Briefing to the Legislative Council Panel on Financial Affairs

EXCHANGEFUNDINVESTMENTBENCHMARKBonds80%Equities20% (Hong Kong : 5%)Currencies80% US dollar bloc15% European bloc5% Yen20The investment benchmark, which directs <strong>the</strong> long-term strategicinvestment of <strong>the</strong> Exchange Fund, is derived from <strong>the</strong> investmen<strong>to</strong>bjectives of <strong>the</strong> Exchange Fund.The investment benchmark of <strong>the</strong> Exchange Fund adopted by <strong>the</strong>Exchange Fund Advisory Committee is an optimal mix of assetsdesigned <strong>to</strong> meet <strong>the</strong> following investment objectives :- <strong>to</strong> preserve capital- <strong>to</strong> ensure that <strong>the</strong> entire monetary base will be at all times fullybacked by highly liquid short-term US dollar denominatedsecurities- <strong>to</strong> ensure sufficient liquidity for <strong>the</strong> purpose of maintainingmonetary and financial stability- subject <strong>to</strong> above, <strong>to</strong> achieve an investment return that willp reserV e <strong>the</strong> long-term purchasing power of <strong>the</strong> assets-20-