Unlocking Value

HSBC China Dragon Fund (HSBC Fund, 820 HK) is an excellent example of a closed-end fund manager acting in the best interest of its investors.

HSBC Fund is a Hong Kong-listed closed-end fund managed by HSBC. On 31 March, 2015, HSBC Fund had net assets of approximately HK$3 billion, which were mostly A-shares or equity-linked instruments of large Chinese companies.

Similar to China Merchants China Direct Investments Limited (CMCDI, 133 HK), HSBC Fund had a relatively concentrated position in the Chinese financial sector, including HK$70 million worth of China Merchants Bank (A Share).

Due to the closed-end nature of HSBC Fund, its market price traded at a 27% discount to its net asset value (NAV) on 31 March 2015.

In 2015, funds managed by Argyle Street Management (ASM) were unitholders of HSBC Fund (which is a “unit trust” that issues units, instead of shares).

ASM actively engaged with HSBC Fund with positive results.

Since ASM’s involvement, HSBC Fund has liquidated a substantial portion of its assets and launched multiple redemption offers to unitholders at approximately NAV per unit. That eliminate the discount to all unitholders’ benefit. Over time, HSBC has redeemed over 80% of its outstanding units.

We applaud HSBC for its excellent stewardship.

汇丰中国翔龙基金（”汇丰基金“，820 HK）是一家由汇丰环球投资管理（香港）有限公司(“汇丰“)管理的在香港上市的封闭式基金。它是经理人为其投资者谋取最大利益的典范案例。

截至2015年3月31日，汇丰基金的总权益约为30亿港币，资产几乎全部为在中国上市的股票或股票挂钩票据。与招商局中国基金有限公司（“招商局中国基金“，133 HK）相似，汇丰基金所持有的股票也相对集中在中国金融业的相关公司，其中持有市值约7,000万港币的招商银行A股股票。

由于汇丰基金是封闭式基金，截至2015年3月31日，其市场价格相对于净资产值折价27%。

2015年，由Argyle Street Management（ASM）管理的基金成为汇丰基金的基金单位持有人。

ASM积极与汇丰沟通，并取得了积极的结果。

自ASM参与以来，汇丰基金已清算了其大部分的资产，并多次发起赎回要约，以大约基金单位净资产的价格赎回单位。由于这些赎回安排，汇丰已赎回了超过80%的发行基金单位，并且消除了股价对净资产的折让并使得所有基金单位持有人得以受益。

我们对汇丰展示的卓越管理成绩表示赞赏。