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Matthews Asia Active ETFs | Annual Report

December 31, 2023 | matthewsasia.com

 

Matthews Emerging Markets Equity Active ETF (MEM)

Matthews Emerging Markets ex China Active ETF (MEMX)

Matthews Emerging Markets Sustainable Future Active ETF (EMSF)

Matthews Asia Innovators Active ETF (MINV)

Matthews Pacific Tiger Active ETF (ASIA)

Matthews China Active ETF (MCH)

Matthews India Active ETF (INDE)

Matthews Japan Active ETF (JPAN)

Matthews Korea Active ETF (MKOR)

Matthews Asia Dividend Active ETF (ADVE)

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Listed on the NYSE Arca

 

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Matthews Asia Active Exchange-Traded Funds (ETFs) are actively managed and do not seek to replicate a specific index. ETFs are bought and sold through an exchange at the then current market price, not net asset value (NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV when traded on an exchange. Brokerage commissions will reduce returns. There can be no guarantee that an active market for ETFs will develop or be maintained, or that the ETF’s listing will continue or remain unchanged.

ETF market price returns since inception are calculated using NAV for the period until market price becomes available (generally a few days after inception).

Investments are not FDIC-insured, nor are they deposits of, or guaranteed by, a bank or any other entity, so they may lose value.

 

 

This report has been prepared for Matthews International Funds (d/b/a Matthews Asia Funds) shareholders. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current Matthews Asia Funds prospectus, which contains more complete information about the Funds’ investment objectives, risks and expenses. Additional copies of the prospectus or summary prospectus may be obtained at matthewsasia.com. Please read the prospectus carefully before you invest or send money.

The views and opinions in this report were current as of December 31, 2023. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of a Fund’s future investment intent. Current and future portfolio holdings are subject to risk.

Statements of fact are from sources considered reliable, but neither the Funds nor the Investment Advisor makes any representation or guarantee as to their completeness or accuracy.

 

2    MATTHEWS ASIA FUNDS


Table of Contents

Contents

 

Message to Shareholders from the President of Matthews Asia Funds     4  
Message to Shareholders from the Investment Advisor     5  
Fund Characteristics and Schedules of Investments:  
Matthews Emerging Markets Equity Active ETF     7  
Matthews Emerging Markets ex China Active ETF     11  
Matthews Emerging Markets Sustainable Future Active ETF     15  
Matthews Asia Innovators Active ETF     18  
Matthews Pacific Tiger Active ETF     21  
Matthews China Active ETF     23  
Matthews India Active ETF     27  
Matthews Japan Active ETF     30  
Matthews Korea Active ETF     33  

Matthews Asia Dividend Active ETF

    37  
Index Definitions     39  
Disclosures     40  
Disclosure of Fund Expenses     40  
Statements of Assets and Liabilities     42  
Statements of Operations     45  
Statements of Changes in Net Assets     48  
Financial Highlights     52  
Notes to Financial Statements     62  
1. Organization     62  
2. Significant Accounting Policies     62  
3. Capital Shares Transactions     65  
4. Investment Management Fees     67  
5. Investments     68  
6. Income Tax Information     68  
7. Other Matters     69  
8. Subsequent Events     70  
9. Report of Independent Registered Public Accounting Firm     71  
10. Tax Information     72  
11. Approval of Investment Management Agreement     74  
12. Statement Regarding Liquidity Risk Management Program     86  
13. Trustees and Officers of the Funds     87  

Investment Risk: Exchange-Traded Fund shares are not deposits or obligations of, or guaranteed by, any depositary institution. Shares are not insured by the FDIC, Federal Reserve Board or any government agency and are subject to investment risks, including possible loss of principal amount invested. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. In addition, single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific industry, sector or geographic location. Investing in small and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than larger companies. Please see the Funds’ Prospectus and Statement of Additional Information for more risk disclosure.

 

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Message to Shareholders from the President of Your Funds

Dear Fellow Shareholder,

Thank you for your continued trust in Matthews as your active partner in a World of Emerging Opportunities.

I believe that Emerging Markets, Asia and China can offer investors important opportunity sets for returns and diversification. The Year of the Dragon may present unique prospects for investors willing to look beyond immediate-term volatility and headlines and focus on specific companies and the long-term growth potential of dynamic economies.

Emerging Markets

2023 was a volatile year for equity and fixed income markets around the world but Emerging Market economies remained resilient, with their central banks largely ahead of inflation and managing rates effectively. We saw renewed interest in India (digitalization and financialization, along with a Moon landing) and South Korea (technology and cultural leadership), as well as broader Emerging Market mandates. While China’s markets remained challenging as it emerged from COVID lockdowns—disappointing expectations for a sharp rebound and geopolitical ‘balloons’—quarterly financials of leading Chinese companies have begun to show encouraging results in both revenue and earnings. Meanwhile, small and mid caps outside of China performed well as investors looked into opportunities in companies that are less affected by regulatory and external concerns and are tied more directly to local economies. Asia’s developed markets, such as Japan, are also generating interest once again, driven by resilient earnings growth amid a tepid global macro economy.

As we look ahead, Emerging Markets and Asia—including India, Brazil, Mexico, Japan, Vietnam and the Gulf—remain attractive with increased opportunities for stock picking supported by risk awareness. Many of the markets we invest in offer compelling valuation and diversification potential. With deep investment experience in these markets and strong fundamental research capabilities, the importance of Matthews as an experienced and trusted guide remains paramount.

Matthews’ Active ETFs and the Power of Choice

Based on our history of providing investors with unique access to Emerging Markets, Asia and China, we further enhanced our leadership in Active ETFs during the year. Building upon the first of their kind suite of active ETFs focused on these regions, Matthews added nine Active ETFs through January 2024. This suite of 12 active, research-based ETF vehicles incorporate experienced insights, sustainability considerations, and our deep research to offer a range of investment opportunity in a new way.

These sophisticated investments incorporate deep understanding of markets and companies to build differentiated portfolios, providing investors with the ‘power of choice’ for investing—and fine-tuning exposures—in these dynamic markets.

Evolutionand Looking Forward

2023 was a year of dynamic changes, focused on the future. At the Funds’ Board of Trustees level, we bid farewell to Toshi Shibano as he retired as a Trustee. He has been replaced by industry veteran Neal Andrews who brings 35 years of experience in financial services, adding to the diverse perspectives and experience of your Board of Trustees, led by Board Chair Gale Caruso. Additionally, Sean Taylor succeeded Robert Horrocks, PhD, as Matthews’ Chief Investment Officer as of January 1, 2024, bringing a depth of intellectual knowledge and team management across Emerging Markets. We thank Toshi and Robert for their support—and Robert will continue as a portfolio manager on the Matthews Asian Growth and Income and the Matthews Asia Dividend Funds.

Looking forward, we will continue to maintain a thoughtful and opportunistic approach to identifying the most attractive long-term investment prospects and we remain steadfast in our research-based investment strategy.

We take seriously the stewardship of your assets and thank you for being a valued shareholder during what has been a tumultuous and challenging year. We look forward to the opportunities to come in the Lunar Year of the Dragon!

Cooper Abbott, CFA

President of the Matthews Asia Funds

Chief Executive Officer, Matthews International Capital Management, LLC

 

4    MATTHEWS ASIA FUNDS     


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Message to Shareholders from the Investment Advisor

Dear Valued Shareholder,

At the start of 2023, much attention was devoted to China. Emerging later than most from COVID lockdowns, China was anticipated by investors to deliver a post-pandemic economic recovery similar to that of other markets. And yet they were to be disappointed. The magnitude of the miscalculation was not immediately evident. However, as the year continued, one disappointment followed the next and the stocks of major companies in China ground down, impacting markets and the relative performance of your portfolios to different degrees.

Many explanations have been given for China’s weak recovery: an interventionist regulatory environment; continued geopolitical risks; underlying lack of confidence among consumers and businesses; and perhaps even fears of a global recession. What seems undeniable is that the problems China encountered were largely domestic in nature and therefore its real problems were domestic as well. A remarkable feature of China’s economic recovery has been consumers ‘trading down’ to cheaper goods while interest rates fell, inflation subsided and unemployment, particularly youth unemployment, rose to a level where it seems the authorities were no longer comfortable publishing the figures.

Less Scrooge, more Ebeneezer

You can talk about geopolitical risks and other external headwinds but I think China’s woes have, to a significant extent, been self-inflicted. After seeing the rise in inflation in other countries after their COVID-related stimulus measures, China’s government declined to boost its own economy. It also continued moves to curb speculation in its housing market. Both decisions negatively impacted the economy significantly, in my view. The subsequent removal of many of the restrictions and rhetoric seeking to limit housing market activity is good news and may well have laid the ground for more effective stimulus measures. We shall see.

Other countries that your portfolios can invest in were less overly restrictive in their policy-making in 2023, in my opinion, preferring to be more Ebeneezer and less Scrooge. This meant that some saw inflation rates rise—India, Brazil, Mexico among them—in the immediate post-COVID period and thus spent much of the last year with elevated interest rates. And yet their domestic demand was strong and many emerging markets economies performed surprisingly well given that backdrop. The transient nature of inflation—another way of saying that a good portion was created by temporary supply-chain issues—meant that stimulus could also be withdrawn without great damage to their economies. The overall resilience of emerging markets in this rate-rise cycle, I believe, was a mixture of good policy choices made in the past and some good fortune in that the nature of the inflation problem made it inherently easier to treat.

While returns were hard to come by in 2023, there were some standout performances and India was one of them. Prime Minister Modi’s reforms are starting to bear fruit, and hopes of global supply chain realignments bringing more manufacturing export business to India are also cause for optimism even if results on the ground remain debatable. By the end of 2023, some of the blush looked to have come off the rose as falling nominal growth rates started to approach the level of interest rates on India’s government debt and this brought fiscal pressures back into focus. Still, the growth runway for India remains robust and compelling in our view.

Turning to another key market, Brazil has done almost as much to add to volatility as it has to returns over the past five years. However, it is not without its attractions. Valuations are reasonable and the central bank has been ahead of the curve in terms of tightening in the recent inflationary environment. It is likely to benefit, therefore, from falling inflation and, if the promise of recession-less disinflation bears out, the cyclicality of many of its business will not be the headwind that many fear.

