Under normal circumstances, the Matthews Emerging Markets Equity 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. 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. The list of emerging market countries and frontier market countries may change from time to time. The Fund may also invest in companies located in developed countries; however, the Fund may not invest in any company located in a developed country if, at the time of purchase, more than 20% of the Fund’s assets are invested in developed market companies.
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.
The 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
2.77%
Net Expense Ratio
1.15%
Performance
Monthly
Quarterly
As of 12/31/2020
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews Emerging Markets Equity Fund
MEGMX
9.01%
22.15%
n.a.
n.a.
n.a.
n.a.
n.a.
61.23%
04/30/2020
MSCI Emerging Markets Index
7.40%
19.77%
n.a.
n.a.
n.a.
n.a.
n.a.
42.23%
As of 12/31/2020
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews Emerging Markets Equity Fund
MEGMX
9.01%
22.15%
n.a.
n.a.
n.a.
n.a.
n.a.
61.23%
04/30/2020
MSCI Emerging Markets Index
7.40%
19.77%
n.a.
n.a.
n.a.
n.a.
n.a.
42.23%
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
Year to Date and Since Inception performance with less than one year of history represents actual performance, not annualized.
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 $10,000 Investment Since Inception
(as of 12/31/2020)
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
John Paul Lech is a Portfolio Manager at Matthews Asia and manages the firm's Emering Markets Equity Strategy. Prior to joining the firm in 2018, he spent most of his 10 years at OppenheimerFunds (subsequently acquired by Invesco) as an Analyst and Portfolio Manager on a diversified emerging market equity strategy. John Paul started his career as an Analyst and Associate at Citigroup Global Markets, Inc. John Paul earned both an M.A. and a B.S.F.S from the Walsh School of Foreign Service at Georgetown University. He is fluent in Spanish and conversational in French and Portuguese.
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 12/31/2020)
Sector Allocation
Country Allocation
Market Cap Exposure
Sector
Fund
Benchmark
Difference
Information Technology
19.3
20.5
-1.2
Consumer Discretionary
18.6
18.3
0.3
Financials
17.7
18.0
-0.3
Communication Services
9.0
11.6
-2.6
Materials
6.7
7.6
-0.9
Health Care
6.6
4.7
1.9
Energy
5.2
5.0
0.2
Consumer Staples
5.0
5.9
-0.9
Industrials
4.0
4.3
-0.3
Real Estate
3.9
2.1
1.8
Utilities
0.0
2.0
-2.0
Cash and Other Assets, Less Liabilities
4.0
0.0
4.0
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
30.0
40.3
-10.3
South Korea
11.9
13.5
-1.6
India
11.2
9.2
2.0
Brazil
6.3
5.1
1.2
Taiwan
5.8
12.6
-6.8
Russia
5.4
3.0
2.4
Singapore
3.3
0.0
3.3
Mexico
3.2
1.7
1.5
Poland
3.1
0.7
2.4
France
2.6
0.0
2.6
Netherlands
2.0
0.0
2.0
United Kingdom
1.8
0.0
1.8
Indonesia
1.7
1.3
0.4
Canada
1.6
0.0
1.6
Philippines
1.3
0.7
0.6
Peru
1.3
0.2
1.1
Argentina
1.3
0.1
1.2
South Africa
1.1
2.3
-1.2
Vietnam
0.7
0.0
0.7
Cyprus
0.4
0.0
0.4
Saudi Arabia
0.0
2.4
-2.4
Thailand
0.0
1.8
-1.8
Malaysia
0.0
1.5
-1.5
Qatar
0.0
0.7
-0.7
Chile
0.0
0.5
-0.5
Kuwait
0.0
0.5
-0.5
United Arab Emirates
0.0
0.5
-0.5
Turkey
0.0
0.4
-0.4
Colombia
0.0
0.2
-0.2
Hungary
0.0
0.2
-0.2
Czech Republic
0.0
0.1
-0.1
Egypt
0.0
0.1
-0.1
Greece
0.0
0.1
-0.1
Cash and Other Assets, Less Liabilities
4.0
0.0
4.0
Not all countries are included in the benchmark index(es).
