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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

26 September 2002

MPF Performance Review

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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

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Portfolio Review

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Fund Choices

INVESCO Strategic MPF Scheme(Class A)

High Risk / High ReturnLow Risk / Low Return

* 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of capital and at least 4.5% p.a. interest over the investment period into the Guaranteed Fund if accrued benefits are withdrawn upon qualifying events.

Growth Fund

100% Equities

Balanced Fund

70% Equities30% Bonds

Capital StableFund

30% Equities70% Bonds

GuaranteedFund*

20%-80% Equities15%-75% Bonds

3%-20% Money Market Instruments

CapitalPreservation

Fund

100%Money Market Instruments

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Performance Review

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-21.1

-19.5

-19.9

-29.3

6.6

-1.0

-32.6

-12.7

-14.1

-0.1

-19.3

2.6

12.9

-13.1

-40 -30 -20 -10 0 10 20

NASDAQ

Hong Kong (90% FT HK + 10%HSBC)

Europe (FT)

Japan (FT)

N America (FT)

Other Asia (MSCI)

Bonds (SSB)

HKD (%)

YTD Aug 2002

Calendar Year 2001

Market Performance Review

Source: Standard & Poor’s Micropal, Datastream

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Inception Date: 26 February 2001Source: INVESCO Strategic MPF Scheme (Class A & G)Data as of 31 August 2002 (% in HKD)

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.

* 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.

YTD to31 Aug 02

Since inception to 31 Aug 02

Dollar Cost Average*

Growth Fund -12.1% -28.6% -13.5%

Balanced Fund -6.7% -19.5% -8.1%

Capital Stable Fund 2.5% -3.4% 1.3%

Guaranteed Fund -8.2% -11.9% -6.7%

Capital Preservation Fund 0.5% 2.5% 0.8%

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MPF 1-Year Performance to 31 August 2002MPF 1-Year Performance to 31 August 2002

Source: INVESCO Strategic MPF Scheme (Class A & G), HKIFA

MPF Performance Review – 1 Year to 31 August 2002

-7.2%

0.9% 0.9%

-6.6%

-11.8%

-0.6%-0.7%-0.2%

-7.3%

-10.9%

-16%

-12%

-8%

-4%

0%

4%

Growth Fund Balanced Fund Capital StableFund

GuaranteedFund

CapitalPreservation

Fund

Cum

ulat

ive

Ret

urn

(HKD

)

INVESCO

Industry Median

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Source: INVESCO Strategic MPF Scheme (Class A & G), HKIFA

MPF Performance Review – Q2 2002

MPF Q2 Performance up to 30 June 2002MPF Q2 Performance up to 30 June 2002

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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 2002MPF 6-month Performance up to 31 August 2002

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Investment Outlook & Strategy

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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.

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Global Equity Strategy

Asia Pacific ex Japan : Overweight

Japan : Underweight

Weightings Relative to Benchmark

Europe : Neutral

US : Mildly Underweight

Factors such as corporate malfeasances, weak US economic growth and corporate earnings growth will limit upside for global equities in the near term.

Hong Kong : Neutral

Data as of 31 August 2002Data as of 31 August 2002

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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.

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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.

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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.

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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.

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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.

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Global Bonds Strategy

Europe (ex-UK) : Overweight

Duration-adjusted Weightings Relative to Benchmark

Hong Kong : Neutral

Data as of 31 August 2002Data as of 31 August 2002

UK : Neutral

Japan : Neutral

US Dollar : Overweight

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* Benchmark asset allocation used for INVESCO internally only.Data as of 31 December 2001 & 31 August 2002

Aug 02 Dec 01 Bmk* Aug 02 Dec 01 Bmk* Aug 02 Dec 01 Bmk*(%) (%) (%) (%) (%) (%) (%) (%) (%)

Equities

HK 31.8 32.8 35 22.3 24.4 24.5 9.6 10.3 10.5

N. America 19.2 22.1 20 13.5 16.5 14 5.8 7.0 6

Europe 17.5 18.2 20 12.3 13.6 14 5.3 5.7 6

Japan 11.1 10.0 12 7.7 7.4 8.4 3.3 3.2 3.6

Asia Pacific 15.4 12.8 13 10.8 9.5 9.1 4.6 4.0 3.9

Total Equities 95.0 95.9 100 66.6 71.4 70 28.6 30.2 30

Bonds 0 0 0 27.6 22.7 30 64.5 60.6 70

Cash 5.0 4.1 0 5.8 5.9 0 6.9 9.2 0

Total 100 100 100 100 100 100 100 100 100

Growth Fund Balanced Fund Capital Stable Fund

Asset Allocation

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Global Equity – Sector Breakdown