 

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Japan has also done well though it did finish 2023 on comparatively high valuations. For close to 20 years, I have thought that Japan has needed inflation and I expect that global disinflationary conditions may slow its progress somewhat relative to other markets. Nevertheless, it remains home to world-class companies that will do well amid a weak yen.

Markets with opportunities

In terms of industry trends, semiconductors were a strong source of market excitement. In this segment, Asia has some top quality companies and they continued to perform well. As belief grows over some of the productivity-enhancing aspects of artificial intelligence (AI), chip companies can expect continued strong demand, I believe. AI, for now, can do routine work where compromises can be made on quality and originality and I can see how this could be a boon for developed markets where low-skilled tasks are costly. In the medium term, at least, this is less likely to be an opportunity in low-wage economies. Therefore, I see AI impacting our markets and our portfolios most positively in the areas of hardware and components rather than from the practical adoption of the technology.

It was also a strong year for smaller companies. Smaller-scale businesses tend to do well in reflationary environments and that has been the case in this cycle. At Matthews, we have always had a tilt toward smaller companies because of the greater entrepreneurship they embody relative to their less commercial (or sometimes commercial but over-regulated) large-cap competitors. I would expect this to be a tilt that continues in the future.

At the same time as small caps rallied, value companies also picked up. Value-stock rallies are often correlated with a rebound in cyclical names in the financial and raw materials industries. Perhaps nowhere was this effect more noticeable than in Japan where its large trading companies had stellar performances. In a relative sense, this detracted from performance in some cases as your portfolios are typically weighted more toward secular growth.

In 2024, concerns over China’s weak recovery and the struggles of its many former mega-cap leaders will undoubtedly remain. The year, however, also holds the possibility of being one of many changes. Hong Kong, for example, has been hit hard—by the weak demand in China and by the fact that due to its fixed exchange rate, its interest rates must rise in the face of such economic weakness, precisely the opposite of what economic common sense dictates. As the U.S. enters a downward rate cycle, it could be positioned for a reversal in fortune.

And beyond China we also have solid grounds for optimism. India’s outlook appears sound, key markets in Latin America are in good shape, and emerging markets, particularly in Asia, will likely become ever more embedded in secular trends like AI. Navigating these opportunities will demand flexibility and a continued focus on companies adept at plotting their own course for growth. In all cases, we shall place emphasis on finding good businesses for the long term.

Finally, as of January 1st, I am stepping down from my CIO responsibilities. What a privilege it has been to work with my colleagues on your behalf. But I felt it was time for a change. We have all—myself, Cooper, and many other colleagues on the investment team and in other departments—worked together to find Sean Taylor to take over the role. He has all the experience needed to run and grow a successful Emerging Markets and Asian team and will strive to achieve good performance in your portfolios. I remain at Matthews to continue to do my bit as a Portfolio Manager in that effort.

Robert Horrocks, PhD

Chief Investment Officer

Matthews International Capital Management, LLC

 

6    MATTHEWS ASIA FUNDS     


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PORTFOLIO MANAGERS
Alex Zarechnak  

Lead Manager

 
Sean Taylor   Andrew Mattock, CFA

Co-Manager

  Co-Manager
Peeyush Mittal, CFA   Jeremy Sutch, CFA

Co-Manager

  Co-Manager
FUND FACTS
Ticker   MEM

CUSIP

  577125818

Inception Date

  07/13/22

Gross Expense Ratio

  0.79%

NAV (as of 12/31/23)

  $28.24

Market Price (as of 12/31/23)

  $28.27

# of Positions

  55

Net Assets

  $55.9 million

Portfolio Turnover

  54.86%

Weight Average Market Cap

  $116.2 billion

Benchmark

MSCI Emerging Markets Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in emerging market countries. Emerging market countries generally include every country in the world except the United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.

Matthews Emerging Markets Equity Active ETF (unaudited)

FUND INSIGHTS

 

    The top three contributors to absolute performance during the year included Prologis Property Mexico, a Mexican real estate company, Taiwan Semiconductor Manufacturing , a Taiwanese information technology company, and Samsung Electronics, a South Korean information technology company.

 

    The largest detractors to performance during the year included JD.com, a Chinese consumer discretionary company, First Quantum Minerals, a Zambian materials company, and AIA Group, a Hong Kong financials company.

 

    The top three contributors to relative performance, on a country basis, were Mexico, due to an overweight allocation, China/Hong Kong, because of an underweight allocation, and Vietnam, due to an off-benchmark allocation.

 

    The top three detractors to relative performance, on a country basis, were India and South Korea due to stock selection, and Taiwan due to an underweight position.

 

    The top three contributors to relative performance, on a sector basis, were real estate, consumer staples and financials due to stock selection.

 

    The top three detractors to relative performance, on a sector basis, were consumer discretionary, energy and health care due to stock selection.

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

      

 

     Average Annual
Total Returns
 
     3 Months      1 Year      Since
Inception
     Inception
date
 
Emerging Markets Equity Active ETF (NAV)1      7.26%        7.51%        9.05%        07/13/22  
Emerging Markets Equity Active ETF (market price)      7.54%        6.93%        9.12%     
MSCI Emerging Markets Index2      7.93%        10.27%        6.83%     

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION

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Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

 

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TOP TEN HOLDINGS3                   
Name    Sector    Country      % Net Assets  
Samsung Electronics Co., Ltd., Pfd.    Information Technology    South Korea        6.0%  
Taiwan Semiconductor Manufacturing Co., Ltd.    Information Technology    Taiwan        5.4%  
Prologis Property Mexico SA de CV REIT    Real Estate    Mexico        4.2%  
Tencent Holdings, Ltd.    Communication Services    China        3.9%  
HDFC Bank, Ltd. ADR    Financials    India        3.5%  
Banco BTG Pactual SA    Financials    Brazil        2.7%  
FPT Corp.    Information Technology    Vietnam        2.6%  
ICICI Bank, Ltd. ADR    Financials    India        2.4%  
Infosys, Ltd. ADR    Information Technology    India        2.4%  
Woodside Energy Group, Ltd.    Energy    Australia        2.4%  
% OF ASSETS IN TOP 10              35.6%  

 

  3

Holdings may combine more than one security from same issuer and related depositary receipts.

 

   
COUNTRY ALLOCATION (%)4,5      
India     16.6  
China/Hong Kong     15.5  
Brazil     11.0  
Mexico     9.2  
South Korea     7.4  
Taiwan     6.7  
United States     5.5  
Vietnam     4.7  
France     3.6  
Philippines     2.6  
Australia     2.4  
Indonesia     2.2  
United Kingdom     2.0  
United Arab Emirates     2.0  
Poland     2.0  
Kazakhstan     1.5  
Switzerland     1.4  
Saudi Arabia     1.0  
Cash and Other Assets, Less Liabilities     2.7  
   
SECTOR ALLOCATION (%)5      
Financials     24.2  
Information Technology     22.0  
Consumer Discretionary     14.8  
Materials     10.2  
Energy     5.8  
Real Estate     5.3  
Consumer Staples     4.4  
Industrials     4.2  
Communication Services     3.9  
Health Care     2.4  
Cash and Other Assets, Less Liabilities     2.7  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     58.1  
Large Cap ($10B-$25B)     12.2  
Mid Cap ($3B-10B)     20.6  
Small Cap (under $3B)     6.4  
Cash and Other Assets, Less Liabilities     2.7  
4

Not all countries where the Fund may invest are included in the benchmark index.

 

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

 

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Matthews Emerging Markets Equity Active ETF

December 31, 2023

Schedule of Investments

COMMON EQUITIES: 91.3%

 

     Shares     Value  
INDIA: 16.6%    

HDFC Bank, Ltd. ADR

    29,004       $1,946,458  

ICICI Bank, Ltd. ADR

    57,408       1,368,607  

Infosys, Ltd. ADR

    73,964       1,359,458  

UltraTech Cement, Ltd.

    8,002       1,009,994  

Indian Hotels Co., Ltd.

    166,548       877,335  

PI Industries, Ltd.

    17,987       759,976  

Restaurant Brands Asia, Ltd.a

    555,025       745,692  

Varun Beverages, Ltd.

    41,433       615,866  

Kotak Mahindra Bank, Ltd.

    25,326       580,728  
   

 

 

 

Total India

      9,264,114  
   

 

 

 
   
     
CHINA/HONG KONG: 15.5%    

Tencent Holdings, Ltd.

    58,600       2,203,349  

AIA Group, Ltd.

    126,200       1,099,809  

H World Group, Ltd. ADR

    27,976       935,517  

JD.com, Inc. Class A

    63,450       914,142  

Midea Group Co., Ltd. A Shares

    115,800       891,988  

Yum China Holdings, Inc.

    17,958       761,958  

BYD Co., Ltd. A Shares

    26,400       734,095  

Innovent Biologics, Inc.a,b,c

    83,500       457,143  

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. A Shares

    9,600       391,787  

PDD Holdings, Inc. ADRa

    1,854       271,259  

Midea Group Co., Ltd. A Shares

    2,600       19,947  
   

 

 

 

Total China/Hong Kong

      8,680,994  
   

 

 

 
   
     
BRAZIL: 11.0%    

Banco BTG Pactual SA

    191,500       1,482,690  

Armac Locacao Logistica E Servicos SA

    246,300       864,504  

Vale SA ADR

    53,989       856,266  

Vinci Partners Investments, Ltd. Class A

    74,862       819,739  

WEG SA

    83,700       635,986  

PRIO SA

    65,600       621,887  

Hapvida Participacoes e Investimentos SAa,b,c

    567,700       520,064  

NU Holdings, Ltd. Class Aa

    39,159       326,195  
   

 

 

 

Total Brazil

      6,127,331  
   

 

 

 
   
     
MEXICO: 9.2%    

Prologis Property Mexico SA de CV REIT

    494,800       2,359,391  

GCC SAB de CV

    91,700       1,083,429  

Grupo Financiero Banorte SAB de CV Class O

    91,500       922,645  

Becle SAB de CV

    386,200       758,740  
   

 

 

 

Total Mexico

      5,124,205  
   

 

 

 
   
     
TAIWAN: 6.7%    

Taiwan Semiconductor Manufacturing Co., Ltd.

