Under normal circumstances, the Matthews Emerging Markets Sustainable Future 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. Certain emerging market countries may also be classified as “frontier” market countries, which are a subset of emerging market countries with newer or even less developed economies and markets, such as Sri Lanka and Vietnam.
Risks
Investments in emerging and frontier securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Additionally, investing in emerging and frontier markets countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Matthews Emerging Markets Sustainable Future Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.
These and other risks associated with investing in the Fund can be found in the
prospectus.
Emerging Markets - 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
Fees & Expenses
Gross Expense Ratio
1.23%
Objective
Long-term capital appreciation
Strategy
Under normal circumstances, the Matthews Emerging Markets Sustainable Future 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. Certain emerging market countries may also be classified as “frontier” market countries, which are a subset of emerging market countries with newer or even less developed economies and markets, such as Sri Lanka and Vietnam.
Risks
Investments in emerging and frontier securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Additionally, investing in emerging and frontier markets countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Matthews Emerging Markets Sustainable Future Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.
The risks associated with investing in the Fund can be found in the prospectus
Performance
Monthly
Quarterly
Calendar Year
As of 06/30/2024
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews Emerging Markets Sustainable Future Fund - MASGX
04/30/2015
MASGX
0.56%
0.16%
1.04%
0.66%
-3.07%
8.87%
n.a.
6.94%
MSCI Emerging Markets Index
4.01%
5.12%
7.68%
12.98%
-4.68%
3.49%
n.a.
3.28%
As of 06/30/2024
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews Emerging Markets Sustainable Future Fund - MASGX
04/30/2015
MASGX
0.56%
0.16%
1.04%
0.66%
-3.07%
8.87%
n.a.
6.94%
MSCI Emerging Markets Index
4.01%
5.12%
7.68%
12.98%
-4.68%
3.49%
n.a.
3.28%
For the years ended December 31st
Name
2023
2022
2021
2020
2019
2018
2017
2016
Matthews Emerging Markets Sustainable Future Fund - MASGX
MASGX
7.83%
-14.38%
11.76%
42.87%
12.55%
-9.73%
33.79%
-1.40%
MSCI Emerging Markets Index
10.27%
-19.74%
-2.22%
18.69%
18.88%
-14.24%
37.75%
11.60%
Before July 29, 2022, the Fund was managed with a different investment strategy and may have achieved different performance results under its current investment strategy from the performance shown for periods before that date.
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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 redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. Performance differences between the Institutional class and the Investor class may arise due to differences in fees charged to each class.
Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.
Growth of a Hypothetical $10,000 Investment Since Inception
(as of 06/30/2024)
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
The Overall Morningstar® Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.
Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Lipper Analytical Services, Inc., rankings are based on total return, including reinvestment of dividends and capital gains for the stated periods. Funds are assigned a rank within a universe of funds similar in investment objective as determined by Lipper. For the absolute rankings shown the lower the number rank, the better the Fund performed compared to other funds in the classification group. Lipper also calculates a quartile ranking which divides the peer group into quartiles to identify funds of similar quality. Funds in the 1st or 2nd quartile had outperformed the average fund in the peer group while funds in the 3rd or 4th quartile had underperformed.
Vivek Tanneeru is a Portfolio Manager at Matthews and manages the firm’s Emerging Markets Sustainable Future, Emerging Markets Small Companies, Emerging Markets Discovery, Asia Small Companies and Asia Sustainable Future Strategies. Prior to joining Matthews in 2011, Vivek was an Investment Manager on the Global Emerging Markets team of Pictet Asset Management in London. While at Pictet, he also worked on the firm’s Global Equities team, managing Japan and Asia ex-Japan markets. Before earning his MBA from the London Business School in 2006, Vivek was a Business Systems Officer at The World Bank and served as a Consultant at Arthur Andersen Business Consulting and Citicorp Infotech Industries. He interned at Generation Investment Management while studying for his MBA Vivek received his Master’s in Finance from the Birla Institute of Technology & Science in India. He is fluent in Hindi and Telugu.
