Download ppt - 3 March 2004 Hong Kong Baptist University 1998 Superannuation Fund

3 March 2004

Hong Kong Baptist University1998 Superannuation Fund

Hong Kong Baptist University 2

Contents

• Portfolio Size Summary

• Performance Summary

• Asset Allocation

• Performance Review

• Current Investment Strategy and Market Outlook

Portfolio Size Summary


Portfolio Size Summary

MLIIF US Dollar Global Bond Stable Fund

US$ HK$ US$ HK$

31 January 2004 1,207,577.65 9,390,123.81* 1,083,427.75

8,422,892.33+

* 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.

Performance Summary


Performance Summary

MLIIF US Dollar Global Bond Stable Fund

Actual %1 Benchmark %2 Actual %3 Benchmark %4

January 2004 0.23 0.54 0.44 0.86

December 2003 1.03 0.86 2.73 2.48

November 2003 0.35 0.12 0.92 0.54

4Q 2003 0.30 -0.08 4.38 4.06

YTD (1 January 04 – 31 January 04) 0.23 0.54 0.44 0.86

Inception-to-date (26 April 02 – 31 January 04) 8.26 9.93 8.99 11.25

Remarks: 1. Performance figures are net of 1.15% management fee and after 0.75% rebate.2. Citigroup WGBI - 18 US $ Hdgd3. 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)

As at 31 January 2004

Asset Allocation


MLIIF US Dollar Global Bond Fund (%)

3.3

74.2

22.5

By Region, as at 31 January 2004

MLIIF US Dollar Global Bond Fund

* Citigroup WGBI - 18 US $ Hdgd Source: Internal; Datastream

The Fund Benchmark*(%) (%)

North America 3.3 22.0

Europe 74.2 47.3

Japan 22.5 29.8

Other 0.0 0.9

Cash 0.0 0.0

Total 100 100

Benchmark* (%)

22.0

47.3

29.8

0.9


Benchmark* (%)

30

70

Stable Fund (%)

39.1

40.1

14.8

By Asset Class, as at 31 January 2004

Stable Fund

The Fund Benchmark* (%) (%)

Equities 39.1 30.0

Bonds 46.1 70.0

Cash 14.8 0.0

Total 100 100

* 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net)Source: Internal; Datastream


By Region, as at 31 January 2004

Stable Fund

* 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net)Source: Internal; Datastream

Stable Fund (%)

21.7

13.7

3.2

0.4

1.5

34.2

10.4

14.8

The Fund Benchmark*

(%) (%)

Equities


Europe 13.7 9.0

Japan 3.2 2.7

Pacific Basin 0.4 1.0

Total Equities 39.1 30.0

Bonds


Europe 34.2 33.1

Japan 10.4 20.9

Other 0.0 0.6

Total Bonds 46.1 70.0

Cash 14.8 0.0

Total Fund 100 100

Benchmark* (%)

17.3

2.7

1.0

15.433.1

20.9

0.6

9.0


Stable Fund* (%)

27.4

14

9.59.8

11.3

10.4

6.9

4.74.5

1.4 0.1

By Sector, as at 31 January 2004

Stable Fund

Benchmark+ (%)

23.7

12.6

11.58.1

12.8

11

6.9

4.65.2 3.6

* Allocation only includes the equity portion of Stable Fund.+ MSCI World (net)Source: Internal; Datastream

The Fund* Benchmark+

(%) (%)

Financials 27.4 23.7

Consumer Dis. 14.0 12.6

Healthcare 9.5 11.5

Consumer Staples 9.8 8.1

Information Tech. 11.3 12.8

Industrials 10.4 11.0

Energy 6.9 6.9

Materials 4.7 4.6

Telecoms Services 4.5 5.2

Utilities 1.4 3.6

Cash 0.1 0.0

Total 100 100

Performance Review




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.

Performance Review

Stable Fund


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.

Performance Review

Major Markets Summary


Major Markets Summary

All indices in HK dollar terms except where indicated

2003

%

December 2003

%

MSCI Hong Kong 37.5 2.0 HSBC (Reg) 43.7 2.9 MSCI North America 29.5 5.2 MSCI Europe 37.9 8.2 MSCI Japan 35.5 6.9 MSCI Pacific free ex Japan & Hong Kong 48.3 7.1 MSCI Emerging Markets Free 55.6 7.2 Citigroup WGBI Hedged 2.0 0.9 Selected “small” markets in local currency terms

Thailand (SET) 116.6 19.5 Indonesia (JCI) 62.8 12.1 Philippines (PHISX) 41.6 9.8 Korea (KOSPI) 29.2 1.8 Taiwan (weighted) 32.3 2.1 Mexico (IPC) 43.6 2.8 Brazil (BOVESPA)

97.3 10.2

MSCI World 32.5 6.2 Hang Seng 34.9 2.1 S&P 500 28.1 5.2 MSCI Europe ex UK 42.0 8.6 FT All Share (UK) 33.8 7.1 TOPIX

38.0 6.7

HK Dollar to Japanese Yen - -9.3 -2.1 HK Dollar to Sterling 9.7 -3.9 HK Dollar to Euro -16.4 -4.9 HK Dollar to Aus Dollar -24.9 -3.9

Current Investment Strategy and Market Outlook


The story of 2003

• Q1 03 - Fear / depression

• Q2 03 - Relief rally

• Q3 03 - Cyclical recovery

• Q4 03 - Liquidity returns


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.


US consumer confidence surges after unemployment peaks

Source: Datastream

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 023

4

5

6

7

8

9

10

11

40

60

80

100

120

140

160

US Unemployment RateUS Consumer Confidence Index (R.H.Scale)

% Index


Europe following in wake of global recovery

Source: Datastream

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003-3

-2

-1

0

1

2

3

4

5

80

85

90

95

100

105

110

115

IFO Business Expectations (R. H. Scale)German GDP Growth, %

% Index


Chinese growth set to slow

Source: PBOC

Reserve Deposits Of The Banking System (R. H. Scale)

Loan Growth, 12 Months Forward (L. H. Scale)

Growth rate, % y/y Growth rate, % y/y

-20

0

20

40

60

80

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

5

10

15

20

25

30

35


G3 Interest rates remain on hold into H2 2004

Source: Datastream

G3 capacity utilisation

Capacity Utilisation

%

70

75

80

85

90

79 81 83 85 87 89 91 93 95 97 99 01


Global real short rates to remain close to zero

Source: Datastream

1999 2000 2001 2002 2003-2

-1

0

1

2

3

4

Japanese Real Call Rates Eurozone Real Repo RatesUS Real Fed Funds

%

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).