THE release of detailed figures on the territory's exchange fund was greeted with some interest as the $287.5 billion of reserves places Hongkong among the top 10 economies in the world in terms of accumulated reserves. A superficial view of the figures, however, can be very misleading. Last year when the Government revealed details of the Exchange Fund, the focus of curiosity was the size of the reserve. Now it is how well the fund has performed. While the Government in the Legislative Council on Wednesday said the result was very satisfactory, critics point out that the accumulated earnings growth of eight per cent was the lowest since 1987 and behind inflation of about 9.5 per cent. The figures released by the Monetary Authority, led by chief executive Joseph Yam, showed total assets grew by 22 per cent but liabilities were up strongly, at 31.5 per cent, accounting for real earnings growth, or return on assets, being the lowest in five years. A Government spokesman was quick to say it was unfair to use inflation or comparisons with other investment funds because the Exchange Fund's primary purpose was to stabilise Hongkong's exchange rate whereas an investment fund sought high returns. That being the case, can the public assess the fund's performance in a fair way? The response of analysts is yes, but not on a year-on-year basis nor in comparison with other profit-driven investment funds. Analysts find that the accumulated earnings figures do not give an accurate picture of the fund's actual earnings. Wardley Investment Services associate director Alfred Y.T. Wong says: ''The fund needs to pay interest to some of its liabilities, like the Exchange Fund bills and the fiscal reserves.'' The accumulated earnings exclude the amount paid out as interest on these liabilities, he says. ''Using that figure would probably underestimate the fund's rate of return.'' It can also be misleading to compare the earnings growth on a year-on-year basis because the investment environments are completely different. Bank of America regional treasurer Anthony Yuen Kwan-tao says: ''In 1992, the US dollar was appreciating whereas in 1990 and 1991, the two years when the earnings were high, the dollar was weakening.'' The Exchange Fund's portfolio is 95 per cent in foreign currency, mainly US dollars. The fund is reported in Hongkong dollars which is pegged to the US dollar. ''Since our reporting currency was strong last year, the fund would find it difficult to manage the non-US foreign currencies,'' he says. It means that the fund would suffer conversion loss on its non-US foreign currencies. The world economy in 1990 and 1991 was mired in recession. Without inflation pressure, bonds and commercial paper showed high yields, Mr Wong says. ''In 1992, the various economies displayed signs of gradual recovery, therefore the performance of bonds and papers was not as good as before,'' he says. In addition, the European currency upheavals in September last year further aggravated the difficulties in managing non-US foreign currencies. ''Unless the fund had 100 per cent hedged its European currency exposure at that time, which is highly unlikely, it was bound to incur some losses. A fund as big as the Exchange Fund must have some European currencies,'' Mr Yuen says. Another major investment headache for the fund in 1992, as pointed out by Mr Yuen, was the level of US interest rates. ''US interest rates in 1992 compared to 1990 and 1991 were substantially lower, and we are talking about at least two to three per cent here,'' Mr Yuen says. He said US interest rates in 1992 were the lowest in the past five years. With a portfolio invested mainly in US dollars - such as the Exchange Fund - the rate of return would be affected accordingly. If one compares the fund's performance with other investment funds going for higher yield, one misses the whole point of having the fund. ''Given that the primary objective of the fund is to maintain exchange rate stability, it has to invest in liquid assets and safe securities, like short-term commercial papers and high quality bonds,'' Mr Wong says. The government spokesman says about one-third of its assets were transferred from fiscal reserves which can be drawn upon at short notice to meet public expenditures. That was maintained by a matching and highly liquid portfolio. The remaining portion of the fund can be broken up into three slices: one for investment by in-house fund managers, one for external managers and another kept in very liquid form for the purpose of intervention in the market to defend the exchange rate. It is repeatedly stressed that not the whole pie of HK$287 billion can be used for long-term investment purposes. ''Since the portfolio has no equity component, it is unfair to expect a yield which can match those equity funds,'' Mr Yuen says. The Government used the Salomon Brothers US bond index, which stood at 5.5 per cent last year, as the benchmark for its performance. Given all the considerations, many analysts find the eight per cent earnings growth satisfactory and acceptable. The Monetary Authority is keen to further improve management of the fund. It recruited an investment adviser from the Bank of England last year to head its investment teams, both the internal and external ones. To facilitate assessment of the performance of the fund managers, benchmarks are being devised for different investment instruments. Comparison between these two types of fund managers will be made and the authority expects the outside professional one to perform better than the internal ones. The fund has also decided to take a less passive investment strategy. One manifestation is that it is trying the US equity market in search of higher returns. The US equity market is considered the safest because there will be no currency risk and the market is well-regulated, the government spokesman says. Next year's focus probably will be on how the fund has improved with these new measures and strategies.