Inbok Song is a Portfolio Manager at Matthews and manages the firm’s Pacific Tiger and Asia ex Japan Total Return Equity Strategies and co-manages the Emerging Markets Sustainable Future and Asia Innovators Strategies. Prior to rejoining Matthews in 2019, Inbok spent three years at Seafarer Capital Partners as a portfolio manager, the firm’s Director of Research and chief data scientist. Previously she was at Thornburg Investment Management as an associate portfolio manager. From 2007 to 2015, she was at Matthews, most recently as a portfolio manager. From 2005 to 2006, Inbok served as an Analyst and Technology Specialist at T. Stone Corp., a private equity firm in Seoul, South Korea. From 2004 to 2005, she was a research engineer for Samsung SDI in Seoul. Inbok received both a B.A. and Masters in Materials Science and Engineering from Seoul National University. She received a Masters in International Management from the University of London, King’s College, and also an M.A. in Management Science and Engineering, with a concentration in finance from Stanford University. Inbok is fluent in Korean.
Alex Zarechnak is a Portfolio Manager at Matthews and manages the firm’s Emerging Markets Equity and Emerging Markets ex China Strategies and co-manages the Emerging Markets Small Companies, Emerging Markets Discovery, and Emerging Markets Sustainable Future Strategies. Prior to joining the firm in 2020, he spent a total of 15 years (1998 – 2006 and 2012 – 2019) at Wellington Management as an analyst for the firm’s flagship Emerging Markets Equity fund as a generalist first covering CEEMEA, then Latin America. From 2006-2012, he was a regional equity analyst at Capital Group, covering Emerging Markets with a focus on energy, telecoms and consumer sectors in Latin America and CEEMEA. Alex began his Emerging Markets career as a Russia equity analyst with Templeton Emerging Markets, based in Moscow. He earned a B.A. in Economics and Government from the College of William & Mary. Alex is fluent in Russian.
Portfolio Characteristics
(as of 06/30/2024)
Fund
Benchmark
Number of Positions
54
1,330
Weighted Average Market Cap
$25.1 billion
$157.1 billion
Active Share
98.4
n.a.
P/E using FY1 estimates
17.3x
12.9x
P/E using FY2 estimates
13.6x
11.2x
Price/Cash Flow
10.7
8.2
Price/Book
2.5
1.8
Return On Equity
13.4
15.9
EPS Growth (3 Yr)
27.1%
18.8%
Sources: Factset Research Systems, Inc.
Risk Metrics (3 Yr Return)
(as of 06/30/2024)
Category
3YR Return Metric
Alpha
1.56%
Beta
0.94
Upside Capture
87.43%
Downside Capture
88.13%
Sharpe Ratio
-0.32
Information Ratio
0.17
Tracking Error
9.76%
R²
74.84
1.56%
Alpha
0.94
Beta
87.43%
Upside Capture
88.13%
Downside Capture
-0.32
Sharpe Ratio
0.17
Information Ratio
9.76%
Tracking Error
74.84
R²
Fund Risk Metrics are reflective of Investor share class.
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts. Source: BNY Mellon Investment Servicing (US) Inc.