Equity market cap of issuer
Fund
Benchmark
Difference
Mega Cap (over $25B)
57.4
59.2
-1.8
Large Cap ($10B-$25B)
18.6
20.5
-1.9
Mid Cap ($3B-$10B)
12.1
18.5
-6.4
Small Cap (under $3B)
7.8
1.8
6.0
Cash and Other Assets, Less Liabilities
4.0
0.0
4.0
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.
For the quarter ending Sept. 30, 2020, the Matthews Emerging Markets Equity Fund returned 13.11% (Investor Class) and 13.20% (Institutional Class), while its benchmark, the MSCI Emerging Markets Index, returned 9.70%.
Market Environment:
The macroeconomic environment for most markets—emerging and developed alike—continues to be dominated by the COVID-19 pandemic. Many countries have seen a bounce in economic activity as mobility improved after initial stages of lockdowns, which began earlier in the year. The sustainability of improvements for each country, however, will depend on both incidence and intensity of the virus. The development of a vaccine that is effective, manufactured at scale and successfully distributed remains an open question.
Currently, broad aggregates of economic activity are favoring North Asian markets of China, South Korea and Taiwan, which have implemented highly effective public health responses to the pandemic. The Chinese renminbi appreciated relative to the U.S. dollar, as did the South Korean won and the Taiwan dollar. In contrast, much of the rest of the developing world continues to be more deeply affected by the ongoing public health and economic impacts of COVID-19. The Russian ruble depreciated relative to the U.S. dollar, while the Indonesian rupiah and Brazilian real also lost ground.
We expect the economic recovery may broaden over time. Recoveries have the potential to be accompanied by an expansion of nominal GDP growth rate differentials favoring emerging versus developed economies. This may lead to a recovery in relative earnings growth, a favorable foreign exchange tailwind, tighter emerging market credit spreads (reflecting a lower risk premium), a boost to sentiment and ultimately a recovery in investor inflows across emerging markets in our view.
Contributors and Detractors:
A contributor in the quarter was Polish software services company LiveChat. The company helps their clients, which range from large to small businesses, engage with their end customers via chat functions embedded in websites. LiveChat has seen positive momentum to its growth via new client acquisition and an ability to deepen relationships with current clients. We believe Livechat’s business was accelerated by the pandemic and is also likely to thrive in the post COVID-19 world.
A detractor was energy producer Lukoil. The pandemic has suppressed global travel, creating negative sentiment toward the energy sector. At the same time, we see green shoots for energy demand and remain constructive on the company. The company is not particularly geared to the underlying price of oil compared to the sector and has virtually no debt on its balance sheet. The company makes positive cash flow at much lower prevailing energy prices. We expect energy demand to eventually pick up again in the post COVID-19 world.
From a regional standpoint, stock selection in China was a strong contributor to both absolute and relative returns. Amid a V-shaped economic recovery in China, strong performers among the Fund’s holdings included Chinese stocks in the consumer discretionary, health care and consumer staples sectors. On the other hand, the Fund’s holdings in the Philippines were a mild detractor from both absolute and relative performance. The Philippines, along with much of Southeast Asia, has faced steeper public health and economic challenges associated with the COVID-19 pandemic. From a sector perspective, communication services and financials were contributors to absolute and relative performance. The consumer discretionary sector detracted from relative performance.
Notable Portfolio Changes:
We were active in the quarter, adding several new positions, while exiting a handful of others. Among the new positions initiated was Magazine Luiza, a leading e-commerce player in Brazil. The pandemic has acted like an accelerant for the adoption of online shopping in geographies like Brazil, where e-commerce is less penetrated as a percentage of personal consumption verses many of our Asian markets including China. We also initiated a small position in Fresnillo, a leading producer of gold and silver in Mexico. While the Fund is generally not heavily involved in extractive industries like metals and mining , the extremely accommodative stance of the U.S. Fed may portend U.S. dollar weakness, and thus we thought it prudent to initiate We exited two positions in consumer staples due to prices that we believe were disconnected from our view of each company’s respective prospects.
