1. 3 March 2004 Hong Kong Baptist University 1998 Superannuation Fund

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

3. Portfolio Size Summary

4. Hong Kong Baptist University 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.

5. Performance Summary

6. Hong Kong Baptist University 6 Performance Summary 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) As at 31 January 2004

7. Asset Allocation

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

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

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

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

12. Performance Review MLIIF US Dollar Global Bond Fund

13. Hong Kong Baptist University 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.

14. Performance Review Stable Fund

15. Hong Kong Baptist University 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.

16. Performance Review Major Markets Summary

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

18. Current Investment Strategy and Market Outlook

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

20. 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.

21. Hong Kong Baptist University 21 US consumer confidence surges after unemployment peaks Source: Datastream 7072747678808284868890929496980002 3 4 5 6 7 8 9 10 11 40 60 80 100 120 140 160 US Unemployment Rate US Consumer Confidence Index (R.H.Scale) % Index

22. Hong Kong Baptist University 22 Europe following in wake of global recovery Source: Datastream 199219931994199519961997199819992000200120022003 -3 -2 0 1 2 3 4 5 80 85 90 95 100 105 110 115 IFO Business Expectations (R. H. Scale) German GDP Growth, % % Index

23. Hong Kong Baptist University 23 Chinese growth set to slow

24. Hong Kong Baptist University 24 G3 Interest rates remain on hold into H2 2004 Source: Datastream G3 capacity utilisation

25. Hong Kong Baptist University 25 Global real short rates to remain close to zero Source: Datastream 19992000200120022003 -2 0 1 2 3 4 Japanese Real Call RatesEurozone Real Repo Rates US Real Fed Funds %

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).