Hongde CSI 500 Index Enhanced Annual Report Analysis: Class C Shares Shrink by 86.65%, Net Profit of 16.01 million yuan for the Year Underperforms the Benchmark

Key Financial Indicators: Net Profit 16.01 Million RMB; Net Assets at Period End 622.2 Million RMB

The Hornd-Dee CSI 500 Index Enhanced Fund was established on April 17, 2025. In its first year of operation, it achieved a net profit of 16,018,642.65 RMB. Of this, Class A shares recorded profit for the period of 7,232,574.75 RMB, and Class C shares recorded 8,786,067.90 RMB. Total net assets of the fund at period end were 62,199,327.78 RMB, down by approximately 70.7% from 212,308,246.64 RMB at the time of its establishment.

• | | Weighted Average Net Value Profit Rate | 23.20% | 18.46% |
• |

Net Asset Value Performance: Both Share Classes Underperformed the Benchmark—Class A by 1.04 Percentage Points

During the reporting period, the fund’s Class A shares’ net asset value growth rate was 31.42%, Class C was 31.05%, both lower than the performance benchmark (CSI 500 Index return × 95% + bank demand deposit interest rate × 5%) of 32.46%. Of these, Class A underperformed the benchmark by 1.04 percentage points, and Class C by 1.41 percentage points. Looking at different time frames, over the past three months both share classes outperformed the benchmark by 2.54% and 2.44%, respectively, but since inception the overall results have still not met expectations.

Investment Strategy and Operation: Quantitative Model Leads, Stock Trading Is Active

The fund adopts an index-enhanced quantitative investment strategy. It constructs a portfolio by iteratively building models and strictly controls tracking error (absolute daily tracking deviation not exceeding 0.5%, annual tracking error not exceeding 8.0%). During the reporting period, stock investments and trading were active. The total cost of bought stocks was 266,617,088.86 RMB, total proceeds from sold stocks were 225,654,122.99 RMB, resulting in realized gains from stock trades of 13,261,962.89 RMB, accounting for 95.28% of investment income.

Fee Structure: Management Fee 452,200 RMB; Trading Commissions 91,500 RMB

The fund’s annual management fees totaled 452,221.80 RMB (including client maintenance fees of 160,213.99 RMB paid to sales institutions), custody fees of 84,791.54 RMB, and sales service fees of 137,180.97 RMB. Stock trading expenses were 235,907.47 RMB, mainly paid to AVIC Securities (60,601.95 RMB, accounting for 66.22%) and Hualin Securities (30,910.59 RMB, accounting for 33.78%).

Stock Holdings: Manufacturing Accounts for More Than 60%; Concentration of Top 10 Holdings at 10.2%

At period end, the market value of stock investments was 57,115,054.99 RMB, accounting for 91.83% of the fund’s net asset value. Industry allocation is mainly manufacturing. In index investing, the manufacturing industry proportion was 50.24%, and in active investment, manufacturing proportion was 11.53%, for a total of 61.77%. The total market value of the top ten holdings (index investing) was 6,354,857.20 RMB, accounting for 10.2% of net asset value. The largest holding, Chifeng Gold (600988), was 615,428 RMB, accounting for 0.99%.

Changes in Shares: Class C Shares Redeemed by More Than 80%; Institutions Hold Nearly 60% of Class A

During the reporting period, the fund’s share balance shrank substantially. Class A shares decreased from 44.51 million shares at inception to 24.99 million shares at period end, with net redemptions of 19.5253 million shares and a redemption rate of 43.86%. Class C shares decreased from 168 million shares to 22.3982 million shares, with net redemptions of 145.3923 million shares and a redemption rate of 86.65%. Regarding holder structure, institutions held 14.8793 million shares of Class A (59.54%), and individuals held 10.1131 million shares (40.46%); all Class C shares were held by individuals.

Manager’s Outlook: Profit Improvement in 2026 as the Main Line; High-Visibility Industries in Focus

The manager believes that in 2026, China A-shares are likely to continue with a pattern of oscillating upward movement. The driving logic will shift from being liquidity-led to being driven by profit improvements. High-visibility and high-growth industries will become the core allocation theme. The fund will continue optimizing its quantitative model, improving adaptability and stability, and will strive to generate excess returns under different market styles.

Risk Warning: Significant Pressure from Large Redemptions; Ongoing Performance Consistency Still to Be Observed

The fund has two major risk points: first, the redemption rate of Class C shares is as high as 86.65%, which may reflect investors’ dissatisfaction with performance; in the future, if institutional funds concentrate redemptions, it may further intensify liquidity pressure. Second, since inception the fund has underperformed the benchmark, so the effectiveness of the quantitative model needs further verification. Investors should pay attention to changes in the fund’s size and the stability of excess returns.

(Data Source: Hornd-Dee CSI 500 Index Enhanced Securities Investment Fund 2025 Annual Report)

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