March 3, 2004 Fidelity Retirement Services Investment Review.

March 3, 2004

Fidelity Retirement Services Investment Review

Hong Kong Baptist University 1998 Superannuation Fund

High Growth Profile1

Equities90%

Cash3%Bonds

7%

Growth Profile2

Bonds25%

Equities70%

Cash5%

Balanced Profile3

Cash5%

Bonds45%

Equities50%

1 High Growth Profile invests in Fidelity Advantage Portfolio Fund – Growth Fund Ordinary Class2 Growth Profile invests in Fidelity Advantage Portfolio Fund – Balanced Fund Ordinary Class

3 Balanced Profile invests in Fidelity Advantage Portfolio Fund – Stable Growth Fund Ordinary Class

Cumulative Performance

0%

3%

6%

9%

3-Month 9.7% 9.1%

Benchmark Fund

High Growth Profile

High Growth Profile Assets as at 31 Jan 2004 - HKD 13,896,251.81 High Growth Profile invests in Fidelity Advantage Portfolio Fund – Growth Fund Ordinary Class

Benchmark: A composite index consisting of 27% FTSE AW HK, 3% HSBC, 12% FTSE AW Japan, 12% FTSE AW Asia Pacific ex. Japan ex. HK, 18% FTSE AW North America, 18% FTSE AW Europe, 7% Salomon Smith Barney WGBI, and 3% 1-month HIBOR

Source: Fidelity Investments, Ordinary Class, NAV to NAV, and in USD, as of Jan 31, 2004.


0%

20%

40%

60%

80%

Since 1/1995 69.3% 72.1%

Benchmark Fund


0.0%

2.5%

5.0%

7.5%

10.0%

3-Month 8.7% 8.3%

Benchmark Fund

Growth Profile

Growth Profile Assets as at 31 Jan 2004 - HKD 7,062,741.78 Growth Profile invests in Fidelity Advantage Portfolio Fund – Balanced Fund Ordinary Class

Benchmark: A composite index consisting of 21.6% FTSE AW HK, 2.4% HSBC, 9% FTSE AW Japan, 9% FTSE AW Asia Pacific ex. Japan ex. HK, 14% FTSE AW North America, 14% FTSE AW Europe, 25% Salomon Smith Barney WGBI, and 5% 1-month HIBOR



0%

20%

40%

60%

80%

Since 1/1995 77.4% 76.0%

Benchmark Fund


0.0%

2.0%

4.0%

6.0%

8.0%

3-Month 7.9% 7.4%

Benchmark Fund

Balanced Profile

Balanced Profile Assets as at 31 Jan 2004 - HKD 6,403,544.91 Balanced Profile invests in Fidelity Advantage Portfolio Fund – Stable Growth Fund Ordinary Class

Benchmark: A composite index consisting of 15.3% FTSE AW HK, 1.7% HSBC, 6.5% FTSE AW Japan, 6.5% FTSE AW Asia Pacific ex. Japan ex. HK, 10% FTSE AW North America, 10% FTSE AW Europe, 45% Salomon Smith Barney WGBI, and 5% 1-month HIBOR



0%

10%

20%

30%

40%

Since 5/1997 31.9% 33.7%

Benchmark Fund

Balanced Profile

Source: Fidelity Investments, Ordinary Units, NAV to NAV, in USD, at as 31/01/2004Benchmark – Since 30/04/02

High Growth Profile invests in Fidelity Advantage Portfolio Fund – Growth Fund Ordinary ClassGrowth Profile invests in Fidelity Advantage Portfolio Fund – Balanced Fund Ordinary Class

Balanced Profile invests in Fidelity Advantage Portfolio Fund – Stable Growth Fund Ordinary Class


0%

5%

10%

15%

20%

25%

Since26/04/02

22.9% 18.1%

Benchmark Fund


0%

5%

10%

15%

20%

25%

Since26/04/02

24.3% 23.2%

Benchmark Fund

Growth ProfileHigh Growth ProfileCumulative Performance

0%

5%

10%

15%

20%

25%

Since26/04/02

21.0% 19.0%

Benchmark Fund

High Growth Profile


0%

10%

20%

30%

1-Year 34.4% 33.4%

Median Fund


0%

5%

10%

15%

3-Month 12.6% 12.2%

Median Fund

High Growth Profile invests in Fidelity Advantage Portfolio Fund – Growth Fund Ordinary ClassMedian: Survey median for the growth fund category is the median representative from the Mercer Hong Kong Investment Choice Universe

Source: Mercer Hong Kong Investment Choice Survey, Mercer Investment Consulting, NAV to NAV, and in HKD, as of Dec 31, 2003.

