We study how mutual fund managers update beliefs and whether such updating reflects managerial skill. Using regulator-mandated, forward-looking investment outlook disclosures from Chinese mutual funds, we construct a novel measure of belief updating intensity based on year-over-year changes in stated beliefs, and further decompose these updates into macro and micro themes. We show that belief updating is strongly state contingent. During recessions, funds with more intensive updating shift their outlooks toward macroeconomic conditions, reduce procyclical stock exposures, and scale back on-site company visits, while the opposite pattern emerges in expansions. Belief-updating intensity positively predicts future performance, and this payoff is strongest when managers reweight beliefs in ways that align with prevailing economic conditions, indicating that belief updating captures an ex ante dimension of managerial skill. Consistent with a signaling interpretation, investors allocate more capital to funds with stronger belief updating, particularly when past returns are less informative.