Formerly known as the China Small Companies Fund.
05/31/2011
Inception Date
4.81%
YTD Return
(as of 10/28/2026)
$11.99
NAV
(as of 10/28/2026)
+0.13
1 Day NAV Change
(as of 10/28/2026)
Long-term capital appreciation.
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 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. China includes its administrative and other districts, such as Hong Kong. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health.
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, because the fund concentrates its investments in a single-country, its share price may be more volatile, and more affected by political, economic and other events in the country in which it invests than that of funds that are not as geographically concentrated. Non-diversified funds may be more susceptible to any single economic, political or regulatory event than a diversified fund because a higher percentage of a fund’s assets may be invested in the securities of a limited number of issuers.
These and other risks associated with investing in the Fund can be found in the prospectus.
| Inception Date | 05/31/2011 | |
| Fund Assets | $76.74 million (09/30/2026) | |
| Currency | USD | |
| Ticker | MCSMX | |
| Cusip | 577-125-404 | |
| Benchmark | MSCI China All Shares Index MSCI China IndexMSCI China Small Cap Index | |
| Geographic Focus | China - China includes its administrative and other districts, such as Hong Kong | |
| Gross Expense Ratio | 1.57% | |
| Net Expense Ratio | 1.40% | |
| 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 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. China includes its administrative and other districts, such as Hong Kong. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health. |
| 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, because the fund concentrates its investments in a single-country, its share price may be more volatile, and more affected by political, economic and other events in the country in which it invests than that of funds that are not as geographically concentrated. Non-diversified funds may be more susceptible to any single economic, political or regulatory event than a diversified fund because a higher percentage of a fund’s assets may be invested in the securities of a limited number of issuers.
The risks associated with investing in the Fund can be found in the prospectus |
Unusually high returns may not be sustainable.
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.
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.
(as of 09/30/2026)
CATEGORY: Greater China Region
| OVERALL | 4 stars | out of 70 funds |
| 3 YEAR | 3 stars | out of 70 funds |
| 5 YEAR | 3 stars | out of 64 funds |
| 10 YEAR | 4 stars | out of 37 funds |
Ratings agency calculation methodology
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.
Portfolio Manager
Tiffany Hsiao is a Portfolio Manager at Matthews. She originally joined Matthews in April 2014 and departed in August 2020 to launch a China-focused private fund at Artisan Partners. Prior to her departure, Tiffany managed the firm’s China Small Companies, former Asia Small Companies (now Emerging Markets Small Companies) and Asia Innovators strategies. Previously, she was a Vice President at Goldman Sachs Investment Partners in Hong Kong and Tokyo from 2007 to 2013, responsible for Asia Pacific investments with an emphasis on equities in China. Previous to this, she spent six years at Franklin Templeton Investments, where she managed the firm’s global communications fund. Tiffany earned her Master of Science and Information Technology from Carnegie Mellon University and received a B.A. in Economics from the University of California, Berkeley. She is fluent in Mandarin and Taiwanese, and conversational in Cantonese.
Sources: Factset Research Systems, Inc.
Fund Risk Metrics are reflective of Investor share class.
Source: FactSet Research Systems
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: BNY Mellon Investment Servicing (US) Inc.
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
The Portfolio’s market cap exposure breakdown presented is used for comparison purposes and the definition of the capitalization breakdown is from MSCI.
The Fund defines Small Companies as companies with market capitalization no higher than the greater of US$5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI China Small Cap Index.
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.
Visit our Glossary of Terms page for definitions and additional information.
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 September 30, 2026
Summary
Market Review
Chinese equities delivered mixed results during the third quarter, with a wide gap between more resilient Hong Kong-listed shares and weaker mainland technology and growth companies.
The AI hardware trade reversed against a backdrop of higher global rates and continued U.S.-Iran tensions. The September 24 Trump-Xi summit signaled a constructive tone on trade and AI cooperation but failed to deliver substantive semiconductor export relief. Calls from U.S. senators for tighter AI export controls and proposed sanctions on Chinese optical-module suppliers added pressure to the sector, which gave back some strong gains from earlier in the year.
Onshore technology stocks also faced headwinds from tighter enforcement of investment mandate compliance and capital rotation ahead of the Chinese chipmaker, CXMT Corp.’s IPO created short-term pressure across the domestic semiconductor supply chain. Notably, CXMT overtook Tencent in market capitalization less than three weeks after its July listing.
Policy support remained robust but offered limited relief, despite China’s introduction of its first nationwide mortgage-interest subsidy for first-time buyers. Large-language-model companies fell more than 30% as competition intensified and U.S. developers pushed to restrict Chinese access to advanced models.
With mainland markets closed for Golden Week at the start of October, investors activity is expected to remain cautious ahead of third-quarter earnings amid persistent macro uncertainty.
3Q 2026 Performance
For the quarter ended September 30, 2026, the Matthews China Innovators Fund returned -25.48% (Investor Class) and 25.45% (Institutional Class), while its benchmark, the MSCI China All Shares Index, returned -2.74%. Performance was primarily attributable to stock selection. Information Technology was the main source of weakness, followed by Industrials and Material.