Portfolio Breakdown (%)
(as of 06/30/2024)
Sector Allocation
Country Allocation
Market Cap Exposure
Sector
Fund
Benchmark
Difference
Financials
25.6
21.9
3.7
Information Technology
24.4
25.1
-0.7
Industrials
15.1
6.9
8.2
Consumer Discretionary
13.0
12.3
0.7
Health Care
6.6
3.2
3.4
Consumer Staples
6.5
5.2
1.3
Communication Services
4.6
8.9
-4.3
Real Estate
4.0
1.5
2.5
Materials
1.0
6.9
-5.9
Utilities
0.3
3.0
-2.7
Energy
0.0
5.2
-5.2
Liabilities in Excess of Cash and Other Assets
-1.1
0.0
-1.1
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
Country
Fund
Benchmark
Difference
China/Hong Kong
35.9
25.2
10.7
India
24.4
19.2
5.2
Taiwan
9.9
19.3
-9.4
South Korea
7.9
12.2
-4.3
Brazil
5.1
4.2
0.9
United States
4.0
0.0
4.0
Poland
3.2
1.0
2.2
South Africa
2.2
3.0
-0.8
Saudi Arabia
2.1
3.9
-1.8
Romania
1.7
0.0
1.7
Turkey
1.6
0.8
0.8
Vietnam
1.3
0.0
1.3
Jordan
1.0
0.0
1.0
Bangladesh
0.4
0.0
0.4
Chile
0.3
0.4
-0.1
Mexico
0.0
2.1
-2.1
Indonesia
0.0
1.6
-1.6
Malaysia
0.0
1.4
-1.4
Thailand
0.0
1.3
-1.3
United Arab Emirates
0.0
1.1
-1.1
Qatar
0.0
0.8
-0.8
Kuwait
0.0
0.7
-0.7
Greece
0.0
0.5
-0.5
Philippines
0.0
0.5
-0.5
Peru
0.0
0.3
-0.3
Hungary
0.0
0.2
-0.2
Colombia
0.0
0.1
-0.1
Czech Republic
0.0
0.1
-0.1
Egypt
0.0
0.1
-0.1
Liabilities in Excess of Cash and Other Assets
-1.1
0.0
-1.1
Not all countries are included in the benchmark index(es).
Equity market cap of issuer
Fund
Benchmark
Difference
Mega Cap (over $25B)
21.7
57.4
-35.7
Large Cap ($10B-$25B)
17.0
22.1
-5.1
Mid Cap ($3B-$10B)
40.5
19.7
20.8
Small Cap (under $3B)
21.9
0.8
21.1
Liabilities in Excess of Cash and Other Assets
-1.1
0.0
-1.1
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. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.
Portfolio Breakdown benchmark reflects the MSCI Emerging Markets Index as of 6/30/23.
There is no guarantee that the Fund will pay or continue to pay distributions.
Past performance is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost.
Emerging markets performed largely in line with our expectations in the second quarter, with Taiwan, India and China leading the way, while Mexico and Brazil underperformed. Inflation on the whole is not as high as in developed markets and in the absence of rate cuts from the U.S. Federal Reserve, a lot of positive performance was driven by fundamentals and earnings growth.
The expansion of the artificial intelligence (AI) supply chain, led by large U.S. tech firms, was another supportive theme, particularly for semiconductor hubs in emerging markets. We also saw volatility in India and Mexico following their elections, triggered by Prime Minister Modi’s failure to win a majority and Claudia Sheinbaum’s landslide victory—sparking worries among investors that the economic status quo in both countries could be challenged.
By region, Asia led performance in emerging markets. Taiwan was buoyed by demand for hardware from the U.S. while India’s markets recovered from their negative reaction to the election result when it became clear Modi would form a coalition with allies. Indian local bonds also had their inaugural inclusion in the JPMorgan Government Bond Index-Emerging Markets (GBI-EM) index, which is expected to add significant foreign investor inflows in coming quarters. Chinese equities, meanwhile, performed well despite ongoing economic challenges, helped by the government’s attempts to stabilize the real estate market and a cyclical pickup in some sectors.
In Latin America, higher-for-longer U.S. interest rates remained a headwind. In Mexico, though the long-term structural story remains intact, uncertainty over the potential reformist agenda of the new administration pulled markets down. High rates also hampered Brazil and market sentiment was negatively impacted by the corporate interventions of the government and concerns over its fiscal management.
Contributors and Detractors
For the quarter ended June 30, 2024, the Matthews Emerging Markets Sustainable Future Fund returned 0.16%, (Investor Class) and 0.24% (Institutional Class) while its benchmark, the MSCI Emerging Markets Index, returned 5.12% over the same period.
On a country basis, the top three contributors to relative performance were India due to stock selection, and Mexico and Indonesia due to zero allocation. The top three detractors were China/Hong Kong, Taiwan and Brazil due to stock selection.
