In 1998, as a result of the market intervention and the transfer of the assets of the Land Fund, the Exchange Fund acquired a substantial portfolio of Hong Kong equities. The investment allocation of the Exchange Fund allows it to retain a portfolio of Hong Kong equities equivalent to approximately 5 per cent of the total value of the Exchange Fund for long-term investment purposes. The Exchange Fund Investment Limited (EFIL) was charged with the task of managing the long-term investment portfolio through external fund managers and devising a programme for the disposal of the remainder of the Hong Kong equities.

    The EFIL's disposal programme began in 1999 with the launch of the Tracker Fund of Hong Kong (TraHK), a unit trust authorised by the SFC and listed on the SEHK. Between 1999 and the end of 2002, a total of HK$140.4 billion worth of the Exchange Fund's Hong Kong equities was disposed of through the initial public offer of TraHK and subsequent quarterly disposals to TraHK through a continuous offer mechanism known as the Tap Facility. The EFIL's disposal programme was completed on October 15 with minimal disruption to the market. On December 3, the HKMA announced that, following the completion of the disposal programme, the EFIL would be wound down by the end of January 2003. Responsibility for the management of the Exchange Fund's long-term Hong Kong equity investment portfolio will be transferred from the EFIL to the HKMA with effect from the end of January 2003.

Home Pages

Financial Services and the Treasury Bureau: http://www.gov.hk/fstb

Hong Kong Monetary Authority: http://www.gov.hk/hkma

Securities and Futures Commission: http://www.hksfc.org.hk

Mandatory Provident Fund Schemes Authority: http://www.mpfahk.org

Hong Kong Exchanges and Clearing Limited: http://www.hkex.com.hk