    157,000       3,033,545  

Taiwan Semiconductor Manufacturing Co., Ltd. ADR

    7,031       731,224  
   

 

 

 

Total Taiwan

      3,764,769  
   

 

 

 
   
     
UNITED STATES: 5.5%    

Globant SAa

    5,232       1,245,111  

Applied Materials, Inc.

    7,072       1,146,159  

Freeport-McMoRan, Inc.

    15,534       661,283  
   

 

 

 

Total United States

      3,052,553  
   

 

 

 
   
     Shares     Value  
VIETNAM: 4.7%    

FPT Corp.

    362,505       $1,435,856  

Military Commercial Joint Stock Bank

    933,105       717,270  

HDBank

    589,818       493,500  
   

 

 

 

Total Vietnam

      2,646,626  
   

 

 

 
   
     
FRANCE: 3.6%    

TotalEnergies SE ADR

    19,603       1,320,850  

LVMH Moet Hennessy Louis Vuitton SE

    851       689,626  
   

 

 

 

Total France

      2,010,476  
   

 

 

 
   
     
PHILIPPINES: 2.6%    

Ayala Corp.

    66,720       820,520  

Wilcon Depot, Inc.

    1,711,200       645,853  
   

 

 

 

Total Philippines

      1,466,373  
   

 

 

 
   
     
AUSTRALIA: 2.4%    

Woodside Energy Group, Ltd.

    62,602       1,326,774  
   

 

 

 

Total Australia

      1,326,774  
   

 

 

 
   
     
INDONESIA: 2.2%    

PT Bank Rakyat Indonesia Persero Tbk

    3,302,200       1,227,843  
   

 

 

 

Total Indonesia

      1,227,843  
   

 

 

 
   
     
UNITED KINGDOM: 2.0%    

Prudential PLC

    100,727       1,139,226  
   

 

 

 

Total United Kingdom

      1,139,226  
   

 

 

 
   
     
UNITED ARAB EMIRATES: 2.0%    

Emaar Properties PJSC

    273,456       589,687  

Fertiglobe PLC

    660,263       533,927  
   

 

 

 

Total United Arab Emirates

      1,123,614  
   

 

 

 
   
     
POLAND: 2.0%    

Dino Polska SAa,b,c

    9,462       1,108,562  
   

 

 

 

Total Poland

      1,108,562  
   

 

 

 
   
     
KAZAKHSTAN: 1.5%    

Kaspi.KZ JSC GDRc

    9,011       829,012  
   

 

 

 

Total Kazakhstan

      829,012  
   

 

 

 
   
     
SOUTH KOREA: 1.4%    

LG Chem, Ltd.

    2,059       797,765  
   

 

 

 

Total South Korea

      797,765  
   

 

 

 
   
     
SWITZERLAND: 1.4%    

Cie Financiere Richemont SA Class A

    5,633       774,692  
   

 

 

 

Total Switzerland

      774,692  
   

 

 

 
   
     
SAUDI ARABIA: 1.0%    

Bupa Arabia for Cooperative Insurance Co.

    9,841       559,494  
   

 

 

 

Total Saudi Arabia

      559,494  
   

 

 

 
   
     
TOTAL COMMON EQUITIES       51,024,423  
   

 

 

 

(Cost $48,557,535)

   

 

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Table of Contents

Matthews Emerging Markets Equity Active ETF

December 31, 2023

Schedule of Investments (continued)

PREFERRED EQUITIES: 6.0%

 

     Shares     Value  
SOUTH KOREA: 6.0%    

Samsung Electronics Co., Ltd., Pfd.

    69,481       $3,361,027  
   

 

 

 

Total South Korea

      3,361,027  
   

 

 

 
   
     
TOTAL PREFERRED EQUITIES       3,361,027  
   

 

 

 

(Cost $2,808,273)

   
   

SHORT-TERM INVESTMENTS: 2.0%

   
     
MONEY MARKET FUNDS: 2.0%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%d

    1,107,780       1,107,780  
   

 

 

 

(Cost $1,107,780)

   
   
     
TOTAL INVESTMENTS: 99.3%       55,493,230  

(Cost $52,473,588)

   
   
CASH AND OTHER ASSETS,
LESS LIABILITIES: 0.7%
      413,783  
   

 

 

 

NET ASSETS: 100.0%

      $55,907,013  
   

 

 

 
a

Non-income producing security.

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $2,085,769, which is 3.73% of net assets.

 

c

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

d

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

 

GDR

Global Depositary Receipt

 

JSC

Joint Stock Co.

 

Pfd.

Preferred

 

PJSC

Public Joint Stock Co.

 

REIT

Real Estate Investment Trust

See accompanying notes to financial statements.

 

10    Matthews Emerging Markets Equity Active ETF     


Table of Contents

LOGO

 

PORTFOLIO MANAGERS
Alex Zarechnak  

Lead Manager

 
Sean Taylor   Peeyush Mittal, CFA

Co-Manager

  Co-Manager
Jeremy Sutch, CFA  

Co-Manager

 
FUND FACTS
Ticker  

MEMX

CUSIP

 

577125792

Inception Date

 

01/10/23

Gross Expense Ratio

 

0.79%

NAV (as of 12/31/23)

  $27.60

Market Price (as of 12/31/23)

  $27.74

# of Positions

 

47

Net Assets

 

$8.8 million

Portfolio Turnover

 

28.64%

Weight Average Market Cap

 

$114.4 billion

Benchmark

MSCI Emerging Markets ex China Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in emerging market countries excluding China. Emerging market countries generally include every country in the world except the United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.

Matthews Emerging Markets ex China Active ETF

(unaudited)

FUND INSIGHTS

 

    The Matthews Emerging Markets ex China Active ETF launched on January 10, 2023.

 

    The top three contributors to absolute performance during the period included Taiwan Semiconductor Manufacturing, a Taiwanese information technology company, Prologis Property Mexico, a Mexican real estate company, and Banco BTG Pactual, a Brazilian financials company.

 

    The largest detractors to performance during the year included First Quantum Minerals, a Zambian Materials company, Prudential, a United Kingdom financials company, and Wilcon Depot, a Philippines consumer discretionary company.

 

    The top three contributors to relative performance, on a country basis, were Vietnam, because of an off-benchmark allocation, Mexico, due to an overweight position, and South Africa, due to a zero allocation.

 

    The top three detractors to relative performance, on a country basis were India due to stock selection, and the United Kingdom and Singapore, due to off-benchmark allocations.

 

    The top three contributors to relative performance, on a sector basis, were real estate and financials due to stock selection and communication services because of an underweight allocation.

 

    The top three detractors to relative performance, on a sector basis, were energy, consumer discretionary and industrials due to stock selection.

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

     Actual Return,
Not  Annualized
 
     3 Months      Since
Inception
     Inception
date
 
Emerging Markets ex China Active ETF (NAV)1      9.88%        11.68%        01/10/23  
Emerging Markets ex China Active ETF (market price)      10.25%        12.23%     
MSCI Emerging Markets ex China Index2      13.12%        15.73%     

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION

LOGO

Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

 

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Table of Contents

 

       
TOP TEN HOLDINGS3                   
Name   

Sector

   Country      % Net Assets  

Taiwan Semiconductor Manufacturing Co., Ltd. ADR

   Information Technology    Taiwan        9.6%  

Samsung Electronics Co., Ltd., Pfd.

   Information Technology    South Korea        6.5%  

Prologis Property Mexico SA de CV REIT

   Real Estate    Mexico        4.3%  

HDFC Bank, Ltd. ADR

   Financials    India        3.9%  

Infosys, Ltd. ADR

   Information Technology    India        3.0%  

Banco BTG Pactual SA

   Financials    Brazil        3.0%  

Woodside Energy Group, Ltd.

   Energy    Australia        2.7%  

TotalEnergies SE ADR

   Energy    France        2.7%  

FPT Corp.

   Information Technology    Vietnam        2.6%  

ICICI Bank, Ltd. ADR

   Financials    India        2.6%  
% OF ASSETS IN TOP 10              40.8%  

 

  3

Holdings may combine more than one security from same issuer and related depositary receipts.

 

   
COUNTRY ALLOCATION (%)4,5      

India

    19.8  

Brazil

    12.9  

Mexico

    9.8  

South Korea

    9.6  

Taiwan

    9.6  

United States

    5.9  

Vietnam

    4.4  

France

    4.0  

Philippines

    3.2  

Australia

    2.7  

United Arab Emirates

    2.6  

Indonesia

    2.3  

Poland

    2.3  

United Kingdom

    2.3  

Kazakhstan

    1.6  

Switzerland

    1.5  

Chile

    1.2  

Saudi Arabia

    1.2  

Turkey

    1.0  

Cash and Other Assets, Less Liabilities

    2.2  
   
SECTOR ALLOCATION (%)5      

Information Technology

    26.4  

Financials

    24.5  

Materials

    12.7  

Consumer Discretionary

    9.3  

Consumer Staples

    6.8  

Energy

    6.5  

Real Estate

    5.7  

Industrials

    4.6  

Health Care

    1.1  

Cash and Other Assets, Less Liabilities

    2.2  

 

   
MARKET CAP EXPOSURE (%)5      

Mega Cap (over $25B)

    55.4  

Large Cap ($10B-$25B)

    13.2  

Mid Cap ($3B-10B)

    22.1  

Small Cap (under $3B)

    7.1  

Cash and Other Assets, Less Liabilities

    2.2  
4

Not all countries where the Fund may invest are included in the benchmark index.

 

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

 

12    Matthews Emerging Markets ex China Active ETF     


Table of Contents

Matthews Emerging Markets ex China Active ETF

December 31, 2023

Schedule of Investments

COMMON EQUITIES: 91.3%

 

     Shares     Value  
INDIA: 19.8%    

HDFC Bank, Ltd. ADR

    5,139       $344,878  

Infosys, Ltd. ADR

    14,611       268,550  

ICICI Bank, Ltd. ADR

    9,551       227,696  

UltraTech Cement, Ltd.

    1,504       189,831  

Indian Hotels Co., Ltd.

    29,957       157,806  

Restaurant Brands Asia, Ltd.a

    100,225       134,655  

PI Industries, Ltd.

    3,124       131,994  

Kotak Mahindra Bank, Ltd.

    4,882       111,945  

Varun Beverages, Ltd.