On a sector basis, the top three contributors to relative performance were financials and real estate due to stock selection and materials due to an underweight allocation. The top three detractors were information technology (IT), consumer staples and industrials due to stock selection.
The largest contributors to absolute performance included Shriram Finance, an Indian financial services provider, Meituan, China’s largest food delivery service and internet platform company, and Indus Towers, an Indian telecommunication infrastructure company. The top three detractors to performance included YDUQS Participacoes, a Brazilian on-campus and distance-learning education company, JD Health International, a Chinese online healthcare platform, and Flat Glass Group, a Chinese glass products manufacturer.
Outlook
Post-COVID growth in emerging markets is starting to come through and broaden out and we think this will pave the way for consistent earnings growth over the next few years. We also see more upside to equity performance driven by North Asia and underpinned by earnings growth, a widening of AI-related adoption and improving value in certain markets.
Emerging markets, particularly those in Latin America, should also benefit from the onset of a monetary easing cycle in the U.S. and the decline in the value of the U.S. dollar that would likely bring, in our view. In India, we think the market will continue to progress though it is expensive. Under the new coalition government, we may see spending on growth spread out beyond infrastructure and CapEx which could yield more opportunities in consumption.
In China, we are cognizant to potential catalysts for growth and to potential headwinds, such as increased volatility as we approach the U.S. president election in November.
Finally, we view sustainable investing as a synonym for long-term investing. Emerging markets, we believe, are a key destination for sustainable investment themes that offer attractive opportunities for alpha generation.
View the Fund’s Top 10 holdings as of June 30, 2024. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MASGX as of 06/30/2024
1YR
3YR
5YR
10YR
Since Inception
Inception Date
0.66%
-3.07%
8.87%
N.A.
6.94%
04/30/2015
All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. For the Fund's most recent month-end performance visit matthewsasia.com
Fees & Expenses
Gross Expense Ratio
1.23%
Investments in emerging and frontier securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Additionally, investing in emerging and frontier markets countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Matthews Emerging Markets Sustainable Future Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.
The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Index is a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China) and foreign listings (e.g. ADRs).
The MSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red chips (issued by entities owned by national or local governments in China), P chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai, Shenzhen and outside of China.
The MSCI Emerging Markets (EM) Asia Index is a free float-adjusted market capitalization weighted index of the stock markets of China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Taiwan and Thailand. The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets ex China Index is a free float-adjusted market capitalization-weighted index that captures large and mid cap representation across 23 of the 24 Emerging Markets (EM) countries excluding China: Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization weighted small cap index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungry, India, Indonesia, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan Thailand, Turkey and United Arab Emirates.
The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.
The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.
The Korea Composite Stock Price Index (KOSPI) is a market capitalization–weighted index of all common stocks listed on the Korea Stock Exchange.
The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Small Cap Index is a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges,Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).
The MSCI India Index is a free float-adjusted market capitalization-weighted index of Indian equities listed in India.
The MSCI Korea Index is a free float-adjusted market capitalization-weighted index of Korean equities listed in Korea.
The MSCI Korea 25/50 Index is designed to measure the performance of the large and mid cap segments of the Korean market. It applies certain investment limits that are imposed on regulated investment companies, or RICs, under the current US Internal Revenue Code.
Indexes are for comparative purposes only and it is not possible to invest directly in an index.
The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Neither the funds nor the Investment Advisor accept any liability for losses either direct or consequential caused by the use of this information.
The views and opinions in the commentary were as of the report date, subject to change and may not reflect current views. 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 the Fund's future investment intent. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. The information does not constitute a recommendation to buy or sell any securities mentioned.
Commentary
Period ended June 30, 2024
Market Environment
Contributors and Detractors
Outlook
View the Fund’s Top 10 holdings as of June 30, 2024. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MASGX as of 06/30/2024
All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. For the Fund's most recent month-end performance visit matthewsasia.com
Fees & Expenses
Investments in emerging and frontier securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Additionally, investing in emerging and frontier markets countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Matthews Emerging Markets Sustainable Future Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.