6 (6) 15 (14) 20 (20) -

US Equities - 7 (6) 16 (14) 22 (20) -

Total Equities - 32 (30) 72 (70) 96 (100) n/a

Bonds & Cash 100 68 (70) 28 (30) 4 (0) n/a

Asset Allocation

* As at April 30, 2001 Figures in bracket are neutral position

- 18 -As at Apr 2001

Bond Structure – International Bond Fund

Sector Index (%) Fund (%) Index Duration Fund Duration

$ Block 29.4 31.4 1.7 1.8

Japan 27.1 21.2 1.5 1.5

U.K. 5.3 5.3 0.4 0.4

Europe 38.2 42.4 1.9 2.3Average Duration 5.5 6.0

* SSB World Gov't Bond Index

- 19 -

Bond Structure – International Bond Fund

Deposits8% Corporates

14%

Financial Institutions

23%Supranationals7%

Sovereign Agencies8%

Sovereigns40%

Duration 6.0 years

Yield to Maturity 4.7%

As at Apr 2001

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Deposits13%

Corporates24%

Financial Institutions

11%

Supranationals29%

Sovereign Agencies4%

Sovereigns19%

Bond Structure - HKD Bond Fund

Duration 2.7 years

Yield to Maturity 5.3%

As at Apr 2001

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Capital Preservation Fund

Average Maturity 85 days

Yield to Maturity 4.8%

Deposit36%

Commercial Paper22%

Short-Dated Bond42%

As at Apr 2001