    6,594       98,014  

Hindustan Unilever, Ltd.

    2,709       86,724  
   

 

 

 

Total India

      1,752,093  
   

 

 

 
   
     
BRAZIL: 12.9%    

Banco BTG Pactual SA

    34,300       265,568  

Vale SA ADR

    10,272       162,914  

Vinci Partners Investments, Ltd. Class A

    13,537       148,230  

Armac Locacao Logistica E Servicos SA

    41,200       144,611  

WEG SA

    15,400       117,015  

PRIO SA

    10,800       102,384  

Hapvida Participacoes e Investimentos SAa,b,c

    106,800       97,838  

NU Holdings, Ltd. Class Aa

    11,718       97,611  
   

 

 

 

Total Brazil

      1,136,171  
   

 

 

 
   
     
MEXICO: 9.8%    

Prologis Property Mexico SA de CV REIT

    79,000       376,701  

GCC SAB de CV

    16,200       191,402  

Grupo Financiero Banorte SAB de CV Class O

    16,200       163,354  

Becle SAB de CV

    66,700       131,041  
   

 

 

 

Total Mexico

      862,498  
   

 

 

 
   
     
TAIWAN: 9.6%    

Taiwan Semiconductor Manufacturing Co., Ltd. ADR

    8,122       844,688  
   

 

 

 

Total Taiwan

      844,688  
   

 

 

 
   
     
UNITED STATES: 5.9%    

Globant SAa

    945       224,891  

Applied Materials, Inc.

    1,212       196,429  

Freeport-McMoRan, Inc.

    2,416       102,849  
   

 

 

 

Total United States

      524,169  
   

 

 

 
   
     
VIETNAM: 4.4%    

FPT Corp.

    57,620       228,229  

Military Commercial Joint Stock Bank

    121,080       93,073  

HDBank

    76,600       64,091  
   

 

 

 

Total Vietnam

      385,393  
   

 

 

 
   
     
FRANCE: 4.0%    

TotalEnergies SE ADR

    3,504       236,099  

LVMH Moet Hennessy Louis Vuitton SE

    145       117,504  
   

 

 

 

Total France

      353,603  
   

 

 

 
   
     
PHILIPPINES: 3.2%    

Ayala Corp.

    11,980       147,330  
     Shares     Value  

Wilcon Depot, Inc.

    355,600       $134,213  
   

 

 

 

Total Philippines

      281,543  
   

 

 

 
   
     
SOUTH KOREA: 3.1%    

Kia Corp.

    1,885       146,362  

LG Chem, Ltd.

    339       131,347  
   

 

 

 

Total South Korea

      277,709  
   

 

 

 
   
     
AUSTRALIA: 2.7%    

Woodside Energy Group, Ltd.

    11,244       238,303  
   

 

 

 

Total Australia

      238,303  
   

 

 

 
   
     
UNITED ARAB EMIRATES: 2.6%    

Emaar Properties PJSC

    60,090       129,579  

Fertiglobe PLC

    125,041       101,116  
   

 

 

 

Total United Arab Emirates

      230,695  
   

 

 

 
   
     
INDONESIA: 2.3%    

PT Bank Rakyat Indonesia Persero Tbk

    546,200       203,091  
   

 

 

 

Total Indonesia

      203,091  
   

 

 

 
   
     
POLAND: 2.3%    

Dino Polska SAa,b,c

    1,701       199,288  
   

 

 

 

Total Poland

      199,288  
   

 

 

 
   
     
UNITED KINGDOM: 2.2%    

Prudential PLC

    17,594       198,989  
   

 

 

 

Total United Kingdom

      198,989  
   

 

 

 
   
     
KAZAKHSTAN: 1.6%    

Kaspi.KZ JSC GDRc

    1,525       140,300  
   

 

 

 

Total Kazakhstan

      140,300  
   

 

 

 
   
     
SWITZERLAND: 1.5%    

Cie Financiere Richemont SA Class A

    978       134,502  
   

 

 

 

Total Switzerland

      134,502  
   

 

 

 
   
     
CHILE: 1.2%    

Antofagasta PLC

    5,130       109,835  
   

 

 

 

Total Chile

      109,835  
   

 

 

 
   
     
SAUDI ARABIA: 1.2%    

Bupa Arabia for Cooperative Insurance Co.

    1,806       102,677  
   

 

 

 

Total Saudi Arabia

      102,677  
   

 

 

 
   
     
TURKEY: 1.0%    

BIM Birlesik Magazalar AS

    8,579       87,361  
   

 

 

 

Total Turkey

      87,361  
   

 

 

 
   
     
TOTAL COMMON EQUITIES       8,062,908  
   

 

 

 

(Cost $7,299,198)

   

 

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Table of Contents

Matthews Emerging Markets ex China Active ETF

December 31, 2023

Schedule of Investments (continued)

PREFERRED EQUITIES: 6.5%

 

     Shares     Value  
SOUTH KOREA: 6.5%    

Samsung Electronics Co., Ltd., Pfd.

    11,842       $572,837  
   

 

 

 

Total South Korea

      572,837  
   

 

 

 
   
     
TOTAL PREFERRED EQUITIES       572,837  
   

 

 

 

(Cost $515,185)

   
   

SHORT-TERM INVESTMENTS: 2.0%

   
     
MONEY MARKET FUNDS: 2.0%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%d

    177,061       177,061  
   

 

 

 

(Cost $177,061)

   
   
     
TOTAL INVESTMENTS: 99.8%       8,812,806  

(Cost $7,991,444)

   
   
CASH AND OTHER ASSETS,
LESS LIABILITIES: 0.2%
      18,483  
   

 

 

 

NET ASSETS: 100.0%

      $8,831,289  
   

 

 

 
a

Non-income producing security.

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $297,126, which is 3.36% of net assets.

 

c

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

d

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

 

GDR

Global Depositary Receipt

 

JSC

Joint Stock Co.

 

Pfd.

Preferred

 

PJSC

Public Joint Stock Co.

 

REIT

Real Estate Investment Trust

See accompanying notes to financial statements.

 

14    Matthews Emerging Markets ex China Active ETF     


Table of Contents

LOGO

 

PORTFOLIO MANAGERS
Vivek Tanneeru  

Lead Manager

 
Inbok Song  

Co-Manager

 
FUND FACTS
Ticker  

EMSF

CUSIP

 

577130628

Inception Date

 

09/21/23

Gross Expense Ratio

 

0.79%

NAV (as of 12/31/23)

  $25.74

Market Price (as of 12/31/23)

  $25.79

# of Positions

 

56

Net Assets

 

$14.2 million

Portfolio Turnover

 

0.37%

Weight Average Market Cap

 

$19.0 billion

Benchmark

 

MSCI Emerging Markets Index

   

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies of any market capitalization located in emerging market countries that satisfy one or more of the Fund’s environmental, social and governance (“ESG”) standards. Emerging market countries generally include every country in the world except the United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.

 

3

Holdings may combine more than one security from same issuer and related depositary receipts.

4

Not all countries where the Fund may invest are included in the benchmark index.

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Emerging Markets Sustainable Future Active ETF (unaudited)

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

     Actual Return,
Not  Annualized
 
    

3 months

    

Since
Inception

    

Inception
date

 

Emerging Markets Sustainable Future Active ETF (NAV)1

     2.17%        2.98%        09/21/23  

Emerging Markets Sustainable Future Active ETF (market price)

     2.20%        3.18%     

MSCI Emerging Markets Index2

     7.93%        7.61%     

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

       
TOP TEN HOLDINGS3                   
Name    Sector    Country      % Net Assets  
Shriram Finance, Ltd.    Financials    India        6.8%  
Bandhan Bank, Ltd.    Financials    India        6.4%  
JD Health International, Inc.    Consumer Staples    China        5.4%  
Full Truck Alliance Co., Ltd. ADR    Industrials    China        5.1%  
Meituan Class B    Consumer Discretionary    China        4.4%  
Legend Biotech Corp. ADR    Health Care    China        4.0%  
Samsung SDI Co., Ltd.    Information Technology    South Korea        3.8%  
Hong Kong Exchanges &
Clearing, Ltd.
   Financials    Hong Kong        3.7%  
YDUQS Participacoes SA    Consumer Discretionary    Brazil        3.7%  
Micron Technology, Inc.    Information Technology    United States        3.6%  
% OF ASSETS IN TOP 10              47.0%  

 

   

COUNTRY ALLOCATION (%)4,5

     

China/Hong Kong

    41.1  
India     20.2  
Taiwan     9.5  
South Korea     7.9  
Brazil     7.7  
United States     3.6  
Poland     3.2  
Saudi Arabia     2.6  
Romania     1.3  
Jordan     1.1  
Chile     0.7  
Estonia     0.7  
Vietnam     0.1  
Bangladesh     0.1  
Cash and Other Assets, Less Liabilities     0.1  
   
SECTOR ALLOCATION (%)5      
Financials     24.9  
Information Technology     22.7  
Industrials     16.2  
Consumer Discretionary     11.7  
Health Care     9.0  
Consumer Staples     7.1  
Communication Services     4.7  
Real Estate     2.1  
Utilities     1.5  
Cash and Other Assets, Less Liabilities     0.1  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     22.3  
Large Cap ($10B-$25B)     15.7  
Mid Cap ($3B-10B)     40.6  
Small Cap (under $3B)     21.4  
Cash and Other Assets, Less Liabilities     0.1  

 

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Table of Contents

Matthews Emerging Markets Sustainable Future Active ETF

December 31, 2023

Schedule of Investmentsa

COMMON EQUITIES: 99.5%

 

     Shares     Value  
CHINA/HONG KONG: 41.1%

 

JD Health International, Inc.b,c,d

    153,950       $770,879  

Full Truck Alliance Co., Ltd. ADRc

    102,617       719,345  

Meituan Class Bb,c,d

    59,400       623,017  

Legend Biotech Corp. ADRc

    9,493       571,194  

Hong Kong Exchanges & Clearing, Ltd.

    15,400       528,549  

Airtac International Group

    11,000       362,001  

Lam Research Corp.

    407       318,787  

Zhihu, Inc. ADRc

    322,873       302,338  

Medlive Technology Co., Ltd.b,d

    236,500       256,836  

Contemporary Amperex Technology Co., Ltd. A Shares

    9,900       226,986  

Silergy Corp.