Outlook:
The world remains highly uncertain, and the U.S. Presidential election is likely to be a key focal point for the remainder of 2020. We expect the effects of the pandemic to persist well into 2021 given that the development of a vaccine requires three steps: 1) acceptable efficacy, 2) scaled production and 3) distribution. None of these steps is insurmountable, but each has challenges. China has had an impressive return of economic activity, but further acceleration likely requires a broadening of recovery from the pandemic.
At the company level, the effect of the pandemic has been positive for some sectors and negative for others. We believe that some companies who have benefited from the pandemic will start to see that effect wane while others may see sustainable benefit from habitual change that has occurred during this difficult time. Video games might be an example of the former, while the embrace of online shopping is likely to be more durable.
Governments should continue to be as accommodative as possible from a fiscal and monetary perspective. However, many EM geographies may find it hard to do more than they have committed to already. Our focus remains the same as ever—to find great companies at accessible prices that are either domiciled in our geographies or conduct substantial business in emerging markets. We are, paradoxically, quite optimistic in believing that many aggregate indicators will remain challenged while benefiting certain companies or making others more attractive in terms of their share prices.
As of 9/30/20, the securities mentioned comprised the Matthews Emerging Markets Fund in the following percentages: LiveChat Software SA, 1.9%; Lukoil PJSC ADR, 1.8%; Magazine Luiza SA, 0.8%; Fresnillo PLC, 0.7%. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MEGMX as of 12/31/2020
1YR
3YR
5YR
10YR
Since Inception
Inception Date
N.A.
N.A.
N.A.
N.A.
61.23%
04/30/2020
Fees & Expenses
Gross Expense Ratio
2.77%
Net Expense Ratio
1.15%
Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class (which is offered through a separate prospectus to eligible investors) to 0.90%, first by waiving class specific expenses (e.g., shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non- class specific expenses (e.g., custody fees) of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 0.90% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 0.90%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2021 and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date.
The Markit iBoxx Asian Local Bond Index tracks the total return performance of a bond portfolio consisting of local-currency denominated, high quality and liquid bonds in Asia ex-Japan. The Markit iBoxx Asian Local Bond Index includes bonds from the following countries: China (on- and offshore markets), Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.
The J.P. Morgan Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.
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 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 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, 2020
For the quarter ending Sept. 30, 2020, the Matthews Emerging Markets Equity Fund returned 13.11% (Investor Class) and 13.20% (Institutional Class), while its benchmark, the MSCI Emerging Markets Index, returned 9.70%.
Market Environment:
The macroeconomic environment for most markets—emerging and developed alike—continues to be dominated by the COVID-19 pandemic. Many countries have seen a bounce in economic activity as mobility improved after initial stages of lockdowns, which began earlier in the year. The sustainability of improvements for each country, however, will depend on both incidence and intensity of the virus. The development of a vaccine that is effective, manufactured at scale and successfully distributed remains an open question.
Currently, broad aggregates of economic activity are favoring North Asian markets of China, South Korea and Taiwan, which have implemented highly effective public health responses to the pandemic. The Chinese renminbi appreciated relative to the U.S. dollar, as did the South Korean won and the Taiwan dollar. In contrast, much of the rest of the developing world continues to be more deeply affected by the ongoing public health and economic impacts of COVID-19. The Russian ruble depreciated relative to the U.S. dollar, while the Indonesian rupiah and Brazilian real also lost ground.
We expect the economic recovery may broaden over time. Recoveries have the potential to be accompanied by an expansion of nominal GDP growth rate differentials favoring emerging versus developed economies. This may lead to a recovery in relative earnings growth, a favorable foreign exchange tailwind, tighter emerging market credit spreads (reflecting a lower risk premium), a boost to sentiment and ultimately a recovery in investor inflows across emerging markets in our view.