0

5

10

15

20

25

30

35

Perc

ent

Portfolio

Benchmark

31 Dec 2001 31 Aug 2002

0

5

10

15

20

25

30

35

Basic

Ind

ustrie

s

Cyclical

Con

sum

er G

oods

Cyclical

Ser

vice

sFi

nanc

ials

Gen

eral

Ind

ustrials

Info

rmat

ion

Tech

nolo

gy

Non

Cyc

lical

Con

sum

er G

oods

Non

Cyc

lical

Ser

vice

sRe

sour

ces

Util

ities

Cash

Perc

ent

Portfolio

Benchmark

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Guaranteed Fund

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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

Global EquitiesGlobal Bonds & Cash

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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.

Guaranteed

Return

Features of Guaranteed Fund

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Assumption:

1. Qualifying condition based on termination of employment only.

2. Initial contribution = $1,000. Net return = 7.5%, 1%, 3% & 8% in respective years

3. Guaranteed rate = 4.5% p.a.

Year Market Value Guaranteed

Balance

1 1,075 1,045

2 1,086 1,092

3 1,118 1,141

4 1,208 1,193

Each member has 2 accounts:

- Normal balance (market value) & qualifying balance (guaranteed value)

Each member has 2 accounts:

- Normal balance (market value) & qualifying balance (guaranteed value)

Features of Guaranteed Fund

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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 withdrawals is allowed

Features of Guaranteed Fund

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Investment Tips

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Dollar-Cost Averaging – How Does It Work?

020406080

100120140

1 2 3 4 5 6 7 8 9 10

Month

Uni

ts P

urch

ased

$0

$5

$10

$15

$20

$25

Uni

t P

rice

No. of Units Purchased Unit Price

020406080

100120140

1 2 3 4 5 6 7 8 9 10

Month

Uni

ts P

urch

ased

$0

$5

$10

$15

$20

$25

Uni

t P

rice

No. of Units Purchased Unit Price

0204060

80100120140

1 2 3 4 5 6 7 8 9 10

Month

Uni

ts P

urch

ased

$0

$5

$10

$15

$20

$25

Uni

t P

rice

No. of Units Purchased Unit Price

Fund A Fund B Fund C

Dollar-cost averaging is a systematic approach to long-term investment.

When markets go down, your monthly contribution can buy you more units.

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Cut loss.

Sell and buy back at lower prices.

Increase your holdings as the market is on sale.

Very difficult to catch bottom prices.

SellSell

“Should I Sell On Falling Prices?”

HoldHold

Short-term trading is profitable.

Long-term investment help you meet your goals.

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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?

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Managing Your MPF Accounts

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Operating Cycle Operating Cycle

New contract New MPF accountNew 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

Accrued benefits will be transferred to preserved account upon receipt of your instruction* or 3 months after the termination of contract automatically

Make contributions until the termination of contract

Make contributions until the termination of contract

* You can also transfer the accrued benefits to other registered master trust scheme.

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You may have more than one MPF 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

Advices for Handling your MPF accounts

Each member should only have

ONE Preserved Account with INVESCO.

Each member should only have

ONE Preserved Account with INVESCO.

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Member Services

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How Are You Using Our Service?

By Service ChannelsBy Service Channels

Cumulative Data from Scheme inception to 31 August 2002Total Number of Hits: 3,041 Cumulative Data from Scheme inception to 31 August 2002Total Number of Hits: 3,041

Web83%

Call Center10%

IVRS7%

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How Are You Using Our Service?

By FunctionsBy Functions

Balance / Transaction

Enquiry71.8%

Others1.8%

PIN Change5.1%Personal Details

Change / Enquiry8.0%

Transactions0.9%

Scheme Enquiry2.4%

Fund Price Enquiry 10.1%

Cumulative Data from Scheme inception to 31 August 2002Total Number of Hits: 3,041 Cumulative Data from Scheme inception to 31 August 2002Total Number of Hits: 3,041

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IVRS

INVESCall Hotline

Member Services

Factsheet, Newsletter& Member Statement

INVESCO Strategic MPF

Scheme

1st Quarter Report

2001

Informative, Convenient, Multi-Media

INVESNet

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Contact Us

INVESCall

2842 7878

INVESNet

http://www.mpf.invesco.com.hk

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HOTLINES:

Investment & Options INVESCall 2842-7878

Enquiries (Finance Office) Ms Cecilia So 3411-7804