    11,000       179,209  

Flat Glass Group Co., Ltd. H Shares

    102,000       172,165  

Ginlong Technologies Co., Ltd. A Shares

    16,500       161,974  

Innovent Biologics, Inc.b,c,d

    22,000       120,445  

Hangzhou Tigermed Consulting Co., Ltd. A Shares

    11,000       84,918  

Wuxi Biologics Cayman, Inc.b,c,d

    22,000       83,396  

OPT Machine Vision Tech Co., Ltd. A Shares

    4,499       70,765  

Centre Testing International Group Co., Ltd. A Shares

    35,200       70,477  

Zhejiang HangKe Technology, Inc. Co. A Shares

    21,329       70,332  

China Conch Venture Holdings, Ltd.

    82,500       68,463  

Morimatsu International Holdings Co., Ltd.c,d

    66,000       46,488  

WuXi XDC Cayman, Inc.c

    520       2,131  
   

 

 

 

Total China/Hong Kong

      5,810,695  
   

 

 

 
   
     
INDIA: 20.2%    

Shriram Finance, Ltd.

    38,729       955,639  

Bandhan Bank, Ltd.b,d

    312,794       907,404  

Indus Towers, Ltd.c

    152,524       364,842  

Phoenix Mills, Ltd.

    10,494       283,071  

Mahindra & Mahindra, Ltd.

    10,901       226,551  

UNO Minda, Ltd.

    10,230       84,537  

Marico, Ltd.

    5,411       35,666  
   

 

 

 

Total India

      2,857,710  
   

 

 

 
   
     
TAIWAN: 9.5%    

Andes Technology Corp.

    22,000       344,080  

Elite Material Co., Ltd.

    22,000       273,831  

M31 Technology Corp.

    6,000       207,230  

Poya International Co., Ltd.

    11,000       197,846  

Sporton International, Inc.

    22,000       172,757  

Formosa Sumco Technology Corp.

    22,000       120,787  

AP Memory Technology Corp.

    2,000       30,563  
   

 

 

 

Total Taiwan

      1,347,094  
   

 

 

 
   
     
BRAZIL: 7.7%    

YDUQS Participacoes SA

    114,400       528,007  

B3 SA - Brasil Bolsa Balcao

    152,900       457,982  

NU Holdings, Ltd. Class Ac

    12,760       106,291  
   

 

 

 

Total Brazil

      1,092,280  
   

 

 

 
   
     
SOUTH KOREA: 7.5%    

Samsung SDI Co., Ltd.

    1,462       535,805  

Eugene Technology Co., Ltd.

    7,370       233,478  
     Shares     Value  

Solus Advanced Materials Co., Ltd.

    7,304       $150,288  

Ecopro BM Co., Ltd.

    594       132,830  

LG Energy Solution, Ltd.c

    22       7,303  
   

 

 

 

Total South Korea

      1,059,704  
   

 

 

 
   
     
UNITED STATES: 3.6%    

Micron Technology, Inc.

    6,015       513,320  
   

 

 

 

Total United States

      513,320  
   

 

 

 
   
     
POLAND: 3.2%    

InPost SAc

    17,963       248,333  

Jeronimo Martins SGPS SA

    8,074       205,493  
   

 

 

 

Total Poland

      453,826  
   

 

 

 
   
     
SAUDI ARABIA: 2.6%    

Saudi Tadawul Group Holding Co.

    7,623       373,222  
   

 

 

 

Total Saudi Arabia

      373,222  
   

 

 

 
   
     
ROMANIA: 1.3%    

Banca Transilvania SA

    34,716       187,008  
   

 

 

 

Total Romania

      187,008  
   

 

 

 
   
     
JORDAN: 1.1%    

Hikma Pharmaceuticals PLC

    6,721       153,280  
   

 

 

 

Total Jordan

      153,280  
   

 

 

 
   
     
CHILE: 0.8%    

Aguas Andinas SA Class A

    324,797       105,850  
   

 

 

 

Total Chile

      105,850  
   

 

 

 
   
     
ESTONIA: 0.7%    

Enefit Green AS

    25,443       99,944  
   

 

 

 

Total Estonia

      99,944  
   

 

 

 
   
     
VIETNAM: 0.1%    

Nam Long Investment Corp.

    12,600       19,034  
   

 

 

 

Total Vietnam

      19,034  
   

 

 

 
   
     
BANGLADESH: 0.1%    

BRAC Bank PLC

    17,844       5,447  

GrameenPhone, Ltd.

    1,302       3,103  
   

 

 

 

Total Bangladesh

      8,550  
   

 

 

 
   
   
TOTAL COMMON EQUITIES

 

    14,081,517  
   

 

 

 

(Cost $13,460,189)

   
   

PREFERRED EQUITIES: 0.4%

   
     
SOUTH KOREA: 0.4%    

Samsung SDI Co., Ltd., Pfd.

    341       65,134  
   

 

 

 

Total South Korea

      65,134  
   

 

 

 
   
     
TOTAL PREFERRED EQUITIES       65,134  
   

 

 

 

(Cost $61,975)

   

 

16    Matthews Emerging Markets Sustainable Future Active ETF     


Table of Contents

Matthews Emerging Markets Sustainable Future Active ETF

December 31, 2023

Schedule of Investmentsa (continued)

SHORT-TERM INVESTMENTS: 0.2%

 

     Shares     Value  
MONEY MARKET FUNDS: 0.2%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%e

    26,961       $26,961  
   

 

 

 

(Cost $26,961)

   
   
     
TOTAL INVESTMENTS: 100.1%       14,173,612  

(Cost $13,549,125)

   
   
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS: (0.1%)
      (19,013
   

 

 

 

NET ASSETS: 100.0%

      $14,154,599  
   

 

 

 
a

Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note 2-A).

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $2,761,977, which is 19.51% of net assets.

 

c

Non-income producing security.

 

d

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

e

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

 

Pfd.

Preferred

See accompanying notes to financial statements.

 

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Table of Contents

LOGO

 

PORTFOLIO MANAGERS
Michael J. Oh, CFA  

Lead Manager

 

Inbok Song

 

Co-Manager

 
FUND FACTS
Ticker   MINV

CUSIP

  577125826

Inception Date

  07/13/22

Gross Expense Ratio

  0.79%

NAV (as of 12/31/23)

  $23.56

Market Price (as of 12/31/23)

  $23.41

# of Positions

  49

Net Assets

  $84.8 million

Portfolio Turnover

  277.86%

Weight Average Market Cap

  $188.3 billion

Benchmark

MSCI AC Asia ex Japan Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia ex Japan that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets. Asia ex Japan consists of all countries and markets in Asia excluding Japan, including developed, emerging, and frontier countries and markets in the Asia region.

Matthews Asia Innovators Active ETF (unaudited)

FUND INSIGHTS

 

    The top three contributors to absolute performance during the year included PDD Holdings, a Chinese consumer discretionary company, Alchip Technologies, a Taiwanese information technology company, and Samsung Electronics, a South Korean information technology company.

 

    The largest detractors to performance during the year included Meituan, a Chinese consumer discretionary company, Wuxi Biologics, a Chinese health care company, and Kuaishou Technology, a Chinese communication services company.

 

    The top three contributors to relative performance, on a country basis, were United States due to an off-benchmark allocation, Thailand due to underweight allocation and Malaysia due to zero allocation.

 

    The top three detractors to relative performance, on a country basis, were China/Hong Kong, India and South Korea due to stock selection.

 

    The top three contributors to relative performance, on a sector basis, were real estate due to stock selection, information technology due to overweight allocation and stock selection and utilities due to zero allocation.

 

    The top three detractors to relative performance, on a sector basis, were communication services and health care due to stock selection and consumer discretionary due to overweight allocation.

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

      

 

     Average Annual
Total Returns
 
     3 Months      YTD      Since
Inception
     Inception
date
 
Asia Innovators Active ETF (NAV)1      6.00%        -1.83%        -3.30%        07/13/22  
Asia Innovators Active ETF (market price)      5.89%        -2.66%        -3.72%     
MSCI AC Asia ex Japan Index2      6.48%        6.34%        3.25%     

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION

LOGO

Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

 

18    Matthews Asia Innovators Active ETF     


Table of Contents
       
TOP TEN HOLDINGS3                 
Name  

Sector

 

Country

    

% Net Assets

 
Taiwan Semiconductor Manufacturing Co., Ltd.   Information Technology   Taiwan        9.0%  
Samsung Electronics Co., Ltd.   Information Technology   South Korea        7.5%  
PDD Holdings, Inc. ADR   Consumer Discretionary   China        7.1%  
NVIDIA Corp.   Information Technology   United States        3.5%  
PT Bank Rakyat Indonesia Persero Tbk   Financials   Indonesia        3.5%  
ICICI Bank, Ltd.   Financials   India        3.4%  
Axis Bank, Ltd.   Financials   India        3.4%  
SK Hynix, Inc.   Information Technology   South Korea        3.2%  
Reliance Industries, Ltd.   Energy   India        3.1%  
Zomato, Ltd.   Consumer Discretionary   India        2.9%  
% OF ASSETS IN TOP 10            46.7%  

 

  3

Holdings may combine more than one security from same issuer and related depositary receipts.

 

   
COUNTRY ALLOCATION (%)4,5      

China/Hong Kong

    32.5  
India     25.2  
Taiwan     14.9  
South Korea     13.9  
United States     5.0  
Indonesia     3.5  
Hong Kong     2.1  
Netherlands     1.9  
Brazil     1.1  
Cash and Other Assets, Less Liabilities     2.1  
   
SECTOR ALLOCATION (%)5      
Information Technology     32.9  
Consumer Discretionary     25.3  
Financials     18.3  
Industrials     7.1  
Communication Services     5.8  
Energy     3.1  
Health Care     3.0  
Consumer Staples     1.2  
Real Estate     1.0  
Cash and Other Assets, Less Liabilities     2.1  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     72.0  
Large Cap ($10B-$25B)     14.1  
Mid Cap ($3B-10B)     11.6  
Small Cap (under $3B)     0.2  
Cash and Other Assets, Less Liabilities     2.1  
4

Not all countries where the Fund may invest are included in the benchmark index.

