Form 485BPOS
Matthews
Asia Funds | Prospectus
April 29,
2024 | matthewsasia.com
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Matthews Emerging Markets Equity
Fund | MEMGX
(Investor), MIEFX (Institutional)
Matthews Emerging Markets Sustainable Future
Fund | MASGX
(Investor), MISFX (Institutional)
Matthews Emerging Markets Small Companies
Fund | MSMLX
(Investor), MISMX (Institutional)
Matthews Asia Growth Fund | MPACX
(Investor), MIAPX (Institutional)
Matthews Pacific Tiger Fund | MAPTX
(Investor), MIPTX (Institutional)
Matthews Asia Innovators Fund | MATFX
(Investor), MITEX (Institutional)
Matthews China Fund | MCHFX
(Investor), MICFX (Institutional)
Matthews China Small Companies
Fund | MCSMX
(Investor), MICHX (Institutional)
Matthews India Fund | MINDX
(Investor), MIDNX (Institutional)
Matthews Japan Fund | MJFOX
(Investor), MIJFX (Institutional)
Matthews Asian Growth and Income
Fund | MACSX
(Investor), MICSX (Institutional)
Matthews Asia Dividend Fund | MAPIX
(Investor), MIPIX (Institutional)
Matthews China Dividend Fund | MCDFX
(Investor), MICDX (Institutional)
The U.S. Securities and Exchange Commission (the
“SEC”) has not approved or disapproved the Funds. Also, the SEC has not
passed upon the adequacy or accuracy of this prospectus. Anyone who
informs you otherwise is committing a
crime. |
Matthews
Asia Funds
matthewsasia.com
Contents
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FUND
SUMMARIES |
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GLOBAL EMERGING
MARKETS STRATEGIES |
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1 |
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6 |
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12 |
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ASIA GROWTH
STRATEGIES |
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18 |
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23 |
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28 |
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33 |
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37 |
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42 |
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46 |
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ASIA GROWTH AND
INCOME STRATEGIES |
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50 |
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55 |
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60 |
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66 |
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Additional Fund Information |
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91 |
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91 |
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91 |
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94 |
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110 |
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118 |
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118 |
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118 |
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122 |
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122 |
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123 |
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124 |
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127 |
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128 |
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128 |
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Please
read this document carefully before you make any investment decision. If you
have any questions, do not hesitate to contact a Matthews Asia Funds
representative at 800.789.ASIA (2742) or visit matthewsasia.com.
Please
keep this prospectus with your other account documents for future
reference.
Matthews
Emerging Markets Equity Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
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Investor Class |
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Institutional Class |
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Maximum Account Fee on Redemptions (for
wire redemptions only) |
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$9 |
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$9 |
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ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
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Management
Fees |
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0.68% |
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0.68% |
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Distribution
(12b‑1) Fees |
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0.00% |
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0.00% |
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Other Expenses |
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1.02% |
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0.83% |
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Administration
and Shareholder Servicing Fees |
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0.18% |
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0.18% |
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Total Annual
Fund Operating Expenses |
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1.70% |
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1.51% |
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Fee
Waiver and Expense Reimbursement1 |
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(0.58%) |
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(0.61%) |
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Total Annual Fund Operating Expenses After Fee
Waiver and Expense Reimbursement |
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1.12% |
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0.90% |
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1 |
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 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 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, 2025 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. |
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the fee waiver for the one year period
only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
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One year |
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Three years |
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Five years |
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Ten years |
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Investor Class |
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$114 |
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$479 |
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$869 |
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$1,960 |
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Institutional Class |
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$92 |
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$417 |
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$766 |
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$1,749 |
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MATTHEWS EMERGING MARKETS EQUITY
FUND |
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PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 26% of the average value of its
portfolio.
Principal Investment
Strategy
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. The
Fund has concentrated its investments (meaning more than 25% of its assets) from
time to time in a single country, including
China.
A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an emerging market (or specific
country) security or instrument, if it has substantial ties to that country or
region. Matthews currently makes that determination based primarily on one or
more of the following criteria: (A) with respect to a company or issuer,
whether (i) it is organized under the laws of that country or any
country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of its assets located, within that country or region;
(iii) it has the primary trading markets for its securities in that country
or region; (iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI Emerging Markets Index, the
Fund’s primary benchmark index; or (v) it is denominated in the currency of
an emerging market country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts that are treated as emerging markets investments,
including American, European and Global Depositary
Receipts.
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. Matthews expects that the companies
in which the Fund invests typically will be of medium or large size, but the
Fund may invest in companies of any size. Matthews measures a company’s size
with respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector.
The
Fund may invest in the Matthews Emerging Markets Equity Active ETF, a series of
the Trust with a substantially similar investment strategy to the Fund, for cash
equitization purposes, which allows the Fund to invest in a manner consistent
with its investment strategy while managing daily cash flows, including
purchases and redemptions by
investors.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Foreign Investing Risk: Investments in foreign
securities may involve greater risks than investing in U.S. securities. As
compared to U.S. companies, foreign issuers generally disclose less financial
and other information publicly and are subject to less stringent and less
uniform accounting, auditing and financial reporting standards. Foreign
countries typically impose less thorough regulations on brokers, dealers, stock
exchanges, corporate insiders and listed companies than does the U.S., and
foreign securities markets may be less liquid and more volatile than U.S.
markets. Investments in foreign securities generally involve higher costs than
investments in U.S. securities, including higher transaction and custody costs
as well as additional taxes imposed by foreign governments. In addition,
security trading practices abroad may offer less protection to investors such as
the Fund. Political or social instability, civil unrest, acts of terrorism,
regional economic volatility, and the imposition of sanctions, confiscations,
trade restrictions (including tariffs) and other government restrictions by the
U.S. and/or other governments are other potential risks that could impact an
investment in a foreign security. Settlement of transactions in some foreign
markets may be delayed or may be less frequent than in the U.S., which could
affect the liquidity of the Fund’s
portfolio.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar
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matthewsasia.com | 800.789.ASIA |
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to
those in recent years may result in market volatility and may have long term
effects on the global financial markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, emerging market countries may
utilize formal or informal currency-exchange controls or “capital controls.”
Capital controls may impose restrictions on the Fund’s ability to repatriate
investments or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier
Markets: Emerging and frontier markets are often less stable politically
and economically than developed markets such as the U.S. and investing in these
markets involves different and greater risks due to, among other factors,
different accounting standards; variable quality and reliability of financial
information and related audits of companies; higher brokerage costs and thinner
trading markets as compared to those in developed countries; the possibility of
currency transfer restrictions; and the risk of expropriation, nationalization
or other adverse political, economic or social developments. There may be less
publicly available information about companies in many emerging market
countries, and the stock exchanges and brokerage industries in many emerging
market countries typically do not have the level of government oversight as do
those in the U.S. Securities markets of many emerging market countries are also
substantially smaller, less liquid and more volatile than securities markets in
the U.S. Additionally, investors may have substantial difficulties bringing
legal actions to enforce or protect investors’ rights, which can increase the
risks of loss. Frontier markets, a subset of emerging markets, generally have
smaller economies and even less mature capital markets than emerging markets. As
a result, the risks of investing in emerging market countries are magnified in
frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices,
and lower trading volumes, which could lead to greater price volatility and
illiquidity.
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of emerging market securities that are more volatile than
those of companies in more developed regions. This volatility can cause the
price of the Fund’s shares to go up or down dramatically. Because of this
volatility, this Fund is better suited for long-term investors (typically five
years or longer).
Country Concentration Risk: The Fund may invest
a significant portion of its total net assets in the securities of issuers
located in a single country. An investment in the Fund therefore may entail
greater risk than an investment in a fund that does not concentrate its
investments in a single or small number of countries because these securities
may be more sensitive to adverse social, political, economic or regulatory
developments affecting that country or countries. As a result, events affecting
a single or small number of countries may have a significant and potentially
adverse impact on the Fund’s investments, and the Fund’s performance may be more
volatile than that of funds that invest globally. The Fund has concentrated or
may concentrate its investments in China.
Risks Associated with China: The Chinese
government exercises significant control over China’s economy through its
industrial policies, monetary policy, management of currency exchange rates, and
management of the payment of foreign currency-denominated obligations. Changes
in these policies could adversely impact affected industries or companies in
China. China’s economy, particularly its export-oriented industries, may be
adversely impacted by trade or political disputes with China’s major trading
partners, including the U.S. In addition, as its consumer class continues to
grow, China’s domestically oriented industries may be especially sensitive to
changes in government policy and investment cycles.
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MATTHEWS EMERGING MARKETS EQUITY
FUND |
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Risks Associated with Latin America: The
economies of Latin American countries have in the past experienced considerable
difficulties, including high inflation rates, high interest rates, high
unemployment, government overspending and political instability. Similar
conditions in the present or future could impact the Fund’s performance. Many
Latin American countries are highly reliant on the exportation of commodities
and their economies may be significantly impacted by fluctuations in commodity
prices and the global demand for certain commodities. Investments in Latin
American countries may be subject to currency risks, such as restrictions on the
flow of money in and out of a country, extreme volatility relative to the U.S.
dollar, and devaluation, all of which could decrease the value of the Fund’s
investments. Other Latin American investment risks may include inadequate
investor protection, less developed regulatory, accounting, auditing and
financial standards, unfavorable changes in laws or regulations, natural
disasters, corruption and military activity. The governments of many Latin
American countries may also exercise substantial influence over many aspects of
the private sector, and any such exercise could have a significant effect on
companies in which the Fund invests. Securities of companies in Latin American
countries may be subject to significant price volatility, which could impact
Fund performance.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
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Financial Sector Risk: As of
December 31, 2023, 25% of the Fund’s assets were invested in the
financial sector. Financial companies are subject to extensive government
regulation and can be significantly affected by the availability and cost
of capital funds, changes in interest rates, the rate of corporate and
consumer debt defaults, price competition and other sector-specific
factors. |
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Information Technology Sector Risk: As
of December 31, 2023, 22% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
Underlying ETF Risk: Because the Fund may
invest in the Matthews Emerging Markets Equity Active ETF, it is subject to
additional risks that do not apply to conventional mutual funds, including the
risks that the market price of the ETF’s shares may trade at a discount to its
net asset value, an active secondary trading market may not develop or be
maintained, or trading may be halted by the exchange in which the ETFs trade,
which may impact the Fund’s ability to sell its shares of an
ETF.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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matthewsasia.com | 800.789.ASIA |
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Past Performance
The bar chart below shows the Fund’s performance
over certain periods of time and how it has varied from year to year, reflective
of the Fund’s volatility and some indication of risk. Also shown
are the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURN FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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Since Inception
(4/30/20) |
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Matthews
Emerging Markets Equity Fund—Investor Class |
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Return
before taxes |
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8.43% |
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9.04% |
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Return
after taxes on distributions1 |
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8.14% |
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7.87% |
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Return
after taxes on distributions and sale of Fund shares1 |
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5.49% |
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6.97% |
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Matthews
Emerging Markets Equity Fund—Institutional Class |
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Return
before taxes |
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8.63% |
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9.25% |
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MSCI
Emerging Markets Index |
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(reflects no deduction for fees, expenses
or taxes) |
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10.27% |
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5.82% |
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1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Sean Taylor is Chief Investment
Officer at Matthews and has been a Portfolio Manager of the Matthews Emerging
Markets Equity Fund since 2023.
Lead Manager: Alex Zarechnak has been a
Portfolio Manager of the Matthews Emerging Markets Equity Fund since 2022.
Co‑Manager: Andrew Mattock, CFA, has been a
Portfolio Manager of the Matthews Emerging Markets Equity Fund since 2023.
Co‑Manager: Peeyush Mittal, CFA, has been a
Portfolio Manager of the Matthews Emerging Markets Equity Fund since 2023.
Co‑Manager: Jeremy Sutch, CFA, has been a
Portfolio Manager of the Matthews Emerging Markets Equity Fund since
2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consult
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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MATTHEWS EMERGING MARKETS EQUITY
FUND |
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Matthews
Emerging Markets Sustainable Future Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
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Investor Class |
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Institutional Class |
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Maximum Account Fee on Redemptions (for
wire redemptions only) |
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$9 |
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$9 |
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ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
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Management
Fees |
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0.68% |
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0.68% |
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Distribution
(12b‑1) Fees |
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0.00% |
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0.00% |
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Other Expenses |
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0.55% |
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0.42% |
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Administration
and Shareholder Servicing Fees |
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0.18% |
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0.18% |
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Total Annual Fund Operating
Expenses |
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1.23% |
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1.10% |
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EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the expense limitation for the one year
period only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
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One year |
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Three years |
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Five years |
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Ten years |
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Investor Class |
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$125 |
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$390 |
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$676 |
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$1,489 |
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Institutional Class |
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$112 |
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$350 |
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$606 |
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$1,340 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 49% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Emerging Markets Sustainable Future 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 of any market capitalization located in emerging
market countries that satisfy one or more of the Fund’s environmental, social
and governance (“ESG”) standards. Up to 20% of the Fund’s net assets may be
invested in companies that do not satisfy these ESG standards. 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
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invested
in developed market companies. The Fund has concentrated its investments
(meaning more than 25% of its assets) from time to time in a single country,
including China.
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.
A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an emerging market (or specific
country) security or instrument, if it has substantial ties to that country or
region. Matthews currently makes that determination based primarily on one or
more of the following criteria: (A) with respect to a company or issuer,
whether (i) it is organized under the laws of that country or any country
in that region; (ii) it derives at least 50% of its revenues or profits
from goods produced or sold, investments made, or services performed, or has at
least 50% of its assets located, within that country or region; (iii) it
has the primary trading markets for its securities in that country or region;
(iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI Emerging Markets Index, the
Fund’s primary benchmark index; or (v) it is denominated in the currency of
an emerging market country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts that are treated as emerging markets investments,
including American, European and Global Depositary Receipts, and in convertible
securities and fixed-income securities, of any duration or quality, including
high yield securities (also known as “junk
bonds”).
In
implementing its strategy for this Fund, Matthews will use any one or more of
the Fund’s following key ESG standards to evaluate potential investments:
whether the issuer has adopted and followed (i) sustainable environmental
practices, responsible resource management and energy efficiency practices,
(ii) policies related to social responsibility, employee welfare, diversity
and inclusion, or (iii) sound governance practices that align interests of
shareholders and management and demonstrate a commitment to integration of
sustainability or ESG considerations. Businesses that meet one or more of the
Fund’s ESG standards are generally businesses that currently engage in practices
or have business objectives that, in the judgment of Matthews, if continued to
be followed or if successfully implemented would make human or business activity
less destructive to the environment or businesses that promote positive
environmental, social and economic developments. Matthews uses various sources
of information, including
non‑governmental
organizations (NGOs), primary research, and third-party data sources such as
negative news monitoring services and ESG data and research providers, in
analyzing whether a company satisfies the Fund’s ESG standards. However, it is
Matthews’ determination, based on its own analysis, as to whether a company
satisfies those standards and is eligible for investment by the
Fund.
In
addition to traditional financial data, the stock selection process takes into
consideration the Fund’s ESG standards that help identify companies that
Matthews believes contribute (or have the potential to contribute) to a
sustainable future by addressing global environmental and social challenges.
Matthews will use these standards to help identify companies that are
contributing (or have the potential to contribute) to positive outcomes in
environmental, social and governance focus areas including, for example, climate
change mitigation and adaptation, clean environment (such as pollution
alleviation), sustainable production and consumption (such as energy
efficiency), health and well-being (such as food security), human capital
developments (such as training and equality), sustainable and inclusive
development, or corporate governance practices that demonstrate a strong
commitment to the integration of the Fund’s ESG standards. Matthews will also
employ a negative screening process using data and ratings from various
third-party data providers and Matthews’ own internal analysis to exclude, in
the ultimate determination of Matthews, companies that Matthews believes do not
meet the Fund’s ESG standards. This screening process may use various thresholds
based on the percentage of revenue derived from certain sectors, including
(1) the production or sale of tobacco products, (2) controversial
weapons (e.g., cluster munitions) or the
production of or military contracting for weapons, and (3) the exploration,
extraction, or production of energy using certain fossil fuels, including
thermal coal. The screening process is also used to help Matthews exclude
companies that are in severe breach of the goals of the UN Global Compact or the
OECD Guidelines for Multinational Enterprises. The ESG characteristics used by
Matthews to identify or exclude potential investments may change from time to
time.
The
Fund engages its portfolio companies on sustainability matters primarily through
active dialogue and proxy voting, which will be voted according to the Fund’s
ESG standards, and by encouraging enhanced ESG disclosure. The implementation of
the principal investment strategies of the Fund may result in a significant
portion of the Fund’s assets being invested from time to time in one or more
sectors, but the Fund may invest in companies in any
sector.
The
Fund’s primary focus is long-term capital appreciation. In achieving this
objective, the Fund seeks to invest in companies that Matthews believes to be
undervalued but of high quality and run by management teams with good operating
and governance track records. While the Fund may invest in companies across the
market capitalization spectrum, it has in the past invested, and may continue to
invest, a substantial portion of Fund assets in smaller
companies.
The
Fund may invest in the Matthews Emerging Markets Sustainable Future Active ETF,
a series of the Trust with a substantially similar investment strategy to the
Fund, for cash equitization purposes, which allows the Fund to invest in a
manner consistent with its investment strategy while managing daily cash flows,
including purchases and redemptions by
investors.
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MATTHEWS EMERGING MARKETS SUSTAINABLE FUTURE FUND |
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7 |
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Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Risks Associated with Emerging and Frontier Markets:
Emerging and frontier markets are often less stable politically and
economically than developed markets such as the U.S., and investing in these
markets involves different and greater risks due to, among other factors,
different accounting standards; variable quality and reliability of financial
information and related audits of companies; higher brokerage costs and thinner
trading markets as compared to those in developed countries; the possibility of
currency transfer restrictions; and the risk of expropriation, nationalization
or other adverse political, economic or social developments. There may be less
publicly available information about companies in many emerging market
countries, and the stock exchanges and brokerage industries in many emerging
market countries typically do not have the level of government oversight as do
those in the U.S. Securities markets of many emerging market countries are also
substantially smaller, less liquid and more volatile than securities markets in
the U.S. Additionally, investors may have substantial difficulties bringing
legal actions to enforce or protect investors’ rights, which can increase the
risks of loss. Frontier markets, a subset of emerging markets, generally have
smaller economies and even less mature capital markets than emerging markets. As
a result, the risks of investing in emerging market countries are magnified in
frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices,
and lower trading volumes, which could lead to greater price volatility and
illiquidity.
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the
value
of
the U.S. dollar. The value of an investment denominated in a foreign currency
will decline in U.S. dollar terms if that currency weakens against the U.S.
dollar. While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
Sustainable and ESG Investing Risk: The Fund’s
sustainability and ESG strategy may select or exclude securities of certain
issuers for reasons other than potential performance. The Fund’s consideration
of its ESG standards in making its investment decisions may reduce or increase
the Fund’s exposure to certain issuers, industries, sectors, regions or
countries or cause the Fund to forego certain investment opportunities which may
lower the performance of the Fund as compared to funds that do not utilize a
sustainability or ESG strategy. Sustainability and ESG investing is qualitative
and subjective by nature, and there is no guarantee that the standards used by
Matthews or any judgment exercised by Matthews will reflect the opinions of any
particular investor. Although an investment by the Fund in a company may satisfy
one or more of the Fund’s ESG standards in the view of the portfolio managers,
there is no guarantee that such company will actually conduct its affairs in a
manner that is less destructive to the environment, or that will actually
promote positive social and economic developments or otherwise contribute to a
sustainable future, and that same company may also fail to satisfy other ESG
standards, in some cases even egregiously. In addition, Matthews may utilize
third party data to evaluate ESG factors which may be incomplete or inaccurate
and cause Matthews to incorrectly assess the ESG characteristics a security or
issuer. Funds with sustainability investment strategies are generally suited for
long-term rather than short-term
investors.
There
are no universally agreed upon objective standards for assessing ESG standards
for companies. Rather, the Fund’s standards tend to have many subjective
characteristics, can be difficult to analyze, and frequently involve a balancing
of a company’s business plans, objectives, actual conduct and other factors. The
Fund’s ESG standards can vary over different periods, can evolve over time and
tend to be stated broadly and applied flexibly. They may also be difficult to
apply consistently across regions, countries, industries or sectors. In some
cases, Matthews will consider an investment to be eligible for the Fund where a
company has expressed a goal or objective and has started to take actions that,
if successful, would satisfy the Fund’s ESG standards in the judgment of
Matthews.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect
a
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particular
industry or industries, or as a result of changes in overall market, economic
and political conditions that are not specifically related to a company or
industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating
agencies. The Fund may invest in convertible debt securities of any maturity and
in those that are unrated, or would be below investment grade (referred to as
“junk bonds”) if rated. Therefore, credit risk may be greater for the Fund than
for other funds in higher-grade securities. These securities are also subject to
greater liquidity risk than many other
securities.
Credit Risk: Credit risk refers to the risk
that an issuer may default in the payment of principal and/or interest on an
instrument.
Interest Rate Risk: Fixed-income securities may
decline in value because of changes in interest rates. Bond prices generally
rise when interest rates decline and generally decline when interest rates
rise.
High Yield Securities Risk: High yield
securities or unrated securities of similar credit quality (commonly known as
“junk bonds”) are more likely to default than higher rated securities. These
securities typically entail greater potential price volatility and are
considered predominantly speculative. Issuers of high yield securities may also
be more susceptible to adverse economic and competitive industry conditions than
those of higher-rated securities.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade
less
frequently
and in lesser volume than more widely held securities and the securities of
smaller companies generally are subject to more abrupt or erratic price
movements than more widely held or larger, more established companies or the
market indices in general.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Country Concentration Risk: The Fund may invest
a significant portion of its total net assets in the securities of issuers
located in a single country. An investment in the Fund therefore may entail
greater risk than an investment in a fund that does not concentrate its
investments in a single or small number of countries because these securities
may be more sensitive to adverse social, political, economic or regulatory
developments affecting that country or countries. As a result, events affecting
a single or small number of countries may have a significant and potentially
adverse impact on the Fund’s investments, and the Fund’s performance may be more
volatile than that of funds that invest globally.
Risks Associated with China: The Chinese
government exercises significant control over China’s economy through its
industrial policies, monetary policy, management of currency exchange rates, and
management of the payment of foreign currency-denominated obligations. Changes
in these policies could adversely impact affected industries or companies in
China. China’s economy, particularly its export-oriented industries, may be
adversely impacted by trade or political disputes with China’s major trading
partners, including the U.S. In addition, as its consumer class continues to
grow, China’s domestically oriented industries may be especially sensitive to
changes in government policy and investment
cycles.
Risks Associated with India: Government
actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could
adversely affect market conditions, economic growth and the profitability of
private enterprises in India. Global factors and foreign actions may inhibit the
flow of foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of
family-controlled companies may be weaker and less transparent, which increases
the potential for loss and unequal treatment of investors. India experiences
many of the risks associated with developing economies, including relatively low
levels of liquidity, which may result in extreme volatility in the prices of
Indian securities.
Religious,
cultural and military disputes persist in India and between India and Pakistan
(as well as sectarian groups within each country). Both India and Pakistan have
tested nuclear arms, and the threat of deployment of such weapons could hinder
development of the Indian economy, and escalating tensions could impact the
broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential
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MATTHEWS EMERGING MARKETS SUSTAINABLE FUTURE FUND |
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9 |
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expense,
which reduces its net asset values. For further information regarding this tax,
please see page 126.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sectors described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
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Information Technology Sector Risk: As
of December 31, 2023, 25% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
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Financial Sector Risk: As of
December 31, 2023, 22% of the Fund’s assets were invested in the
financial sector. : Financial companies are subject to extensive
government regulation and can be significantly affected by the
availability and cost of capital funds, changes in interest rates, the
rate of corporate and consumer debt defaults, price competition and other
sector-specific
factors. |
Underlying ETF Risk: Because the Fund may
invest in the Matthews Emerging Markets Sustainable Future Active ETF, it is
subject to additional risks that do not apply to conventional mutual funds,
including the risks that the market price of the ETF’s shares may trade at a
discount to its net asset value, an active secondary trading market may not
develop or be maintained, or trading may be halted by the exchange in which the
ETFs trade, which may impact the Fund’s ability to sell its shares of an
ETF.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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Past Performance
The bar chart below shows the Fund’s performance
for each full calendar year since its inception and how it has varied from year
to year, reflective of the Fund’s volatility and some indication of
risk. Also shown are the best and worst quarters for this time
period. The table below shows the Fund’s performance over certain periods of
time, along with performance of its benchmark index. Before July 29, 2022,
the Fund was managed with a slightly different investment strategy and may have
achieved different performance results under its current investment strategy
from the performance shown for periods before that date. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
ANNUAL
RETURNS FOR YEARS ENDED 12/31
INVESTOR
CLASS:
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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5 years |
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Since Inception
(04/30/15) |
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Matthews
Emerging Markets Sustainable Future Fund—Investor Class |
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Return
before taxes |
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7.83% |
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10.66% |
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7.23% |
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Return
after taxes on distributions1 |
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5.62% |
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8.98% |
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5.96% |
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Return
after taxes on distributions and sale of Fund shares1 |
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5.51% |
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8.19% |
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5.53% |
|
Matthews
Emerging Markets Sustainable Future Fund—Institutional Class |
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Return
before taxes |
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8.04% |
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10.84% |
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7.44% |
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MSCI
Emerging Markets Index |
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(reflects no deduction for fees, expenses
or taxes) |
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10.27% |
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4.07% |
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2.59% |
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1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Manager
Lead Manager: Vivek Tanneeru has been a
Portfolio Manager of the Matthews Emerging Markets Sustainable Future Fund
since its inception in 2015.
Co‑Manager: Inbok Song has been a Portfolio
Manager of the Matthews Emerging Markets Sustainable Future Fund since
2023.
Co‑Manager: Alex Zarechnak has been a Portfolio
Manager of the Matthews Emerging Markets Sustainable Future Fund since
2024.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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MATTHEWS EMERGING MARKETS SUSTAINABLE FUTURE FUND |
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Matthews
Emerging Markets Small Companies Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
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Investor Class |
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Institutional Class |
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Maximum Account Fee on Redemptions (for
wire redemptions only) |
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$9 |
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$9 |
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ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
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Management
Fees |
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0.85% |
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0.85% |
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Distribution
(12b‑1) Fees |
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0.00% |
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0.00% |
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Other Expenses |
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0.49% |
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0.38% |
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Administration
and Shareholder Servicing Fees |
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0.18% |
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0.18% |
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Total Annual
Fund Operating Expenses |
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1.34% |
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1.23% |
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Fee
Waiver and Expense Reimbursement1 |
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0.00% |
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(0.08% |
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Total Annual Fund Operating Expenses After Fee
Waiver and Expense Reimbursement |
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1.34% |
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1.15% |
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1 |
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 to 1.15%, 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 1.15% 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 1.15%. If the operating
expenses fall below the expense limitation 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, 2025 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. |
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the expense limitation for the one year
period only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
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One year |
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Three years |
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Five years |
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Ten years |
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Investor Class |
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$136 |
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$425 |
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$734 |
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$1,613 |
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Institutional Class |
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$117 |
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$382 |
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$668 |
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$1,482 |
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PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 27% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Emerging Markets Small Companies 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 Small Companies (defined below) 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 Small 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. The Fund has concentrated its investments (meaning more than
25% of its assets) from time to time in a single country, including
China.