Contributors and Detractors:
A contributor in the quarter was Polish software services company LiveChat. The company helps their clients, which range from large to small businesses, engage with their end customers via chat functions embedded in websites. LiveChat has seen positive momentum to its growth via new client acquisition and an ability to deepen relationships with current clients. We believe Livechat’s business was accelerated by the pandemic and is also likely to thrive in the post COVID-19 world.
A detractor was energy producer Lukoil. The pandemic has suppressed global travel, creating negative sentiment toward the energy sector. At the same time, we see green shoots for energy demand and remain constructive on the company. The company is not particularly geared to the underlying price of oil compared to the sector and has virtually no debt on its balance sheet. The company makes positive cash flow at much lower prevailing energy prices. We expect energy demand to eventually pick up again in the post COVID-19 world.
From a regional standpoint, stock selection in China was a strong contributor to both absolute and relative returns. Amid a V-shaped economic recovery in China, strong performers among the Fund’s holdings included Chinese stocks in the consumer discretionary, health care and consumer staples sectors. On the other hand, the Fund’s holdings in the Philippines were a mild detractor from both absolute and relative performance. The Philippines, along with much of Southeast Asia, has faced steeper public health and economic challenges associated with the COVID-19 pandemic. From a sector perspective, communication services and financials were contributors to absolute and relative performance. The consumer discretionary sector detracted from relative performance.
Notable Portfolio Changes:
We were active in the quarter, adding several new positions, while exiting a handful of others. Among the new positions initiated was Magazine Luiza, a leading e-commerce player in Brazil. The pandemic has acted like an accelerant for the adoption of online shopping in geographies like Brazil, where e-commerce is less penetrated as a percentage of personal consumption verses many of our Asian markets including China. We also initiated a small position in Fresnillo, a leading producer of gold and silver in Mexico. While the Fund is generally not heavily involved in extractive industries like metals and mining , the extremely accommodative stance of the U.S. Fed may portend U.S. dollar weakness, and thus we thought it prudent to initiate We exited two positions in consumer staples due to prices that we believe were disconnected from our view of each company’s respective prospects.
Outlook:
The world remains highly uncertain, and the U.S. Presidential election is likely to be a key focal point for the remainder of 2020. We expect the effects of the pandemic to persist well into 2021 given that the development of a vaccine requires three steps: 1) acceptable efficacy, 2) scaled production and 3) distribution. None of these steps is insurmountable, but each has challenges. China has had an impressive return of economic activity, but further acceleration likely requires a broadening of recovery from the pandemic.
At the company level, the effect of the pandemic has been positive for some sectors and negative for others. We believe that some companies who have benefited from the pandemic will start to see that effect wane while others may see sustainable benefit from habitual change that has occurred during this difficult time. Video games might be an example of the former, while the embrace of online shopping is likely to be more durable.
Governments should continue to be as accommodative as possible from a fiscal and monetary perspective. However, many EM geographies may find it hard to do more than they have committed to already. Our focus remains the same as ever—to find great companies at accessible prices that are either domiciled in our geographies or conduct substantial business in emerging markets. We are, paradoxically, quite optimistic in believing that many aggregate indicators will remain challenged while benefiting certain companies or making others more attractive in terms of their share prices.
As of 9/30/20, the securities mentioned comprised the Matthews Emerging Markets Fund in the following percentages: LiveChat Software SA, 1.9%; Lukoil PJSC ADR, 1.8%; Magazine Luiza SA, 0.8%; Fresnillo PLC, 0.7%. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MEGMX as of 12/31/2020
Fees & Expenses
Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class (which is offered through a separate prospectus to eligible investors) to 0.90%, first by waiving class specific expenses (e.g., shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non- class specific expenses (e.g., custody fees) of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 0.90% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 0.90%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2021 and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date.