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Matthews China Dividend Fund
MCDFX

Snapshot
  • Total return strategy seeks to access the growth of China with lower volatility
  • Unconstrained all-cap portfolio with a quality bias
  • Flexible approach offers participation in both growth and value markets

11/30/2009

Inception Date

32.11%

YTD Return

(as of 10/04/2024)

$13.75

NAV

(as of 10/04/2024)

+0.34

1 Day NAV Change

(as of 10/04/2024)

Objective

Total return with an emphasis on providing current income.

Strategy

Under normal circumstances, the Matthews China Dividend Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in dividend-paying equity securities of companies located in China. The Fund may also invest in convertible debt and equity securities. The Fund seeks to provide a level of current income that is higher than the yield generally available in Chinese equity markets over the long term.

Risks

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 11/30/2009
Fund Assets $91.53 million (08/31/2024)
Currency USD
Ticker MCDFX
Cusip 577-125-305
Portfolio Turnover 27.3%
Benchmark MSCI China Index
Geographic Focus China - China includes its administrative and other districts, such as Hong Kong
Fees & Expenses
Gross Expense Ratio 1.17%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 08/31/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Dividend Fund - MCDFX
11/30/2009
MCDFX
1.14% -3.72% 2.13% -9.35% -13.99% -2.54% 2.98% 5.32%
MSCI China Index
1.01% -2.06% 4.58% -2.57% -13.41% -3.24% 0.72% 1.67%
As of 06/30/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Dividend Fund - MCDFX
11/30/2009
MCDFX
-2.36% 7.48% 3.57% -9.92% -15.32% -3.39% 3.59% 5.48%
MSCI China Index
-1.84% 7.16% 4.82% -1.43% -17.53% -4.12% 1.56% 1.71%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews China Dividend Fund - MCDFX
MCDFX
-20.67% -16.75% -0.49% 24.22% 15.00% -9.98% 37.69% 5.70% 9.54% 0.93%
MSCI China Index (USD)
-11.04% -21.80% -21.64% 29.67% 23.66% -18.75% 54.33% 1.11% -7.62% 8.26%

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.

Yield

(as of 06/30/2024)
2.12% 30-Day SEC Yield
2.12% 30-Day SEC Yield (excluding expense waiver)
3.67% Dividend Yield

30-Day SEC Yield Source: BNY Mellon Investment Servicing (US) Inc.

Ratings

  • OVERALL
  • out of 94 funds
  • 3 YEAR
  • out of 94 funds
  • 5 YEAR
  • out of 71 funds
  • 10 YEAR
  • out of 51 funds
  • 1 YEAR
  • 3rd
  • 58 out of 100 funds
  • 3 YEAR
  • 2nd
  • 24 out of 89 funds
  • 5 YEAR
  • 2nd
  • 27 out of 71 funds
  • 10 YEAR
  • 1st
  • 11 out of 50 funds
  • SINCE INCEPTION
  • 1st
  • 8 out of 35 funds

Ratings agency calculation methodology

Portfolio Managers

Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA

Lead Manager

Winnie  Chwang photo
Winnie Chwang

Lead Manager

Elli  Lee photo
Elli Lee

Co-Manager

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Co-Manager

Hardy  Zhu photo
Hardy Zhu

Co-Manager

Portfolio Characteristics

(as of 06/30/2024)
Fund Benchmark
Number of Positions 40 657
Weighted Average Market Cap $98.4 billion $141.4 billion
Active Share 68.4 n.a.
P/E using FY1 estimates 9.3x 9.6x
P/E using FY2 estimates 8.3x 8.7x
Price/Cash Flow 5.8 5.8
Price/Book 1.2 1.3
Return On Equity 14.6 13.5
EPS Growth (3 Yr) 11.2% 8.7%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2024)
-1.55%
Alpha
0.83
Beta
73.42%
Upside Capture
87.99%
Downside Capture
-0.70
Sharpe Ratio
0.25
Information Ratio
8.81%
Tracking Error
92.64

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 08/31/2024)
Name Sector % Net Assets
Tencent Holdings, Ltd. Communication Services 12.0
Alibaba Group Holding, Ltd. Consumer Discretionary 7.8
Ping An Insurance Group Co. of China, Ltd. Financials 4.2
China Merchants Bank Co., Ltd. Financials 4.0
China Construction Bank Corp. Financials 3.7
Meituan Class B Consumer Discretionary 3.7
China Suntien Green Energy Corp., Ltd. Energy 3.1
Fuyao Glass Industry Group Co., Ltd. Consumer Discretionary 2.9
Haier Smart Home Co., Ltd. Consumer Discretionary 2.9
Postal Savings Bank of China Co., Ltd. Financials 2.9
TOTAL 47.2

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
  • Asset Type Breakdown
  • Market Cap Exposure
  • China Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 30.2 28.3 1.9
Financials 16.6 17.6 -1.0
Industrials 13.6 5.0 8.6
Communication Services 13.3 22.7 -9.4
Consumer Staples 6.2 4.3 1.9
Energy 5.3 4.1 1.2
Real Estate 4.4 2.0 2.4
Information Technology 3.3 5.9 -2.6
Materials 1.9 3.6 -1.7
Health Care 1.6 3.6 -2.0
Utilities 0.0 2.9 -2.9
Cash and Other Assets, Less Liabilities 3.6 0.0 3.6

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.