 

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

 

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Table of Contents

Matthews Asia Innovators Active ETF

December 31, 2023

Schedule of Investments

COMMON EQUITIES: 97.9%

 

     Shares     Value  
CHINA/HONG KONG: 32.5%    

PDD Holdings, Inc. ADRa

    41,360       $6,051,382  

Alibaba Group Holding, Ltd.

    246,900       2,390,410  

AIA Group, Ltd.

    208,600       1,817,909  

Tencent Holdings, Ltd.

    41,400       1,556,632  

Trip.com Group, Ltd. ADRa

    35,977       1,295,532  

WuXi AppTec Co., Ltd. A Shares

    126,500       1,292,607  

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. A Shares

    31,500       1,285,552  

Meituan Class Ba,b,c

    120,900       1,268,060  

Full Truck Alliance Co., Ltd. ADRa

    177,854       1,246,757  

Contemporary Amperex Technology Co., Ltd. A Shares

    49,000       1,123,464  

Shenzhen Inovance Technology Co., Ltd. A Shares

    115,500       1,024,165  

Kanzhun, Ltd. ADR

    60,394       1,003,144  

BYD Co., Ltd. H Shares

    36,000       988,455  

Zhejiang Shuanghuan Driveline Co., Ltd. A Shares

    240,600       879,197  

KE Holdings, Inc. ADR

    53,970       874,854  

MINISO Group Holding, Ltd. ADR

    41,795       852,618  

DiDi Global, Inc.a

    206,083       814,028  

New Oriental Education & Technology Group, Inc. ADRa

    9,597       703,268  

Tencent Music Entertainment Group ADRa

    72,799       655,919  

NAURA Technology Group Co., Ltd. A Shares

    12,600       434,787  
   

 

 

 

Total China/Hong Kong

      27,558,740  
   

 

 

 
   
     
INDIA: 25.2%    

ICICI Bank, Ltd.

    244,205       2,924,693  

Axis Bank, Ltd.

    216,860       2,872,660  

Reliance Industries, Ltd.

    84,358       2,620,495  

Zomato, Ltd.a

    1,657,568       2,464,030  

HDFC Bank, Ltd.

    114,352       2,348,844  

Mahindra & Mahindra, Ltd.

    84,426       1,754,594  

Godrej Consumer Products, Ltd.

    76,845       1,044,624  

Indian Hotels Co., Ltd.

    194,228       1,023,146  

ABB India, Ltd.

    17,667       992,511  

Titan Co., Ltd.

    19,463       859,657  

Bajaj Finance, Ltd.

    9,407       828,374  

Cummins India, Ltd.

    34,274       808,910  

HDFC Life Insurance Co., Ltd.b,c

    103,338       803,097  
   

 

 

 

Total India

      21,345,635  
   

 

 

 
   
     
TAIWAN: 14.9%    

Taiwan Semiconductor Manufacturing Co., Ltd.

    396,000       7,651,488  

Alchip Technologies, Ltd.

    17,000       1,814,079  

Accton Technology Corp.

    54,000       920,220  

Unimicron Technology Corp.

    146,000       837,262  

Wiwynn Corp.

    14,000       832,505  

Lotes Co., Ltd.

    12,000       418,371  

M31 Technology Corp.

    5,000       172,692  
   

 

 

 

Total Taiwan

      12,646,617  
   

 

 

 
   
     
SOUTH KOREA: 13.9%    

Samsung Electronics Co., Ltd.

    104,392       6,362,895  

SK Hynix, Inc.

    24,575       2,700,025  
     Shares     Value  

NAVER Corp.

    10,022       $1,743,092  

Kia Corp.

    12,447       966,457  
   

 

 

 

Total South Korea

      11,772,469  
   

 

 

 
   
     
UNITED STATES: 5.0%    

NVIDIA Corp.

    5,986       2,964,387  

Applied Materials, Inc.

    7,724       1,251,828  
   

 

 

 

Total United States

      4,216,215  
   

 

 

 
   
     
INDONESIA: 3.5%    

PT Bank Rakyat Indonesia Persero Tbk

    7,968,200       2,962,781  
   

 

 

 

Total Indonesia

      2,962,781  
   

 

 

 
   
     
NETHERLANDS: 1.8%    

ASML Holding NV

    2,091       1,582,720  
   

 

 

 

Total Netherlands

      1,582,720  
   

 

 

 
   
     
BRAZIL: 1.1%    

NU Holdings, Ltd. Class Aa

    111,730       930,711  
   

 

 

 

Total Brazil

      930,711  
   

 

 

 
   
     
TOTAL COMMON EQUITIES       83,015,888  
   

 

 

 

(Cost $70,816,737)

   
   

SHORT-TERM INVESTMENTS: 0.7%

   
     
MONEY MARKET FUNDS: 0.7%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%d

    579,144       579,144  
   

 

 

 

(Cost $579,144)

   
   
   
TOTAL INVESTMENTS: 98.6%

 

    83,595,032  

(Cost $71,395,881)

   
   
CASH AND OTHER ASSETS,
LESS LIABILITIES: 1.4%
      1,214,371  
   

 

 

 
   

NET ASSETS: 100.0%

 

    $84,809,403  
   

 

 

 

 

a

Non-income producing security.

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $2,071,157, which is 2.44% of net assets.

 

c

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

d

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

See accompanying notes to financial statements.

 

20    Matthews Asia Innovators Active ETF     


Table of Contents

LOGO

 

PORTFOLIO MANAGERS

Sean Taylor

  Inbok Song

Lead Manager

  Lead Manager

Winnie Chwang

 

Andrew Mattock, CFA

Co-Manager

 

Co-Manager

Peeyush Mittal, CFA   Jeremy Sutch, CFA

Co-Manager

 

Co-Manager

FUND FACTS

   
Ticker   ASIA

CUSIP

  577130578

Inception Date

  09/21/23

Gross Expense Ratio

  0.79%

NAV (as of 12/31/23)

  $25.33

Market Price (as of 12/31/23)

  $25.44

# of Positions

  52

Net Assets

  $79.8 million

Portfolio Turnover

 

12.07%

Weight Average Market Cap

  $139.4 billion

Benchmark

 

MSCI AC Asia ex Japan Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia ex Japan, which consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging and frontier countries and markets in the Asian region.

 

3

Holdings may combine more than one security from same issuer and related depositary receipts.

4

Not all countries where the Fund may invest are included in the benchmark index.

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Pacific Tiger Active ETF (unaudited)

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

     Actual Return,
Not  Annualized
 
     3 months      Since
Inception
     Inception
date
 
Pacific Tiger Active ETF (NAV)1      1.85%        1.44%        09/21/23  
Pacific Tiger Active ETF (market price)      2.21%        1.88%     
MSCI AC Asia ex Japan Index2      6.48%        6.39%     

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

       
TOP TEN HOLDINGS3                   
Name    Country    Sector      % Net Assets  
Taiwan Semiconductor Manufacturing Co., Ltd. ADR    Taiwan    Information Technology        8.8%  
Samsung Electronics Co., Ltd.    South Korea    Information Technology        8.8%  
Tencent Holding, Ltd.    China    Communication Services        4.5%  
Central Pattana Public Co., Ltd.    Thailand    Real Estate        3.7%  
ICICI Bank, Ltd. ADR    India    Financials        3.1%  
Titan Co., Ltd.    India    Consumer Discretionary        3.1%  
HDFC Bank, Ltd. ADR    India    Financials        3.0%  
Alibaba Group Holding, Ltd. ADR    China    Consumer Discretionary        2.9%  
PT Bank Central Asia Tbk    Indonesia    Financials        2.8%  
CITIC Securities Co., Ltd. H Shares    China    Financials        2.5%  
% OF ASSETS IN TOP 10              43.0%  

 

   
COUNTRY ALLOCATION (%)4,5      

China/Hong Kong

    36.8  
India     19.8  
Taiwan     19.0  
South Korea     13.3  
Thailand     3.7  
Indonesia     2.8  
Philippines     2.0  
Singapore     1.5  
Vietnam     0.9  
Cash and Other Assets, Less Liabilities     0.2  
   
SECTOR ALLOCATION (%)5      
Information Technology     28.3  
Financials     19.4  
Consumer Discretionary     12.1  
Real Estate     9.5  
Communication Services     9.2  
Consumer Staples     8.1  
Industrials     6.4  
Materials     3.3  
Utilities     1.9  
Health Care     1.7  
Cash and Other Assets, Less Liabilities     0.2  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     62.6  
Large Cap ($10B-$25B)     19.5  
Mid Cap ($3B-10B)     17.6  
Small Cap (under $3B)     0.0  
Cash and Other Assets, Less Liabilities     0.2  

 

     matthewsasia.com | 833.228.5605      21  


Table of Contents

Matthews Pacific Tiger Active ETF

December 31, 2023

Schedule of Investmentsa

COMMON EQUITIES: 99.8%

 

     Shares     Value  
CHINA/HONG KONG: 36.8%    

Tencent Holdings, Ltd.

    94,500       $3,553,182  

Alibaba Group Holding, Ltd. ADR

    30,343       2,351,886  

CITIC Securities Co., Ltd. H Shares

    976,500       1,993,380  

AIA Group, Ltd.

    226,800       1,976,518  

KE Holdings, Inc. ADR

    109,116       1,768,770  

Shenzhen Inovance Technology Co., Ltd. A Shares

    195,300       1,731,770  

Hong Kong Exchanges & Clearing, Ltd.

    50,400       1,729,796  

Kweichow Moutai Co., Ltd. A Shares

    6,300       1,527,090  

Yum China Holdings, Inc.

    35,073       1,488,147  

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. A Shares

    33,300       1,359,012  

China Resources Mixc Lifestyle Services, Ltd.b,c

    365,400       1,303,237  

China Resources Beer Holdings Co., Ltd.

    288,000       1,261,387  

China Tourism Group Duty Free Corp., Ltd. A Shares

    81,900       962,589  

Will Semiconductor Co., Ltd. Shanghai A Shares

    63,000       944,124  

Contemporary Amperex Technology Co., Ltd. A Shares

    37,800       866,673  

Tencent Music Entertainment Group ADRd

    91,556       824,920  

Kuaishou Technologyb,c,d

    119,700       811,689  

Shandong Sinocera Functional Material Co., Ltd. A Shares

    239,400       777,312  

StarPower Semiconductor, Ltd. A Shares

    25,200       640,564  

Meituan Class Bb,c,d

    55,400       581,063  

Kanzhun, Ltd. ADR

    32,940       547,133  

ENN Energy Holdings, Ltd.