A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an emerging market (or specific
country) security or instrument, if it has substantial ties to that country or
region. Matthews currently makes that determination based primarily on one or
more of the following criteria: (A) with respect to a company or issuer,
whether (i) it is organized under the laws of that country or any
country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of its assets located, within that country or region;
(iii) it has the primary trading markets for its securities in that country
or region; (iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI Emerging Markets Small Cap
Index; or (v) it is denominated in the currency of an emerging market
country and addresses at least one of the other above criteria. The term
“located” and the associated criteria listed above have been defined in such a
way that Matthews has latitude in determining whether an issuer should be
included within a region or country. The Fund may also invest in depositary
receipts that are treated as emerging market
investments,
including American, European and Global Depositary
Receipts.
The
Fund seeks to invest in smaller 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. Matthews generally determines
whether a company should be considered to be a small company based on its market
capitalization (the number of the company’s shares outstanding times the market
price per share for such securities). Under normal circumstances, the Fund
invests at least 80% of its net assets in any company that has a market
capitalization no higher than the greater of $5 billion or the market
capitalization of the largest company included in the MSCI Emerging Markets
Small Cap Index (each, a “Small Company” and together, “Small Companies”). The
largest company in the MSCI Emerging Markets Small Cap Index, had a market
capitalization of $9.8 billion on December 31, 2023. Companies in
which the Fund invests typically operate in growth industries and possess the
potential to expand their scope of business over time. A company may grow to a
market capitalization that is higher than the greater of $5 billion or the
market capitalization of the largest company included in the Fund’s primary
benchmark after the Fund has purchased its securities; nevertheless, the
existing holdings of securities of such a company will continue to be considered
a Small Company. If additional purchases of a security are made, all holdings
(including prior purchases) of that security will be re‑classified with respect
to its market capitalization at the time of the last purchase. The
implementation of the principal investment strategies of the Fund may result in
a significant portion of the Fund’s assets being invested from time to time in
one or more sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Foreign Investing Risk: Investments in foreign
securities may involve greater risks than investing in U.S. securities. As
compared to U.S. companies, foreign issuers generally disclose less financial
and other information publicly and are subject to less stringent and less
uniform accounting, auditing and financial reporting standards. Foreign
countries typically impose less thorough regulations on brokers, dealers, stock
exchanges, corporate insiders and listed companies than does the U.S., and
foreign securities markets may be less liquid and more volatile than U.S.
markets. Investments in foreign securities generally involve higher costs than
investments in U.S. securities, including higher transaction and custody costs
as well as additional taxes imposed by foreign governments. In addition,
security trading practices abroad may offer less protection to investors such as
the Fund. Political or social instability, civil unrest, acts of terrorism,
regional economic volatility, and the imposition of sanctions, confiscations,
trade restrictions (including tariffs) and other government restrictions by the
U.S. and/or other governments are other potential risks that could impact an
investment in a foreign security. Settlement of transactions in some foreign
markets
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MATTHEWS EMERGING MARKETS SMALL COMPANIES FUND |
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may
be delayed or may be less frequent than in the U.S., which could affect the
liquidity of the Fund’s portfolio.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, emerging market countries may
utilize formal or informal currency-exchange controls or “capital controls.”
Capital controls may impose restrictions on the Fund’s ability to repatriate
investments or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier Markets:
Emerging and frontier markets are often less stable politically and
economically than developed markets such as the U.S., and investing in these
markets involves different and greater risks due to, among other factors,
different accounting standards; variable quality and reliability of financial
information and related audits of companies; higher brokerage costs and thinner
trading markets as compared to those in developed countries; the possibility of
currency transfer restrictions; and the risk of expropriation, nationalization
or other adverse political, economic or social developments. There may be less
publicly available information about companies in many emerging market
countries, and the stock exchanges and brokerage industries in many emerging
market countries typically do not have the level of government oversight as do
those in the U.S. Securities markets of many emerging market countries are also
substantially smaller, less liquid and more volatile than securities markets in
the U.S. Additionally, investors may have substantial difficulties bringing
legal actions to enforce or protect investors’ rights, which can increase the
risks of loss. Frontier markets, a subset of emerging markets, generally have
smaller economies and even less mature capital markets than emerging markets. As
a result, the risks of investing in emerging market countries are magnified in
frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices,
and lower trading volumes, which could lead to greater price volatility and
illiquidity.
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption
and
military
activity. The economies of many Asian countries differ from the economies of
more developed countries in many respects, such as rate of growth, inflation,
capital reinvestment, resource self-sufficiency, financial system stability, the
national balance of payments position and sensitivity to changes in global
trade.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Smaller companies may be more dependent on one or few
key persons and may lack depth of management. Larger portions of their stock may
be held by a small number of investors (including founders and management) than
is typical of larger companies. Credit may be more difficult to obtain (and on
less advantageous terms) than for larger companies. As a result, the influence
of creditors (and the impact of financial or operating restrictions associated
with debt financing) on smaller companies may be greater than that of larger or
more established companies. The Fund may have more difficulty obtaining
information about smaller companies, making it more difficult to evaluate the
impact of market, economic, regulatory and other factors on them. Informational
difficulties may also make valuing or disposing of their securities more
difficult than it would for larger companies. Securities of smaller companies
may trade less frequently and in lesser volume than more widely held securities
and the securities of smaller companies generally are subject to more abrupt or
erratic price movements than more widely held or larger, more established
companies or the market indices in general. The value of securities of smaller
companies may react differently to political, market and economic developments
than the markets as a whole or than other types of stocks. Some smaller companies may have aggressive
capital structures, including high debt levels, and be involved in rapidly
growing or changing industries or technologies with intense competition. These
companies often have limited operating histories resulting in less predictable
operating results.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and
common
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stock.
If interest rates rise, the dividend on preferred stocks may be less attractive,
causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of emerging market securities that are more volatile than
those of companies in more developed regions. This volatility can cause the
price of the Fund’s shares to go up or down dramatically. Because of this
volatility, this Fund is better suited for long-term investors (typically five
years or longer).
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated
with larger, more established companies, potentially making their stock prices
more volatile and increasing the risk of
loss.
Country Concentration Risk: The Fund may invest
a significant portion of its total net assets in the securities of issuers
located in a single country. An investment in the Fund therefore may entail
greater risk than an investment in a fund that does not concentrate its
investments in a single or small number of countries because these securities
may be more sensitive to adverse social, political, economic or regulatory
developments affecting that country or countries. As a result, events affecting
a single or small number of countries may have a significant and potentially
adverse impact on the Fund’s investments, and the Fund’s performance may be more
volatile than that of funds that invest globally. The Fund has concentrated or
may concentrate its investments in China.
Risks Associated with China: The Chinese
government exercises significant control over China’s economy through its
industrial policies, monetary policy, management of currency exchange rates, and
management of the payment of foreign currency-denominated obligations. Changes
in these policies could adversely impact affected industries or companies in
China. China’s economy, particularly its export-oriented industries, may be
adversely impacted by trade or political disputes with China’s major trading
partners, including the U.S. In addition, as its consumer class continues to
grow, China’s domestically oriented industries may be especially sensitive to
changes in government policy and investment
cycles.
Risks Associated with India: Government
actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could
adversely affect market conditions, economic growth and the profitability of
private enterprises in India. Global factors and foreign actions may inhibit the
flow of foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of
family-controlled companies may be weaker and less
transparent,
which
increases the potential for loss and unequal treatment of investors. India
experiences many of the risks associated with developing economies, including
relatively low levels of liquidity, which may result in extreme volatility in
the prices of Indian securities.
Religious,
cultural and military disputes persist in India and between India and Pakistan
(as well as sectarian groups within each country). Both India and Pakistan have
tested nuclear arms, and the threat of deployment of such weapons could hinder
development of the Indian economy, and escalating tensions could impact the
broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential expense, which reduces its net asset values. For
further information regarding this tax, please see page
126.
Risks Associated with Latin America: The
economies of Latin American countries have in the past experienced considerable
difficulties, including high inflation rates, high interest rates, high
unemployment, government overspending and political instability. Similar
conditions in the present or future could impact the Fund’s performance. Many
Latin American countries are highly reliant on the exportation of commodities
and their economies may be significantly impacted by fluctuations in commodity
prices and the global demand for certain commodities. Investments in Latin
American countries may be subject to currency risks, such as restrictions on the
flow of money in and out of a country, extreme volatility relative to the U.S.
dollar, and devaluation, all of which could decrease the value of the Fund’s
investments. Other Latin American investment risks may include inadequate
investor protection, less developed regulatory, accounting, auditing and
financial standards, unfavorable changes in laws or regulations, natural
disasters, corruption and military activity. The governments of many Latin
American countries may also exercise substantial influence over many aspects of
the private sector, and any such exercise could have a significant effect on
companies in which the Fund invests.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
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Industrial Sector Risk: As of
December 31, 2023, 24% of the Fund’s assets were invested in the
industrial sector. Industrial companies are affected by supply and demand
both for their specific product or service and for industrial sector
products in general. Government regulation, world events, exchange rates
and economic conditions, technological developments and liabilities for
environmental damage and general civil liabilities will likewise affect
the performance of these
companies. |
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MATTHEWS EMERGING MARKETS SMALL COMPANIES FUND |
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Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability
to
calculate its NAV, impediments to trading, the inability of shareholders to
transact business, violations of applicable privacy and other laws, regulatory
fines, penalties, reputational damage, reimbursement or other compensation
costs, or additional compliance costs.
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Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The
table below shows the Fund’s performance over certain periods of time, along
with performance of the MSCI Emerging Markets Index, its primary benchmark
index, and the MSCI Emerging Markets Small Cap Index, its secondary benchmark
index. Before April 30, 2021, the Fund was managed with a
materially different investment strategy and may have achieved materially
different performance results under its current investment strategy from the
performance shown for periods before that date. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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5 years |
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10 years |
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Since Inception
(9/15/08 Investor)
(4/30/13 Institutional) |
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Matthews
Emerging Markets Small Companies Fund—Investor Class |
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Return
before taxes |
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19.88% |
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15.48% |
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8.13% |
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11.16% |
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Return
after taxes on distributions1 |
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17.53% |
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14.17% |
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6.84% |
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10.13% |
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Return
after taxes on distributions and sale of Fund shares1 |
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13.20% |
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12.29% |
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6.27% |
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9.32% |
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Matthews
Emerging Markets Small Companies Fund—Institutional Class |
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Return
before taxes |
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20.12% |
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15.71% |
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8.36% |
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7.82% |
2 |
MSCI
Emerging Markets Index3 |
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(reflects
no deduction for fees, expenses or taxes) |
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10.27% |
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4.07% |
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3.05% |
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4.25% |
4 |
MSCI
Emerging Markets Small Cap Index |
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(reflects no deduction for fees, expenses
or taxes) |
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24.49% |
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10.41% |
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5.74% |
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7.23% |
4 |
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1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
In
connection with the Security and Exchange Commission’s new Tailored
Shareholder Report rule, effective April 29, 2024, the Fund’s
primary benchmark index is the MSCI Emerging Markets Index. The Fund will
continue to show index performance for the MSCI Emerging Markets Small Cap
Index, the Fund’s secondary benchmark index.
|
|
4 |
Calculated
from 9/15/08. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Vivek Tanneeru has been a
Portfolio Manager of the Matthews Emerging Markets Small Companies Fund since
2020.
Co‑Manager: Jeremy Sutch, CFA, has been a
Portfolio Manager of the Matthews Emerging Markets Small Companies Fund since
2021.
Co‑Manager: Alex Zarechnak has been a Portfolio
Manager of the Matthews Emerging Markets Small Companies Fund since 2023.
Co‑Manager: Hardy Zhu has been a Portfolio
Manager of the Matthews Emerging Markets Small Companies Fund since
2024.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS EMERGING MARKETS SMALL COMPANIES FUND |
|
|
17 |
|
Matthews
Asia Growth Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum
Account Fee on Redemptions (for wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.45% |
|
|
|
|
| |
|
0.30% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual
Fund Operating Expenses |
|
|
|
|
|
|
1.13% |
|
|
|
|
|
|
|
0.98% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$115 |
|
$359 |
|
$622 |
|
$1,375 |
|
|
|
| |
Institutional Class |
|
$100 |
|
$312 |
|
$542 |
|
$1,201 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 77% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Asia Growth 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 Asia. The Fund may also invest in convertible securities,
of any duration or quality, including those that are unrated, or would be below
investment grade (referred to as “junk bonds”) if rated, of Asian companies.
Asia consists of all countries and markets in Asia, and includes developed,
emerging, and frontier countries and markets in the Asian region. 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.
|
|
|
|
|
| |
18 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an Asian (or specific country)
security or instrument, if it has substantial ties to that country or region.
Matthews currently makes that determination based primarily on one or more of
the following criteria: (A) with respect to a company or issuer, whether
(i) it is organized under the laws of that country or any country in
that region; (ii) it derives at least 50% of its revenues or profits from
goods produced or sold, investments made, or services performed, or has at least
50% of its assets located, within that country or region; (iii) it has the
primary trading markets for its securities in that country or region;
(iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included the MSCI All Country Asia Pacific Index,
the Fund’s primary benchmark index; or (v) it is denominated in the
currency of an Asian country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts, including American, European and Global Depositary
Receipts.
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. Matthews expects that the companies
in which the Fund invests typically will be of medium or large size, but the
Fund may invest in companies of any size. Matthews measures a company’s size
with respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvest-
ment,
resource self-sufficiency, financial system stability, the national balance of
payments position and sensitivity to changes in global
trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier
Markets: Many Asian countries are considered emerging or frontier
markets. Such markets are often less stable politically and economically than
developed markets such as the United States, and investing in these markets
involves different and greater risks due to, among other factors, different
accounting standards; variable quality and reliability of financial information
and related audits of companies; higher brokerage costs and thinner trading
markets as compared to those in developed countries; the possibility of currency
transfer restrictions; and the risk of expropriation, nationalization or other
adverse political, economic or social developments. There may be less publicly
available information about companies in many Asian countries, and the stock
exchanges and brokerage industries in many Asian countries typically do not have
the level of government oversight as do those in the U.S. Securities markets of
many Asian countries are also substantially smaller, less liquid and more
volatile than securities markets in the U.S. Additionally, investors may have
substantial difficulties bringing legal actions to enforce or protect investors’
rights, which can increase the risks of loss. Frontier markets, a subset of
emerging markets, generally have smaller economies and even less mature capital
markets than emerging markets. As a result, the risks of investing in emerging
market countries are magnified in frontier market countries. Frontier markets
are more susceptible to having abrupt changes in currency values, less mature
markets and settlement practices, and lower trading volumes, which could lead to
greater price volatility and illiquidity.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS ASIA GROWTH FUND |
|
|
19 |
|
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating
agencies. The Fund may invest in convertible debt securities of any maturity and
in those that are unrated, or would be below investment grade (referred to as
“junk bonds”) if rated. Therefore, credit risk may be greater for the Fund than
for other funds in higher-grade securities. These securities are also subject to
greater liquidity risk than many other
securities.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies,
potentially
making their stock prices more volatile and increasing the risk of
loss.
Risks Associated with Japan: The Japanese
economy has only recently emerged from a prolonged economic downturn. Since the
year 2000, Japan’s economic growth rate has remained relatively low. The
Japanese economy is characterized by an aging demographic, declining population,
large government debt and highly regulated labor market. Economic growth in
Japan is dependent on domestic consumption, deregulation and consistent
government policy. International trade, particularly with the U.S., also impacts
growth of the Japanese economy, and adverse economic conditions in the U.S. or
other trade partners may affect Japan.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies, monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to exist within Hong Kong. Due to the
interconnected nature of the Hong Kong and Chinese economies, this instability
in Hong Kong may cause uncertainty in the Hong Kong and Chinese markets. If
China were to exert its authority so as to alter the economic, political or
legal structures or the existing social policy of Hong Kong, investor and
business confidence in Hong Kong could be negatively affected and have an
adverse effect on the Fund’s investments.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Information Technology Sector Risk: As
of December 31, 2023, 26% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
|
|
|
|
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| |
20 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
– |
|
Consumer Discretionary Sector Risk: As
of December 31, 2023, 24% of the Fund’s assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. Changes in demographics and consumer tastes can also affect the
demand for, and success of, consumer products and services in the
marketplace. |
– |
|
Financial Sector Risk: As of December
31, 2023, 21% of the Fund’s assets were invested in the financial sector.
Financial companies are subject to extensive government regulation and can
be significantly affected by the availability and cost
of |
capital
funds, changes in interest rates, the rate of corporate and consumer debt
defaults, price competition and other sector-specific
factors.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS ASIA GROWTH FUND |
|
|
21 |
|
Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or
call 800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(10/31/03 Investor)
(10/29/10 Institutional) |
|
Matthews
Asia Growth Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
3.53% |
|
|
|
1.82% |
|
|
|
2.72% |
|
|
|
6.59% |
|
Return
after taxes on distributions1 |
|
|
3.27% |
|
|
|
1.10% |
|
|
|
2.04% |
|
|
|
6.04% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
2.57% |
|
|
|
1.57% |
|
|
|
2.18% |
|
|
|
5.60% |
|
Matthews
Asia Growth Fund—Institutional Class |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Return
before taxes |
|
|
3.69% |
|
|
|
1.98% |
|
|
|
2.89% |
|
|
|
2.04% |
2 |
MSCI
All Country Asia Pacific Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
11.81% |
|
|
|
5.70% |
|
|
|
4.60% |
|
|
|
6.26% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 10/31/03. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead
Manager: Michael J. Oh, CFA, has been a Portfolio Manager of the Matthews
Asia Growth Fund since 2020.
Co‑Manager: Peeyush Mittal, CFA, has been a
Portfolio Manager of the Matthews Asia Growth Fund since 2023.
Co‑Manager: Shuntaro Takeuchi has been a
Portfolio Manager of the Matthews Asia Growth Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
|
|
|
|
|
| |
22 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Pacific Tiger Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum
Account Fee on Redemptions (for wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.44% |
|
|
|
|
| |
|
0.31% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual
Fund Operating Expenses |
|
|
|
|
|
|
1.12% |
|
|
|
|
|
|
|
0.99% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the fee waiver for the one year period
only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$114 |
|
$356 |
|
$617 |
|
$1,363 |
|
|
|
| |
Institutional Class |
|
$101 |
|
$315 |
|
$547 |
|
$1,213 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 15% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Pacific Tiger 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 Asia ex Japan, which consists of all countries and markets
in Asia excluding Japan, but including all other developed, emerging, and
frontier countries and markets in the Asian region. 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. A company or other issuer is
considered to be “located” in a country or a region, and a security or
instrument is deemed to be an Asian (or specific country) security or
instrument, if it
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has
substantial ties to that country or region. Matthews currently makes that
determination based primarily on one or more of the following criteria:
(A) with respect to a company or issuer, whether (i) it is
organized under the laws of that country or any country in that region;
(ii) it derives at least 50% of its revenues or profits from goods produced
or sold, investments made, or services performed, or has at least 50% of its
assets located, within that country or region; (iii) it has the primary
trading markets for its securities in that country or region; (iv) it has
its principal place of business in or is otherwise headquartered in that country
or region; or (v) it is a governmental entity or an agency, instrumentality
or a political subdivision of that country or any country in that region; and
(B) with respect to an instrument or issue, whether (i) its issuer is
headquartered or organized in that country or region; (ii) it is issued to
finance a project that has at least 50% of its assets or operations in that
country or region; (iii) it is at least 50% secured or backed by assets
located in that country or region; (iv) it is a component of or its issuer
is included in the MSCI All Country Asia ex Japan Index, the Fund’s primary
benchmark index; or (v) it is denominated in the currency of an Asian
country and addresses at least one of the other above criteria. The term
“located” and the associated criteria listed above have been defined in such a
way that Matthews has latitude in determining whether an issuer should be
included within a region or country. The Fund may also invest in depositary
receipts, including American, European and Global Depositary
Receipts.
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. Matthews expects that the companies
in which the Fund invests typically will be of medium or large size, but the
Fund may invest in companies of any size. Matthews measures a company’s size
with respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector.
The
Fund may invest in the Matthews Pacific Tiger Active ETF, a series of the Trust
with a substantially similar investment strategy to the Fund, for cash
equitization purposes, which allows the Fund to invest in a manner consistent
with its investment strategy while managing daily cash flows, including
purchases and redemptions by
investors.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption
and
military
activity. The economies of many Asian countries differ from the economies of
more developed countries in many respects, such as rate of growth, inflation,
capital reinvestment, resource self-sufficiency, financial system stability, the
national balance of payments position and sensitivity to changes in global
trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and
climate-
related
events, pandemics, epidemics, terrorism, international conflicts, regulatory
events and governmental or quasi-governmental actions. The occurrence of global
events similar to those in recent years may result in market volatility and may
have long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier
Markets: Many Asian countries are considered emerging or frontier
markets. Such markets are often less stable politically and economically than
developed markets such as the United States, and investing in these markets
involves different and greater risks due to, among other factors, different
accounting standards; variable quality and reliability of financial information
and related audits of companies; higher brokerage costs and thinner trading
markets as compared to those in developed countries; the possibility of currency
transfer restrictions; and the risk of expropriation, nationalization or other
adverse political, economic or social developments. There may be less publicly
available information about companies in many Asian countries, and the stock
exchanges and brokerage industries in many Asian countries typically do not have
the level of government oversight as do those in the U.S. Securities markets of
many Asian countries are also substantially smaller, less liquid and more
volatile than securities markets in the U.S. Additionally, investors may have
substantial difficulties bringing legal actions to enforce or protect investors’
rights, which can increase the risks of loss. Frontier markets, a subset of
emerging markets, generally have smaller economies and even less mature capital
markets than emerging markets. As a result, the risks of investing in emerging
market countries are magnified in frontier market countries. Frontier markets
are more susceptible to having abrupt changes in currency values, less mature
markets and settlement practices, and lower trading volumes, which could lead to
greater price volatility and illiquidity.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to
investor
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perceptions
of the issuing company’s growth potential. Growth stocks may go in and out of
favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies, monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to exist within Hong Kong. Due to the
interconnected nature
of
the Hong Kong and Chinese economies, this instability in Hong Kong may cause
uncertainty in the Hong Kong and Chinese markets. If China were to exert its
authority so as to alter the economic, political or legal structures or the
existing social policy of Hong Kong, investor and business confidence in Hong
Kong could be negatively affected and have an adverse effect on the Fund’s
investments.
Risks Associated with India: Government
actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could
adversely affect market conditions, economic growth and the profitability of
private enterprises in India. Global factors and foreign actions may inhibit the
flow of foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of family-
controlled companies may be weaker and less transparent, which increases the
potential for loss and unequal treatment of investors. India experiences many of
the risks associated with developing economies, including relatively low levels
of liquidity, which may result in extreme volatility in the prices of Indian
securities.
Religious,
cultural and military disputes persist in India, and between India and Pakistan
(as well as sectarian groups within each country). Both India and Pakistan have
tested nuclear arms, and the threat of deployment of such weapons could hinder
development of the Indian economy, and escalating tensions could impact the
broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential expense, which reduces its net asset values. For
further information regarding this tax, please see page
126.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
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|
Information Technology Sector Risk: As
of December 31, 2023, 29% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
Underlying ETF Risk: Because the Fund may
invest in the Matthews Pacific Tiger Active ETF, it is subject to
additional
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MATTHEWS PACIFIC TIGER FUND |
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risks
that do not apply to conventional mutual funds, including the risks that the
market price of the ETF’s shares may trade at a discount to its net asset value,
an active secondary trading market may not develop or be maintained, or trading
may be halted by the exchange in which the ETFs trade, which may impact the
Fund’s ability to sell its shares of an ETF.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to
operational,
information security, and related risks. Cyber incidents affecting the Fund or
its service providers may cause disruptions and impact business operations,
potentially resulting in financial losses, interference with the Fund’s ability
to calculate its NAV, impediments to trading, the inability of shareholders to
transact business, violations of applicable privacy and other laws, regulatory
fines, penalties, reputational damage, reimbursement or other compensation
costs, or additional compliance costs.
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Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or
call 800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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5 years |
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10 years |
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Since Inception
(9/12/94 Investor)
(10/29/10 Institutional) |
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Matthews
Pacific Tiger Fund—Investor Class |
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Return
before taxes |
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-4.87% |
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0.56% |
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3.49% |
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7.01% |
|
Return
after taxes on distributions1 |
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-5.54% |
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-1.20% |
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2.02% |
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6.01% |
|
Return
after taxes on distributions and sale of Fund shares1 |
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-2.44% |
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0.75% |
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2.86% |
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5.97% |
|
Matthews
Pacific Tiger Fund—Institutional Class |
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Return
before taxes |
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-4.75% |
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0.69% |
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3.65% |
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3.67% |
2 |
MSCI
All Country Asia ex Japan Index |
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(reflects no deduction for fees, expenses
or taxes) |
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6.34% |
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4.01% |
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4.17% |
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4.13% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
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3 |
Calculated
from 8/31/94. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Sean Taylor is Chief Investment
Officer and has been a Portfolio Manager of the Matthews Pacific Tiger Fund
since 2023.
Lead Manager: Inbok Song has been a Portfolio
Manager of the Matthews Pacific Tiger Fund since 2019.
Co‑Manager: Winnie Chwang has been a Portfolio
Manager of the Matthews Pacific Tiger Fund since 2021.
Co‑Manager: Andrew Mattock has been a Portfolio
Manager of the Matthews Pacific Tiger Fund since 2022.
Co‑Manager: Peeyush Mittal, CFA, has been a
Portfolio Manager of the Matthews Pacific Tiger Fund since 2023.