Growth Profile


0.0%

10.0%

20.0%

30.0%

1-Year 28.6% 28.6%

Median Fund


0.0%

4.0%

8.0%

12.0%

3-Month 10.6% 10.4%

Median Fund

Growth Profile invests in Fidelity Advantage Portfolio Fund – Balanced Fund Ordinary ClassMedian: Survey median for the balanced fund category is the median representative from the Mercer Hong Kong Investment Choice Universe


Balanced Profile


0.0%

10.0%

20.0%

1-Year 22.8% 24.0%

Median Fund


0.0%

3.0%

6.0%

9.0%

3-Month 8.4% 8.8%

Median Fund

Balanced Profile invests in Fidelity Advantage Portfolio Fund – Stable Growth Fund Ordinary ClassMedian: Survey median for the stable growth fund category is the median representative from the Mercer Hong Kong Investment Choice Universe


Source: Fidelity Investments, Jan 2004

Investment Strategy Summary

Asset Class Investment View Main Reasons

Hong Kong Equity Positive

Corporate earnings forecasts have been revised upwards. The low/declining rate environment is positive. Investor sentiment has been helped by liberalization of mainland tourists coming to Hong Kong and signing of CEPA with China.

U.S. Equity Neutral

Valuations appear expensive when compared to historical averages. Markets could be vulnerable to economic disappointment, currency volatility and geopolitical uncertainties. Earnings growth has been driven by cost cutting and balance sheet improvement.

Japanese Equity Slightly PositiveJapanese economy continues to show signs of recovery. Valuations, profit growth momentum, as well as equity demand and supply remain supportive.

European Equity NeutralContinental Europe follows the global cycle with a lag. It could deliver more potential of upside surprises than other region. Improvement in both confidence and valuations should benefit the demand & supply situation.

Other Asian Equity Positive

Accelerating economic growth and receding deflationary pressure have been positive to regional markets. Company profit forecasts have also been upgraded. Valuations of Asian emerging markets remain attractive when compared to global peers.

Global Bonds Slightly Negative

The market is now discounting higher interest rates in 2004, especially in the US. The investment environment has been more favorable to equities than bonds. Within the bond universe, investors might find value in the lower-rated end of the investment-grade segment and in the high-yield segment of the corporate bond market.

Contact Fidelity Investments

2629-2666

www.fidelity.com.hk

Hotline

Website

Discount on sales charge for

personal investment savings outside

the Superannuation Fund

Including both lump sum and

monthly savings

Free rollover arrangement when

leaving the University

Keep investing in the same profile

under Saving Class

Ask for a “Fidelity Rollover Pack -

ORSO”

Call Fidelity at 2629-2666

Privileges for Hong Kong Baptist University Members

Investment involves risks. Past performance is no guarantee of future returns. Please refer to the Explanatory Memorandum of Fidelity Advantage Portfolio Fund for further details.

Investment in the Fidelity Advantage Portfolio Fund is not available to the general investing public. Investment in the Fidelity Advantage Portfolio Fund is available only to ORSO and MPF retirement benefit schemes, their related Approved Pool Investment Funds, institutions, high net worth individuals, or those individuals who have recently been or still are members of an ORSO or MPF retirement benefit scheme.

If you are an individual retail investor who is not a current member of an ORSO or MPF retirement benefit scheme but wish to invest your accrued benefits in Fidelity managed funds, please contact Fidelity for further details about our range of investment funds, which are available to the general public.

Fidelity Advantage Portfolio Fund (FAP) – Investment Objectives

Appendix

Growth Fund Mainly invested in equity funds

Geographical bias towards Hong Kong

To maximise long term returns

Balanced Fund

Normally maintain a balanced, global portfolio of bond funds and equity funds

To achieve a consistent overall return than Hong Kong inflation

With lower risk and volatility of returns in the short term

Stable Growth Fund

To invest in a global portfolio of bond funds, cash funds and equity funds

With a lower weighting in equities than the Balanced Fund

To achieve a consistent overall return higher than Hong Kong inflation

Geographic Allocation

Asset Class Target Current

Hong Kong Equities 30% 30.40%

Japan Equities 12% 13.14%

Other Asia Pacific Equities 12% 13.05%

US Equities 18% 18.20%

European Equities 18% 19.21%

Global Bonds 7% 6.00%

Cash & Others 3% 0.00%

High Growth Profile

High Growth Profile invests in Fidelity Advantage Portfolio Fund – Growth Fund Ordinary ClassSource: Fidelity Investments as of Dec 31, 2003.










Growth Profile

Growth Profile invests in Fidelity Advantage Portfolio Fund – Balanced Fund Ordinary ClassSource: Fidelity Investments as of Dec 31, 2003.










Balanced Profile

Balanced Profile invests in Fidelity Advantage Portfolio Fund – Stable Growth Fund Ordinary ClassSource: Fidelity Investments as of Dec 31, 2003.

March 3, 2004 Fidelity Retirement Services Investment Review.

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