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Hong Kong Baptist University Seminar on INVESCO “Strategic MPF Scheme” (Cantonese ) Date : 26 September 2002 (Thursday) Time : 1:00pm - 2:00pm Venue : RRS905, SIR RUN RUN SHAW BLDG., HSH Campus. MPF Performance Review. 26 September 2002. Table of Contents. Page Portfolio Review 3
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Hong Kong Baptist University • Seminar on INVESCO “Strategic MPF Scheme” (Cantonese) • Date : 26 September 2002 (Thursday) • Time : 1:00pm - 2:00pm • Venue : RRS905, SIR RUN RUN SHAW BLDG., HSH Campus
MPF Performance Review 26 September 2002
Table of Contents Page Portfolio Review 3 Performance Review 5 Investment Outlook & Strategy 11 Guaranteed Fund 22 Investment Tips 27 Managing Your MPF Accounts 31 Member Services 34
Capital Preservation Fund Guaranteed Fund* Capital Stable Fund Balanced Fund Growth Fund 30% Equities 70% Bonds 100% Equities 70% Equities 30% Bonds 100% Money Market Instruments 20%-80% Equities 15%-75% Bonds 3%-20% Money Market Instruments Low Risk / Low Return High Risk / High Return Fund Choices INVESCO Strategic MPF Scheme (Class A) * Net contributions will receive a guarantee of capital and at least 4.5% p.a. interest over the investment period into the Guaranteed Fund if accrued benefits are withdrawn upon qualifying events.
Market Performance Review Source: Standard & Poor’s Micropal, Datastream
MPF Performance Review * Calculation is based on the assumption that a fixed amount is invested in the various constituent funds on the actual dealing dates of contributions made by Hong Kong Baptist University. Inception Date: 26 February 2001 Source: INVESCO Strategic MPF Scheme (Class A & G) Data as of 31 August 2002 (% in HKD)
MPF Performance Review – 1 Year to 31 August 2002 MPF 1-Year Performance to 31 August 2002 Source: INVESCO Strategic MPF Scheme (Class A & G), HKIFA
MPF Performance Review – Q2 2002 MPF Q2 Performance up to 30 June 2002 Source: INVESCO Strategic MPF Scheme (Class A & G), HKIFA
MPF Performance Review – 6-month to 31 August 2002 MPF 6-month Performance up to 31 August 2002 Source: INVESCO Strategic MPF Scheme (Class A & G), HKIFA
Global Economic Outlook • The global economic recovery will be moderate and non-inflationary in the foreseeable future. • The US economy and corporate earnings have bottomed but recent stock market weakness may affect the prevailing recovery. • Economic indictors in Europe continue to slow down. It is increasingly apparent that economic and corporate woes are the reasons behind the current market malaise. • In Hong Kong, deflation and rising unemployment rates are expected to dampen sentiment in the near term. • Pick-up in domestic consumption reduces Asia’s reliance on exports.
Global Equity Strategy Weightings Relative to Benchmark Hong Kong : Neutral US : Mildly Underweight Europe : Neutral Japan : Underweight Asia Pacific ex Japan : Overweight • Factors such as corporate malfeasances, weak US economic growth and corporate earnings growth will limit upside for global equities in the near term. Data as of 31 August 2002
Hong Kong • Rising unemployment rates. • Domestic consumption remains weak as consumer sentiment stays low. • Asset deflation limits increase in property prices. • Companies enjoy healthy cashflow after deleveraging and should be able to survive in the downturn. • Value begins to emerge but growth rate remains low.
US • Mixed signals on the economy. • Favorable • Auto sales were up again in July. • Refinancing continued to rise due to low short rates. • Core CPI deflator was up just 1.1% - no inflationary pressure. • Unfavorable • GDP growth rose 5.0% in Q1 and 1.1% in Q2. • The unemployment rate edged up to 5.9%. • Corporate capital expenditure isn’t recovering as companies resize themselves for profitability. • Stocks and the USD remained weak.