Co‑Manager: Jeremy Sutch, CFA, has been a
Portfolio Manager of the Matthews Pacific Tiger Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consult
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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MATTHEWS PACIFIC TIGER FUND |
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Matthews
Asia Innovators Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your investment)
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Investor Class |
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Institutional Class |
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Maximum Account Fee on Redemptions (for
wire redemptions only) |
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$9 |
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$9 |
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ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
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Management
Fees |
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0.68% |
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0.68% |
|
Distribution
(12b‑1) Fees |
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0.00% |
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0.00% |
|
Other Expenses |
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0.47% |
|
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0.34% |
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Administration
and Shareholder Servicing Fees |
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0.18% |
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0.18% |
|
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Total Annual Fund Operating
Expenses |
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1.15% |
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1.02% |
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EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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One year |
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Three years |
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Five years |
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Ten years |
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Investor Class |
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$117 |
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$365 |
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$633 |
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$1,398 |
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Institutional Class |
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$104 |
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$325 |
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$563 |
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$1,248 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 248% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Asia Innovators 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 Asia ex Japan 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. Asia
ex Japan consists of all countries and markets in Asia excluding Japan, but
including other developed, emerging, and frontier countries and markets in the
Asian region. 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.
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A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an Asian (or specific country)
security or instrument, if it has substantial ties to that country or region.
Matthews currently makes that determination based primarily on one or more of
the following criteria: (A) with respect to a company or issuer, whether
(i) it is organized under the laws of that country or any country in
that region; (ii) it derives at least 50% of its revenues or profits from
goods produced or sold, investments made, or services performed, or has at least
50% of its assets located, within that country or region; (iii) it has the
primary trading markets for its securities in that country or region;
(iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI All Country Asia ex Japan
Index, the Fund’s primary benchmark index; or (v) it is denominated in the
currency of an Asian country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts, including American, European and Global Depositary
Receipts.
It
is important to note that there are no universally agreed upon objective
standards for assessing innovators. Innovative companies can be both old and new
companies. Innovative companies can exist in any industries, old and new, and in
any countries, emerging or developed. Companies perceived as innovators in one
country or one industry might not be perceived as innovators in another country
or another industry. For these reasons, the term innovators may be aspirational
and tend to be stated broadly and applied
flexibly.
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. The Fund may invest in companies of
any size, including smaller size companies. Matthews measures a company’s size
with respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector. The implementation of the Fund’s principal investment
strategies may also result in high portfolio turnover
rates.
The
Fund has a fundamental policy to invest at least 25% of its net assets, which
include borrowings for investment purposes, in the common and preferred stocks
of companies that derive more than 50% of their revenues from the sale
of
products
or services in science‑and technology-related industries and services, which
Matthews considers to be the following, among others: telecommunications,
telecommunications equipment, computers, semiconductors, semiconductor capital
equipment, networking, Internet and online service companies, media, office
automation, server hardware producers, software companies (e.g., design,
consumer and industrial), biotechnology and medical device technology companies,
pharmaceuticals and companies involved in the distribution and servicing of
these products.
The
Fund may invest in the Matthews Asia Innovators Active ETF, a series of the
Trust with a substantially similar investment strategy to the Fund, for cash
equitization purposes, which allows the Fund to invest in a manner consistent
with its investment strategy while managing daily cash flows, including
purchases and redemptions by
investors.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
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29 |
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Risks Associated with Emerging and Frontier
Markets: Many Asian countries are considered emerging or frontier
markets. Such markets are often less stable politically and economically than
developed markets such as the United States, and investing in these markets
involves different and greater risks due to, among other factors,
different
accounting
standards; variable quality and reliability of financial information and related
audits of companies; higher brokerage costs and thinner trading markets as
compared to those in developed countries; the possibility of currency transfer
restrictions; and the risk of expropriation, nationalization or other adverse
political, economic or social developments. There may be less publicly available
information about companies in many Asian countries, and the stock exchanges and
brokerage industries in many Asian countries typically do not have the level of
government oversight as do those in the U.S. Securities markets of many Asian
countries are also substantially smaller, less liquid and more volatile than
securities markets in the U.S. Additionally, investors may have substantial
difficulties bringing legal actions to enforce or protect investors’ rights,
which can increase the risks of loss. Frontier markets, a subset of emerging
markets, generally have smaller economies and even less mature capital markets
than emerging markets. As a result, the risks of investing in emerging market
countries are magnified in frontier market countries. Frontier markets are more
susceptible to having abrupt changes in currency values, less mature markets and
settlement practices, and lower trading volumes, which could lead to greater
price volatility and illiquidity.
Risks Associated with Investing in Innovative
Companies: The standards for assessing innovative companies tend to have
many subjective characteristics, can be difficult to analyze, and frequently
involve a balancing of a company’s business plans, objectives, actual conduct
and other factors. The definition of innovators can vary over different periods
and can evolve over time. They may also be difficult to apply consistently
across regions, countries, industries or
sectors.
High Portfolio Turnover Risk: The Fund’s
principal investment strategies may result in high portfolio turnover rates,
which may increase the Fund’s brokerage commission costs and negatively impact
the Fund’s performance. Such portfolio turnover also may generate higher taxable
gains for shareholders of the Fund.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares
bankruptcy.
However,
in the event a company is liquidated or declares bankruptcy, the claims of
owners of bonds take precedence over the claims of those who own preferred and
common stock. If interest rates rise, the dividend on preferred stocks may be
less attractive, causing the price of such stocks to
decline.
Science and Technology Companies Risk: As a
fund that invests in science and technology companies, the Fund is subject to
the risks associated with these industries. This makes the Fund more vulnerable
to the price changes of securities issuers in science- and technology-related
industries and to factors that affect these industries, relative to a broadly
diversified fund. Certain science- and technology-related companies may face
special risks because their products or services may not prove to be
commercially successful. Many science and technology companies have limited
operating histories and experience in managing adverse market conditions,
and are also strongly affected by worldwide scientific or technological
developments and global demand cycles. As a result, their products may rapidly
become obsolete, which could cause a dramatic decrease in the value of their
stock. Such companies are also often subject to governmental regulation and may
therefore be adversely affected by changes in governmental policies. The
possible loss or impairment of intellectual property rights may also negatively
impact science and technology companies.
Concentration Risk: By focusing on a group of
industries, the Fund carries much greater risks of adverse developments and
price movements in such industries than a fund that invests in a wider variety
of industries. Because the Fund concentrates in a group of industries, there is
also the risk that the Fund will perform poorly during a slump in demand for
securities of companies in such industries.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies, monetary policy,
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management
of currency exchange rates, and management of the payment of foreign
currency-denominated obligations. Changes in these policies could adversely
impact affected industries or companies in China. China’s economy, particularly
its export-oriented industries, may be adversely impacted by trade or political
disputes with China’s major trading partners, including the U.S. In addition, as
its consumer class continues to grow, China’s domestically oriented industries
may be especially sensitive to changes in government policy and investment
cycles. As demonstrated by Hong Kong protests in recent years over political,
economic, and legal freedoms, and the Chinese government’s response to them,
considerable political uncertainty continues to exist within Hong Kong. Due to
the interconnected nature of the Hong Kong and Chinese economies, this
instability in Hong Kong may cause uncertainty in the Hong Kong and Chinese
markets. If China were to exert its authority so as to alter the economic,
political or legal structures or the existing social policy of Hong Kong,
investor and business confidence in Hong Kong could be negatively affected and
have an adverse effect on the Fund’s investments.
Risks Associated with India: Government
actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could
adversely affect market conditions, economic growth and the profitability of
private enterprises in India. Global factors and foreign actions may inhibit the
flow of foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of family-
controlled companies may be weaker and less transparent, which increases the
potential for loss and unequal treatment of investors. India experiences many of
the risks associated with developing economies, including relatively low levels
of liquidity, which may result in extreme volatility in the prices of Indian
securities.
Religious,
cultural and military disputes persist in India, and between India and Pakistan
(as well as sectarian groups within each country). Both India and Pakistan have
tested nuclear arms, and the threat of deployment of such weapons could hinder
development of the Indian economy, and escalating tensions could impact the
broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential expense, which reduces its net asset values. For
further information regarding this tax, please see page
126.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sectors described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Information Technology Sector Risk: As
of December 31, 2023, 33% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
– |
|
Consumer Discretionary Sector Risk: As
of December 31, 2023, 26% of the Fund’s assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. Changes in demographics and consumer tastes can also affect the
demand for, and success of, consumer products and services in the
marketplace. |
Underlying ETF Risk: Because the Fund may
invest in the Matthews Asia Innovators Active ETF, it is subject to additional
risks that do not apply to conventional mutual funds, including the risks that
the market price of the ETF’s shares may trade at a discount to its net asset
value, an active secondary trading market may not develop or be maintained, or
trading may be halted by the exchange in which the ETFs trade, which may impact
the Fund’s ability to sell its shares of an
ETF.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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MATTHEWS ASIA INNOVATORS FUND |
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Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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|
5 years |
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|
10 years |
|
|
Since Inception
(12/27/99 Investor)
(4/30/13 Institutional) |
|
Matthews
Asia Innovators Fund—Investor Class |
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Return
before taxes |
|
|
-1.77% |
|
|
|
9.21% |
|
|
|
7.20% |
|
|
|
4.20% |
|
Return
after taxes on distributions1 |
|
|
-1.63% |
|
|
|
6.89% |
|
|
|
5.18% |
|
|
|
3.31% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
-0.91% |
|
|
|
7.47% |
|
|
|
5.64% |
|
|
|
3.37% |
|
Matthews
Asia Innovators Fund—Institutional Class |
|
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Return
before taxes |
|
|
-1.62% |
|
|
|
9.35% |
|
|
|
7.39%. |
|
|
|
9.17% |
2 |
MSCI
All Country Asia ex Japan Index |
|
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| |
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| |
|
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| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
6.34% |
|
|
|
4.01% |
|
|
|
4.17% |
|
|
|
5.45% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 12/31/99. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Michael J. Oh, CFA, has been a
Portfolio Manager of the Matthews Asia Innovators Fund since 2006.
Co‑Manager: Inbok Song has been a Portfolio
Manager of the Matthews Asia Innovators Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Manager.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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Matthews
China Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your investment)
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Investor Class |
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Institutional Class |
|
Maximum Account Fee on Redemptions (for
wire redemptions only) |
|
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$9 |
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$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
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Management
Fees |
|
|
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|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.47% |
|
|
|
|
| |
|
0.33% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual Fund Operating
Expenses |
|
|
|
| |
|
1.15% |
|
|
|
|
| |
|
1.01% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$117 |
|
$365 |
|
$633 |
|
$1,398 |
|
|
|
| |
Institutional Class |
|
$103 |
|
$322 |
|
$558 |
|
$1,236 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 50% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews China 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. China includes its administrative and other districts, such as Hong
Kong. A company or other issuer is considered to be “located” in a country or a
region, and a security or instrument is deemed to be an Asian (or specific
country) security or instrument, if it has substantial ties to that country or
region. Matthews currently makes that determination based primarily on one or
more of the following criteria: (A) with respect to a company or issuer,
whether (i) it is organized under the laws of that country or any
country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of its
assets
located, within that country or region; (iii) it has the primary trading
markets for its securities in that country or region; (iv) it has its
principal place of business in or is otherwise headquartered in that country or
region; or (v) it is a governmental entity or an agency, instrumentality or
a political subdivision of that country or any country in that region; and
(B) with respect to an instrument or issue, whether (i) its issuer is
headquartered or organized in that country or region; (ii) it is issued to
finance a project that has at least 50% of its assets or operations in that
country or region; (iii) it is at least 50% secured or backed by assets
located in that country or region; (iv) it is a component of or its issuer
is included in the MSCI China Index, the Fund’s primary benchmark index; or
(v) it is denominated in the currency of an Asian country and addresses at
least one of the other above criteria. The term “located” and the associated
criteria listed above have been defined in such a way that Matthews has latitude
in determining whether an issuer should be included within a region or country.
The Fund may also invest in depositary receipts, including American, European
and Global Depositary Receipts.
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. Matthews expects that the companies
in which the Fund invests typically will be of medium or large size, but the
Fund may invest in companies of any size. Matthews measures a company’s size
with respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector.
The
Fund may invest in the Matthews China Active ETF, a series of the Trust with a
substantially similar investment strategy to the Fund, for cash equitization
purposes, which allows the Fund to invest in a manner consistent with its
investment strategy while managing daily cash flows, including purchases and
redemptions by investors.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, China may utilize formal or
informal currency-exchange controls or “capital controls.” Capital controls may
impose restrictions on the Fund’s ability to repatriate investments or income.
Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging Markets: Many
Asian countries are considered emerging markets. Such markets are often less
stable politically and economically than developed markets such as the United
States, and investing in these markets involves different and greater risks due
to, among other factors, different accounting standards; variable quality and
reliability of financial information and related audits of companies; higher
brokerage costs and thinner trading markets as compared to those in developed
countries; the possibility of currency transfer restrictions; and the risk of
expropriation, nationalization or other adverse political, economic or social
developments. There may be less publicly available information about companies
in many Asian countries, and the stock exchanges and brokerage industries in
many Asian countries typically do not have the level of government oversight as
do those in the United States. Securities markets of many Asian countries
are also substantially smaller, less liquid and more volatile than securities
markets in the United States. Additionally, investors may have substantial
difficulties bringing legal actions to enforce or protect investors’ rights,
which can increase the risks of loss.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies (e.g., allocation of resources and other
preferential treatment), monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to
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exist
within Hong Kong. Due to the interconnected nature of the Hong Kong and Chinese
economies, this instability in Hong Kong may cause uncertainty in the Hong Kong
and Chinese markets. If China were to exert its authority so as to alter the
economic, political or legal structures or the existing social policy of Hong
Kong, investor and business confidence in Hong Kong could be negatively affected
and have an adverse effect on the Fund’s
investments.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is
better
suited for long-term investors (typically five years or longer).
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Consumer Discretionary Sector Risk: As
of December 31, 2023, 37% of the Fund’s assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. Changes in demographics and consumer tastes can also affect the
demand for, and success of, consumer products and services in the
marketplace. |
Underlying ETF Risk: Because the Fund may
invest in the Matthews China Active ETF, it is subject to additional risks that
do not apply to conventional mutual funds, including the risks that the market
price of the ETF’s shares may trade at a discount to its net asset value, an
active secondary trading market may not develop or be maintained, or trading may
be halted by the exchange in which the ETFs trade, which may impact the Fund’s
ability to sell its shares of an ETF.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of the
Fund’s benchmark indices. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or
call 800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(2/19/98 Investor)
(10/29/10 Institutional) |
|
Matthews
China Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
-19.22% |
|
|
|
0.62% |
|
|
|
1.83% |
|
|
|
7.22% |
|
Return
after taxes on distributions1 |
|
|
-19.25% |
|
|
|
-0.63% |
|
|
|
-0.21% |
|
|
|
5.76% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
-11.15% |
|
|
|
0.76% |
|
|
|
1.39% |
|
|
|
6.06% |
|
Matthews
China Fund—Institutional Class |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Return
before taxes |
|
|
-19.11% |
|
|
|
0.79% |
|
|
|
1.99% |
|
|
|
1.19% |
2 |
MSCI
China Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects
no deduction for fees, expenses or taxes) |
|
|
-11.04% |
|
|
|
-2.65% |
|
|
|
1.03% |
|
|
|
2.65% |
3 |
MSCI
China All Shares Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
-11.35% |
|
|
|
0.21% |
|
|
|
n.a. |
4 |
|
|
n.a. |
4 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 2/28/98. |
|
4 |
Index
launched on 6/26/14. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Andrew Mattock, CFA, has been a
Portfolio Manager of the Matthews China Fund since 2015.
Co‑Manager: Winnie Chwang has been a Portfolio
Manager of the Matthews China Fund since 2014.
Co‑Manager: Sherwood Zhang, CFA, has been a
Portfolio Manager of the Matthews China Fund since 2022.
Co‑Manager: Hardy Zhu has been a Portfolio
Manager of the Matthews China Fund since 2024.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
|
|
|
|
|
| |
36 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
China Small Companies Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum Account Fee on Redemptions (for
wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.85% |
|
|
|
|
|
|
|
0.85% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.55% |
|
|
|
|
| |
|
0.41% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual
Fund Operating Expenses |
|
|
|
|
|
|
1.40% |
|
|
|
|
|
|
|
1.26% |
|
Fee
Waiver and Expense Reimbursement1 |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
(0.06% |
) |
Total Annual Fund Operating Expenses After Fee
Waiver and Expense Reimbursement |
|
|
|
| |
|
1.40% |
|
|
|
|
| |
|
1.20% |
|
|
1 |
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 to 1.20%, 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 1.20% 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 1.20%. If the operating
expenses fall below the expense limitation 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, 2025 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. |
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the expense limitation for the one year
period only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$143 |
|
$443 |
|
$766 |
|
$1,680 |
|
|
|
| |
Institutional Class |
|
$122 |
|
$394 |
|
$686 |
|
$1,517 |
|
|
|
|
|
| |
| |
| |
MATTHEWS CHINA SMALL COMPANIES
FUND |
|
|
37 |
|
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 59% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews China Small Companies 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 Small Companies (defined below) located in China. China includes its
administrative and other districts, such as Hong Kong. A company or other
issuer is considered to be “located” in a country or a region, and a security or
instrument is deemed to be an Asian (or specific country) security or
instrument, if it has substantial ties to that country or region. Matthews
currently makes that determination based primarily on one or more of the
following criteria: (A) with respect to a company or issuer, whether
(i) it is organized under the laws of that country or any country in
that region; (ii) it derives at least 50% of its revenues or profits from
goods produced or sold, investments made, or services performed, or has at least
50% of its assets located, within that country or region; (iii) it has the
primary trading markets for its securities in that country or region;
(iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI China Small Cap Index; or
(v) it is denominated in the currency of an Asian country and addresses at
least one of the other above criteria. The term “located” and the associated
criteria listed above have been defined in such a way that Matthews has latitude
in determining whether an issuer should be included within a region or country.
The Fund may also invest in depositary receipts, including American, European
and Global Depositary Receipts.
The
Fund seeks to invest in smaller 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. Matthews generally determines
whether a company should be considered to be a small company based on its market
capitalization (the number of the company’s shares outstanding times the market
price per share for such securities). Under normal circumstances, the Fund
invests at least 80% of its net assets in any company that has a market
capitalization no higher than the greater of $5 billion or the market
capitalization of the largest company included in the MSCI China Small Cap Index
(each, a “Small Company” and
together,
“Small Companies”). The largest company in the MSCI China Small Cap Index had a
market capitalization of $3.1 billion on December 31, 2023. Companies
in which the Fund invests typically operate in growth industries and possess the
potential to expand their scope of business over time. A company may grow to a
market capitalization that is higher than the greater of $5 billion or the
market capitalization of the largest company included in the Fund’s primary
benchmark after the Fund has purchased its securities; nevertheless, the
existing holdings of securities of such a company will continue to be considered
a Small Company. If additional purchases of a security are made, all holdings
(including prior purchases) of that security will be re‑classified with respect
to its market capitalization at the time of the last purchase. The
implementation of the principal investment strategies of the Fund may result in
a significant portion of the Fund’s assets being invested from time to time in
one or more sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, China may utilize formal or
informal currency-exchange controls or “capital controls.” Capital controls may
impose restrictions on the Fund’s ability to repatriate investments or income.
Such controls may also affect the value of the Fund’s
holdings.
|
|
|
|
|
|
|
| |
38 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Risks Associated with Emerging Markets: Many
Asian countries are considered emerging markets. Such markets are often less
stable politically and economically than developed markets such as the
United States, and investing in these markets involves different and
greater risks due to, among other factors, different accounting standards;
variable quality and reliability of financial information and related audits of
companies; higher brokerage costs and thinner trading markets as compared to
those in developed countries; the possibility of currency transfer restrictions;
and the risk of expropriation, nationalization or other adverse political,
economic or social developments. There may be less publicly available
information about companies in many Asian countries, and the stock exchanges and
brokerage industries in many Asian countries typically do not have the level of
government oversight as do those in the United States. Securities markets
of many Asian countries are also substantially smaller, less liquid and more
volatile than securities markets in the United States. Additionally, investors
may have substantial difficulties bringing legal actions to enforce or protect
investors’ rights, which can increase the risks of
loss.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Smaller companies may be more dependent on one or few
key persons and may lack depth of management. Larger portions of their stock may
be held by a small number of investors (including founders and management) than
is typical of larger companies. Credit may be more difficult to obtain (and on
less advantageous terms) than for larger companies. As a result, the influence
of creditors (and the impact of financial or operating restrictions associated
with debt financing) on smaller companies may be greater than on larger or more
established companies. The Fund may have more difficulty obtaining information
about smaller companies, making it more difficult to evaluate the impact of
market, economic, regulatory and other factors on them. Informational
difficulties may also make valuing or disposing of their securities more
difficult than it would for larger companies. Securities of smaller companies
may trade less frequently and in lesser volume than more widely held securities
and the securities of smaller companies generally are subject to more abrupt or
erratic price movements than more widely held or larger, more established
companies or the market indices in general. The value of securities of smaller
companies may react differently to political, market and economic developments
than the markets as a whole or than other types of stocks. Some smaller
companies may have aggressive capital structures, including high debt levels,
and be involved in rapidly growing or changing industries or technologies with
intense competition. These companies often have limited operating histories
resulting in less predictable operating
results.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies (e.g., allocation
of
resources
and other preferential treatment), monetary policy, management of currency
exchange rates, and management of the payment of foreign currency-denominated
obligations. Changes in these policies could adversely impact affected
industries or companies in China. China’s economy, particularly its
export-oriented industries, may be adversely impacted by trade or political
disputes with China’s major trading partners, including the U.S. In addition, as
its consumer class continues to grow, China’s domestically oriented industries
may be especially sensitive to changes in government policy and investment
cycles. As demonstrated by Hong Kong protests in recent years over political,
economic, and legal freedoms, and the Chinese government’s response to them,
considerable political uncertainty continues to exist within Hong Kong. Due to
the interconnected nature of the Hong Kong and Chinese economies, this
instability in Hong Kong may cause uncertainty in the Hong Kong and Chinese
markets. If China were to exert its authority so as to alter the economic,
political or legal structures or the existing social policy of Hong Kong,
investor and business confidence in Hong Kong could be negatively affected and
have an adverse effect on the Fund’s
investments.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS CHINA SMALL COMPANIES
FUND |
|
|
39 |
|
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sectors described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Consumer Discretionary Sector Risk: As
of December 31, 2023, 22% of the Fund’s assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. |
|
Changes
in demographics and consumer tastes can also affect the demand for, and
success of, consumer products and services in the
marketplace. |
– |
|
Industrial Sector Risk: As of
December 31, 2023, 20% of the Fund’s assets were invested in the
industrial sector. Industrial companies are affected by supply and demand
both for their specific product or service and for industrial sector
products in general. Government regulation, world events, exchange rates
and economic conditions, technological developments and liabilities for
environmental damage and general civil liabilities will likewise affect
the performance of these
companies. |
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
|
|
|
|
|
| |
40 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Past Performance
The bar chart below shows the Fund’s performance
for each full calendar year since its inception and how it has varied from year
to year, reflective of the Fund’s volatility and some indication of
risk. Also shown are the best and worst quarters for this time
period. The
table below shows the Fund’s performance over certain periods of time, along
with performance of the MSCI China Index, its primary benchmark index, and the
MSCI China Small Cap Index, its secondary benchmark index.
The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(5/31/11 Investor)
(11/30/17 Institutional) |
|
Matthews China Small Companies Fund—Investor
Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
-17.51% |
|
|
|
6.21% |
|
|
|
5.34% |
|
|
|
4.25% |
|
Return
after taxes on distributions1 |
|
|
-17.92% |
|
|
|
3.71% |
|
|
|
3.50% |
|
|
|
2.76% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
-9.99% |
|
|
|
4.86% |
|
|
|
4.06% |
|
|
|
3.22% |
|
Matthews
China Small Companies Fund—Institutional Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
-17.37% |
|
|
|
6.43% |
|
|
|
n.a. |
|
|
|
3.00% |
2 |
MSCI
China Index3 |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects
no deduction for fees, expenses or taxes) |
|
|
-11.04% |
|
|
|
-2.65% |
|
|
|
1.03% |
|
|
|
0.80% |
4 |
MSCI
China Small Cap Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
-24.82% |
|
|
|
-6.38% |
|
|
|
-3.51% |
|
|
|
-3.21% |
4 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
In connection with the Security and
Exchange Commission’s new Tailored Shareholder Report rule, effective April 29, 2024, the Fund’s primary
benchmark index is the MSCI China Index. The Fund will continue to show
index performance for the MSCI China Small Cap Index, the Fund’s secondary
benchmark index. |
|
4 |
Calculated
from 5/31/11. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Winnie Chwang has been a
Portfolio Manager of the Matthews China Small Companies Fund since 2020.
Lead Manager: Andrew Mattock, CFA, has been a
Portfolio Manager of the Matthews China Small Companies Fund since 2020.
Co‑Manager: Sherwood Zhang, CFA, has been a
Portfolio Manager of the Matthews China Small Companies Fund since 2024.
Co-Manager: Hardy Zhu has been a Portfolio Manager
of the Matthews China Small Companies Fund since 2024.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consults
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS CHINA SMALL COMPANIES
FUND |
|
|
41 |
|
Matthews
India Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum Account Fee on Redemptions (for
wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.46% |
|
|
|
|
| |
|
0.33% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual Fund Operating
Expenses |
|
|
|
| |
|
1.14% |
|
|
|
|
| |
|
1.01% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$116 |
|
$362 |
|
$628 |
|
$1,386 |
|
|
|
| |
Institutional Class |
|
$103 |
|
$322 |
|
$558 |
|
$1,236 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 51% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews India Fund seeks to achieve its investment
objective by investing at least 80% of its net assets, which include borrowings
for investment purposes, in common stocks, preferred stocks and convertible
securities, of any duration or quality, including those that are unrated, or
would be below investment grade (referred to as “junk bonds”) if rated, of
companies located in India. A company or other issuer is considered to be
“located” in a country or a region, and a security or instrument is deemed to be
an Asian (or specific country) security or instrument, if it has substantial
ties to that country or region. Matthews currently makes that determination
based primarily on one or more of the following criteria: (A) with respect
to a company or issuer, whether (i) it is organized under the laws of
that country or any country in that region; (ii) it derives at least 50% of
its revenues or profits from goods
|
|
|
|
|
|
|
| |
42 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
produced
or sold, investments made, or services performed, or has at least 50% of its
assets located, within that country or region; (iii) it has the primary
trading markets for its securities in that country or region; (iv) it has
its principal place of business in or is otherwise headquartered in that country
or region; or (v) it is a governmental entity or an agency, instrumentality
or a political subdivision of that country or any country in that region; and
(B) with respect to an instrument or issue, whether (i) its issuer is
headquartered or organized in that country or region; (ii) it is issued to
finance a project that has at least 50 % of its assets or operations in
that country or region; (iii) it is at least 50% secured or backed by
assets located in that country or region; (iv) it is a component of or its
issuer is included in the MSCI India Index, the Fund’s primary benchmark index;
or (v) it is denominated in the currency of an Asian country and addresses
at least one of the other above criteria. The term “located” and the associated
criteria listed above have been defined in such a way that Matthews has latitude
in determining whether an issuer should be included within a region or country.