Information Technology
Information Technology was the largest detractor during the quarter. Kingboard Laminates, a manufacturer of copper-clad laminates used in printed circuit boards, declined approximately -70% following a strong earlier advance, as investors reassessed its valuation and exposure to AI-related demand. Wuxi NCE Power, a power-semiconductor manufacturer, declined about -46%. ACM Research, a supplier of wafer-cleaning and other semiconductor-manufacturing equipment fell -36%, while ASMPT, a semiconductor-assembly, packaging and surface-mount technology company, declined-34% amid weaker sentiment toward the semiconductor supply chain and continued export-control concerns. Beijing Huafeng Test & Control Technology, which develops automated test equipment used to assess semiconductor performance and quality, fell about -29% despite the company’s longer-term position in China’s domestic semiconductor-equipment market.
These declines were partly offset by gains in Lenovo and Unimicron Technology. Lenovo, a global personal-computer manufacturer with expanding exposure to servers, infrastructure solutions and AI-enabled devices, rose about 49%, supported by better-than-expected results and stronger demand for AI hardware and infrastructure solutions. Unimicron Technology, a manufacturer of advanced printed circuit boards and integrated-circuit substrates used in computing, communications and other electronic devices, gained about 35%, supported by exposure to higher-performance computing applications.
Industrials
Industrials also detracted, with performance varying across holdings. Acter Technology Integration, which provides engineering and facility-integration services for high-technology manufacturing plants and data centers, declined about -49% as investors reduced exposure to electronics-infrastructure companies. These losses were partly offset by SITC International, an Asia-focused container-shipping and logistics company, which rose about 57%, supported by resilient intra-Asian shipping demand. Robotechnik Intelligent Technology, a supplier of automation equipment for advanced manufacturing, including production-line systems for electronics and related industries, gained about 43%, while Sany Heavy Equipment International, a manufacturer of mining and industrial machinery, advanced about 26%.
Materials
Materials detracted, led by Jiangsu Boqian New Materials, which declined about -58% following strong first-half performance. The company manufactures nanometer-scale metal powders used in electronic components and other advanced-material applications. The decline coincided with a broader reduction of exposure to companies associated with the AI hardware buildout, despite the company’s ongoing investment in capacity and longer-term demand opportunities.
Positioning
During the quarter, the portfolio continued to evolve from a more concentrated semiconductor- and AI-hardware-oriented allocation toward a broader representation of innovation opportunities across China. SelectInformation Technology and Materials holdings were reduced following strong earlier performance and a less favorable near-term risk-reward profile. Capital was redeployed toward more attractively valued innovation adopters across Consumer Discretionary, Communication Services and Health Care, including businesses applying technology to consumer services, digital platforms and drug development. These changes broadened potential sources of return while remaining consistent with the Fund’s innovation enablers and adopters framework. Cash was maintained at a higher level to support selective investment as valuations adjusted.
Two new positions illustrate this approach. Luckin Coffee was added as a consumer technology adopter. The company combines a large store network with app-based ordering, digital customer engagement and a data-led approach to store expansion and product development. We believe this model provides exposure to the ongoing formalization and digitalization of China’s coffee market, while the company’s scale may support operating efficiency and product innovation.
Jiangsu Hengrui Pharmaceuticals was also initiated to increase exposure to domestically developed medicines and China’s expanding role in global pharmaceutical research. The company has a broad pipeline across oncology and other therapeutic areas and has entered licensing and collaboration agreements with global pharmaceutical partners. We believe its research platform, clinical-development capabilities and potential to monetize pipeline assets internationally provide a differentiated source of innovation exposure.
Kingboard Laminates was exited after a strong earlier share-price advance left the valuation less compelling and the position more exposed to changes in sentiment toward AI-related printed circuit board demand. The exit reduced concentration in hardware-linked beneficiaries and helped fund additions in areas with different demand drivers.
Outlook
The recent correction in China's innovation-related equities is viewed as having created attractive long-term entry points across several areas of the market. Near-term sentiment remains challenged by geopolitical uncertainty, export-control concerns and a soft domestic macroeconomic backdrop. China's late-September stimulus measures were generally viewed as designed to keep economic growth on target rather than deliver a broad demand revival, and disappointed markets that had hoped for more forceful intervention.
The economy increasingly resembles a K-shaped recovery, where companies with strong products, technology leadership and competitive advantages continue to gain market share, while weaker businesses remain under pressure. This environment reinforces the importance of disciplined stock selection and the need to be dynamic.
Recent on-the-ground research in Hong Kong, Shenzhen, Shanghai and Wuxi included meetings with portfolio companies, public and private peers, competitors and prospective investments across artificial intelligence, renewable energy, automation, semiconductors and consumer industries. These meetings reinforced our conviction in China's progress in AI technology localisation and Taiwan's capabilities in advanced packaging and optical communications. Within artificial intelligence, we prefer picks and shovels play to leverage China’s AI growth rather than investing in pure play AI model companies themselves.
Our discussions also supported a selective approach at this point: maintaining exposure to businesses that enable domestic computing, semiconductor and industrial capabilities while broadening the portfolio toward adopters with established end markets, clearer monetization pathways and company-specific growth drivers.
We remain encouraged by the earnings outlook of many portfolio holdings as China's broader innovation ecosystem continues to evolve.
View the Fund's Top 10 holdings as of September 30, 2026. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MCSMX as of 09/30/2026
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
Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2027. Please see the Fund’s prospectus for additional details.
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, because the fund concentrates its investments in a single-country, its share price may be more volatile, and more affected by political, economic and other events in the country in which it invests than that of funds that are not as geographically concentrated. Non-diversified funds may be more susceptible to any single economic, political or regulatory event than a diversified fund because a higher percentage of a fund’s assets may be invested in the securities of a limited number of issuers.