1. 5 September 2003 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 7.7993 HKD/USD as of 31 July 2003. + The exchange rate is based on the spot rate from Bloomberg, which is 7.7996 HKD/USD as of 31 July 2003.

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 July 2003

7. Hong Kong Baptist University 7 MLIIF US Dollar Global Bond, as at 29 July 2003 Alloted Shares Unit Price Cumulative Alloted Shares No. of Shares Cumulative Real Return* Unit Price Cumulative Invested Assets Cumulative Capital Employed Source: Internal * Excess returns are calculated net of management fee and before rebate.  Assume USD1,000 contribution on every 29th of the month

8. Hong Kong Baptist University 8  Assume USD1,000 contribution on every 29th of the month Stable Fund, as at 29 July 2003 Cumulative Real Return* No. of Shares Alloted Shares Unit Price Cumulative Alloted Shares Unit Price Cumulative Invested Assets Cumulative Capital Employed Source: Internal * Excess returns are calculated net of management fee and before rebate.

9. Hong Kong Baptist University 9 MLIIF US Dollar Global Bond Stable Fund Source: Internal * Excess returns are calculated net of management fee and before rebate. As at 29 July 2003  Assume USD1,000 contribution on every 29th of the month Cumulative Real Return*

10. Asset Allocation

11. Hong Kong Baptist University 11 By Region, as at 31 July 2003 MLIIF US Dollar Global Bond Fund * Citigroup WGBI - 18 US $ Hdgd Source: Internal; Datastream

12. Hong Kong Baptist University 12 By Asset Class, as at 31 July 2003 Stable Fund * 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net) Source: Internal; Datastream

13. Hong Kong Baptist University 13 By Region, as at 31 July 2003 Stable Fund * 70% Citigroup WGBI - 18 US $ Hdgd and 30% MSCI World (net) Source: Internal; Datastream

14. Hong Kong Baptist University 14 By Sector, as at 31 July 2003 Stable Fund * Allocation only includes the equity portion of Stable Fund. + MSCI World (net) Source: Internal; Datastream

15. Performance Review MLIIF US Dollar Global Bond Fund

16. Hong Kong Baptist University 16 MLIIF US Dollar Global Bond Fund  Our overweight duration position in euro-zone bonds benefited from an extended rally, although this was partially offset by market sell-offs in March and June.  We remained underweight duration in US dollar bloc bonds, which detracted as US bond yields declined beyond expectations.  Being overweight duration in corporate bonds also benefited, these were attractive given positive issuance and low government bond yields.

17. Performance Review Stable Fund

18. Hong Kong Baptist University 18 Stable Fund  The fund slightly underperformed the benchmark for the quarter. The performance suffered due to the defensive stance taken. Over the quarter, we significantly underweighed bonds as we believed the bond valuation is very expensive.  The overall bond investment performance is the same as benchmark.  On equity side, our underweight in information technology detracted, as many of these shares rallied strongly in the second quarter, as investors sought high earnings leverage into the anticipated economic recovery.  In consumer discretionary, the media segment was impacted by similar trends. Our holdings in high quality publishing companies like Reed Elsevier lagged.  Positive contribution came from financials, our holdings in Banca Intessa, BNP Paribas and US corporate and municipal bond insurer, AMBAC Financial outperformed towards end June.

19. Performance Review Major Markets Summary

20. Hong Kong Baptist University 20 Major Markets Summary

21. Investment Outlook

22. Hong Kong Baptist University 22 What We Said And What Happened Source: MLIM

23. Hong Kong Baptist University 23 Markets Have Come A Long Way Source: Bloomberg

24. Hong Kong Baptist University 24 Global recovery to consolidate % ActualForecast 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 20002001200220032004 Source: OEF / MLIM World GDP Growth

25. Hong Kong Baptist University 25 Deflation risk is low, particularly in the US & UK Source: Datastream; MLIM 0 10 20 30 40 50 60 70 80 90 G7 UK US Eurozone Germany Japan % Probability of deflation in 2004

26. Hong Kong Baptist University 26 High operational leverage is boosting earnings 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 80 82848688 90 929496980002 Trend Earnings Actual Earnings Source: Datastream; MLIM Real earnings per share, MSCI world

27. Hong Kong Baptist University 27 Global equities close to fair value in aggregate Source: MLIM; MSCI MSCI world, price to normalised earnings 5 10 15 20 25 30 35 40 7072747678808284868890929496980002 Average

28. Hong Kong Baptist University 28 For the rest of the year... Source: MLIM

29. Hong Kong Baptist University 29 Conclusions Extreme risk aversion has subsided Short term market direction now dependent on economic follow through Global equity valuations no longer cheap but opportunities exist in UK Bonds are still expensive, particularly investment grade

30. The following notes should be read in conjunction with the attached document: 1.Issued by Merrill Lynch Investment Managers Limited, regulated by The FSA and a subsidiary of Merrill Lynch & Co., Inc. Merrill Lynch Investment Managers is a trading name of Merrill Lynch Investment Managers Limited. Merrill Lynch & Co., Inc. and its subsidiaries are known as the Merrill Lynch Group. 2.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. Levels and basis of taxation may change from time to time. 3.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 of such research 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. 4.This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any Merrill Lynch Group funds and has not been prepared in connection with any such offer. 5.This material is for distribution to Intermediate Customers (as defined by The FSA Rules). Unless otherwise specified, all information contained in this document is current as at February 2003.