The Fund may also invest in depositary receipts, including American, European
and Global Depositary Receipts.
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. While the Fund may invest in
companies across the market capitalization spectrum, it has in the past
invested, and may continue to invest, a substantial portion of Fund assets in
smaller companies. Matthews measures a company’s size with respect to
fundamental criteria such as, but not limited to, market capitalization, book
value, revenues, profits, cash flow, dividends paid and number of employees. The
implementation of the principal investment strategies of the Fund may result in
a significant portion of the Fund’s assets being invested from time to time in
one or more sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country,
region
or financial market. Securities in the Fund’s portfolio may underperform due to
inflation (or expectations for inflation), interest rates, global demand for
particular products or resources, natural disasters, climate change and
climate-related events, pandemics, epidemics, terrorism, international
conflicts, regulatory events and governmental or quasi-governmental actions. The
occurrence of global events similar to those in recent years may result in
market volatility and may have long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, India may utilize formal or
informal currency-exchange controls or “capital controls.” Capital controls may
impose restrictions on the Fund’s ability to repatriate investments or income.
Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging Markets: Many
Asian countries are considered emerging markets. Such markets are often less
stable politically and economically than developed markets such as the
United States, and investing in these markets involves different and
greater risks due to, among other factors, different accounting standards;
variable quality and reliability of financial information and related audits of
companies; higher brokerage costs and thinner trading markets as compared to
those in developed countries; the possibility of currency transfer restrictions;
and the risk of expropriation, nationalization or other adverse political,
economic or social developments. There may be less publicly available
information about companies in many Asian countries, and the stock exchanges and
brokerage industries in many Asian countries typically do not have the level of
government oversight as do those in the United States. Securities markets
of many Asian countries are also substantially smaller, less liquid and more
volatile than securities markets in the United States. Additionally, investors
may have substantial difficulties bringing legal actions to enforce or protect
investors’ rights, which can increase the risks of
loss.
Risks Associated with India: Government
actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could
adversely affect market conditions, economic growth and the profitability of
private enterprises in India. Global factors and foreign actions may inhibit the
flow of foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of
family-controlled companies may be weaker and less transparent, which increases
the potential for loss and unequal treatment of investors. India experiences
many of the risks associated with developing economies, including relatively low
levels of liquidity, which may result in extreme volatility in the prices of
Indian securities.
Religious,
cultural and military disputes persist in India, and between India and Pakistan
(as well as sectarian groups within each country). Both India and Pakistan have
tested nuclear arms, and the threat of deployment of such weapons
could
hinder
development of the Indian economy, and escalating tensions could impact the
broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential expense, which reduces its net asset values. For
further information regarding this tax, please see page
126.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing
an
ownership
interest or the right to acquire an ownership interest in an issuer. Equity risk
is the risk that stocks and other equity securities generally fluctuate in value
more than bonds and may decline in value over short or extended periods. The
value of stocks and other equity securities may be affected by changes in an
issuer’s financial condition, factors that affect a particular industry or
industries, or as a result of changes in overall market, economic and political
conditions that are not specifically related to a company or
industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating
agencies. The Fund may invest in convertible debt securities of any
maturity
and
in those that are unrated, or would be below investment grade (referred to as
“junk bonds”) if rated. Therefore, credit risk may be greater for the Fund than
for other funds that invest in higher-grade securities. These securities are
also subject to greater liquidity risk than many other
securities.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated
with larger, more established companies, potentially making their stock prices
more volatile and increasing the risk of
loss.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sectors described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Financial Sector Risk: As of
December 31, 2023, 34% of the Fund’s assets were invested in the
financial sector. Financial companies are subject to extensive government
regulation and can be significantly affected by the availability and cost
of capital funds, changes in interest rates, the rate of corporate and
consumer debt defaults, price competition and other sector-specific
factors. |
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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| |
44 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The
table below shows the Fund’s performance over certain periods of time, along
with performance of the MSCI India Index, its primary benchmark index, and the
S&P Bombay Stock Exchange 100 Index, its secondary benchmark
index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(10/31/05 Investor)
(10/29/10 Institutional) |
|
Matthews
India Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
23.10% |
|
|
|
8.62% |
|
|
|
11.65% |
|
|
|
10.28% |
|
Return
after taxes on distributions1 |
|
|
22.18% |
|
|
|
6.60% |
|
|
|
10.09% |
|
|
|
9.24% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
14.24% |
|
|
|
6.49% |
|
|
|
9.39% |
|
|
|
8.65% |
|
Matthews
India Fund—Institutional Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
23.32% |
|
|
|
8.76% |
|
|
|
11.83% |
|
|
|
6.77% |
2 |
MSCI
India Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects
no deduction for fees, expenses or taxes) |
|
|
21.29% |
|
|
|
12.12% |
|
|
|
10.08% |
|
|
|
9.76% |
3 |
S&P
Bombay Stock Exchange 100 Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
22.44% |
|
|
|
12.39% |
|
|
|
11.65% |
|
|
|
10.78% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 10/31/05. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Peeyush Mittal, CFA, has been a
Portfolio Manager of the Matthews India Fund since 2018.
Co‑Manager: Swagato Ghosh has been a Portfolio
Manager of the Matthews India Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Manager is supported by and consults
with the Co‑Manager.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
Matthews Japan Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum Account Fee on Redemptions (for
wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.41% |
|
|
|
|
| |
|
0.34% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual Fund Operating
Expenses |
|
|
|
| |
|
1.09% |
|
|
|
|
| |
|
1.02% |
|
EXAMPLE OF FUND
EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$111 |
|
$347 |
|
$601 |
|
$1,329 |
|
|
|
| |
Institutional Class |
|
$104 |
|
$325 |
|
$563 |
|
$1,248 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 101% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Japan 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 Japan. A company or other issuer is considered to be “located” in a country
or a region, and a security or instrument is deemed to be an Asian (or specific
country) security or instrument, if it has substantial ties to that country or
region. Matthews currently makes that determination based primarily on one or
more of the following criteria: (A) with respect to a company or issuer,
whether (i) it is organized under the laws of that country or any
country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of
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| |
46 |
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matthewsasia.com | 800.789.ASIA |
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its
assets located, within that country or region; (iii) it has the primary
trading markets for its securities in that country or region; (iv) it has
its principal place of business in or is otherwise headquartered in that country
or region; or (v) it is a governmental entity or an agency, instrumentality
or a political subdivision of that country or any country in that region; and
(B) with respect to an instrument or issue, whether (i) its issuer is
headquartered or organized in that country or region; (ii) it is issued to
finance a project that has at least 50% of its assets or operations in that
country or region; (iii) it is at least 50% secured or backed by assets
located in that country or region; (iv) it is a component of or its issuer
is included in the MSCI Japan Index, the Fund’s primary benchmark index; or
(v) it is denominated in the currency of an Asian country and addresses at
least one of the other above criteria. The term “located” and the associated
criteria listed above have been defined in such a way that Matthews has latitude
in determining whether an issuer should be included within a region or country.
The Fund may also invest in depositary receipts, including American, European
and Global Depositary Receipts.
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. The Fund may invest in companies of
any market capitalization. Matthews measures a company’s size with respect to
fundamental criteria such as, but not limited to, market capitalization, book
value, revenues, profits, cash flow, dividends paid and number of employees. The
implementation of the principal investment strategies of the Fund may result in
a significant portion of the Fund’s assets being invested from time to time in
one or more sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular
products
or
resources, natural disasters, climate change and climate-related events,
pandemics, epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time.
Risks Associated with Japan: The Japanese
economy has only recently emerged from a prolonged economic downturn. Since
the year 2000, Japan’s economic growth rate has remained relatively
low. The Japanese economy is characterized by an aging demographic,
declining population, large government debt and highly regulated labor market.
Economic growth in Japan is dependent on domestic consumption, deregulation and
consistent government policy. International trade, particularly with the U.S.,
also impacts growth of the Japanese economy and adverse economic conditions in
the U.S. or other trade partners may affect Japan. Japan also has a growing
economic relationship with China and other
Southeast
Asian
countries, and thus Japan’s economy may also be affected by economic,
political or social instability in those countries (whether resulting from
local or global events). Other factors, such as the occurrence of natural
disasters and relations with neighboring countries (including China, South
Korea, North Korea and Russia), may also negatively impact the Japanese
economy.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount
(or
premium)
to the underlying security. In addition, depositary receipts may not pass
through voting and other shareholder rights, and may be less liquid than the
underlying securities listed on an
exchange.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Information Technology Sector Risk: As
of December 31, 2023, 22% of the Fund’s assets were invested in the
information technology sector. Information technology companies may be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short
product |
|
cycle,
possible loss or impairment of intellectual property rights, and changes
in government regulations, may also adversely impact information
technology companies. |
– |
|
Industrial Sector Risk: As of
December 31, 2023, 21% of the Fund’s assets were invested in the
industrial sector. Industrial companies are affected by supply and demand
both for their specific product or service and for industrial sector
products in general. Government regulation, world events, exchange rates
and economic conditions, technological developments and liabilities for
environmental damage and general civil liabilities will likewise affect
the performance of these companies. |
– |
|
Consumer Discretionary Sector Risk: As
of December 31, 2023, 20% of the Fund’ assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. Changes in demographics and consumer tastes can also affect the
demand for, and success of, consumer products and services in the
marketplace. |
High Portfolio Turnover Risk: The Fund’s
principal investment strategies may result in high portfolio turnover rates,
which may increase the Fund’s brokerage commission costs and negatively impact
the Fund’s performance. Such portfolio turnover also may generate higher taxable
gains for shareholders of the Fund.
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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48 |
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matthewsasia.com | 800.789.ASIA |
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Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or
call 800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(12/31/98 Investor)
(10/29/10 Institutional) |
|
Matthews
Japan Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
17.99% |
|
|
|
6.45% |
|
|
|
5.55% |
|
|
|
5.54% |
|
Return
after taxes on distributions1 |
|
|
17.99% |
|
|
|
4.72% |
|
|
|
4.49% |
|
|
|
4.75% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
10.65% |
|
|
|
5.19% |
|
|
|
4.51% |
|
|
|
4.54% |
|
Matthews
Japan Fund—Institutional Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
18.08% |
|
|
|
6.49% |
|
|
|
5.63% |
|
|
|
7.47% |
2 |
MSCI
Japan Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
20.77% |
|
|
|
7.31% |
|
|
|
5.34% |
|
|
|
3.89% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated from
12/31/98. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Lead Manager: Shuntaro Takeuchi has been a
Portfolio Manager of the Matthews Japan Fund since 2019.
Lead Manager: Donghoon Han has been a Portfolio
Manager of the Matthews Japan Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
Matthews Asian Growth and Income
Fund
FUND SUMMARY
Investment Objective
Long-term
capital appreciation. The Fund also seeks to provide some current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
|
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| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum Account Fee on Redemptions
(for wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.47% |
|
|
|
|
| |
|
0.34% |
|
|
|
|
| |
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual Fund Operating
Expenses |
|
|
|
| |
|
1.15% |
|
|
|
|
| |
|
1.02% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
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| |
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One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$117 |
|
$365 |
|
$633 |
|
$1,398 |
|
|
|
| |
Institutional Class |
|
$104 |
|
$325 |
|
$563 |
|
$1,248 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 12% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Asian Growth and Income 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 common stock,
preferred stock and other equity securities, and convertible securities as well
as fixed-income securities, of any duration or quality, including high yield
securities (also known as “junk bonds”), of companies located in Asia, which
consists of all countries and markets in Asia, including developed, emerging,
and frontier countries and markets in the Asian region. 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.
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50 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
A
company or other issuer is considered to be “located” in a country or a region,
and a security or instrument is deemed to be an Asian (or specific country)
security or instrument, if it has substantial ties to that country or region.
Matthews currently makes that determination based primarily on one or more of
the following criteria: (A) with respect to a company or issuer, whether
(i) it is organized under the laws of that country or any country in
that region; (ii) it derives at least 50% of its revenues or profits from
goods produced or sold, investments made, or services performed, or has at least
50% of its assets located, within that country or region; (iii) it has the
primary trading markets for its securities in that country or region;
(iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI All Country Asia ex Japan
Index, the Fund’s primary benchmark index; or (v) it is denominated in the
currency of an Asian country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts, including American, European and Global Depositary
Receipts.
The
Fund attempts to offer investors a relatively stable means of participating in a
portion of the Asian region’s growth prospects, while providing some downside
protection, in comparison to a portfolio that invests purely in common stocks.
The strategy of owning convertible bonds and dividend-paying equities is
designed to help the Fund to meet its investment objective while helping to
reduce the volatility of its portfolio. Matthews expects that the companies in
which the Fund invests typically will be of medium or large size, but the Fund
may invest in companies of any size. Matthews measures a company’s size with
respect to fundamental criteria such as, but not limited to, market
capitalization, book value, revenues, profits, cash flow, dividends paid and
number of employees. The implementation of the principal investment strategies
of the Fund may result in a significant portion of the Fund’s assets being
invested from time to time in one or more sectors, but the Fund may invest in
companies in any sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption
and
military
activity. The economies of many Asian countries differ from the economies of
more developed countries in many respects, such as rate of growth, inflation,
capital reinvestment, resource self-sufficiency, financial system stability, the
national balance of payments position and sensitivity to changes in global
trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier Markets:
Many Asian countries are considered emerging or frontier markets. Such
markets are often less stable politically and economically than developed
markets such as the United States, and investing in these markets involves
different and greater risks due to, among other factors, different accounting
standards; variable quality and reliability of financial information and related
audits of companies; higher brokerage costs and thinner trading markets as
compared to those in developed countries; the possibility of currency transfer
restrictions; and the risk of expropriation, nationalization or other adverse
political, economic or social developments. There may be less publicly available
information about companies in many Asian countries, and the stock exchanges and
brokerage industries in many Asian countries typically do not have the level of
government oversight as do those in the U. S. Securities markets of many
Asian countries are also substantially smaller, less liquid and more volatile
than securities markets in the U.S. Additionally, investors may have substantial
difficulties bringing legal actions to enforce or protect investors’ rights,
which can increase the risks of loss. Frontier markets, a subset of emerging
markets, generally have smaller economies and even less mature capital markets
than emerging markets. As a result, the risks of investing in emerging market
countries are magnified in frontier market countries. Frontier markets are more
susceptible to having abrupt changes in currency values, less mature markets and
settlement practices, and lower trading volumes, which could lead to greater
price volatility and illiquidity.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they
may
|
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| |
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| |
MATTHEWS ASIAN GROWTH AND INCOME
FUND |
|
|
51 |
|
also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating
agencies. The Fund may invest in convertible debt securities of any maturity and
in those that are unrated, or would be below investment grade (referred to as
“junk bonds”) if rated. Therefore, credit risk may be greater for the Fund than
for other funds that invest in higher-grade securities. These securities are
also subject to greater liquidity risk than many other
securities.
Growth Stock Risk: Growth stocks may be more
volatile than other stocks because they are more sensitive to investor
perceptions of the issuing company’s growth potential. Growth stocks may go in
and out of favor over time and may perform differently than the market as a
whole.
Dividend-Paying Securities Risk: The Fund may
invest in dividend-paying equity securities. There can be no guarantee that
companies that have historically paid dividends will continue to pay them or pay
them at the current rates in the future. The prices of dividend-paying equity
securities (and particularly of those issued by Asian companies) can be highly
volatile. In addition, dividend-paying equity securities, in particular those
whose market price is closely related to their yield, may exhibit greater
sensitivity to interest rate changes. The Fund’s investment in such securities
may also limit its potential for appreciation during a broad market
advance.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Preferred Stock Risk: Preferred stock
normally pays dividends at a specified rate and has precedence over common stock
in the event the issuer is liquidated or declares bankruptcy. However, in the
event a company is liquidated or declares bankruptcy, the claims of owners of
bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to
decline.
Credit Risk: Credit risk refers to the risk
that an issuer may default in the payment of principal and/or interest on an
instrument.
Interest Rate Risk: Fixed-income securities may
decline in value because of changes in interest rates. Bond prices generally
rise when interest rates decline and generally decline when interest rates
rise.
High Yield Securities Risk: High yield
securities or unrated securities of similar credit quality (commonly known as
“junk bonds”) are more likely to default than higher rated securities. These
securities typically entail greater potential price volatility and are
considered predominantly speculative. Issuers of high yield securities may also
be more susceptible to adverse economic and competitive industry conditions than
those of higher-rated securities.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated
with larger, more established companies, potentially making their stock prices
more volatile and increasing the risk of
loss.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth;
they also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies, monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to exist within Hong Kong. Due to the
interconnected nature of the Hong Kong and Chinese economies, this instability
in Hong Kong may cause uncertainty in the Hong Kong and Chinese markets. If
China were to exert its authority so as to alter the economic, political or
legal structures or the existing social policy of Hong Kong, investor and
business confidence in Hong Kong could be negatively affected and have an
adverse effect on the Fund’s investments.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
|
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|
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|
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| |
52 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
|
Financial Sector Risk: As of December
31, 2023, 22% of the Fund’s assets were invested in the financial sector.
Financial companies are subject to extensive government regulation and can
be significantly affected by the availability and cost of capital funds,
changes in interest rates, the rate of corporate and consumer debt
defaults, price competition and other sector-specific
factors. |
– |
|
Information Technology Sector Risk: As
of December 31, 2023, 21% of the Fund’s assets were invested in the
information technology sector. Information technology companies
may |
|
be
significantly affected by aggressive pricing as a result of intense
competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may
also adversely impact information technology
companies. |
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
|
|
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|
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| |
| |
| |
MATTHEWS ASIAN GROWTH AND INCOME
FUND |
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|
53 |
|
Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or
call 800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception (9/12/94 Investor)
(10/29/10 Institutional) |
|
Matthews
Asian Growth and Income Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
3.33% |
|
|
|
2.78% |
|
|
|
1.81% |
|
|
|
7.61% |
|
Return
after taxes on distributions1 |
|
|
2.68% |
|
|
|
1.63% |
|
|
|
0.38% |
|
|
|
5.79% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
2.45% |
|
|
|
2.20% |
|
|
|
1.31% |
|
|
|
5.87% |
|
Matthews
Asian Growth and Income Fund—Institutional Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
3.39% |
|
|
|
2.92% |
|
|
|
1.95% |
|
|
|
3.05% |
2 |
MSCI
All Country Asia ex Japan Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
6.34% |
|
|
|
4.01% |
|
|
|
4.17% |
|
|
|
4.13% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 8/31/94. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Robert Horrocks, PhD, has been a
Portfolio Manager of the Matthews Asian Growth and Income Fund since
2009.
Lead Manager: Kenneth Lowe, CFA, has been a
Portfolio Manager of the Matthews Asian Growth and Income Fund since 2011.
Co‑Manager: Siddharth Bhargava has been a
Portfolio Manager of the Matthews Asian Growth and Income Fund since 2021.
Co‑Manager: Elli Lee has been a Portfolio
Manager of the Matthews Asian Growth and Income Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consult
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
|
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54 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
Matthews Asia Dividend Fund
FUND SUMMARY
Investment Objective
Total
return with an emphasis on providing current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
|
|
|
|
|
|
|
| |
|
|
Investor Class |
|
|
Institutional Class |
|
Maximum Account Fee on Redemptions (for
wire redemptions only) |
|
|
$9 |
|
|
|
$9 |
|
ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Management
Fees |
|
|
|
|
|
|
0.68% |
|
|
|
|
|
|
|
0.68% |
|
Distribution
(12b‑1) Fees |
|
|
|
|
|
|
0.00% |
|
|
|
|
|
|
|
0.00% |
|
Other Expenses |
|
|
|
| |
|
0.42% |
|
|
|
|
| |
|
0.31% |
|
Administration
and Shareholder Servicing Fees |
|
|
0.18% |
|
|
|
|
|
|
|
0.18% |
|
|
|
|
|
Total Annual Fund Operating
Expenses |
|
|
|
| |
|
1.10% |
|
|
|
|
| |
|
0.99% |
|
EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The example reflects the fee waiver for the one year period
only. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
|
|
|
|
|
|
|
| |
|
|
One year |
|
Three years |
|
Five years |
|
Ten years |
|
|
|
| |
Investor Class |
|
$112 |
|
$350 |
|
$606 |
|
$1,340 |
|
|
|
| |
Institutional Class |
|
$101 |
|
$315 |
|
$547 |
|
$1,213 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 76% of the average value of its
portfolio.
Principal Investment
Strategy
Under
normal circumstances, the Matthews Asia 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 Asia. The Fund may also invest in convertible debt and
equity securities of any maturity and quality, including those that are unrated,
or would be below investment grade (referred to as “junk bonds”) if rated, of
companies located in Asia. Asia consists of all countries and markets in Asia,
and includes developed, emerging, and frontier countries and markets in the
Asian region. 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
|
|
|
|
|
| |
| |
| |
MATTHEWS ASIA DIVIDEND FUND |
|
|
55 |
|
Sri Lanka
and Vietnam. A company or other issuer is considered to be “located” in a
country or a region, and a security or instrument is deemed to be an Asian (or
specific country) security or instrument, if it has substantial ties to that
country or region. Matthews currently makes that determination based primarily
on one or more of the following criteria: (A) with respect to a company or
issuer, whether (i) it is organized under the laws of that country or
any country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of its assets located, within that country or region;
(iii) it has the primary trading markets for its securities in that country
or region; (iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI All Country Asia Pacific
Index, the Fund’s primary benchmark index; or (v) it is denominated in the
currency of an Asian country and addresses at least one of the other above
criteria. The term “located” and the associated criteria listed above have been
defined in such a way that Matthews has latitude in determining whether an
issuer should be included within a region or country. The Fund may also invest
in depositary receipts, including American, European and Global Depositary
Receipts.
The
Fund seeks to provide a level of current income that is higher than the yield
generally available in Asian equity markets over the long term. The Fund intends
to distribute its realized income, if any, regularly (typically quarterly
in March, June, September and December). There is no guarantee that the Fund
will be able to distribute its realized income, if any, regularly. If the value
of the Fund’s investments declines, the net asset value of the Fund will decline
and investors may lose some or all of the value of their
investments.
The
Fund’s objective is total return with an emphasis on providing current income.
Total return includes current income (dividends and distributions paid to
shareholders) and capital gains (share price appreciation). The Fund
measures total return over longer periods. Because of this objective, under
normal circumstances, the Fund primarily invests in companies that exhibit
attractive dividend yields and the propensity (in Matthews’ judgment) to pay
increasing dividends. Matthews believes that in addition to providing current
income, growing dividend payments by portfolio companies are an important
component supporting capital appreciation. Matthews expects that such companies
typically will be of medium or large size, but the Fund may invest in companies
of any size. Matthews measures a company’s size with respect to fundamental
criteria such as, but not limited to, market capitalization, book value,
revenues, profits, cash flow, dividends paid and number of employees. The
implementation of the principal investment strategies of the Fund may result in
a significant portion of the Fund’s assets being invested from time to time in
one or more sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected by
political, economic, social and religious instability; inadequate investor
protection; changes in laws or regulations of countries within the Asian region
(including countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, Asian countries may utilize
formal or informal currency-exchange controls or “capital controls.” Capital
controls may impose restrictions on the Fund’s ability to repatriate investments
or income. Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging and Frontier
Markets: Many Asian countries are considered emerging or frontier
markets. Such markets are often less stable politically and economically than
developed markets such as the United States, and investing in these markets
involves different and greater risks due to, among other factors, different
accounting standards; variable quality and reliability of financial information
and related audits of companies; higher brokerage costs and thinner trading
markets as compared to those in developed countries; the possibility of currency
transfer restrictions; and the risk of expropriation, nationalization or other
adverse political, economic or social developments. There may be less publicly
available information about companies in many Asian countries, and the stock
exchanges and brokerage industries in many Asian countries typically do not have
the level of government oversight as do those in the U.S. Securities markets of
many Asian countries are also substantially smaller, less liquid and more
volatile than securities
|
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| |
56 |
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matthewsasia.com | 800.789.ASIA |
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| |
|
markets
in the U.S. Additionally, investors may have substantial difficulties bringing
legal actions to enforce or protect investors’ rights, which can increase the
risks of loss. Frontier markets, a subset of emerging markets, generally have
smaller economies and even less mature capital markets than emerging markets. As
a result, the risks of investing in emerging market countries are magnified in
frontier market countries. Frontier markets are more susceptible to having
abrupt changes in currency values, less mature markets and settlement practices,
and lower trading volumes, which could lead to greater price volatility and
illiquidity.
Dividend-Paying Securities Risk: The Fund will
invest in dividend-paying equity securities. There can be no guarantee that
companies that have historically paid dividends will continue to pay them or pay
them at the current rates in the future. The prices of dividend-paying equity
securities (and particularly of those issued by Asian companies) can be highly
volatile. In addition, dividend-paying equity securities, in particular those
whose market price is closely related to their yield, may exhibit greater
sensitivity to interest rate changes. The Fund’s investment in such securities
may also limit its potential for appreciation during a broad market
advance.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating
agencies. The Fund may invest in convertible debt securities of any maturity and
in those that are unrated, or would be below investment grade (referred to as
“junk bonds”) if rated. Therefore, credit risk may be greater for the Fund than
for other funds that invest in higher-grade securities. These securities are
also subject to greater liquidity risk than many other types of
securities.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies, monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to exist within Hong Kong. Due to the
interconnected nature of the Hong Kong and Chinese economies, this instability
in Hong Kong may cause uncertainty in the Hong Kong and Chinese markets. If
China were to exert its authority so as to alter the economic, political or
legal structures or the existing social policy of Hong Kong, investor and
business confidence in Hong Kong could be negatively affected and have an
adverse effect on the Fund’s investments.
Risks Associated with Japan: The Japanese
economy has only recently emerged from a prolonged economic downturn. Since
the year 2000, Japan’s economic growth rate has remained relatively
low. The Japanese economy is characterized by an aging demographic,
declining population, large government debt and highly regulated labor market.
Economic growth in Japan is dependent on domestic consumption, deregulation and
consistent government policy. International trade, particularly with the U.S.,
also impacts growth of the Japanese economy, and adverse economic conditions in
the U.S. or other trade partners may affect
Japan.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or
|
|
|
|
|
| |
| |
| |
MATTHEWS ASIA DIVIDEND FUND |
|
|
57 |
|
financial
developments could significantly affect a single sector. By focusing its
investments in a particular sector, the Fund may face more risks than if it were
diversified broadly over numerous sectors.