    50,400       371,132  

WuXi XDC Cayman, Inc.d

    120       492  
   

 

 

 

Total China/Hong Kong

      29,371,866  
   

 

 

 
   
     
INDIA: 19.8%    

ICICI Bank, Ltd. ADR

    103,572       2,469,157  

Titan Co., Ltd.

    55,503       2,451,500  

HDFC Bank, Ltd. ADR

    35,112       2,356,366  

Pidilite Industries, Ltd.

    56,196       1,833,564  

Tata Consultancy Services, Ltd.

    39,128       1,783,697  

Ashok Leyland, Ltd.

    616,455       1,344,939  

Tata Power Co., Ltd.

    285,516       1,139,645  

Dabur India, Ltd.

    146,186       978,863  

Tata Consumer Products, Ltd.

    63,664       831,474  

Mahindra & Mahindra, Ltd.

    30,601       635,969  
   

 

 

 

Total India

      15,825,174  
   

 

 

 
   
     
TAIWAN: 19.0%    

Taiwan Semiconductor Manufacturing Co., Ltd. ADR

    67,479       7,017,816  

Chailease Holding Co., Ltd.

    252,000       1,584,725  

MediaTek, Inc.

    43,000       1,422,101  

E Ink Holdings, Inc.

    181,000       1,161,825  

Eclat Textile Co., Ltd.

    63,000       1,153,647  

Accton Technology Corp.

    63,000       1,073,590  

Uni-President Enterprises Corp.

    361,000       876,313  

Delta Electronics, Inc.

    63,000       643,538  

ASE Technology Holding Co., Ltd.

    58,000       255,128  
   

 

 

 

Total Taiwan

      15,188,683  
   

 

 

 
   
     
SOUTH KOREA: 13.3%    

Samsung Electronics Co., Ltd.

    115,026       7,011,057  

NAVER Corp.

    9,111       1,584,645  
     Shares     Value  

Samsung Engineering Co., Ltd.d

    52,101       $1,173,173  

Orion Corp.

    9,180       827,547  
   

 

 

 

Total South Korea

      10,596,422  
   

 

 

 
   
     
THAILAND: 3.7%    

Central Pattana Public Co., Ltd.

    1,436,400       2,921,888  
   

 

 

 

Total Thailand

      2,921,888  
   

 

 

 
   
     
INDONESIA: 2.8%    

PT Bank Central Asia Tbk

    3,604,200       2,200,395  
   

 

 

 

Total Indonesia

      2,200,395  
   

 

 

 
   
     
PHILIPPINES: 2.0%    

SM Prime Holdings, Inc.

    2,624,100       1,559,059  
   

 

 

 

Total Philippines

      1,559,059  
   

 

 

 
   
     
SINGAPORE: 1.5%    

DBS Group Holdings, Ltd.

    47,700       1,208,140  
   

 

 

 

Total Singapore

      1,208,140  
   

 

 

 
   
     
VIETNAM: 0.9%    

FPT Corp.

    151,900       601,664  

Vietnam Dairy Products JSC

    53,100       147,950  
   

 

 

 

Total Vietnam

      749,614  
   

 

 

 
   
     
TOTAL COMMON EQUITIES       79,621,241  
   

 

 

 

(Cost $76,623,537)

   
   

SHORT-TERM INVESTMENTS: 4.7%

   
     
MONEY MARKET FUNDS: 4.7%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%e

    3,771,939       3,771,939  
   

 

 

 

(Cost $3,771,939)

   
   
   
TOTAL INVESTMENTS: 104.5%

 

    83,393,180  

(Cost $80,395,476)

   
   
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS: (4.5%)
      (3,604,029
   

 

 

 
   

NET ASSETS: 100.0%

 

    $79,789,151  
   

 

 

 

 

a

Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note 2-A).

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $2,695,989, which is 3.38% of net assets.

 

c

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

d

Non-income producing security.

 

e

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

 

JSC

Joint Stock Co.

See accompanying notes to financial statements.

 

22    Matthews Pacific Tiger Active ETF     


Table of Contents

LOGO

 

PORTFOLIO MANAGERS
Andrew Mattock, CFA  

Lead Manager

 
Winnie Chwang   Sherwood Zhang, CFA

Co-Manager

  Co-Manager
FUND FACTS
Ticker  

MCH

CUSIP

 

577125834

Inception Date

 

07/13/22

Gross Expense Ratio

 

0.79%

NAV (as of 12/31/23)

  $19.07

Market Price (as of 12/31/23)

  $19.04

# of Positions

 

51

Net Assets

 

$21.7 million

Portfolio Turnover

 

58.98%

Weight Average Market Cap

 

$101 billion

Benchmark

MSCI China Index

MSCI China All Shares Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in China. China includes its administrative and other districts, such as Hong Kong.

Matthews China Active ETF (unaudited)

FUND INSIGHTS

 

    The top three contributors to absolute performance during the year included PDD Holdings, a consumer discretionary company, Beijing Kingsoft Office Software, an information technology company, and Tencent Music Entertainment Group, a communication services company.

 

    The largest detractors to performance during the year included Meituan and JD.com, a consumer discretionary company and CIFI Holdings (Group), a real estate company.

 

    The top three contributors to relative performance, on a sector basis, were materials due to an underweight allocation, and information technology and consumer staples due to stock selection.

 

    The top three detractors to relative performance, on a sector basis, were real estate and consumer discretionary due to stock selection and communication services due to an underweight allocation.

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

      

 

     Average Annual
Total Returns
 
     3 Months      1 Year      Since
Inception
     Inception
date
 
China Active ETF (NAV)1      -5.23%        -19.35%        -15.89%        07/13/22  
China Active ETF (market price)      -5.68%        -19.92%        -16.00%     
MSCI China Index2      -4.21%        -11.04%        -12.49%     
MSCI China All Shares Index2      -3.81%        -11.35%        -13.90%     

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION

LOGO

Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

 

     matthewsasia.com | 833.228.5605      23  


Table of Contents

 

     
TOP TEN HOLDINGS3              
    

Sector

        
Tencent Holdings, Ltd.    Communication Services        8.9%  
Alibaba Group Holding, Ltd.    Consumer Discretionary        7.8%  
PDD Holdings, Inc. ADR    Consumer Discretionary        7.2%  
JD.com, Inc. Class A    Consumer Discretionary        4.6%  
CITIC Securities Co., Ltd. H Shares    Financials        4.4%  
China Merchants Bank Co., Ltd. A Shares    Financials        4.2%  
KE Holdings, Inc. ADR    Real Estate        4.0%  
Meituan Class B    Consumer Discretionary        3.7%  
China International Capital Corp., Ltd. H Shares    Financials        3.3%  
China Construction Bank Corp. H Shares    Financials        2.1%  
% OF ASSETS IN TOP 10           50.1%  

 

  3

Holdings may combine more than one security from same issuer and related depositary receipts.

 

 
COUNTRY ALLOCATION (%)4,5  
China/Hong Kong     99.4  
Cash and Other Assets, Less Liabilities     0.6  
   
SECTOR ALLOCATION (%)4      
Consumer Discretionary     33.9  
Financials     18.9  
Communication Services     15.4  
Consumer Staples     6.7  
Industrials     6.5  
Real Estate     5.7  
Information Technology     5.3  
Health Care     4.2  
Energy     1.8  
Utilities     0.9  
Cash and Other Assets, Less Liabilities     0.6  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     63.8  
Large Cap ($10B-$25B)     24.3  
Mid Cap ($3B-10B)     7.3  
Small Cap (under $3B)     3.9  
Cash and Other Assets, Less Liabilities     0.6  
4

Not all countries where the Fund may invest are included in the benchmark index.

 

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

 

24    Matthews China Active ETF     


Table of Contents

Matthews China Active ETF

December 31, 2023

Schedule of Investments

COMMON EQUITIES: 99.4%

 

     Shares     Value  
CONSUMER DISCRETIONARY: 34.0%    

Broadline Retail: 19.7%

   

Alibaba Group Holding, Ltd.

    175,400       $1,698,169  

PDD Holdings, Inc. ADRa

    10,728       1,569,614  

JD.com, Inc. Class A

    70,050       1,009,230  
   

 

 

 
      4,277,013  
   

 

 

 
   

Hotels, Restaurants & Leisure: 8.9%

   

Meituan Class Ba,b,c

    77,010       807,719  

Galaxy Entertainment Group, Ltd.

    74,000       414,610  

Yum China Holdings, Inc.

    6,253       265,315  

Trip.com Group, Ltd. ADRa

    6,871       247,425  

Luckin Coffee, Inc. ADRa

    7,418       202,363  
   

 

 

 
      1,937,432  
   

 

 

 
   

Household Durables: 3.1%

   

Midea Group Co., Ltd. A Shares

    47,400       363,658  

Man Wah Holdings, Ltd.

    436,000       298,724  
   

 

 

 
      662,382  
   

 

 

 
   

Diversified Consumer Services: 0.8%

   

China Education Group Holdings, Ltd.c

    292,000       183,235  
   

 

 

 
   

Automobiles: 0.8%

   

Yadea Group Holdings, Ltd.b,c

    92,000       161,648  
   

 

 

 
   

Specialty Retail: 0.7%

   

China Tourism Group Duty Free Corp., Ltd. A Shares

    13,300       156,318  
   

 

 

 

Total Consumer Discretionary

      7,378,028  
   

 

 

 
   
     
FINANCIALS: 18.9%    

Capital Markets: 9.3%

   

CITIC Securities Co., Ltd. H Shares

    463,500       946,167  

China International Capital Corp., Ltd. H Sharesb,c

    483,600       709,742  

Hong Kong Exchanges & Clearing, Ltd.

