Hong Kong Baptist University 1998 Superannuation Fund

1. Hong Kong Baptist University1998 Superannuation Fund 3 March 2004

2. Contents • Portfolio Size Summary • Performance Summary • Asset Allocation • Performance Review • Current Investment Strategy and Market Outlook Hong Kong Baptist University

3. Portfolio Size Summary

4. Portfolio Size Summary * The exchange rate is the deal FX rate, which is 7.776 HKD/USD as of 31 January 2004. + The exchange rate is based on the spot rate from Bloomberg, which is 7.7743 HKD/USD as of 31 January 2004. Hong Kong Baptist University

5. Performance Summary

6. Performance Summary As at 31 January 2004 Remarks: 1. Performance figures are net of 1.15% management fee and after 0.75% rebate. 2. Citigroup WGBI - 18 US $ Hdgd 3. Performance figures are net of 1.15% management fee and after 0.70% rebate. 4. 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net) Hong Kong Baptist University

7. Asset Allocation

8. MLIIF US Dollar Global Bond Fund By Region, as at 31 January 2004 * Citigroup WGBI - 18 US $ Hdgd Source: Internal; Datastream Hong Kong Baptist University

9. Stable Fund By Asset Class, as at 31 January 2004 * 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net) Source: Internal; Datastream Hong Kong Baptist University

10. Stable Fund By Region, as at 31 January 2004 * 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net) Source: Internal; Datastream Hong Kong Baptist University

11. Stable Fund By Sector, as at 31 January 2004 * Allocation only includes the equity portion of Stable Fund. + MSCI World (net) Source: Internal; Datastream Hong Kong Baptist University

12. Performance Review MLIIF US Dollar Global Bond Fund

13. MLIIF US Dollar Global Bond Fund • The Fund outperformed the benchmark during the fourth quarter. Positive impact came from our underweight duration position in US dollar bloc bonds. • Our overweight in A and BBB rated corporate bonds, also had a positive effect. • The Fund’s underweight US dollar position benefited as the dollar continued to decline against most major currencies. • Being overweight duration in euro-zone bonds throughout October and much of November detracted, as macroeconomic data appeared to improve and bond yields rose. Hong Kong Baptist University

14. Performance Review Stable Fund

15. Stable Fund • Asset allocation added value over the period as equities performed strongly and fixed income markets underperformed cash. Strong economic growth in the US combined with strong global corporate earnings and high liquidity contributed to the strong performance seen from world equity markets over the quarter. • For the equity portion, positive contribution came from our holdings in Tyco, Assa Abloy, International Game Technologies and US homebuilders such as D R Horton. • Being underweight semiconductor companies Intel and Texas Instruments impacted negatively in October as they rose strongly. We continue to believe both stocks are overvalued. • Our Japanese listed IT holdings such as Rohm and Canon underperformed due to concern over potential yen strength against the US dollar. We believe these stocks are oversold and we retain our positions. Hong Kong Baptist University

16. Performance Review Major Markets Summary

17. Major Markets Summary All indices in HK dollar terms except where indicated Hong Kong Baptist University

18. Current Investment Strategy and Market Outlook

19. The story of 2003 • Q1 03 - Fear / depression • Q2 03 - Relief rally • Q3 03 - Cyclical recovery • Q4 03 - Liquidity returns Hong Kong Baptist University

20. Five surprises for 2004 • Global growth exceeds market expectations. • China slowdown. • Earnings improve but momentum deteriorates. • G3 Interest rates remain on hold into H2 2004. • President Bush struggles in polls ahead of US election. Hong Kong Baptist University

21. Index % 11 160 10 140 9 120 8 100 7 6 80 5 60 4 3 40 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 US Unemployment Rate US Consumer Confidence Index (R.H.Scale) Source: Datastream US consumer confidence surges after unemployment peaks Hong Kong Baptist University

22. Europe following in wake of global recovery % Index 5 115 4 110 3 105 2 100 1 95 0 90 -1 85 -2 -3 80 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 German GDP Growth, % IFO Business Expectations (R. H. Scale) Source: Datastream Hong Kong Baptist University

23. Growth rate, % y/y Growth rate, % y/y 35 80 30 60 25 40 20 20 15 0 10 5 -20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Reserve Deposits Of The Banking System (R. H. Scale) Loan Growth, 12 Months Forward (L. H. Scale) Source: PBOC Chinese growth set to slow Hong Kong Baptist University

24. % 90 85 80 75 70 79 81 83 85 87 89 91 93 95 97 99 01 Capacity Utilisation G3 Interest rates remain on hold into H2 2004 G3 capacity utilisation Source: Datastream Hong Kong Baptist University

25. 4 3 2 1 0 -1 -2 1999 2000 2001 2002 2003 Global real short rates to remain close to zero % Japanese Real Call Rates Eurozone Real Repo Rates US Real Fed Funds Source: Datastream Hong Kong Baptist University

26. Issued by Merrill Lynch Investment Managers, regulated by The FSA and a subsidiary of Merrill Lynch & Co., Inc. Past performance is not necessarily a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Any research in this document has been procured and may have been acted on by Merrill Lynch Investment Managers for its own purpose. The results are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the Merrill Lynch Group or any part thereof and no assurances are made as to their accuracy. Unless otherwise specified, all information contained in this document is current as at 15th October 2003. This material is for distribution to Intermediate Customers (as defined by the FSA Rules).