– |
|
Financial Sector Risk: As of December
31, 2023, 20% of the Fund’s assets were invested in the financial sector.
Financial companies are subject to extensive government regulation and can
be significantly affected by the availability and cost of capital funds,
changes in interest rates, the rate of corporate and consumer debt
defaults, price competition and other sector-specific
factors. |
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
|
|
|
|
|
|
|
| |
58 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1 year |
|
|
5 years |
|
|
10 years |
|
|
Since Inception
(10/31/06 Investor)
(10/29/10 Institutional) |
|
Matthews
Asia Dividend Fund—Investor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
before taxes |
|
|
4.69% |
|
|
|
0.89% |
|
|
|
2.85% |
|
|
|
6.09% |
|
Return
after taxes on distributions1 |
|
|
4.66% |
|
|
|
0.02% |
|
|
|
1.97% |
|
|
|
5.15% |
|
Return
after taxes on distributions and sale of Fund shares1 |
|
|
3.22% |
|
|
|
0.93% |
|
|
|
2.38% |
|
|
|
5.01% |
|
Matthews
Asia Dividend Fund—Institutional Class |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Return
before taxes |
|
|
4.77% |
|
|
|
0.99% |
|
|
|
2.96% |
|
|
|
4.03% |
2 |
MSCI
All Country Asia Pacific Index |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
(reflects no deduction for fees, expenses
or taxes) |
|
|
11.81% |
|
|
|
5.70% |
|
|
|
4.60% |
|
|
|
4.18% |
3 |
|
1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
|
2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
|
3 |
Calculated
from 10/31/06. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Robert Horrocks, PhD, has been a
Portfolio Manager of the Matthews Asia Dividend Fund since 2013.
Lead Manager: Kenneth Lowe, CFA, has been a
Portfolio Manager of the Matthews Asia Dividend Fund since 2022.
Co‑Manager: Siddharth Bhargava has been a
Portfolio Manager of the Matthews Asia Dividend Fund since 2022.
Co‑Manager: Elli Lee has been a Portfolio
Manager of the Matthews Asia Dividend Fund since 2022.
Co‑Manager: Winnie Chwang has been a Portfolio
Manager of the Matthews Asia Dividend Fund since 2023.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consult
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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MATTHEWS ASIA DIVIDEND FUND |
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Matthews China Dividend Fund
FUND SUMMARY
Investment Objective
Total
return with an emphasis on providing current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of this Fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table and
example below.
SHAREHOLDER
FEES
(fees paid directly from your
investment)
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Investor Class |
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Institutional Class |
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Maximum Account Fee on Redemptions (for
wire redemptions only) |
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$9 |
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$9 |
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ANNUAL
OPERATING EXPENSES
(expenses that you pay each year as a percentage of
the value of your investment)
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Management
Fees |
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0.68% |
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0.68% |
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Distribution
(12b‑1) Fees |
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0.00% |
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0.00% |
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Other Expenses |
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0.49% |
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0.36% |
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Administration
and Shareholder Servicing Fees |
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0.18% |
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0.18% |
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Total Annual Fund Operating
Expenses |
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1.17% |
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1.04% |
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EXAMPLE
OF FUND EXPENSES
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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One year |
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Three years |
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Five years |
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Ten years |
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Investor Class |
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$119 |
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$372 |
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$644 |
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$1,420 |
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Institutional Class |
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$106 |
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$331 |
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$574 |
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$1,271 |
PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example of fund expenses, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 27% of the average value of its
portfolio.
Principal Investment
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 of any maturity and quality, including those that are unrated,
or would be below investment grade (referred to as “junk bonds”) if rated, of
companies located in China. China also includes its administrative and other
districts, such as Hong Kong. A company or other issuer is considered to be
“located” in a country or a region, and a security or instrument is deemed to be
an Asian (or specific country) security or instrument, if it has substantial
ties to that country or region. Matthews currently makes that determination
based primarily on one or more of the following criteria: (A) with respect
to a company
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or
issuer, whether (i) it is organized under the laws of that country or
any country in that region; (ii) it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, or
has at least 50% of its assets located, within that country or region;
(iii) it has the primary trading markets for its securities in that country
or region; (iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity
or an agency, instrumentality or a political subdivision of that country or any
country in that region; and (B) with respect to an instrument or issue,
whether (i) its issuer is headquartered or organized in that country or
region; (ii) it is issued to finance a project that has at least 50% of its
assets or operations in that country or region; (iii) it is at least 50%
secured or backed by assets located in that country or region; (iv) it is a
component of or its issuer is included in the MSCI China Index, the Fund’s
primary benchmark index; or (v) it is denominated in the currency of an
Asian country and addresses at least one of the other above criteria. The term
“located” and the associated criteria listed above have been defined in such a
way that Matthews has latitude in determining whether an issuer should be
included within a region or country. The Fund may also invest in depositary
receipts, including American, European and Global Depositary
Receipts.
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. The Fund
intends to distribute its realized income, if any, regularly (typically
semi-annually in June and December). There is no guarantee that the Fund will be
able to distribute its realized income, if any, regularly. If the value of the
Fund’s investments declines, the net asset value of the Fund will decline and
investors may lose some or all of the value of their
investments.
The
Fund’s objective is total return with an emphasis on providing current income.
Total return includes current income (dividends and distributions paid to
shareholders) and capital gains (share price appreciation). The Fund measures
total return over longer periods. Because of this objective, under normal
circumstances, the Fund primarily invests in companies that exhibit attractive
dividend yields and the propensity (in Matthews’ judgment) to pay increasing
dividends. Matthews believes that in addition to providing current income,
growing dividend payments by portfolio companies are an important component
supporting capital appreciation. Matthews expects that such companies typically
will be of small or medium size, but the Fund may invest in companies of any
size. Matthews measures a company’s size with respect to fundamental criteria
such as, but not limited to, market capitalization, book value, revenues,
profits, cash flow, dividends paid and number of employees. The implementation
of the principal investment strategies of the Fund may result in a significant
portion of the Fund’s assets being invested from time to time in one or more
sectors, but the Fund may invest in companies in any
sector.
Principal Risks of
Investment
There
is no guarantee that your investment in the Fund will increase in value.
The value of your investment in the Fund could go down, meaning
you could lose money. The principal risks of investing in the
Fund are:
Political, Social and Economic Risks of Investing in
Asia: The value of the Fund’s assets may be adversely affected
by
political,
economic, social and religious instability; inadequate investor protection;
changes in laws or regulations of countries within the Asian region (including
countries in which the Fund invests, as well as the broader region);
international relations with other nations; natural disasters; corruption and
military activity. The economies of many Asian countries differ from the
economies of more developed countries in many respects, such as rate of growth,
inflation, capital reinvestment, resource self-sufficiency, financial system
stability, the national balance of payments position and sensitivity to changes
in global trade.
Geopolitical Events Risk: The interconnectivity
between global economies and financial markets increases the likelihood that
events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. Securities in the
Fund’s portfolio may underperform due to inflation (or expectations for
inflation), interest rates, global demand for particular products or resources,
natural disasters, climate change and climate-related events, pandemics,
epidemics, terrorism, international conflicts, regulatory events and
governmental or quasi-governmental actions. The occurrence of global events
similar to those in recent years may result in market volatility and may have
long term effects on the global financial
markets.
Currency Risk: When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in U.S. dollar terms if that currency weakens against the U.S. dollar.
While the Fund is permitted to hedge currency risks, Matthews does not
anticipate doing so at this time. Additionally, China may utilize formal or
informal currency-exchange controls or “capital controls.” Capital controls may
impose restrictions on the Fund’s ability to repatriate investments or income.
Such controls may also affect the value of the Fund’s
holdings.
Risks Associated with Emerging Markets: Many
Asian countries are considered emerging markets. Such markets are often less
stable politically and economically than developed markets such as the
United States, and investing in these markets involves different and
greater risks due to, among other factors, different accounting standards;
variable quality and reliability of financial information and related audits of
companies; higher brokerage costs and thinner trading markets as compared to
those in developed countries; the possibility of currency transfer restrictions;
and the risk of expropriation, nationalization or other adverse political,
economic or social developments. There may be less publicly available
information about companies in many Asian countries, and the stock exchanges and
brokerage industries in many Asian countries typically do not have the level of
government oversight as do those in the United States. Securities markets of
many Asian countries are also substantially smaller, less liquid and more
volatile than securities markets in the United States. Additionally, investors
may have substantial difficulties bringing legal actions to enforce or protect
investors’ rights, which can increase the risks of
loss.
Dividend-Paying Securities Risk: The Fund will
invest in dividend-paying equity securities. There can be no guarantee that
companies that have historically paid dividends will continue to pay them or pay
them at the current rates in the future. The prices of dividend-paying equity
securities (and
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MATTHEWS CHINA DIVIDEND FUND |
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particularly
of those issued by Asian companies) can be highly volatile. In addition,
dividend-paying equity securities, in particular those whose market price is
closely related to their yield, may exhibit greater sensitivity to interest rate
changes.
The
Fund’s investment in such securities may also limit its potential for
appreciation during a broad market
advance.
Equity Securities Risk: Equity securities
may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer.
Equity risk is the risk that stocks and other equity securities generally
fluctuate in value more than bonds and may decline in value over short or
extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, or as a result of changes in overall market,
economic and political conditions that are not specifically related to a company
or industry.
Risks Associated with China and Hong Kong: The
Chinese government exercises significant control over China’s economy through
its industrial policies (e.g., allocation of resources and other
preferential treatment), monetary policy, management of currency exchange rates,
and management of the payment of foreign currency-denominated obligations.
Changes in these policies could adversely impact affected industries or
companies in China. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with
China’s major trading partners, including the U.S. In addition, as its consumer
class continues to grow, China’s domestically oriented industries may be
especially sensitive to changes in government policy and investment cycles. As
demonstrated by Hong Kong protests in recent years over political, economic, and
legal freedoms, and the Chinese government’s response to them, considerable
political uncertainty continues to exist within Hong Kong. Due to the
interconnected nature of the Hong Kong and Chinese economies, this instability
in Hong Kong may cause uncertainty in the Hong Kong and Chinese markets. If
China were to exert its authority so as to alter the economic, political or
legal structures or the existing social policy of Hong Kong, investor and
business confidence in Hong Kong could be negatively affected and have an
adverse effect on the Fund’s investments.
Depositary Receipts Risk: Although depositary
receipts have risks similar to the securities that they represent, they may also
involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through
voting and other shareholder rights, and may be less liquid than the underlying
securities listed on an exchange.
Volatility Risk: The smaller size and lower
levels of liquidity, as well as other factors, may result in changes in the
prices of securities that are more volatile than those of companies in more
developed regions. This volatility can cause the price of the Fund’s shares to
go up or down dramatically. Because of this volatility, this Fund is better
suited for long-term investors (typically five years or
longer).
Convertible Securities Risk: The Fund may
invest in convertible preferred stocks, and convertible bonds and debentures.
The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian
convertible
securities are not rated by rating agencies. The Fund may invest in convertible
debt securities of any maturity and in those that are unrated, or would be below
investment grade (referred to as “junk bonds”) if rated. Therefore, credit risk
may be greater for the Fund than for other funds that invest in higher-grade
securities. These securities are also subject to greater liquidity risk than
many other types of securities.
Risks Associated with Smaller Companies:
Smaller companies may offer substantial opportunities for capital growth; they
also involve substantial risks, and investments in smaller companies may be
considered speculative. Such companies often have limited product lines, markets
or financial resources. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities and the
securities of smaller companies generally are subject to more abrupt or erratic
price movements than more widely held or larger, more established companies or
the market indices in general.
Risks Associated with Medium‑Size Companies:
Medium‑size companies may be subject to a number of risks not associated with
larger, more established companies, potentially making their stock prices more
volatile and increasing the risk of loss.
Active Management Risk: The Fund is
actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Sector Concentration Risk: To the extent that
the Fund emphasizes, from time to time, investments in a particular sector, the
Fund will be subject to a greater degree to the risks particular to that sector,
including the sector described below. Market conditions, interest rates, and
economic, regulatory, or financial developments could significantly affect a
single sector. By focusing its investments in a particular sector, the Fund may
face more risks than if it were diversified broadly over numerous
sectors.
– |
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Consumer Discretionary Sector Risk: As
of December 31, 2023, 27% of the Fund’s assets were invested in the
consumer discretionary sector. The success of consumer product
manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary
sector depends heavily on disposable household income and consumer
spending. Changes in demographics and consumer tastes can also affect the
demand for, and success of, consumer products and services in the
marketplace. |
Cybersecurity Risk: With the increased use of
technologies such as the internet to conduct business, the Fund is susceptible
to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance
costs.
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Past Performance
The bar chart below shows the Fund’s performance
for the past 10 years and how it has varied from year to year, reflective of the
Fund’s volatility and some indication of risk. Also shown are
the best and worst quarters for this time period. The table below shows the
Fund’s performance over certain periods of time, along with performance of its
benchmark index. The
information presented below is past performance, before and after taxes, and is
not a prediction of future results. Both the bar chart and
performance table assume reinvestment of all dividends and distributions. For
the Fund’s most recent month‑end performance, please visit matthewsasia.com or call
800.789.ASIA
(2742).
INVESTOR
CLASS:
ANNUAL
RETURNS FOR YEARS ENDED 12/31
AVERAGE
ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2023
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1 year |
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5 years |
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10 years |
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Since Inception (11/30/09 Investor)
(10/29/10 Institutional) |
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Matthews
China Dividend Fund—Investor Class |
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Return
before taxes |
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-20.67% |
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-1.25% |
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3.12% |
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5.42% |
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Return
after taxes on distributions1 |
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-21.27% |
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-2.33% |
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1.61% |
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4.10% |
|
Return
after taxes on distributions and sale of Fund shares1 |
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-11.59% |
|
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-0.71% |
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2.41% |
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4.29% |
|
Matthews
China Dividend Fund—Institutional Class |
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Return
before taxes |
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-20.58% |
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-1.12% |
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3.28% |
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4.52% |
2 |
MSCI
China Index |
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(reflects no deduction for fees, expenses
or taxes) |
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-11.04% |
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-2.65% |
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1.03% |
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1.43% |
3 |
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1 |
After‑tax returns are calculated using the
highest historical individual federal marginal income tax rates and do not
reflect the impact of state and local taxes.
Actual after‑tax returns depend on an
investor’s tax situation and may differ from those shown. After‑tax
returns shown are not relevant to investors who hold their Fund shares
through tax‑deferred arrangements, such as 401(k) plans or individual
retirement
accounts. |
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2 |
Because
the inception date of the Institutional Class is later than that of
the Index returns shown, the since-inception performance of the
Institutional Class is not directly comparable to the performance of
the Index. |
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3 |
Calculated
from 11/30/09. |
Investment Advisor
Matthews
International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager: Sherwood Zhang, CFA, has been a
Portfolio Manager of the Matthews China Dividend Fund since 2014.
Lead Manager: Winnie Chwang has been a
Portfolio Manager of the Matthews China Dividend Fund since 2022.
Co‑Manager: Elli Lee has been a Portfolio
Manager of the Matthews China Dividend Fund since 2022.
Co‑Manager: Andrew Mattock, CFA, has been a
Portfolio Manager of the Matthews China Dividend Fund since 2022.
Co‑Manager: Hardy Zhu has been a Portfolio
Manager of the Matthews China Dividend Fund since 2024.
The
Portfolio Managers are primarily responsible for the Fund’s day‑to‑day
investment management decisions. The Lead Managers are supported by and consult
with the Co‑Managers.
For
important information about the Purchase and Sale of Fund Shares; Tax
Information; and Payments to Broker-Dealers and Other Financial Intermediaries,
please turn to page 64.
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MATTHEWS CHINA DIVIDEND FUND |
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Important
Information
Purchase
and Sale of Fund Shares
You
may purchase and sell Fund shares directly through the Funds’ transfer agent by
calling 800.789.ASIA (2742) or online at matthewsasia.com. Fund shares may
also be purchased and sold through various securities brokers and benefit plan
administrators or their sub‑agents. You may purchase and redeem Fund shares by
electronic bank transfer, check, or wire. The minimum initial and subsequent
investment amounts for various types of accounts offered by the Funds are shown
below.
INVESTOR CLASS SHARES
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Type of Account |
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Minimum
Initial Investment |
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Minimum
Subsequent Investments |
Non‑retirement |
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$2,500 |
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$100 |
Retirement and Coverdell |
|
$500 |
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$50 |
INSTITUTIONAL CLASS
SHARES
|
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| |
Type of Account |
|
Minimum
Initial Investment |
|
Minimum
Subsequent Investments |
All
accounts |
|
$100,000 |
|
$100 |
Minimum
amount for Institutional Class Shares may be lower for purchases through
certain financial intermediaries and different minimums may apply for retirement
plans and other arrangements subject to criteria set by Matthews.
The
minimum investment requirements for both the Investor and Institutional Classes
do not apply to Trustees, officers and employees of the Funds and Matthews, and
their immediate family members.
Tax
Information
The
Funds’ distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax‑deferred arrangement, such
as a 401(k) plan or an individual retirement account. Tax‑deferred arrangements
may be taxed later upon withdrawal from those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a bank), Matthews may pay the intermediary for the sale of Fund shares
and related services. Shareholders who purchase or hold Fund shares through an
intermediary may inquire about such payments from that intermediary. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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Financial Highlights
The
financial highlights tables are intended to help you understand the Funds’
financial performance for the past 5 years or, if shorter, the period of the
applicable Fund’s operations. Certain information reflects financial results for
a single Fund share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, the Funds’ independent registered public
accounting firm, whose report, along with the Funds’ financial statements, are
included in the Funds’ annual report, which is available upon
request.
Matthews
Emerging Markets Equity Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
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Year Ended Dec. 31, |
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Period Ended Dec. 31, 20201 |
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INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
Net
Asset Value, beginning of period |
|
|
$11.14 |
|
|
|
$14.34 |
|
|
|
$15.76 |
|
|
|
$10.00 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)2 |
|
|
0.13 |
|
|
|
0.20 |
|
|
|
0.19 |
|
|
|
0.04 |
|
Net
realized gain (loss) and unrealized appreciation/depreciation
on investments, foreign currency related transactions and foreign
capital gains taxes |
|
|
0.81 |
|
|
|
(3.20) |
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|
|
(0.31) |
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|
|
6.08 |
|
Total
from investment operations |
|
|
0.94 |
|
|
|
(3.00) |
|
|
|
(0.12) |
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|
|
6.12 |
|
Less distributions from: |
|
|
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| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.22) |
|
|
|
(0.20) |
|
|
|
(0.18) |
|
|
|
— |
|
Net
realized gains on investments |
|
|
— |
|
|
|
— |
|
|
|
(1.12) |
|
|
|
(0.36) |
|
Total
distributions |
|
|
(0.22) |
|
|
|
(0.20) |
|
|
|
(1.30) |
|
|
|
(0.36) |
|
Net
Asset Value, end of period |
|
|
$11.86 |
|
|
|
$11.14 |
|
|
|
$14.34 |
|
|
|
$15.76 |
|
Total
return* |
|
|
8.43% |
|
|
|
(20.94%) |
|
|
|
(0.60%) |
|
|
|
61.23% |
3 |
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of period (in 000s) |
|
|
$9,618 |
|
|
|
$10,111 |
|
|
|
$13,317 |
|
|
|
$9,851 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.70% |
|
|
|
1.58% |
|
|
|
1.52% |
|
|
|
2.76% |
4 |
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
1.12% |
|
|
|
1.08% |
|
|
|
1.13% |
|
|
|
1.08% |
4 |
Ratio
of net investment income (loss) to average net assets |
|
|
1.16% |
|
|
|
1.46% |
|
|
|
1.15% |
|
|
|
0.45% |
4 |
Portfolio
turnover5 |
|
|
26.39% |
|
|
|
63.08% |
|
|
|
88.45% |
|
|
|
62.30% |
3 |
1
Commenced operations on April 30, 2020.
2
Calculated using the average daily shares method.
3
Not annualized.
4
Annualized.
5
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
66 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Emerging Markets Equity Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
|
Period Ended Dec. 31, 20201 |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
Net
Asset Value, beginning of period |
|
|
$11.13 |
|
|
|
$14.34 |
|
|
|
$15.77 |
|
|
|
$10.00 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)2 |
|
|
0.17 |
|
|
|
0.23 |
|
|
|
0.22 |
|
|
|
0.04 |
|
Net
realized gain (loss) and unrealized appreciation/depreciation
on investments, foreign currency related transactions and foreign
capital gains taxes |
|
|
0.79 |
|
|
|
(3.21) |
|
|
|
(0.31) |
|
|
|
6.11 |
|
Total
from investment operations |
|
|
0.96 |
|
|
|
(2.98) |
|
|
|
(0.09) |
|
|
|
6.15 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.25) |
|
|
|
(0.23) |
|
|
|
(0.22) |
|
|
|
(0.02) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
— |
|
|
|
(1.12) |
|
|
|
(0.36) |
|
Total
distributions |
|
|
(0.25) |
|
|
|
(0.23) |
|
|
|
(1.34) |
|
|
|
(0.38) |
|
Net
Asset Value, end of period |
|
|
$11.84 |
|
|
|
$11.13 |
|
|
|
$14.34 |
|
|
|
$15.77 |
|
Total
return* |
|
|
8.63% |
|
|
|
(20.81%) |
|
|
|
(0.43%) |
|
|
|
61.55% |
3 |
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of period (in 000s) |
|
|
$11,284 |
|
|
|
$23,353 |
|
|
|
$36,240 |
|
|
|
$34,941 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.51% |
|
|
|
1.47% |
|
|
|
1.38% |
|
|
|
2.65% |
4 |
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
0.90% |
|
|
|
0.90% |
|
|
|
0.90% |
|
|
|
0.90% |
4 |
Ratio
of net investment income (loss) to average net assets |
|
|
1.45% |
|
|
|
1.70% |
|
|
|
1.33% |
|
|
|
0.44% |
4 |
Portfolio
turnover5 |
|
|
26.39% |
|
|
|
63.08% |
|
|
|
88.45% |
|
|
|
62.30% |
3 |
1
Commenced operations on April 30, 2020.
2
Calculated using the average daily shares method.
3
Not annualized.
4
Annualized.
5
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Emerging Markets Sustainable Future Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$12.51 |
|
|
|
$15.37 |
|
|
|
$14.94 |
|
|
|
$11.08 |
|
|
|
$9.98 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
(0.02) |
|
|
|
(0.05) |
|
|
|
(0.07) |
|
|
|
(0.01) |
|
|
|
0.04 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency related transactions and
foreign capital gains taxes |
|
|
0.99 |
|
|
|
(2.14) |
|
|
|
1.85 |
|
|
|
4.72 |
|
|
|
1.21 |
|
Total
from investment operations |
|
|
0.97 |
|
|
|
(2.19) |
|
|
|
1.78 |
|
|
|
4.71 |
|
|
|
1.25 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.25) |
|
|
|
(0.04) |
|
|
|
— |
|
|
|
(0.01) |
|
|
|
(0.03) |
|
Net
realized gains on investments |
|
|
(0.69) |
|
|
|
(0.63) |
|
|
|
(1.35) |
|
|
|
(0.84) |
|
|
|
(0.12) |
|
Total
distributions |
|
|
(0.94) |
|
|
|
(0.67) |
|
|
|
(1.35) |
|
|
|
(0.85) |
|
|
|
(0.15) |
|
Net
Asset Value, end of year |
|
|
$12.54 |
|
|
|
$12.51 |
|
|
|
$15.37 |
|
|
|
$14.94 |
|
|
|
$11.08 |
|
Total
return* |
|
|
7.83% |
|
|
|
(14.38%) |
|
|
|
11.76% |
|
|
|
42.87% |
|
|
|
12.55% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$38,176 |
|
|
|
$32,249 |
|
|
|
$39,612 |
|
|
|
$37,385 |
|
|
|
$19,291 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.23% |
|
|
|
1.24% |
|
|
|
1.20% |
|
|
|
1.42% |
|
|
|
1.54% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.23% |
|
|
|
1.30% |
|
|
|
1.40% |
|
|
|
1.38% |
|
|
|
1.42% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.17%) |
|
|
|
(0.41%) |
|
|
|
(0.41%) |
|
|
|
(0.08%) |
|
|
|
0.41% |
|
Portfolio
turnover2 |
|
|
49.16% |
|
|
|
31.53% |
|
|
|
65.56% |
|
|
|
84.60% |
|
|
|
29.67% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
68 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Emerging Markets Sustainable Future Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$12.51 |
|
|
|
$15.38 |
|
|
|
$14.92 |
|
|
|
$11.06 |
|
|
|
$9.96 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
— |
3 |
|
|
(0.04) |
|
|
|
(0.04) |
|
|
|
0.01 |
|
|
|
0.06 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency related transactions and
foreign capital gains taxes |
|
|
1.00 |
|
|
|
(2.14) |
|
|
|
1.85 |
|
|
|
4.72 |
|
|
|
1.21 |
|
Total
from investment operations |
|
|
1.00 |
|
|
|
(2.18) |
|
|
|
1.81 |
|
|
|
4.73 |
|
|
|
1.27 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.27) |
|
|
|
(0.06) |
|
|
|
— |
|
|
|
(0.03) |
|
|
|
(0.05) |
|
Net
realized gains on investments |
|
|
(0.69) |
|
|
|
(0.63) |
|
|
|
(1.35) |
|
|
|
(0.84) |
|
|
|
(0.12) |
|
Total
distributions |
|
|
(0.96) |
|
|
|
(0.69) |
|
|
|
(1.35) |
|
|
|
(0.87) |
|
|
|
(0.17) |
|
Net
Asset Value, end of year |
|
|
$12.55 |
|
|
|
$12.51 |
|
|
|
$15.38 |
|
|
|
$14.92 |
|
|
|
$11.06 |
|
Total
return* |
|
|
8.04% |
|
|
|
(14.32%) |
|
|
|
11.98% |
|
|
|
43.13% |
|
|
|
12.74% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$171,349 |
|
|
|
$140,059 |
|
|
|
$87,241 |
|
|
|
$50,642 |
|
|
|
$36,008 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.10% |
|
|
|
1.11% |
|
|
|
1.07% |
|
|
|
1.29% |
|
|
|
1.41% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.10% |
|
|
|
1.17% |
|
|
|
1.20% |
|
|
|
1.20% |
|
|
|
1.24% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.02%) |
|
|
|
(0.29%) |
|
|
|
(0.25%) |
|
|
|
0.09% |
|
|
|
0.54% |
|
Portfolio
turnover2 |
|
|
49.16% |
|
|
|
31.53% |
|
|
|
65.56% |
|
|
|
84.60% |
|
|
|
29.67% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
3
Less than $0.01 per share.