Asset Type Fund
Common Equities and ADRs 96.4
Cash and Other Assets, Less Liabilities 3.6
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 51.3 68.8 -17.5
Large Cap ($10B-$25B) 8.8 14.8 -6.0
Mid Cap ($3B-$10B) 27.5 15.7 11.8
Small Cap (under $3B) 8.9 0.7 8.2
Cash and Other Assets, Less Liabilities 3.6 0.0 3.6
China Exposure Portfolio Weight
Hong Kong Listed Companies 68.2
Mainland China Listed Companies 12.7
Other 9.8
ADR/GDR 5.7
Cash and Other Assets, Less Liabilities 3.6

Mainland China listed companies includes A Share and B Shares. A Shares are Mainland Chinese companies incorporated in China and listed on the Shanghai or Shenzhen exchanges, available mostly to local Chinese investors and qualified institutional investors. B Shares are mainland Chinese companies listed on the Shanghai and Shenzhen stock exchanges, available to both Chinese and non-Chinese investors. ADRs are American Depositary Receipts and GDRs are Global Depositary Receipts. Hong Kong Listed Companies include SAR (Hong Kong) companies, China-affiliated corporations, and H Shares. SAR companies are companies that conduct business in Hong Kong and/or mainland China. China-affiliated corporations [CAC], also known as "Red Chips," are mainland China companies with partial state ownership listed in Hong Kong, and incorporated in Hong Kong. H Shares are mainland Chinese companies listed on the Hong Kong exchange but incorporated in mainland China. Other represents Chinese companies listed in other countries or non-China companies with a majority of revenue coming from China such as Japan, Singapore, Taiwan and the United States or other non-China companies.

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.

Distributions

Record Date Ex, Pay and
Reinvest Date
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distributions
Per Share
% of NAV Nondividend Distribution (Return of Capital)
06/25/2024 06/26/2024 $0.31572 $0.00000 $0.00000 $0.31572 2.8% N.A.
12/13/2023 12/14/2023 $0.10744 $0.00000 $0.00000 $0.10744 1.0% N.A.
06/27/2023 06/28/2023 $0.32906 $0.00000 $0.00000 $0.32906 2.6% N.A.
12/13/2022 12/14/2022 $0.10770 $0.00000 $0.25441 $0.36211 2.5% N.A.
06/27/2022 06/28/2022 $0.41693 $0.00000 $0.00000 $0.41693 2.8% N.A.

 

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.

Commentary

Period ended June 30, 2024

Market Environment

  • China’s market performed well in the second quarter, helped by positive sentiment generated by government initiatives to support the real estate sector and strong exports which compensated for lackluster domestic consumption.
  • The government’s move to enable provinces to buy real estate inventory from developers and use it for social housing has been notable as it should begin to take the stress off developers’ balance sheets and provide a meaningful tailwind. That said, China remains an economy with many challenges and macro indicators remained mixed. On the retail side there has been improvement, but overall consumer sentiment is still quite weak.
  • In the quarter, we focused on companies that are producing better earnings. In large sectors, like digital and e-commerce companies, there have been improvements in improvements on the revenue side. More generally, margins are starting to widen, and we are seeing companies with good dividends and good dividend yield support with low valuations.

Contributors and Detractors

  • For the quarter ended June 30, 2024, the Matthews China Dividend Fund returned 7.48%, (Investor Class) and 7.35% (Institutional Class) while its benchmark, the MSCI China Index, returned 7.16% over the same period.
  • On a sector basis, the top three contributors to relative performance were industrials, real estate and energy due to stock selection. The top three detractors were financials due to stock selection, consumer staples due to an overweight allocation and utilities due to an underweight allocation.
  • The largest contributors to absolute performance during the quarter included Tencent Holdings, an online gaming, and social media conglomerate, Yangzijiang Shipbuilding Holdings, one of China’s largest privately owned shipbuilding company and China Suntien Green Energy, a natural gas supplier. The top three detractors to performance included Wuliangye Yibin, a baijiu distillery, Yuexiu Property Company Limited, Chinese real estate company and Galaxy Entertainment Group, a developer and operator of entertaining facilities.

Outlook

  • China continues to face several economic and external headwinds; however, we see opportunities in stocks that are improving earnings and in companies with robust dividend yield support and share buybacks.
  • While there might be moderate catalysts for growth on the macro front, in our view there is unlikely to be a big fiscal or monetary stimulus for the economy as such moves in the past have left China with large debt burdens.
  • In terms of geopolitics, and particularly related to the upcoming U.S. presidential election, we think a lot of expectations are priced into the markets but there will likely be volatility as signals emerge over the potential winner. It could be that the election provides an opportunity to reduce positions in China or, as we near the election, valuations in China equities may decline and the market may overreact to the election outcome, in which case there could be opportunities to increase exposure.

 

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 - MCDFX as of 06/30/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
-9.92% -15.32% -3.39% 3.59% 5.48% 11/30/2009

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 1.17%
Yields as of 06/30/2024
30-Day SEC Yield 2.12%
30-Day SEC Yield (excluding expense waiver) 2.12%
Dividend Yield 3.67%

The 30-Day SEC Yield represents net investment income earned by the Fund over the 30-day period ended 06/30/2024, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day SEC Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate. Source: BNY Mellon Investment Servicing (US) Inc.

Dividend Yield (trailing) is the weighted average sum of the dividends paid by each equity security held by the Fund over the last 12 months divided by the current price as of report date. The annualised dividend yield is for the equity-only portion of the Fund and does not reflect the actual yield an investor in the Fund would receive. There can be no guarantee that companies that the Fund invests in, and which have historically paid dividends, will continue to pay them or to pay them at the current rates in the future. A positive distribution yield does not imply positive return, and past yields are no guarantee of future yields.

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.

There is no guarantee that a company will pay or continue to increase dividends. Past performance is no guarantee of future results.

 

Visit our Glossary of Terms page for definitions and additional information.

Index Definitions

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.