Europe • Monetary policies remain restrictive. • Recent strength of the Euro may slow down economic growth. • Strong Euro vs USD may erode export competitiveness but reduce inflationary pressure. • Capital expenditure rebound will be critical but high debt levels of European telcos may delay corporate capital expenditure. • We remain cautious in Technology & Telecoms and prefer Cyclicals.
Japan • Domestic consumption is likely to stay weak. • The strong Yen may erode export competitiveness. • Deflationary pressure remains. • Bankruptcies are still rising and will continue to hit consumer sentiment.
Other Asia • Asian markets are still attractively valued relative to developed markets. • Pre-emptive rate hikes in Korea & Australia are favorable to a more sustainable economic upturn. • Consumer balance sheet are healthy: • Nominal interest rates are at historically low levels. • Demographics are favorable. • Banking sector has undergone massive consolidation and clean up, especially in Korea and Malaysia. • Trimmed technology holdings and focus on domestic consumption related companies.
Global Bonds Strategy Duration-adjusted Weightings Relative to Benchmark US Dollar : Overweight Europe (ex-UK) : Overweight UK : Neutral Japan : Neutral Hong Kong : Neutral Data as of 31 August 2002
Asset Allocation * Benchmark asset allocation used for INVESCO internally only. Data as of 31 December 2001 & 31 August 2002
Global Equity – Sector Breakdown 31 Aug 2002 31 Dec 2001
Global Bonds & Cash Global Equities Guaranteed Fund • Investment Objective: Provides average guaranteed return of 4.5% per year over the career of employee while seeking long-term capital appreciation • Expected Risk/Return: Low • Invests in balanced portfolio of equities, bonds and cash
Guaranteed Return Features of Guaranteed Fund • You will be qualified for the guaranteed return if you claim your accrued benefit immediately when any one of the following reasons is met: • * Termination of employment AND invested for a continuous period of at least 36 months; • Early retirement; • Retirement; • Permanent departure from Hong Kong; • Total incapacity; • Death; • Small balance account. • *In this case, you are qualifying for the guaranteed return when you choose to transfer the accrued benefits to preserved account or other MPF account.
Features of Guaranteed Fund Each member has 2 accounts: - Normal balance (market value) &qualifying balance (guaranteed value) • Assumption: • Qualifying condition based on termination of employment only. • Initial contribution = $1,000. Net return = 7.5%, 1%, 3% & 8% in respective years • Guaranteed rate = 4.5% p.a.
Important Notice Features of Guaranteed Fund • Fund switching will be based on market value • 36 months of qualifying period will be recounted when there is fund switches • When the member changes his or her account from active to preserved account without meeting the qualifying events , the guaranteed interest will be reset. • No partial withdrawalsis allowed
Dollar-Cost Averaging – How Does It Work? • Dollar-cost averaging is a systematic approach to long-term investment. • When markets go down, your monthly contribution can buy you more units. Fund A Fund B Fund C
Sell “Should I Sell On Falling Prices?” Hold • Increase your holdings as the market is on sale. • Cut loss. • Very difficult to catch bottom prices. • Sell and buy back at lower prices. • Short-term trading is profitable. • Long-term investment help you meet your goals.
What Should I Consider Before Making Switches? • Consider the latest fund performance? • Market timing? • Wrong investment decisions in the past? • Change of investment horizon? • Increased/reduced financial burden?
Make contributions until the termination of contract New contract New MPF account Accrued benefits will be transferred to preserved account upon receipt of your instruction* or 3 months after the termination of contract automatically Operating Cycle * You can also transfer the accrued benefits to other registered master trust scheme.
Advices for Handling your MPF accounts • You may have more than oneMPF accounts with INVESCO at one time • Retain your Membership Certificates and PINs • Remember to submit “Fund Transfer Form” after the termination of contract • Synchronize PINs so that you can manage your MPF accounts easily Each member should only have ONE Preserved Account with INVESCO.
How Are You Using Our Service? By Service Channels Cumulative Data from Scheme inception to 31 August 2002 Total Number of Hits: 3,041
How Are You Using Our Service? By Functions Cumulative Data from Scheme inception to 31 August 2002 Total Number of Hits: 3,041
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