Matthews
Emerging Markets Small Companies Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$23.08 |
|
|
|
$29.92 |
|
|
|
$25.93 |
|
|
|
$18.10 |
|
|
|
$15.50 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
— |
2 |
|
|
(0.06) |
|
|
|
(0.17) |
|
|
|
(0.02) |
|
|
|
0.12 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency related transactions and foreign capital
gains taxes |
|
|
4.58 |
|
|
|
(4.92) |
|
|
|
5.90 |
|
|
|
7.92 |
|
|
|
2.57 |
|
Total
from investment operations |
|
|
4.58 |
|
|
|
(4.98) |
|
|
|
5.73 |
|
|
|
7.90 |
|
|
|
2.69 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.41) |
|
|
|
(0.09) |
|
|
|
— |
|
|
|
(0.05) |
|
|
|
(0.09) |
|
Net
realized gains on investments |
|
|
(1.73) |
|
|
|
(1.77) |
|
|
|
(1.74) |
|
|
|
(0.02) |
|
|
|
— |
|
Total
distributions |
|
|
(2.14) |
|
|
|
(1.86) |
|
|
|
(1.74) |
|
|
|
(0.07) |
|
|
|
(0.09) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
3 |
Net
Asset Value, end of year |
|
|
$25.52 |
|
|
|
$23.08 |
|
|
|
$29.92 |
|
|
|
$25.93 |
|
|
|
$18.10 |
|
Total
return* |
|
|
19.88% |
|
|
|
(16.84%) |
|
|
|
22.14% |
|
|
|
43.68% |
|
|
|
17.38% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$287,674 |
|
|
|
$141,254 |
|
|
|
$176,723 |
|
|
|
$99,573 |
|
|
|
$96,229 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.49% |
|
|
|
1.49% |
|
|
|
1.51% |
|
|
|
1.57% |
|
|
|
1.60% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.34% |
|
|
|
1.37% |
|
|
|
1.36% |
|
|
|
1.39% |
|
|
|
1.45% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.01%) |
|
|
|
(0.24%) |
|
|
|
(0.55%) |
|
|
|
(0.11%) |
|
|
|
0.72% |
|
Portfolio
turnover4 |
|
|
26.92% |
|
|
|
27.85% |
|
|
|
50.82% |
|
|
|
111.87% |
|
|
|
59.10% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The Fund charged redemption fees through October 31, 2019.
4
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
|
|
|
|
|
| |
70 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Emerging Markets Small Companies Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$23.04 |
|
|
|
$29.87 |
|
|
|
$25.87 |
|
|
|
$18.06 |
|
|
|
$15.46 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.04 |
|
|
|
— |
2 |
|
|
(0.10) |
|
|
|
0.01 |
|
|
|
0.15 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency related transactions and foreign
capital gains taxes |
|
|
4.58 |
|
|
|
(4.92) |
|
|
|
5.88 |
|
|
|
7.91 |
|
|
|
2.58 |
|
Total
from investment operations |
|
|
4.62 |
|
|
|
(4.92) |
|
|
|
5.78 |
|
|
|
7.92 |
|
|
|
2.73 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.44) |
|
|
|
(0.14) |
|
|
|
(0.04) |
|
|
|
(0.09) |
|
|
|
(0.13) |
|
Net
realized gains on investments |
|
|
(1.73) |
|
|
|
(1.77) |
|
|
|
(1.74) |
|
|
|
(0.02) |
|
|
|
— |
|
Total
distributions |
|
|
(2.17) |
|
|
|
(1.91) |
|
|
|
(1.78) |
|
|
|
(0.11) |
|
|
|
(0.13) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
3 |
Net
Asset Value, end of year |
|
|
$25.49 |
|
|
|
$23.04 |
|
|
|
$29.87 |
|
|
|
$25.87 |
|
|
|
$18.06 |
|
Total
return* |
|
|
20.12% |
|
|
|
(16.66%) |
|
|
|
22.39% |
|
|
|
43.90% |
|
|
|
17.65% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$327,724 |
|
|
|
$228,194 |
|
|
|
$221,286 |
|
|
|
$107,569 |
|
|
|
$85,006 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.38% |
|
|
|
1.37% |
|
|
|
1.38% |
|
|
|
1.47% |
|
|
|
1.46% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.15% |
|
|
|
1.15% |
|
|
|
1.16% |
|
|
|
1.20% |
|
|
|
1.24% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.16% |
|
|
|
(0.01%) |
|
|
|
(0.34%) |
|
|
|
0.08% |
|
|
|
0.85% |
|
Portfolio
turnover4 |
|
|
26.29% |
|
|
|
27.85% |
|
|
|
50.82% |
|
|
|
111.87% |
|
|
|
59.10% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The Fund charged redemption fees through October 31, 2019.
4
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
Matthews
Asia Growth Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$20.84 |
|
|
|
$31.99 |
|
|
|
$39.44 |
|
|
|
$28.10 |
|
|
|
$22.49 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.03 |
|
|
|
(0.08) |
|
|
|
(0.24) |
|
|
|
(0.11) |
|
|
|
(0.03) |
|
Net
realized gain (loss) and unrealized
appreciation/ depreciation on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
0.70 |
|
|
|
(10.49) |
|
|
|
(5.56) |
|
|
|
13.16 |
|
|
|
5.91 |
|
Total
from investment operations |
|
|
0.73 |
|
|
|
(10.57) |
|
|
|
(5.80) |
|
|
|
13.05 |
|
|
|
5.88 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.38) |
|
|
|
— |
|
|
|
— |
|
|
|
(0.15) |
|
|
|
— |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.58) |
|
|
|
(1.65) |
|
|
|
(1.56) |
|
|
|
(0.27) |
|
Total
distributions |
|
|
(0.38) |
|
|
|
(0.58) |
|
|
|
(1.65) |
|
|
|
(1.71) |
|
|
|
(0.27) |
|
Net
Asset Value, end of year |
|
|
$21.19 |
|
|
|
$20.84 |
|
|
|
$31.99 |
|
|
|
$39.44 |
|
|
|
$28.10 |
|
Total
return* |
|
|
3.53% |
|
|
|
(33.12%) |
|
|
|
(14.65%) |
|
|
|
46.76% |
|
|
|
26.18% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$162,263 |
|
|
|
$225,923 |
|
|
|
$568,001 |
|
|
|
$784,085 |
|
|
|
$504,538 |
|
Ratio
of expenses to average net assets |
|
|
1.13% |
|
|
|
1.13% |
|
|
|
1.07% |
|
|
|
1.08% |
|
|
|
1.09% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.13% |
|
|
|
(0.32%) |
|
|
|
(0.62%) |
|
|
|
(0.35%) |
|
|
|
(0.14%) |
|
Portfolio
turnover2 |
|
|
77.32% |
|
|
|
47.48% |
|
|
|
42.37% |
|
|
|
42.78% |
|
|
|
38.05% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
72 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Asia Growth Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$21.11 |
|
|
|
$32.33 |
|
|
|
$39.82 |
|
|
|
$28.34 |
|
|
|
$22.65 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.07 |
|
|
|
(0.04) |
|
|
|
(0.19) |
|
|
|
(0.07) |
|
|
|
— |
2 |
Net
realized gain (loss) and unrealized
appreciation/ depreciation on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
0.70 |
|
|
|
(10.60) |
|
|
|
(5.63) |
|
|
|
13.30 |
|
|
|
5.96 |
|
Total
from investment operations |
|
|
0.77 |
|
|
|
(10.64) |
|
|
|
(5.82) |
|
|
|
13.23 |
|
|
|
5.96 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.42) |
|
|
|
— |
|
|
|
(0.02) |
|
|
|
(0.19) |
|
|
|
— |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.58) |
|
|
|
(1.65) |
|
|
|
(1.56) |
|
|
|
(0.27) |
|
Total
distributions |
|
|
(0.42) |
|
|
|
(0.58) |
|
|
|
(1.67) |
|
|
|
(1.75) |
|
|
|
(0.27) |
|
Net
Asset Value, end of year |
|
|
$21.46 |
|
|
|
$21.11 |
|
|
|
$32.33 |
|
|
|
$39.82 |
|
|
|
$28.34 |
|
Total
return* |
|
|
3.69% |
|
|
|
(32.99%) |
|
|
|
(14.55%) |
|
|
|
47.01% |
|
|
|
26.34% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$209,009 |
|
|
|
$406,155 |
|
|
|
$1,186,769 |
|
|
|
$1,269,702 |
|
|
|
$698,797 |
|
Ratio
of expenses to average net assets |
|
|
0.98% |
|
|
|
0.98% |
|
|
|
0.92% |
|
|
|
0.95% |
|
|
|
0.94% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.31% |
|
|
|
(0.15%) |
|
|
|
(0.47%) |
|
|
|
(0.23%) |
|
|
|
—% |
3 |
Portfolio
turnover4 |
|
|
77.32% |
|
|
|
47.48% |
|
|
|
42.37% |
|
|
|
42.78% |
|
|
|
38.05% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
Less than 0.01%.
4
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Pacific Tiger Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$20.16 |
|
|
|
$27.54 |
|
|
|
$34.94 |
|
|
|
$28.74 |
|
|
|
$26.86 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.10 |
|
|
|
0.09 |
|
|
|
0.06 |
|
|
|
0.10 |
|
|
|
0.19 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency related transactions and foreign capital
gains taxes |
|
|
(1.10) |
|
|
|
(5.75) |
|
|
|
(1.60) |
|
|
|
8.10 |
|
|
|
2.68 |
|
Total
from investment operations |
|
|
(1.00) |
|
|
|
(5.66) |
|
|
|
(1.54) |
|
|
|
8.20 |
|
|
|
2.87 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.54) |
|
|
|
— |
|
|
|
— |
|
|
|
(0.08) |
|
|
|
(0.15) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.72) |
|
|
|
(5.86) |
|
|
|
(1.92) |
|
|
|
(0.84) |
|
Total
distributions |
|
|
(0.54) |
|
|
|
(1.72) |
|
|
|
(5.86) |
|
|
|
(2.00) |
|
|
|
(0.99) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
2 |
Net
Asset Value, end of year |
|
|
$18.62 |
|
|
|
$20.16 |
|
|
|
$27.54 |
|
|
|
$34.94 |
|
|
|
$28.74 |
|
Total
return* |
|
|
(4.87%) |
|
|
|
(20.73%) |
|
|
|
(4.41%) |
|
|
|
28.83% |
|
|
|
10.72% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund, assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$707,717 |
|
|
|
$1,081,347 |
|
|
|
$1,835,266 |
|
|
|
$2,585,654 |
|
|
|
$2,536,844 |
|
Ratio
of expenses to average net assets before any reimbursement or waiver
or recapture of expenses by Advisor and Administrator |
|
|
1.12% |
|
|
|
1.10% |
|
|
|
1.06% |
|
|
|
1.08% |
|
|
|
1.08% |
|
Ratio
of expenses to average net assets after any reimbursement or waiver
or recapture of expenses by Advisor and Administrator |
|
|
1.12% |
|
|
|
1.09% |
|
|
|
1.03% |
|
|
|
1.06% |
|
|
|
1.05% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.49% |
|
|
|
0.37% |
|
|
|
0.17% |
|
|
|
0.35% |
|
|
|
0.66% |
|
Portfolio
turnover3 |
|
|
14.78% |
|
|
|
5.61% |
|
|
|
46.64% |
|
|
|
38.11% |
|
|
|
17.08% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
74 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Pacific Tiger Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$20.16 |
|
|
|
$27,50 |
|
|
|
$34.90 |
|
|
|
$28.71 |
|
|
|
$26.83 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.13 |
|
|
|
0.11 |
|
|
|
0.11 |
|
|
|
0.13 |
|
|
|
0.23 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency related transactions and foreign capital
gains taxes |
|
|
(1.10) |
|
|
|
(5.73) |
|
|
|
(1.60) |
|
|
|
8.11 |
|
|
|
2.68 |
|
Total
from investment operations |
|
|
(0.97) |
|
|
|
(5.62) |
|
|
|
(1.49) |
|
|
|
8.24 |
|
|
|
2.91 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.58) |
|
|
|
— |
|
|
|
(0.05) |
|
|
|
(0.13) |
|
|
|
(0.19) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.72) |
|
|
|
(5.86) |
|
|
|
(1.92) |
|
|
|
(0.84) |
|
Total
distributions |
|
|
(0.58) |
|
|
|
(1.72) |
|
|
|
(5.91) |
|
|
|
(2.05) |
|
|
|
(1.03) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
2 |
Net
Asset Value, end of year |
|
|
$18.61 |
|
|
|
$20.16 |
|
|
|
$27.50 |
|
|
|
$34.90 |
|
|
|
$28.71 |
|
Total
return* |
|
|
(4.75%) |
|
|
|
(20.62%) |
|
|
|
(4.29%) |
|
|
|
28.98% |
|
|
|
10.90% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund, assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$1,221,317 |
|
|
|
$2,607,437 |
|
|
|
$5,357,198 |
|
|
|
$6,172,995 |
|
|
|
$6,189,015 |
|
Ratio
of expenses to average net assets before any reimbursement or waiver or
recapture of expenses by Advisor and Administrator |
|
|
0.99% |
|
|
|
0.97% |
|
|
|
0.92% |
|
|
|
0.94% |
|
|
|
0.93% |
|
Ratio
of expenses to average net assets after any reimbursement or waiver
or recapture of expenses by Advisor and Administrator |
|
|
0.98% |
|
|
|
0.96% |
|
|
|
0.90% |
|
|
|
0.92% |
|
|
|
0.91% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.66% |
|
|
|
0.48% |
|
|
|
0.30% |
|
|
|
0.46% |
|
|
|
0.80% |
|
Portfolio
turnover3 |
|
|
14.78% |
|
|
|
5.61% |
|
|
|
46.64% |
|
|
|
38.11% |
|
|
|
17.08% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Asia Innovators Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$11.31 |
|
|
|
$18.86 |
|
|
|
$26.70 |
|
|
|
$14.55 |
|
|
|
$11.26 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
(0.02) |
|
|
|
(0.06) |
|
|
|
(0.16) |
|
|
|
(0.11) |
|
|
|
(0.01) |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
(0.18) |
|
|
|
(4.49) |
|
|
|
(3.34) |
|
|
|
12.71 |
|
|
|
3.34 |
|
Total
from investment operations |
|
|
(0.20) |
|
|
|
(4.55) |
|
|
|
(3.50) |
|
|
|
12.60 |
|
|
|
3.33 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
— |
2 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(3.00) |
|
|
|
(4.34) |
|
|
|
(0.45) |
|
|
|
(0.04) |
|
Total
distribution |
|
|
— |
2 |
|
|
(3.00) |
|
|
|
(4.34) |
|
|
|
(0.45) |
|
|
|
(0.04) |
|
Net
Asset Value, end of year |
|
|
$11.11 |
|
|
|
$11.31 |
|
|
|
$18.86 |
|
|
|
$26.70 |
|
|
|
$14.55 |
|
Total
return* |
|
|
(1.77%) |
|
|
|
(24.80%) |
|
|
|
(13.10%) |
|
|
|
86.72% |
|
|
|
29.60% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$177,070 |
|
|
|
$272,950 |
|
|
|
$465,207 |
|
|
|
$631,101 |
|
|
|
$177,639 |
|
Ratio
of expenses to average net assets |
|
|
1.15% |
|
|
|
1.18% |
|
|
|
1.09% |
|
|
|
1.10% |
|
|
|
1.19% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.21%) |
|
|
|
(0.40%) |
|
|
|
(0.59%) |
|
|
|
(0.60%) |
|
|
|
(0.04%) |
|
Portfolio
turnover3 |
|
|
248.19% |
|
|
|
118.08% |
|
|
|
220.45% |
|
|
|
119.81% |
|
|
|
80.10% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
|
|
|
|
|
| |
76 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Asia Innovators Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$11.49 |
|
|
|
$19.08 |
|
|
|
$26.91 |
|
|
|
$14.64 |
|
|
|
$11.32 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
(0.01) |
|
|
|
(0.04) |
|
|
|
(0.11) |
|
|
|
(0.09) |
|
|
|
0.01 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
(0.18) |
|
|
|
(4.55) |
|
|
|
(3.38) |
|
|
|
12.81 |
|
|
|
3.35 |
|
Total
from investment operations |
|
|
(0.19) |
|
|
|
(4.59) |
|
|
|
(3.49) |
|
|
|
12.72 |
|
|
|
3.36 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.02) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(3.00) |
|
|
|
(4.34) |
|
|
|
(0.45) |
|
|
|
(0.04) |
|
Total
distributions |
|
|
(0.02) |
|
|
|
(3.00) |
|
|
|
(4.34) |
|
|
|
(0.45) |
|
|
|
(0.04) |
|
Net
Asset Value, end of year |
|
|
$11.28 |
|
|
|
$11.49 |
|
|
|
$19.08 |
|
|
|
$26.91 |
|
|
|
$14.64 |
|
Total
return* |
|
|
(1.62%) |
|
|
|
(24.73%) |
|
|
|
(12.97%) |
|
|
|
87.01% |
|
|
|
29.71% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$135,882 |
|
|
|
$199,368 |
|
|
|
$930,562 |
|
|
|
$1,094,356 |
|
|
|
$126,911 |
|
Ratio
of expenses to average net assets |
|
|
1.02% |
|
|
|
1.04% |
|
|
|
0.93% |
|
|
|
0.95% |
|
|
|
1.05% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.11%) |
|
|
|
(0.27%) |
|
|
|
(0.43%) |
|
|
|
(0.44%) |
|
|
|
0.10% |
|
Portfolio
turnover2 |
|
|
248.19% |
|
|
|
118.08% |
|
|
|
220.45% |
|
|
|
119.81% |
|
|
|
80.10% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
Matthews
China Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.50 |
|
|
|
$20.58 |
|
|
|
$27.00 |
|
|
|
$19.12 |
|
|
|
$14.37 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.09 |
|
|
|
— |
2 |
|
|
0.03 |
|
|
|
0.05 |
|
|
|
0.16 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments and foreign currency related transactions |
|
|
(2.88) |
|
|
|
(4.99) |
|
|
|
(3.25) |
|
|
|
8.17 |
|
|
|
4.80 |
|
Total
from investment operations |
|
|
(2.79) |
|
|
|
(4.99) |
|
|
|
(3.22) |
|
|
|
8.22 |
|
|
|
4.96 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.09) |
|
|
|
— |
|
|
|
(0.05) |
|
|
|
(0.06) |
|
|
|
(0.21) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.09) |
|
|
|
(3.15) |
|
|
|
(0.28) |
|
|
|
— |
|
Total
distributions |
|
|
(0.09) |
|
|
|
(1.09) |
|
|
|
(3.20) |
|
|
|
(0.34) |
|
|
|
(0.21) |
|
Net
Asset Value, end of year |
|
|
$11.62 |
|
|
|
$14.50 |
|
|
|
$20.58 |
|
|
|
$27.00 |
|
|
|
$19.12 |
|
Total
return* |
|
|
(19.22%) |
|
|
|
(24.40%) |
|
|
|
(12.26%) |
|
|
|
43.05% |
|
|
|
34.56% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$300,132 |
|
|
|
$448,623 |
|
|
|
$710,844 |
|
|
|
$962,714 |
|
|
|
$718,633 |
|
Ratio
of expenses to average net assets |
|
|
1.15% |
|
|
|
1.12% |
|
|
|
1.06% |
|
|
|
1.09% |
|
|
|
1.09% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.65% |
|
|
|
(0.01%) |
|
|
|
0.13% |
|
|
|
0.22% |
|
|
|
0.96% |
|
Portfolio
turnover3 |
|
|
49.60% |
|
|
|
49.38% |
|
|
|
92.28% |
|
|
|
52.64% |
|
|
|
68.93% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
78 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
China Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.48 |
|
|
|
$20.53 |
|
|
|
$26.94 |
|
|
|
$19.08 |
|
|
|
$14.33 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.11 |
|
|
|
0.01 |
|
|
|
0.10 |
|
|
|
0.09 |
|
|
|
0.20 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments and foreign currency related transactions |
|
|
(2.88) |
|
|
|
(4.97) |
|
|
|
(3.26) |
|
|
|
8.15 |
|
|
|
4.80 |
|
Total
from investment operations |
|
|
(2.77) |
|
|
|
(4.96) |
|
|
|
(3.16) |
|
|
|
8.24 |
|
|
|
5.00 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.11) |
|
|
|
— |
|
|
|
(0.10) |
|
|
|
(0.10) |
|
|
|
(0.25) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.09) |
|
|
|
(3.15) |
|
|
|
(0.28) |
|
|
|
— |
|
Total
distributions |
|
|
(0.11) |
|
|
|
(1.09) |
|
|
|
(3.25) |
|
|
|
(0.38) |
|
|
|
(0.25) |
|
Net
Asset Value, end of year |
|
|
$11.60 |
|
|
|
$14.48 |
|
|
|
$20.53 |
|
|
|
$26.94 |
|
|
|
$19.08 |
|
Total
return* |
|
|
(19.11%) |
|
|
|
(24.31%) |
|
|
|
(12.07%) |
|
|
|
43.23% |
|
|
|
34.90% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$148,327 |
|
|
|
$297,165 |
|
|
|
$630,966 |
|
|
|
$546,157 |
|
|
|
$183,762 |
|
Ratio
of expenses to average net assets |
|
|
1.01% |
|
|
|
0.98% |
|
|
|
0.91% |
|
|
|
0.93% |
|
|
|
0.91% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.82% |
|
|
|
0.07% |
|
|
|
0.38% |
|
|
|
0.40% |
|
|
|
1.17% |
|
Portfolio
turnover2 |
|
|
49.60% |
|
|
|
49.38% |
|
|
|
92.28% |
|
|
|
52.64% |
|
|
|
68.93% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
China Small Companies Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$11.11 |
|
|
|
$16.44 |
|
|
|
$19.86 |
|
|
|
$12.84 |
|
|
|
$9.58 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
(0.03) |
|
|
|
0.14 |
|
Net
realized gain (loss) and unrealized
appreciation/ depreciation on investments and foreign
currency related transactions |
|
|
(1.96) |
|
|
|
(5.15) |
|
|
|
(0.80) |
|
|
|
10.42 |
|
|
|
3.24 |
|
Total
from investment operations |
|
|
(1.95) |
|
|
|
(5.13) |
|
|
|
(0.71) |
|
|
|
10.39 |
|
|
|
3.38 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.21) |
|
|
|
(0.20) |
|
|
|
(0.12) |
|
|
|
(0.13) |
|
|
|
(0.13) |
|
Net
realized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
(2.59) |
|
|
|
(3.24) |
|
|
|
— |
|
Total
distributions |
|
|
(0.21) |
|
|
|
(0.20) |
|
|
|
(2.71) |
|
|
|
(3.37) |
|
|
|
(0.13) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
2 |
Net
Asset Value, end of year |
|
|
$8.95 |
|
|
|
$11.11 |
|
|
|
$16.44 |
|
|
|
$19.86 |
|
|
|
$12.84 |
|
Total
return* |
|
|
(17.51%) |
|
|
|
(31.26%) |
|
|
|
(3.59%) |
|
|
|
82.52% |
|
|
|
35.41% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$66,174 |
|
|
|
$114,440 |
|
|
|
$218,398 |
|
|
|
$285,717 |
|
|
|
$63,432 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
1.55% |
|
|
|
1.55% |
|
|
|
1.48% |
|
|
|
1.52% |
|
|
|
1.62% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
1.41% |
|
|
|
1.41% |
|
|
|
1.43% |
|
|
|
1.43% |
|
|
|
1.42% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.09% |
|
|
|
0.17% |
|
|
|
0.44% |
|
|
|
(0.14%) |
|
|
|
1.25% |
|
Portfolio
turnover3 |
|
|
59.05% |
|
|
|
59.00% |
|
|
|
119.65% |
|
|
|
152.86% |
|
|
|
68.17% |
|
1
Calculated using the average daily shares method.
2
The Fund charged redemption fees through October 31, 2019.
3
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
|
|
|
|
|
| |
80 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
China Small Companies Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$11.12 |
|
|
|
$16.47 |
|
|
|
$19.90 |
|
|
|
$12.86 |
|
|
|
$9.59 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.04 |
|
|
|
0.06 |
|
|
|
0.13 |
|
|
|
0.04 |
|
|
|
0.15 |
|
Net
realized gain (loss) and unrealized
appreciation/ depreciation on investments and foreign
currency related transactions |
|
|
(1.98) |
|
|
|
(5.17) |
|
|
|
(0.80) |
|
|
|
10.42 |
|
|
|
3.26 |
|
Total
from investment operations |
|
|
(1.94) |
|
|
|
(5.11) |
|
|
|
(0.67) |
|
|
|
10.46 |
|
|
|
3.41 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.24) |
|
|
|
(0.24) |
|
|
|
(0.17) |
|
|
|
(0.18) |
|
|
|
(0.15) |
|
Net
realized gain on investments |
|
|
— |
|
|
|
— |
|
|
|
(2.59) |
|
|
|
(3.24) |
|
|
|
— |
|
Total
distributions |
|
|
(0.24) |
|
|
|
(0.24) |
|
|
|
(2.76) |
|
|
|
(3.42) |
|
|
|
(0.15) |
|
Paid‑in
capital from redemption fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
2 |
Net
Asset Value, end of year |
|
|
$8.94 |
|
|
|
$11.12 |
|
|
|
$16.47 |
|
|
|
$19.90 |
|
|
|
$12.86 |
|
Total
return* |
|
|
(17.37%) |
|
|
|
(31.08%) |
|
|
|
(3.35%) |
|
|
|
82.89% |
|
|
|
35.68% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$22,983 |
|
|
|
$40,322 |
|
|
|
$162,770 |
|
|
|
$98,052 |
|
|
|
$32,376 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
1.41% |
|
|
|
1.38% |
|
|
|
1.31% |
|
|
|
1.37% |
|
|
|
1.51% |
|
Ratio
of expenses to average net assets after any reimbursement,
waiver or recapture of expenses by Advisor and
Administrator |
|
|
1.20% |
|
|
|
1.20% |
|
|
|
1.20% |
|
|
|
1.20% |
|
|
|
1.24% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.36% |
|
|
|
0.47% |
|
|
|
0.63% |
|
|
|
0.20% |
|
|
|
1.34% |
|
Portfolio
turnover3 |
|
|
59.05% |
|
|
|
59.00% |
|
|
|
119.65% |
|
|
|
152.86% |
|
|
|
68.17% |
|
1
Calculated using the average daily shares method.
2
The Fund charged redemption fees through October 31, 2019.
3
The portfolio turnover rate is calculated on the Fund as a whole for the entire
year without distinguishing between classes of shares issued.
