Matthews China Discovery Active ETF

Matthews China Discovery Active ETF (MCHS) is an actively managed fund (managers choose stocks rather than tracking an index) holding about 50 mostly Chinese technology-related companies, such as Jiangsu Boqian New Materials and Advanced Micro-Fabrication Equipment. It costs 0.89% a year, about double its closest peers' 0.45% average, and shares few holdings with them. It also swings hard: up 30.24% in 2025, then down 34% from June 30 to October 27, 2026.

• Over the year to Oct 27, 2026, MCHS returned +5.0%, 1st of 3 among similar funds.
• Its worst full calendar year was 2025 (+31.2%); its best was 2025 (+31.2%).
• The deepest fall in its price history was 34% (Jun 30, 2026 to Oct 27, 2026), not yet recovered.

As of Jun 30, 2026, the fund held 50 securities; the ten largest made up 46.26% of assets, and 5.29% sat in cash and money-market holdings.

• Over the three months to Jun 30, 2026, investors added a net $18.3M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +20.36%, +10.30%, +10.73%.

MCHS does not track an index. Matthews International Capital Management picks the stocks, aiming for long-term growth. At least 80% of net assets go into companies located in China, including Hong Kong, that Matthews judges to be innovators. These can be “enablers” that supply new technology or “adopters” that use it to grow. Matthews has wide latitude on what counts as Chinese: a company earning at least half its revenue there can qualify. Its April 30, 2026 prospectus refers to the fund as Matthews China Innovators Active ETF.

Matthews weighs fundamentals such as cash flow, balance sheets, management and governance. It expects to focus on science and technology fields, from semiconductors to software and biotech. It may own companies of any size. As a non-diversified fund, it can put more money into fewer companies. As of June 30, 2026, it held about 50, with the top 10 at 46% of assets, led by Jiangsu Boqian New Materials at about 7%.

Position sizes are the managers' call. Turnover was 44%, meaning trades equal to about 44% of the portfolio in a year. Many top holdings are mainland “A-shares” (listed in Shanghai or Shenzhen). About 25% sits in Cayman Islands-registered firms, a common legal home for Hong Kong-listed Chinese companies, and 12% in Taiwan. It held no derivatives as of June 30, 2026.

• MCHS charges 0.89% a year, versus an average of 0.45% for the similar funds below (3rd of 3, cheapest first).
• Of that, 0.99% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.1% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $91 in the first year and $1,204 over 10 years (assuming a 5% annual return).

It is a concentrated, actively managed bet on about 50 mostly Chinese technology-related stocks that fell 34% in about four months, which suits a small slice rather than a portfolio's core.

MCHS could add Chinese technology-related stocks that US stock funds rarely hold. Its record is short. Launched January 10, 2024, it missed the 2008, 2020 and 2022 downturns. Its only full calendar year, 2025, was a 30.24% gain, so its worst year tells little. Later it fell 34% from June 30 to October 27, 2026, and had not recovered by then. Retirees raising cash in that stretch had to give up more shares for each dollar than in June.

Income comes once a year. A $1.16-per-share payout made a 3.34% yield over the 12 months to October 27, 2026, and one payment can vary widely from year to year. Costs are high at 0.89% a year, or $1,204 over 10 years on $10,000 in the SEC's standard example. Past results don't predict the future, and a plan needs to weigh the whole portfolio, not one fund.

Matched by closest holdings overlap from the latest N-PORT reports (no similar fund shares 20% or more of its holdings).