On July 18th, E Fund Management disclosed the second quarter reports of several funds under its management. Among them, the second quarter report of E Fund Consumer Industry managed by Xia Nan and Wang Yuanchun showed that as of the end of the second quarter, the top ten holdings of the fund were Guizhou Maotai (600519.SH), Midea Group (000333.SZ), Wuliangye (000858.SZ), Fuyao Glass (600660.SH), Shanxi Fenjiu (600809.SH), Gujing Gongjiu (000596.SZ), Haier Smart Home (600690.SH), Great Wall Motors (601633.SH), Luzhou Laojiao (000568.SZ), and BYD (002594.SZ). Compared to the end of the first quarter, BYD entered the top ten holdings while Tsingtao Brewery (600600.SH) exited the top ten holdings. Xia Nan stated that we need more patience and wait for high-quality companies to make strategic adjustments, product refining, and organizational changes to further enhance the quality of the companies and welcome a new round of development opportunities. Regarding the specific holdings, the second quarter report showed that the equity investment position of E Fund Consumer Industry reached 86.96% by the end of the second quarter. In terms of adding and reducing holdings, as of the end of the second quarter, the top ten holdings of E Fund Consumer Industry were Guizhou Maotai, Midea Group, Wuliangye, Fuyao Glass, Shanxi Fenjiu, Gujing Gongjiu, Haier Smart Home, Great Wall Motors, Luzhou Laojiao, and BYD. Compared to the end of the first quarter, BYD entered the top ten holdings while Tsingtao Brewery exited the top ten holdings. As for the net asset value of the fund, as of the end of the second quarter, the net asset value per share of E Fund Consumer Industry Fund was 3.408 yuan. Xia Nan pointed out that we had some bias in assessing the strength of the macroeconomic rebound in the first quarter, which caused a decrease in the portfolio net value. In the second quarter, we continued to make efforts to lower the overall valuation level of the portfolio, increased the allocation of home appliances and auto parts, and tried to avoid categories with low profit margins and rigid costs as much as possible. We need more patience and wait for high-quality companies to make strategic adjustments, refine products, and adjust organizations to further enhance the quality of the companies and welcome a new round of development opportunities. Increasing holdings in undervalued high dividend stocks in Hong Kong In addition, the second quarter report of E Fund High Quality Strict Selection Three-Year Holding, managed by Xia Nan, showed that as of the end of the second quarter, its equity investment position reached 86.18%. The net asset value per share of the fund was 0.7740 yuan. In terms of holdings, E Fund High Quality Strict Selection Three-Year Holding increased its holdings in Hong Kong stocks in the second quarter, with its top ten holdings being Tencent Holdings (00700), Shenhuo Group (000933.SZ), Weichai Power (000338.SZ), Wuliangye, Great Wall Motors, Zijin Mining (601899.SH), Wanhua Chemical (600309.SH), PetroChina (00857), HSBC Holdings (00005), and XCMG Machinery (000425.SZ). Among them, Tencent Holdings, Great Wall Motors, Wanhua Chemical, PetroChina, and HSBC Holdings were new holdings. Xia Nan stated that we had some bias in assessing the macroeconomic trends in the second quarter, but quickly made adjustments. We increased our holdings in undervalued high dividend stocks in sectors such as internet, oil, and banking, and reduced holdings in sectors such as discretionary consumption that are more sensitive to macroeconomic conditions. We tried to diversify sources of income and risk as much as possible, and strive to balance the volatility level of the portfolio in the current macro environment to find more excess returns.