Matthews
India Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$22.09 |
|
|
|
$28.17 |
|
|
|
$26.29 |
|
|
|
$23.27 |
|
|
|
$26.32 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
(0.01) |
|
|
|
(0.12) |
|
|
|
(0.11) |
|
|
|
0.01 |
|
|
|
(0.01) |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
5.10 |
|
|
|
(2.58) |
|
|
|
4.81 |
|
|
|
3.81 |
|
|
|
(0.24) |
|
Total
from investment operations |
|
|
5.09 |
|
|
|
(2.70) |
|
|
|
4.70 |
|
|
|
3.82 |
|
|
|
(0.25) |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.51) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net
realized gains on investments |
|
|
(0.30) |
|
|
|
(3.38) |
|
|
|
(2.82) |
|
|
|
(0.80) |
|
|
|
(2.80) |
|
Total
distributions |
|
|
(0.81) |
|
|
|
(3.38) |
|
|
|
(2.82) |
|
|
|
(0.80) |
|
|
|
(2.80) |
|
Net
Asset Value, end of year |
|
|
$26.37 |
|
|
|
$22.09 |
|
|
|
$28.17 |
|
|
|
$26.29 |
|
|
|
$23.27 |
|
Total
return* |
|
|
23.10% |
|
|
|
(9.92%) |
|
|
|
18.11% |
|
|
|
16.51% |
|
|
|
(0.88%) |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$614,103 |
|
|
|
$505,764 |
|
|
|
$635,067 |
|
|
|
$617,908 |
|
|
|
$786,881 |
|
Ratio
of expenses to average net assets |
|
|
1.14% |
|
|
|
1.15% |
|
|
|
1.10% |
|
|
|
1.15% |
|
|
|
1.11% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
(0.04%) |
|
|
|
(0.45%) |
|
|
|
(0.38%) |
|
|
|
0.05% |
|
|
|
(0.03%) |
|
Portfolio
turnover2 |
|
|
50.98% |
|
|
|
41.35% |
|
|
|
42.50% |
|
|
|
57.38% |
|
|
|
24.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$22.54 |
|
|
|
$28.64 |
|
|
|
$26.65 |
|
|
|
$23.55 |
|
|
|
$26.56 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.02 |
|
|
|
(0.08) |
|
|
|
(0.06) |
|
|
|
0.05 |
|
|
|
0.02 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments, foreign currency
related transactions and foreign capital gains taxes |
|
|
5.21 |
|
|
|
(2.64) |
|
|
|
4.87 |
|
|
|
3.85 |
|
|
|
(0.23) |
|
Total
from investment operations |
|
|
5.23 |
|
|
|
(2.72) |
|
|
|
4.81 |
|
|
|
3.90 |
|
|
|
(0.21) |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.54) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net
realized gains on investments |
|
|
(0.30) |
|
|
|
(3.38) |
|
|
|
(2.82) |
|
|
|
(0.80) |
|
|
|
(2.80) |
|
Total
distributions |
|
|
(0.84) |
|
|
|
(3.38) |
|
|
|
(2.82) |
|
|
|
(0.80) |
|
|
|
(2.80) |
|
Net
Asset Value, end of year |
|
|
$26.93 |
|
|
|
$22.54 |
|
|
|
$28.64 |
|
|
|
$26.65 |
|
|
|
$23.55 |
|
Total
return* |
|
|
23.32% |
|
|
|
(9.83%) |
|
|
|
18.28% |
|
|
|
16.65% |
|
|
|
(0.76%) |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$149,023 |
|
|
|
$97,018 |
|
|
|
$128,708 |
|
|
|
$90,053 |
|
|
|
$177,526 |
|
Ratio
of expenses to average net assets |
|
|
1.01% |
|
|
|
1.01% |
|
|
|
0.96% |
|
|
|
1.03% |
|
|
|
0.94% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.07% |
|
|
|
(0.31%) |
|
|
|
(0.19%) |
|
|
|
0.24% |
|
|
|
0.09% |
|
Portfolio
turnover2 |
|
|
50.98% |
|
|
|
41.35% |
|
|
|
42.50% |
|
|
|
57.38% |
|
|
|
24.00% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
82 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Japan Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.90 |
|
|
|
$22.09 |
|
|
|
$25.27 |
|
|
|
$21.51 |
|
|
|
$18.53 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.09 |
|
|
|
0.07 |
|
|
|
0.09 |
|
|
|
0.07 |
|
|
|
0.11 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments and foreign currency related transactions |
|
|
2.59 |
|
|
|
(6.19) |
|
|
|
(0.52) |
|
|
|
6.25 |
|
|
|
4.73 |
|
Total
from investment operations |
|
|
2.68 |
|
|
|
(6.12) |
|
|
|
(0.43) |
|
|
|
6.32 |
|
|
|
4.84 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
— |
|
|
|
— |
|
|
|
(0.24) |
|
|
|
(0.13) |
|
|
|
(0.12) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.07) |
|
|
|
(2.51) |
|
|
|
(2.43) |
|
|
|
(1.74) |
|
Total
distributions |
|
|
— |
|
|
|
(1.07) |
|
|
|
(2.75) |
|
|
|
(2.56) |
|
|
|
(1.86) |
|
Net
Asset Value, end of year |
|
|
$17.58 |
|
|
|
$14.90 |
|
|
|
$22.09 |
|
|
|
$25.27 |
|
|
|
$21.51 |
|
Total
return* |
|
|
17.99% |
|
|
|
(27.85%) |
|
|
|
(1.92%) |
|
|
|
29.82% |
|
|
|
26.08% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$239,578 |
|
|
|
$208,329 |
|
|
|
$373,739 |
|
|
|
$1,101,820 |
|
|
|
$1,466,194 |
|
Ratio
of expenses to average net assets before any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
1.09% |
|
|
|
1.05% |
|
|
|
0.95% |
|
|
|
0.95% |
|
|
|
0.93% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.58% |
|
|
|
0.41% |
|
|
|
0.38% |
|
|
|
0.31% |
|
|
|
0.51% |
|
Portfolio
turnover2 |
|
|
100.59% |
|
|
|
83.38% |
|
|
|
70.30% |
|
|
|
62.03% |
|
|
|
25.42% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Japan Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.93 |
|
|
|
$22.13 |
|
|
|
$25.32 |
|
|
|
$21.55 |
|
|
|
$18.57 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.12 |
|
|
|
0.09 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.11 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments and foreign currency related transactions |
|
|
2.58 |
|
|
|
(6.22) |
|
|
|
(0.46) |
|
|
|
6.29 |
|
|
|
4.74 |
|
Total
from investment operations |
|
|
2.70 |
|
|
|
(6.13) |
|
|
|
(0.41) |
|
|
|
6.34 |
|
|
|
4.85 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
— |
|
|
|
— |
|
|
|
(0.27) |
|
|
|
(0.14) |
|
|
|
(0.13) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(1.07) |
|
|
|
(2.51) |
|
|
|
(2.43) |
|
|
|
(1.74) |
|
Total
distributions |
|
|
— |
|
|
|
(1.07) |
|
|
|
(2.78) |
|
|
|
(2.57) |
|
|
|
(1.87) |
|
Net
Asset Value, end of year |
|
|
$17.63 |
|
|
|
$14.93 |
|
|
|
$22.13 |
|
|
|
$25.32 |
|
|
|
$21.55 |
|
Total
return* |
|
|
18.08% |
|
|
|
(27.84%) |
|
|
|
(1.83%) |
|
|
|
29.85% |
|
|
|
26.10% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$415,920 |
|
|
|
$413,807 |
|
|
|
$1,170,380 |
|
|
|
$548,968 |
|
|
|
$840,476 |
|
Ratio
of expenses to average net assets before any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
1.02% |
|
|
|
0.97% |
|
|
|
0.89% |
|
|
|
0.91% |
|
|
|
0.88% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
0.71% |
|
|
|
0.55% |
|
|
|
0.22% |
|
|
|
0.25% |
|
|
|
0.53% |
|
Portfolio
turnover2 |
|
|
100.59% |
|
|
|
83.38% |
|
|
|
70.30% |
|
|
|
62.03% |
|
|
|
25.42% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
84 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Asian Growth and Income Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$12.50 |
|
|
|
$16.07 |
|
|
|
$18.05 |
|
|
|
$15.73 |
|
|
|
$13.92 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.23 |
|
|
|
0.22 |
|
|
|
0.17 |
|
|
|
0.21 |
|
|
|
0.25 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency
related transactions, and foreign capital gains
taxes |
|
|
0.18 |
|
|
|
(3.17) |
|
|
|
(0.17) |
|
|
|
2.27 |
|
|
|
2.13 |
|
Total
from investment operations |
|
|
0.41 |
|
|
|
(2.95) |
|
|
|
— |
|
|
|
2.48 |
|
|
|
2.38 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.34) |
|
|
|
(0.21) |
|
|
|
(0.20) |
|
|
|
(0.16) |
|
|
|
(0.35) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.41) |
|
|
|
(1.78) |
|
|
|
— |
2 |
|
|
(0.22) |
|
Total
distributions |
|
|
(0.34) |
|
|
|
(0.62) |
|
|
|
(1.98) |
|
|
|
(0.16) |
|
|
|
(0.57) |
|
Net
Asset Value, end of year |
|
|
$12.57 |
|
|
|
$12.50 |
|
|
|
$16.07 |
|
|
|
$18.05 |
|
|
|
$15.73 |
|
Total
return* |
|
|
3.33% |
|
|
|
(18.43%) |
|
|
|
0.04% |
|
|
|
16.00% |
|
|
|
17.26% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$244,698 |
|
|
|
$339,756 |
|
|
|
$541,744 |
|
|
|
$673,576 |
|
|
|
$723,815 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.15% |
|
|
|
1.13% |
|
|
|
1.07% |
|
|
|
1.09% |
|
|
|
1.08% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
1.78% |
|
|
|
1.58% |
|
|
|
0.91% |
|
|
|
1.38% |
|
|
|
1.67% |
|
Portfolio
turnover3 |
|
|
12.00% |
|
|
|
13.16% |
|
|
|
37.85% |
|
|
|
36.27% |
|
|
|
21.89% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Asian Growth and Income Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$12.48 |
|
|
|
$16.04 |
|
|
|
$18.02 |
|
|
|
$15.70 |
|
|
|
$13.89 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.24 |
|
|
|
0.24 |
|
|
|
0.20 |
|
|
|
0.23 |
|
|
|
0.27 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency
related transactions, and foreign capital gains
taxes |
|
|
0.18 |
|
|
|
(3.16) |
|
|
|
(0.17) |
|
|
|
2.27 |
|
|
|
2.14 |
|
Total
from investment operations |
|
|
0.42 |
|
|
|
(2.92) |
|
|
|
0.03 |
|
|
|
2.50 |
|
|
|
2.41 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.36) |
|
|
|
(0.23) |
|
|
|
(0.23) |
|
|
|
(0.18) |
|
|
|
(0.38) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.41) |
|
|
|
(1.78) |
|
|
|
— |
2 |
|
|
(0.22) |
|
Total
distributions |
|
|
(0.36) |
|
|
|
(0.64) |
|
|
|
(2.01) |
|
|
|
(0.18) |
|
|
|
(0.60) |
|
Net
Asset Value, end of year |
|
|
$12.54 |
|
|
|
$12.48 |
|
|
|
$16.04 |
|
|
|
$18.02 |
|
|
|
$15.70 |
|
Total
return* |
|
|
3.39% |
|
|
|
(18.31%) |
|
|
|
0.18% |
|
|
|
16.18% |
|
|
|
17.46% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$79,766 |
|
|
|
$270,259 |
|
|
|
$551,740 |
|
|
|
$822,179 |
|
|
|
$743,951 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.02% |
|
|
|
1.01% |
|
|
|
0.94% |
|
|
|
0.96% |
|
|
|
0.94% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
1.91% |
|
|
|
1.71% |
|
|
|
1.10% |
|
|
|
1.51% |
|
|
|
1.80% |
|
Portfolio
turnover3 |
|
|
12.00% |
|
|
|
13.16% |
|
|
|
37.85% |
|
|
|
36.27% |
|
|
|
21.89% |
|
1
Calculated using the average daily shares method.
2
Less than $0.01 per share.
3
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
86 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
Asia Dividend Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$13.24 |
|
|
|
$18.94 |
|
|
|
$22.63 |
|
|
|
$17.47 |
|
|
|
$16.05 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.19 |
|
|
|
0.13 |
|
|
|
0.18 |
|
|
|
0.15 |
|
|
|
0.28 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency related transactions, and foreign capital
gains taxes |
|
|
0.42 |
|
|
|
(5.72) |
|
|
|
(0.81) |
|
|
|
5.23 |
|
|
|
1.50 |
|
Total
from investment operations |
|
|
0.61 |
|
|
|
(5.59) |
|
|
|
(0.63) |
|
|
|
5.38 |
|
|
|
1.78 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.15) |
|
|
|
(0.11) |
|
|
|
(0.19) |
|
|
|
(0.22) |
|
|
|
(0.36) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
— |
|
|
|
(2.87) |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.15) |
|
|
|
(0.11) |
|
|
|
(3.06) |
|
|
|
(0.22) |
|
|
|
(0.36) |
|
Net
Asset Value, end of year |
|
|
$13.70 |
|
|
|
$13.24 |
|
|
|
$18.94 |
|
|
|
$22.63 |
|
|
|
$17.47 |
|
Total
return* |
|
|
4.69% |
|
|
|
(29.57%) |
|
|
|
(2.83%) |
|
|
|
31.25% |
|
|
|
11.17% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$401,341 |
|
|
|
$602,694 |
|
|
|
$1,586,460 |
|
|
|
$2,292,262 |
|
|
|
$2,312,560 |
|
Ratio
of expenses to average net assets before any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
1.10% |
|
|
|
1.10% |
|
|
|
1.03% |
|
|
|
1.03% |
|
|
|
1.03% |
|
Ratio
of expenses to average net assets after any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
1.10% |
|
|
|
1.10% |
|
|
|
1.02% |
|
|
|
1.02% |
|
|
|
1.02% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
1.43% |
|
|
|
0.84% |
|
|
|
0.80% |
|
|
|
0.85% |
|
|
|
1.68% |
|
Portfolio
turnover2 |
|
|
75.88% |
|
|
|
50.75% |
|
|
|
47.41% |
|
|
|
37.73% |
|
|
|
30.32% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
Asia Dividend Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$13.23 |
|
|
|
$18.94 |
|
|
|
$22.62 |
|
|
|
$17.47 |
|
|
|
$16.04 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.21 |
|
|
|
0.14 |
|
|
|
0.21 |
|
|
|
0.16 |
|
|
|
0.30 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation on
investments, foreign currency related transactions, and foreign capital
gains taxes |
|
|
0.41 |
|
|
|
(5.72) |
|
|
|
(0.80) |
|
|
|
5.22 |
|
|
|
1.50 |
|
Total
from investment operations |
|
|
0.62 |
|
|
|
(5.58) |
|
|
|
(0.59) |
|
|
|
5.38 |
|
|
|
1.80 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.17) |
|
|
|
(0.13) |
|
|
|
(0.22) |
|
|
|
(0.23) |
|
|
|
(0.37) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
— |
|
|
|
(2.87) |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.17) |
|
|
|
(0.13) |
|
|
|
(3.09) |
|
|
|
(0.23) |
|
|
|
(0.37) |
|
Net
Asset Value, end of year |
|
|
$13.68 |
|
|
|
$13.23 |
|
|
|
$18.94 |
|
|
|
$22.62 |
|
|
|
$17.47 |
|
Total
return* |
|
|
4.77% |
|
|
|
(29.55%) |
|
|
|
(2.67%) |
|
|
|
31.29% |
|
|
|
11.35% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$650,333 |
|
|
|
$1,248,676 |
|
|
|
$3,154,407 |
|
|
|
$2,908,674 |
|
|
|
$3,057,896 |
|
Ratio
of expenses to average net assets before any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
0.99% |
|
|
|
0.99% |
|
|
|
0.92% |
|
|
|
0.93% |
|
|
|
0.93% |
|
Ratio
of expenses to average net assets after any reimbursement, waiver or
recapture of expenses by Advisor and Administrator |
|
|
0.99% |
|
|
|
0.99% |
|
|
|
0.91% |
|
|
|
0.93% |
|
|
|
0.92% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
1.55% |
|
|
|
0.95% |
|
|
|
0.93% |
|
|
|
0.91% |
|
|
|
1.80% |
|
Portfolio
turnover2 |
|
|
75.88% |
|
|
|
50.75% |
|
|
|
47.41% |
|
|
|
37.73% |
|
|
|
30.32% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
88 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews
China Dividend Fund
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INVESTOR CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.00 |
|
|
|
$17.73 |
|
|
|
$19.64 |
|
|
|
$16.20 |
|
|
|
$14.32 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.27 |
|
|
|
0.31 |
|
|
|
0.41 |
|
|
|
0.30 |
|
|
|
0.34 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments and foreign
currency related transactions |
|
|
(3.12) |
|
|
|
(3.27) |
|
|
|
(0.48) |
|
|
|
3.54 |
|
|
|
1.80 |
|
Total
from investment operations |
|
|
(2.85) |
|
|
|
(2.96) |
|
|
|
(0.07) |
|
|
|
3.84 |
|
|
|
2.14 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.44) |
|
|
|
(0.52) |
|
|
|
(0.49) |
|
|
|
(0.40) |
|
|
|
(0.26) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.25) |
|
|
|
(1.35) |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.44) |
|
|
|
(0.77) |
|
|
|
(1.84) |
|
|
|
(0.40) |
|
|
|
(0.26) |
|
Net
Asset Value, end of year |
|
|
$10.71 |
|
|
|
$14.00 |
|
|
|
$17.73 |
|
|
|
$19.64 |
|
|
|
$16.20 |
|
Total
return* |
|
|
(20.67%) |
|
|
|
(16.75%) |
|
|
|
(0.49%) |
|
|
|
24.22% |
|
|
|
15.00% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$76,517 |
|
|
|
$137,066 |
|
|
|
$218,766 |
|
|
|
$269,192 |
|
|
|
$258,111 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.17% |
|
|
|
1.20% |
|
|
|
1.12% |
|
|
|
1.15% |
|
|
|
1.15% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
2.03% |
|
|
|
2.12% |
|
|
|
2.05% |
|
|
|
1.79% |
|
|
|
2.14% |
|
Portfolio
turnover2 |
|
|
27.30% |
|
|
|
67.08% |
|
|
|
68.25% |
|
|
|
81.79% |
|
|
|
65.69% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
Matthews
China Dividend Fund (continued)
The
table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Year Ended Dec. 31, |
|
INSTITUTIONAL CLASS |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, beginning of year |
|
|
$14.00 |
|
|
|
$17.72 |
|
|
|
$19.64 |
|
|
|
$16.20 |
|
|
|
$14.32 |
|
Income (loss) from investment
operations: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income (loss)1 |
|
|
0.27 |
|
|
|
0.31 |
|
|
|
0.53 |
|
|
|
0.31 |
|
|
|
0.35 |
|
Net
realized gain (loss) and unrealized appreciation/ depreciation
on investments and foreign
currency related transactions |
|
|
(3.11) |
|
|
|
(3.24) |
|
|
|
(0.58) |
|
|
|
3.55 |
|
|
|
1.81 |
|
Total
from investment operations |
|
|
(2.84) |
|
|
|
(2.93) |
|
|
|
(0.05) |
|
|
|
3.86 |
|
|
|
2.16 |
|
Less distributions from: |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
Net
investment income |
|
|
(0.46) |
|
|
|
(0.54) |
|
|
|
(0.52) |
|
|
|
(0.42) |
|
|
|
(0.28) |
|
Net
realized gains on investments |
|
|
— |
|
|
|
(0.25) |
|
|
|
(1.35) |
|
|
|
— |
|
|
|
— |
|
Total
distributions |
|
|
(0.46) |
|
|
|
(0.79) |
|
|
|
(1.87) |
|
|
|
(0.42) |
|
|
|
(0.28) |
|
Net
Asset Value, end of year |
|
|
$10.70 |
|
|
|
$14.00 |
|
|
|
$17.72 |
|
|
|
$19.64 |
|
|
|
$16.20 |
|
Total
return* |
|
|
(20.58%) |
|
|
|
(16.59%) |
|
|
|
(0.38%) |
|
|
|
24.37% |
|
|
|
15.16% |
|
|
*The total return represents
the rate that an investor would have earned (or lost) on an investment in
the Fund assuming reinvestment of all dividends and distributions. |
|
|
RATIOS/SUPPLEMENTAL DATA |
|
Net
assets, end of year (in 000s) |
|
|
$42,165 |
|
|
|
$84,220 |
|
|
|
$131,395 |
|
|
|
$115,451 |
|
|
|
$122,630 |
|
Ratio
of expenses to average net assets before any reimbursement,
waiver or recapture of expenses by Advisor and Administrator |
|
|
1.04% |
|
|
|
1.06% |
|
|
|
0.97% |
|
|
|
1.02% |
|
|
|
1.01% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
2.09% |
|
|
|
2.12% |
|
|
|
2.65% |
|
|
|
1.85% |
|
|
|
2.25% |
|
Portfolio
turnover2 |
|
|
27.30% |
|
|
|
67.08% |
|
|
|
68.25% |
|
|
|
81.79% |
|
|
|
65.69% |
|
1
Calculated using the average daily shares method.
2
The portfolio turnover rate is calculated on the Fund as a whole without
distinguishing between classes of shares issued.
|
|
|
|
|
| |
90 |
|
matthewsasia.com | 800.789.ASIA |
|
| |
|
Matthews has long-term
investment goals, and its process aims to identify potential portfolio
investments that can be held over an indefinite time horizon.
Investment
Objectives of the Funds
Matthews
Asia Funds (the “Trust” or “Matthews Asia Funds”) offers a range of global,
regional and country-specific funds (each, a “Fund,” and collectively, the
“Funds”) with the following objectives:
|
| |
GLOBAL EMERGING MARKETS STRATEGIES |
|
|
| |
Matthews
Emerging Markets Equity Fund |
|
Long‑term capital appreciation |
| |
Matthews
Emerging Markets Sustainable Future Fund |
|
Long‑term capital appreciation |
| |
Matthews Emerging Markets Small Companies
Fund |
|
Long‑term capital appreciation |
| |
ASIA GROWTH STRATEGIES |
|
|
| |
Matthews Asia
Growth Fund |
|
Long‑term capital appreciation |
| |
Matthews
Pacific Tiger Fund |
|
Long‑term capital appreciation |
| |
Matthews Asia
Innovators Fund |
|
Long‑term capital appreciation |
| |
Matthews China
Fund |
|
Long‑term capital appreciation |
| |
Matthews China
Small Companies Fund |
|
Long‑term capital appreciation |
| |
Matthews India
Fund |
|
Long‑term capital appreciation |
| |
Matthews Japan Fund |
|
Long‑term capital appreciation |
| |
ASIA GROWTH AND INCOME
STRATEGIES |
|
|
| |
Matthews Asian
Growth and Income Fund |
|
Long‑term capital appreciation
with some current income |
| |
Matthews Asia
Dividend Fund |
|
Total return with an emphasis
on providing current income |
| |
Matthews China
Dividend Fund |
|
Total return with an emphasis
on providing current income |
The
investment objective of each Fund is fundamental. This means that it cannot be
changed without a vote of a majority of the voting securities of each respective
Fund.
Non‑Fundamental
Investment Policies
The
manner in which Matthews International Capital Management, LLC, the investment
advisor to each Fund (“Matthews”), attempts to achieve each Fund’s investment
objective is not fundamental and may be changed without shareholder approval.
While an investment policy or restriction may be changed by the Board of
Trustees of the Trust (the “Board” or “Board of Trustees”) (which oversees the
management of the Funds) without shareholder approval, you will be notified
before we make any material change.
Matthews’
Investment Approach
The
principal investment strategies for each Fund are described in the Fund Summary
for each Fund.
In
seeking to achieve the investment objectives for the Funds, Matthews also
employs the investment approach and other principal investment strategies as
described below.
Matthews
invests primarily in the Asia Pacific region and Emerging Markets (as defined on
page 92) for those Funds and other advisory clients with such an investment
focus based on its assessment of the future development and growth prospects of
companies located in those markets.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS’ INVESTMENT APPROACH |
|
|
91 |
|
Matthews
believes that the countries in these markets are on paths toward economic
development and, in general, deregulation and greater openness to market forces.
Matthews believes in the potential for these economies, and that the
intersection of development and deregulation will give rise to new opportunities
for further growth. Matthews attempts to capitalize on its beliefs by investing
in companies it considers to be well-positioned to participate in the economic
evolution of these markets. Matthews uses a range of approaches to participate
in the anticipated growth of Asian and Emerging Markets to suit clients’
differing needs and investment objectives.
Matthews
researches the fundamental characteristics of individual companies to help to
understand the foundation of a company’s growth. This may include consideration
of non-financial information as part of its investment process, such as
governance and sustainability factors, when it believes such information is
likely to have a material financial impact on a company’s value. Such factors
may be used as inputs alongside other factors and may not be determinative on
investment decisions of the Funds. Matthews evaluates potential portfolio
holdings on the basis of their individual merits, and seeks to invest in
companies that it believes are positioned to help a Fund achieve its investment
objective.
Matthews
has long-term investment goals, and its process aims to identify potential
portfolio investments that can be held over an indefinite time horizon. Matthews
regularly tests its beliefs and adjusts portfolio holdings in light of
prevailing market conditions and other factors, including, among other things,
economic, political or market events (e.g., changes in credit conditions or
military action), changes in relative valuation (of a company’s growth prospects
relative to other issuers), liquidity requirements and corporate
governance.