    6,300       216,225  

East Money Information Co., Ltd. A Shares

    80,040       157,818  
   

 

 

 
      2,029,952  
   

 

 

 

Banks: 6.3%

   

China Merchants Bank Co., Ltd. A Shares

    233,500       912,278  

China Construction Bank Corp. H Shares

    756,000       450,199  
   

 

 

 
      1,362,477  
   

 

 

 

Insurance: 3.3%

   

Ping An Insurance Group Co. of China, Ltd. H Shares

    87,000       393,857  

PICC Property & Casualty Co., Ltd. H Shares

    266,000       316,125  
   

 

 

 
      709,982  
   

 

 

 

Total Financials

      4,102,411  
   

 

 

 
   
     
COMMUNICATION SERVICES: 15.4%    

Interactive Media & Services: 11.5%

   

Tencent Holdings, Ltd.

    51,400       1,932,630  

Kuaishou Technologya,b,c

    50,400       341,764  

Baidu, Inc. Class Aa

    15,300       227,485  
   

 

 

 
      2,501,879  
   

 

 

 
   

Entertainment: 2.0%

   

Tencent Music Entertainment Group ADRa

    47,295       426,128  
   

 

 

 
   
     Shares     Value  

Media: 1.9%

   

Focus Media Information Technology Co., Ltd. A Shares

    478,911       $425,065  
   

 

 

 

Total Communication Services

      3,353,072  
   

 

 

 
   
     
CONSUMER STAPLES: 6.7%    

Beverages: 4.3%

 

 

Wuliangye Yibin Co., Ltd. A Shares

    18,700       368,480  

Tsingtao Brewery Co., Ltd. H Shares

    46,000       308,687  

Shanxi Xinghuacun Fen Wine Factory Co., Ltd. A Shares

    8,100       262,466  
   

 

 

 
      939,633  
   

 

 

 
   

Consumer Staples Distribution & Retail: 1.3%

   

JD Health International, Inc.a,b,c

    54,600       273,400  
   

 

 

 
   

Food Products: 1.1%

   

Guangdong Haid Group Co., Ltd. A Shares

    38,600       243,452  
   

 

 

 

Total Consumer Staples

      1,456,485  
   

 

 

 
   
     
INDUSTRIALS: 6.5%    

Electrical Equipment: 3.3%

 

 

Contemporary Amperex Technology Co., Ltd. A Shares

    16,300       373,724  

Sungrow Power Supply Co., Ltd. A Shares

    29,100       357,957  
   

 

 

 
      731,681  
   

 

 

 
   

Machinery: 2.1%

   

Shenzhen Inovance Technology Co., Ltd. A Shares

    30,600       271,337  

Estun Automation Co., Ltd. A Shares

    68,600       179,096  
   

 

 

 
      450,433  
   

 

 

 
   

Transportation Infrastructure: 1.1%

   

Shanghai International Airport Co., Ltd. A Sharesa

    51,252       235,941  
   

 

 

 

Total Industrials

      1,418,055  
   

 

 

 
   
     
REAL ESTATE: 5.7%    

Real Estate Management & Development: 5.7%

 

 

KE Holdings, Inc. ADR

    53,212       862,567  

Country Garden Services Holdings Co., Ltd.

    224,000       193,634  

CIFI Holdings Group Co., Ltd.a

    3,718,000       121,417  

Times China Holdings, Ltd.a

    1,790,000       59,601  
   

 

 

 

Total Real Estate

      1,237,219  
   

 

 

 
   
     
INFORMATION TECHNOLOGY: 5.3%    

Electronic Equipment, Instruments & Components: 2.4%

 

 

Wingtech Technology Co., Ltd. A Sharesa

    46,800       278,081  

SUPCON Technology Co., Ltd. A Shares

    36,470       232,272  
   

 

 

 
      510,353  
   

 

 

 
   

Semiconductors & Semiconductor Equipment: 1.5%

 

 

NAURA Technology Group Co., Ltd. A Shares

    5,887       203,142  

Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. A Shares

    21,503       133,145  
   

 

 

 
      336,287  
   

 

 

 
   

 

     matthewsasia.com | 833.228.5605      25  


Table of Contents

Matthews China Active ETF

December 31, 2023

Schedule of Investments (continued)

COMMON EQUITIES (continued)

 

     Shares     Value  

Software: 1.4%

   

Shanghai Baosight Software Co., Ltd. A Shares

    44,256       $303,302  
   

 

 

 

Total Information Technology

      1,149,942  
   

 

 

 
   
     
HEALTH CARE: 4.2%    

Health Care Equipment & Supplies: 1.9%

   

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. A Shares

    10,000       408,112  
   

 

 

 
   

Life Sciences Tools & Services: 1.4%

   

Wuxi Biologics Cayman, Inc.a,b,c

    80,500       305,153  

WuXi XDC Cayman, Inc.a

    153       627  
   

 

 

 
      305,780  
   

 

 

 
   

Health Care Providers & Services: 0.9%

   

Sinopharm Group Co., Ltd. H Shares

    78,000       204,276  
   

 

 

 

Total Health Care

      918,168  
   

 

 

 
   
     
ENERGY: 1.8%    

Oil, Gas & Consumable Fuels: 1.8%

   

PetroChina Co., Ltd. H Shares

    602,000       397,810  
   

 

 

 

Total Energy

      397,810  
   

 

 

 
   
     
UTILITIES: 0.9%    

Gas Utilities: 0.9%

   

ENN Energy Holdings, Ltd.

    27,400       201,766  
   

 

 

 

Total Utilities

      201,766  
   

 

 

 
   
     
TOTAL COMMON EQUITIES       21,612,956  
   

 

 

 

(Cost $28,176,536)

   
   

SHORT-TERM INVESTMENTS: 0.5%

   
     
MONEY MARKET FUNDS: 0.5%    

JPMorgan U.S. Government Money Market Fund, Capital Shares, 5.25%d

    106,564       106,564  
   

 

 

 

(Cost $106,564)

   
   
     
TOTAL INVESTMENTS: 99.9%       21,719,520  

(Cost $28,283,100)

   
   
CASH AND OTHER ASSETS,
LESS LIABILITIES: 0.1%
      17,680  
   

 

 

 

NET ASSETS: 100.0%

      $21,737,200  
   

 

 

 
a

Non-income producing security.

 

b

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Funds’ Board of Trustees. At December 31, 2023, the aggregate value is $2,599,426, which is 11.96% of net assets.

 

c

The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

 

d

Rate shown is the current yield as of December 31, 2023.

 

ADR

American Depositary Receipt

See accompanying notes to financial statements.

 

26    Matthews China Active ETF     


Table of Contents

LOGO

 

PORTFOLIO MANAGERS

Peeyush Mittal, CFA

 

Lead Manager

 

Swagato Ghosh

 

Co-Manager

 
FUND FACTS
Ticker   INDE

CUSIP

  577130610

Inception Date

  09/21/23

Gross Expense Ratio

  0.79%

NAV (as of 12/31/23)

  $27.00

Market Price (as of 12/31/23)

  $27.03

# of Positions

  60

Net Assets

  $5.9 million

Portfolio Turnover

 

14.97%

Weight Average Market Cap

  $44.1 billion

Benchmark

S&P Bombay Stock Exchange 100 Index MSCI India Index

OBJECTIVE

 

 

Long-term capital appreciation.

STRATEGY

 

 

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in publicly traded common stocks, preferred stocks and convertible securities of companies located in India.

 

 

 

4

Holdings may combine more than one security from same issuer and related depositary receipts.

5

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Country allocations and percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews India Active ETF (unaudited)

 

 
PERFORMANCE AS OF DECEMBER 31, 2023  
 

 

    

 

     Actual Return,
Not  Annualized
 
     3 months      Since
Inception
     Inception
date
 
India Active ETF (NAV)1      8.48%        8.00%        09/21/23  
India Active ETF (market price)      9.34%        8.12%     
S&P Bombay Stock Exchange 100 Index2      11.38%        10.89%     
MSCI India Index3      11.98%        11.59%     

 

  1

The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.

 

  2

It is not possible to invest directly in an index. Source: Index data from S&P BSE 100 Index and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

 

  3

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 39 for index definition.

Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when sold, shares may be worth more or less than their original cost. For the Fund’s most recent month-end performance visit matthewsasia.com.

 

     
TOP TEN HOLDINGS4              
Name    Sector      % Net Assets  
HDFC Bank, Ltd.    Financials        6.1%  
ICICI Bank, Ltd.    Financials        5.2%  
Reliance Industries, Ltd.    Energy        4.7%  
Shriram Finance, Ltd.    Financials        4.5%  
Neuland Laboratories, Ltd.    Health Care        4.2%  
Infosys, Ltd.    Information Technology        4.0%  
IndusInd Bank, Ltd.    Financials        3.3%  
Axis Bank, Ltd.    Financials        3.2%  
Tata Consultancy Services, Ltd.    Information Technology        3.2%  
Titan Co., Ltd.    Consumer Discretionary        2.3%  
% OF ASSETS IN TOP 10           40.7%  

 

   
COUNTRY ALLOCATION (%)5      
India     100.7  
Liabilities in Excess of Cash and Other Assets     -0.7  
   
SECTOR ALLOCATION (%)5      
Financials     33.4  
Information Technology     15.4  
Consumer Discretionary     12.0  
Industrials     11.2  
Health Care     10.6  
Consumer Staples     9.1  
Energy     4.7  
Materials     4.1  
Communication Services     0.2  
Liabilities in Excess of Cash and Other Assets     -0.7  

 

   
MARKET CAP EXPOSURE (%)5      
Mega Cap (over $25B)     41.5  
Large Cap ($10B-$25B)     15.4  
Mid Cap ($3B-10B)     24.3  
Small Cap (under $3B)     19.6  
Liabilities in Excess of Cash and Other Assets     -0.7  

 

     matthewsasia.com | 833.228.5605      27  


Table of Contents

Matthews India Active ETF

December 31, 2023

Schedule of Investments

COMMON EQUITIES: 100.7%

 

     Shares     Value  
FINANCIALS: 33.4%    

Banks: 22.5%

   

HDFC Bank, Ltd.

    17,527       $360,013  

ICICI Bank, Ltd.

    25,868       309,805  

IndusInd Bank, Ltd.

    10,054       193,187  

Axis Bank, Ltd.

    14,562       192,897  

Kotak Mahindra Bank, Ltd.

    5,197       119,168  

Federal Bank, Ltd.

    62,610       117,487  

Bandhan Bank, Ltd.a,b

    15,343       44,510