Matthews
Seeks to Invest in the Long-Term Growth Potential of Asian and Emerging
Markets
T |
|
Matthews
believes that the countries in which the Funds invest will continue to
benefit from economic development over longer investment
horizons. |
T |
|
Matthews
seeks to invest in those companies that it believes will benefit from the
long-term economic evolution of Asian and Emerging Markets, and that will
help each Fund achieve its investment objective. |
T |
|
Matthews
generally does not hedge currency risks. |
Matthews
and the Funds Believe in Investing for the Long Term
T |
|
Matthews
constructs portfolios with long investment horizons—typically five years
or longer. |
Matthews
Is an Active Investor with Strong Convictions
T |
|
Matthews
uses an active approach to investment management (rather than relying on
passive or index strategies) because it believes that the current
composition of the stock markets and indices may not be the best guide to
the most successful industries and companies of the
future. |
T |
|
Matthews
invests in individual companies based on fundamental analysis that aims to
develop an understanding of a company’s long-term business
prospects. |
T |
|
Matthews
monitors the composition of benchmark indices but is not constrained by
their composition or weightings, and constructs portfolios independently
of indices. |
T |
|
Matthews
believes that investors benefit in the long term when the Funds are fully
invested, subject to market conditions and a Fund’s particular investment
objective. |
Matthews
Is a Fundamental Investor
T |
|
Matthews
believes that fundamental investing is based on identifying, analyzing and
understanding basic information about a company or security. These factors
may include matters such as 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. |
THE ASIA PACIFIC REGION
IS DIVIDED INTO THE FOLLOWING GROUPS:
ASIA
Consists
of all countries and markets in Asia, including developed, emerging, and
frontier countries and markets in the Asian region
ASIA
EX JAPAN
Includes
all countries and markets in Asia excluding Japan
ASIA
PACIFIC
Includes
all countries and markets in Asia plus all countries and markets in the Pacific
region, including Australia and New Zealand
EMERGING MARKETS INCLUDE,
BUT ARE NOT LIMITED TO, THE FOLLOWING:
AMERICAS
Argentina,
Brazil, Chile, Colombia, Mexico and Peru
AFRICA
Egypt,
Kenya, Nigeria and South Africa
ASIA
Bangladesh,
China, India, Indonesia, Malaysia, Philippines, Pakistan, South Korea, Sri
Lanka, Taiwan, Thailand and Vietnam
EUROPE
Czech
Republic, Greece, Hungary, Poland, Romania, Russia and Turkey
MIDDLE
EAST
Kuwait,
Qatar, Saudi Arabia and the United Arab Emirates
|
|
|
|
|
| |
92 |
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matthewsasia.com | 800.789.ASIA |
|
| |
|
T |
|
Matthews
may also consider factors such as: |
– |
|
Management: Does management exhibit
integrity? Is there a strong corporate governance culture? What is the
business strategy? Does management exhibit the ability to adapt to change
and handle risk appropriately? |
– |
|
Evolution of Industry: Can company
growth be sustained as the industry and environment
evolve? |
T |
|
Following
this fundamental analysis, Matthews seeks to invest in companies and
securities that it believes are positioned to help a Fund achieve its
investment objective. |
Matthews
Focuses on Individual Companies
T |
|
Matthews
develops views about the course of growth in a region over the long
term. |
T |
|
Matthews
then seeks to combine these beliefs with its analysis of individual
companies and their fundamental characteristics. |
T |
|
Matthews
then seeks to invest in companies and securities that it believes are
positioned to help a Fund achieve its investment
objective. |
T |
|
Each
of the Funds may invest in companies of any equity market capitalization
(the number of shares outstanding times the market price per share).
Except with respect to the Matthews Emerging Markets Small Companies Fund
and Matthews China Small Companies Fund, a company’s size (including its
market capitalization) is not a primary consideration for Matthews when it
decides whether to include that company’s securities in one or more of the
Funds. Please note the Matthews Emerging Markets Small Companies Fund and
Matthews China Small Companies Fund invest at least 80% of their assets in
Small Companies, as defined in each respective Fund
Summary. |
In
extreme market conditions, Matthews may sell some or all of a Fund’s securities
and temporarily invest that Fund’s money in U.S. government securities or
money-market instruments backed by U.S. government securities, if it believes it
is in the best interest of Fund shareholders to do so. When a Fund takes a
temporary defensive position, the Fund may not achieve its investment
objective.
|
|
|
|
|
|
|
| |
| |
| |
MATTHEWS’ INVESTMENT APPROACH |
|
|
93 |
|
Risks
of Investing in the Funds
The
main risks associated with investing in the Funds are described below and are in
addition to, or describe further, the risks stated in the Fund Summaries at the
front of this prospectus. Additional information is also included in the Funds’
Statement of Additional Information (“SAI”).
General
Risks
There
is no guarantee that a Fund’s investment objective will be achieved or that the
value of the investments of any Fund will increase. If the value of a Fund’s
investments declines, the net asset value per share (“NAV”) of that Fund will
decline, and investors may lose some or all of the value of their
investments.
Foreign
securities held by the Funds may be traded on days and at times when the
New York Stock Exchange (the “NYSE”) is closed, and the NAVs of the Funds
are therefore not calculated. Accordingly, the NAVs of the Funds may be
significantly affected on days when shareholders are not able to buy or sell
shares of the Funds. For additional information on the calculation of the Funds’
NAVs, see page 118.
Your
investment in the Funds is exposed to different risks, many of which are
described below. Because of these risks, your investment in a Fund should
constitute only a portion of your overall investment portfolio, not all of it.
We recommend that you invest in a Fund only for the long term (typically five
years or longer), so that you can better manage volatility in the Fund’s NAV (as
described below). Investing in regionally concentrated, single-country or small
company funds, such as the Funds, may not be appropriate for all
investors.
Matthews,
as each Fund’s investment adviser, and its affiliates, provide investment advice
to clients other than the Funds that have investment objectives that may be
substantially similar to those of a Fund. While other funds managed by Matthews
may be substantially similar to a Fund, the strategies employed may not be
identical, allowing for tailored approaches to meet each fund’s stated
investment objective. In pursuing each Fund’s investment objective, Matthews may
emphasize distinct investment strategies and portfolio holdings to achieve its
performance goals as compared with other Matthews-advised funds with names,
investment objectives and policies similar to the Fund. As a result, investments
made by a Fund and the results achieved by the Fund at any given time may not be
the same as or similar to those made by such other Matthews-advised
funds.
Risks
Associated with Matthews’ Investment Approach
Matthews
is an active manager, and its investment process does not rely on passive or
index strategies. For this reason, you should not expect that the composition of
the Funds’ portfolios will closely track the composition or weightings of market
indices (including a Fund’s benchmark index) or of the broader markets
generally. As a result, investors should expect that changes in the Funds’ NAVs
and performance (over short and longer periods) will vary from the performance
of such indices and of broader markets. Differences in the performance of the
Funds and any index (or the markets generally) may also result from the Funds’
fair valuation procedures, which the Funds use to value their holdings for
purposes of determining each Fund’s NAV (see page 118).
Principal Risks
Risks
Associated with Developments in Global Credit and Equity Markets
Developments
in global credit and equity markets, such as the credit and valuation problems
experienced by the global capital markets in 2008 and 2009, may adversely and
significantly impact the Funds’ investments. Although market conditions may
start to improve relatively quickly, many difficult conditions may remain for an
extended period of time or may return. Because the scope of these conditions may
be, and in the past have been, expansive, past investment strategies and models
may not be able to identify all significant risks that the Funds may encounter,
or to predict the duration of
There is no guarantee
that your investment in a Fund will increase in value. The value of your
investment in a Fund could go down, meaning you could lose some or all of your
investment.
For additional
information about strategies and risks, see individual Fund descriptions in the
Fund Summary for each Fund and the Funds’ SAI. The SAI is available to you free
of charge. To receive an SAI, please call 800.789.ASIA (2742), visit the Funds’
website at matthewsasia.com, or visit the website of the Securities and Exchange
Commission (the “SEC”) at sec.gov and access the EDGAR database.
|
|
|
|
|
| |
94 |
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matthewsasia.com | 800.789.ASIA |
|
| |
|
these
events. These conditions could prevent the Funds from successfully executing
their investment strategies, result in future declines in the market values of
the investment assets held by the Funds, or require the Funds to dispose of
investments at a loss while such adverse market conditions prevail.
Risks
Associated with Foreign Investments
Investments
in foreign securities may involve greater risks than investing in U.S.
securities. As compared to U.S. companies, foreign issuers generally disclose
less financial and other information publicly and are subject to less stringent
and less uniform accounting, auditing and financial reporting standards. Foreign
countries typically impose less thorough regulations on brokers, dealers, stock
exchanges, corporate insiders and listed companies than does the United States,
and foreign securities markets may be less liquid and more volatile than U.S.
markets. Investments in foreign securities generally involve higher costs than
investments in U.S. securities, including higher transaction and custody costs
as well as additional taxes imposed by foreign governments. In addition,
security trading practices abroad may offer less protection to investors such as
the Funds. Political or social instability, civil unrest, acts of terrorism,
regional economic volatility, and the imposition of sanctions, confiscations,
trade restrictions (including tariffs) and other government restrictions by the
U.S. and/or other governments are other potential risks that could impact an
investment in a foreign security. Settlement of transactions in some foreign
markets may be delayed or may be less frequent than in the United States, which
could affect the liquidity of the Funds’ portfolios.
In
addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the Funds’ investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the United States. Dividends or interest on, or proceeds from the sale
of, foreign securities may be subject to foreign withholding taxes, and special
U.S. tax considerations may apply. Moreover, foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Many
foreign countries are heavily dependent upon exports and, accordingly, have been
and may continue to be adversely affected by trade barriers, managed adjustments
in relative
currency
values, and other protectionist measures imposed or negotiated by the United
States and other countries with which they trade. These economies also have been
and may continue to be negatively impacted by economic conditions in the United
States and other trading partners, which can lower the demand for goods produced
in those countries.
Currency
Risk
When
a Fund conducts securities transactions in a foreign currency, there is the risk
of the value of the foreign currency increasing or decreasing against the value
of the U.S. dollar. The value of an investment denominated in a foreign
currency will decline in U.S. dollar terms if that currency weakens against the
U.S. dollar. While each Fund is permitted to hedge currency risks, Matthews does
not anticipate doing so at this time.
Additionally,
Asian and emerging market countries may utilize formal or informal
currency-exchange controls or “capital controls.” Capital controls may impose
restrictions on the Fund’s ability to repatriate investments or income. Such
controls may also affect the value of a Fund’s holdings.
Emerging
and Frontier Market Country Risk
Investing
in emerging and frontier market countries involves substantial risk due to,
among other factors, different accounting standards; thinner trading markets as
compared to those in developed countries; the possibility of currency transfer
restrictions; and the risk of expropriation, nationalization or other adverse
political, economic or social developments. Political and economic structures in
some emerging and frontier market countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristics of developed countries. Some of
these countries have in the past failed to recognize private property rights and
have nationalized or expropriated the assets of private companies.
Among
other risks of investing in less developed markets are the variable quality and
reliability of financial information and related audits of companies. In some
cases, financial information and related audits can be unreliable and not
subject to verification. Auditing firms in some of these markets are not subject
to independent inspection or oversight of audit quality. This can result in
investment decisions being made based on flawed or misleading information.
Additionally, investors may have substantial difficulties bringing legal actions
to enforce or protect investors’ rights, which can increase the risks of
loss.
The
securities markets of emerging and frontier market countries can be
substantially smaller, less developed, less liquid and more volatile than the
major securities markets in the United States and other developed nations. The
limited size of many securities markets in emerging and frontier market
countries and limited trading volume in issuers compared to the volume in U.S.
securities or securities of issuers in other developed countries could cause
prices to be erratic for reasons other than factors that affect the quality of
the securities. In
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addition,
emerging and frontier market countries’ exchanges and broker-dealers are
generally subject to less regulation than their counterparts in developed
countries. Brokerage commissions, custodial expenses and other transaction costs
are generally higher in emerging and frontier market countries than in developed
countries. As a result, funds that invest in emerging and frontier market
countries generally have operating expenses that are higher than funds investing
in other securities markets. Securities markets in emerging markets may also be
susceptible to manipulation or other fraudulent trade practices, which could
disrupt the functioning of these markets or adversely affect the value of
investments traded in these markets, including investments of the Funds. The
Funds’ rights with respect to their investments in emerging markets will
generally be governed by local law, which may make it difficult or impossible
for the Funds to pursue legal remedies or to obtain and enforce judgments in
local courts.
Many
emerging and frontier market countries have a greater degree of economic,
political and social instability than the United States and other developed
countries. Such social, political and economic instability could disrupt the
financial markets in which the Funds invest and adversely affect the value of
their investment portfolios. In addition, currencies of emerging and frontier
market countries experience devaluations relative to the U.S. dollar from time
to time. A devaluation of the currency in which investment portfolio securities
are denominated will negatively impact the value of those securities in U.S.
dollar terms. Emerging and frontier market countries have and may in the future
impose foreign currency controls and repatriation controls.
The
emerging and frontier market countries in which the Funds invest may become
subject to economic and trade sanctions or embargoes imposed by the United
States, foreign governments or the United Nations. These sanctions or other
actions could result in the devaluation of a country’s currency or a decline in
the value and liquidity of securities of issuers in that country. In addition,
sanctions could result in a freeze on an issuer’s securities, which would
prevent the Funds from selling securities they hold or alternatively could force
the Funds to sell securities they hold at a time Matthews otherwise believes to
be unattractive. The value of the securities issued by companies that operate
in, or have dealings with, these countries may be negatively impacted by any
such sanction or embargo and may reduce Fund returns.
Frontier
markets are a subset of emerging markets and generally have smaller economies
and even less mature capital markets than emerging markets. As a result, the
risks of investing in emerging market countries are magnified in frontier market
countries. Frontier markets are more susceptible to having abrupt changes in
currency values, less mature markets and settlement practices, and lower trading
volumes that could lead to greater price volatility and illiquidity.
Volatility
Risk
The
smaller size and lower levels of liquidity in emerging markets, as well as other
factors, may result in changes in the
prices
of Asian and emerging market securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of a
Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors (typically five years or
longer).
Geopolitical
Events Risk
The
increasing interconnectivity between global economies and financial markets
increases the likelihood that events or conditions in one region or financial
market may adversely impact issuers in a different country, region or financial
market. Securities in a Fund’s portfolio may underperform due to inflation (or
expectations for inflation), interest rates, global demand for particular
products or resources, natural disasters, climate change and climate-related
events, pandemics, epidemics, terrorism, regulatory events and governmental or
quasi-governmental actions. The occurrence of global events similar to those in
recent years, such as terrorist attacks around the world, territorial invasions
and global economic sanctions implemented in response, natural disasters, social
and political discord or debt crises and downgrades, among others, may result in
market volatility and may have long term effects on the global financial
markets. It is difficult to predict when similar events affecting the global
financial markets may occur, the effects that such events may have and the
duration of those effects. Any such event(s) could have a significant adverse
impact on the value and risk profile of a Fund’s portfolio. Global pandemics
such as the novel coronavirus (COVID‑19) can have severe negative impacts, on
markets worldwide. It is not known how long such impacts, or any future impacts
of new public health crises will or would last, but there could be a prolonged
period of global economic slowdown, which may impact your investment in the
Funds, Therefore, the Funds could lose money over short periods due to
short-term market movements and over longer periods during more prolonged market
downturns. During a general market downturn, multiple asset classes may be
negatively affected. Changes in market conditions and interest rates can have
the same impact on all types of securities and instruments. In times of severe
market disruptions, you could lose your entire investment.
Equity
Securities Risk
Equity
securities may include common stock, preferred stock or other securities
representing an ownership interest or the right to acquire an ownership interest
in an issuer. Equity risk is the risk that stocks and other equity securities
generally fluctuate in value more than bonds and may decline in value over short
or extended periods. The value of stocks and other equity securities may be
affected by changes in an issuer’s financial condition, factors that affect a
particular industry or industries, such as labor shortages or an increase in
production costs and competitive conditions within an industry, or as a result
of changes in overall market, economic and political conditions that are not
specifically related to a company or industry, such as real or perceived adverse
economic
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conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or generally adverse investor sentiment.
Preferred
Stock Risk
Preferred
stock normally pays dividends at a specified rate and has precedence over common
stock in the event the issuer is liquidated or declares bankruptcy. However, in
the event a company is liquidated or declares bankruptcy, the claims of owners
of bonds take precedence over the claims of those who own preferred and common
stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to decline. Preferred stock may
have mandatory sinking fund provisions, as well as provisions allowing the stock
to be called or redeemed, which can limit the benefit of a decline in interest
rates. Preferred stock is subject to many of the risks to which common stock and
debt securities are subject.
Depositary
Receipts Risk
Although
depositary receipts have risks similar to the securities that they represent,
they may also involve higher expenses and may trade at a discount (or premium)
to the underlying security. In addition, depositary receipts may not pass
through voting and other shareholder rights, and may be less liquid than the
underlying securities listed on an exchange.
Convertible
Securities Risk
As
part of their investment strategies, the Funds may invest in convertible
preferred stocks and bonds and debentures of any maturity and quality, including
those that are unrated, or would be below investment grade (referred to as “junk
bonds”) if rated. Convertible securities may, under specific circumstances, be
converted into the common or preferred stock of the issuing company and may be
denominated in U.S. dollars, euros or a local currency. The value of convertible
securities varies with a number of factors, including the value and volatility
of the underlying stock, the level and volatility of interest rates, the passage
of time, dividend policy and other variables.
The
risks of convertible bonds and debentures include repayment risk and interest
rate risk. Repayment risk is the risk that a borrower does not repay the amount
of money that was borrowed (or “principal”) when the bond was issued. This
failure to repay the amount borrowed is called a “default” and could result in
losses for a Fund. Interest rate risk is the risk that market rates of interest
may increase over the rate paid by a bond held by a Fund. When interest rates
increase, the market value of a bond paying a lower rate generally will
decrease. If a Fund were to sell such a bond, the Fund might receive less than
it originally paid for it.
Investing
in a convertible security denominated in a currency different from that of the
security into which it is convertible may expose the Fund to currency risk as
well as risks associated with the level and volatility of the foreign exchange
rate between the security’s currency and the underlying
stock’s
currency. Convertible securities are subject to greater liquidity risk than many
other securities and may trade less frequently and in lower volumes, or have
periods of less frequent trading. Lower trading volume may also make it more
difficult for the Funds to value such securities.
Dividend-Paying
Securities Risk
Each
of the Funds, including the Matthews Asian Growth and Income Fund, Matthews Asia
Dividend Fund and Matthews China Dividend Fund (each of which seek to provide
current income), may invest in dividend-paying equity securities.
There
can be no guarantee that companies that have historically paid dividends will
continue to pay them or pay them at the current rates in the future. A reduction
or discontinuation of dividend payments may have a negative impact on the value
of a Fund’s holdings in these companies. The prices of dividend-paying equity
securities (and particularly of those issued by Asian and emerging market
companies) can be highly volatile. Investors should not assume that a Fund’s
investments in these securities will necessarily reduce the volatility of the
Fund’s NAV or provide “protection,” compared to other types of equity
securities, when markets perform poorly. In addition, dividend-paying equity
securities, in particular those whose market price is closely related to their
yield, may exhibit greater sensitivity to interest rate changes. During periods
of rising interest rates, such securities may decline. A Fund’s investment in
such securities may also limit its potential for appreciation during a broad
market advance.
The
inclusion of Passive Foreign Investment Companies (“PFICs”) in a portfolio can
result in higher variability—both negatively and positively—in the income
distribution.
Risks
Associated with Smaller and Medium‑Size Companies
The
Matthews Emerging Markets Small Companies Fund and Matthews China Small
Companies Fund invest in securities of smaller companies, and each of the other
Funds may invest in securities of smaller and medium‑size companies. Smaller and
medium‑size companies may offer substantial opportunities for capital growth;
they also involve substantial risks, and investments in smaller and medium‑size
companies may be considered speculative. Such companies often have limited
product lines, markets or financial resources. Smaller and medium‑size companies
may be more dependent on one or few key persons and may lack depth of
management. Larger portions of their stock may be held by a small number of
investors (including founders and management) than is typical of larger
companies. Credit may be more difficult to obtain (and on less advantageous
terms) than for larger companies. As a result, the influence of creditors (and
the impact of financial or operating restrictions associated with debt
financing) may be greater on such companies than that on larger or more
established companies. Both of these factors may dilute the holdings, or
otherwise adversely impact the rights of a Fund and smaller shareholders in
corporate governance or corporate actions. Smaller and medium‑size companies
also may be unable to generate funds necessary for growth or development, or may
be developing or marketing new
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products
or services for which markets are not yet established and may never become
established. The Funds may have more difficulty obtaining information about
smaller and medium‑size companies, making it more difficult to evaluate the
impact of market, economic, regulatory and other factors on them. Informational
difficulties may also make valuing or disposing of their securities more
difficult than it would for larger companies. Securities of smaller and
medium‑size companies may trade less frequently and in lesser volume than more
widely held securities, and securities of smaller and medium‑size companies
generally are subject to more abrupt or erratic price movements than more widely
held or larger, more established companies or the market indices in general.
Among the reasons for the greater price volatility are the less certain growth
prospects of smaller and medium‑size companies, the lower degree of liquidity in
the markets for securities of such companies, and the greater sensitivity of
such companies to changing economic conditions. For these and other reasons, the
value of securities of smaller and medium‑size companies may react differently
to political, market and economic developments than the markets as a whole or
than other types of stocks.
High
Portfolio Turnover Risk
Certain
Funds’ investment strategies may result in high portfolio turnover rates.
Generally, portfolio turnover over 100% is considered high. High portfolio
turnover may increase a Fund’s brokerage commission costs. The performance of a
Fund could be negatively impacted by the increased brokerage commission cost
incurred by that Fund. Rapid portfolio turnover also exposes shareholders to a
higher current realization of short-term capital gains, distributions of which
would generally be taxed to shareholders as ordinary income and thus cause
shareholders to pay higher taxes.
Certain
Risks of Fixed-Income Securities
The
Matthews Asian Growth and Income Fund and Matthews Emerging Markets Sustainable
Future Fund may invest in fixed-income securities (including high-yield
securities) as a principal strategy. The other Funds may invest in fixed-income
securities to a lesser extent.
The
prices of fixed-income securities respond to economic developments, particularly
interest rate changes, as well as to changes in an issuer’s credit rating or
market perceptions about the creditworthiness of an issuer. Generally
fixed-income securities decrease in value if interest rates rise and increase in
value if interest rates fall, and longer-term and lower rated securities are
more volatile than shorter-term and higher rated securities.
Credit
Risk
Credit
risk refers to the risk that an issuer may default in the payment of principal
and/or interest on an instrument. Financial strength and solvency of an issuer
are the primary factors influencing credit risk. In addition, lack or inadequacy
of collateral or credit enhancement for a debt instrument may affect its credit
risk. Credit risk may change over the life of an
investment
and securities that are rated by rating agencies are often reviewed periodically
and may be subject to downgrade.
Interest
Rate Risk
Interest
rate risk refers to the risks associated with market changes in interest rates.
Interest rate changes may affect the value of a debt instrument indirectly
(especially in the case of fixed-rate securities) and directly (especially in
the case of instruments whose rates are adjustable). In general, rising interest
rates will negatively impact the price of a fixed rate debt instrument and
falling interest rates will have a positive effect on price. Adjustable rate
instruments also react to interest rate changes in a similar manner although
generally to a lesser degree (depending, however, on the characteristics of the
reset terms, including, without limitation, the index chosen, frequency of reset
and reset caps or floors). Interest rate sensitivity is generally more
pronounced and less predictable in instruments with uncertain payment or
prepayment schedules.
High
Yield Securities Risk
Securities
rated lower than Baa by Moody’s Investors Service, Inc. (“Moody’s”), or
equivalently rated by S&P Global (“S&P”) or Fitch Ratings, Inc.
(“Fitch”), and unrated securities of similar credit quality, are referred to as
“high yield securities” or “junk bonds.” Investing in these securities involves
special risks in addition to the risks associated with investments in
higher-rated fixed-income securities. High yield securities typically entail
greater potential price volatility, entail greater levels of credit and
repayment risks and may be less liquid than higher- rated securities.
High
yield securities are considered predominantly speculative with respect to the
issuer’s continuing ability to meet principal and interest payments. They may
also be more susceptible to adverse economic and competitive industry conditions
than higher-rated securities. An economic downturn or a period of rising
interest rates could adversely affect the market for these securities and reduce
a Fund’s ability to sell these securities (liquidity risk). Issuers of
securities in default may fail to resume principal and interest payments, in
which case a Fund may lose its entire investment. Funds that invest in junk
bonds may also be subject to greater levels of credit and liquidity risk than
funds that do not invest in such securities.
Growth
Stock Risk
Growth
stocks may be more volatile than other stocks because they are more sensitive to
investor perceptions of the issuing company’s growth potential. Growth stocks
may go in and out of favor over time and may perform differently than the market
as a whole.
Sustainable
Investing Risk
A
Fund’s consideration of non-financial information, such as sustainability and
governance factors, may reduce or increase its exposure to certain issuers,
industries, sectors, regions or countries or cause the Fund to forego certain
investment opportunities which may lower the performance of the Fund. A Fund’s
consideration of such factors as part of its investment
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process
may make it perform differently from a fund that relies solely or primarily on
financial metrics. Sustainable investing is qualitative and subjective by
nature, and there is no guarantee that the criteria used by Matthews or any
judgment exercised by Matthews will reflect the opinions of any particular
investor. In addition, Matthews may utilize third party data to evaluate
sustainability and governance factors which may be incomplete or inaccurate and
cause Matthews to incorrectly assess such characteristics of a security or
issuer. (See additional risk disclosure for the Matthews Emerging Markets
Sustainable Future Fund on page 8).
Risks
Associated with Investing in Innovative Companies
The
standards for assessing innovative companies in which the Matthews Asia
Innovators Fund invests tend to have many subjective characteristics, can be
difficult to analyze, and frequently involve a balancing of a company’s business
plans, objectives, actual conduct and other factors. The definition of
innovators can vary over different periods and can evolve over time. They may
also be difficult to apply consistently across regions, countries, industries or
sectors.
Risks
of Investing in Science and Technology Companies
Each
of the Funds may, and the Matthews Asia Innovators Fund will, invest in
securities of science and technology companies. Such companies may face special
risks because their products or services may not prove to be commercially
successful and may be affected by rapid product changes and associated
developments. These companies also face the risks that new services, equipment
or technologies will not be accepted by consumers or businesses or will become
rapidly obsolete. Many science and technology companies have limited operating
histories and experience in managing adverse market conditions and are also
strongly affected by worldwide scientific or technological developments and
global demand cycles. Such companies are also often subject to governmental
regulation and greater competitive pressures, such as new market entrants,
aggressive pricing and competition for market share, and potential for falling
profit margins. The possible loss or impairment of intellectual property rights
may also negatively impact science and technology companies. As a result, the
price movements of science and technology company stocks can be abrupt or
erratic (especially over the short term), and historically have been more
volatile than stocks of other types of companies. These factors may also affect
the profitability of science and technology companies and therefore the value of
their securities. Accordingly, the NAV of a Fund may be more volatile,
especially over the short term, as a result of such Fund’s investments in
science and technology companies. These risks are especially important when
considering an investment in the Matthews Asia Innovators Fund, which focuses on
the science and technology sectors. The Matthews Asia Innovators Fund is less
diversified than stock funds investing in a broader range of sectors and,
therefore, could experience significant volatility, and the movements in its NAV
may follow the science and technology sectors, as opposed to the general
movement of the economies
of
the countries where the companies are located under certain circumstances.
By
focusing on the science and technology industries, the Matthews Asia Innovators
Fund carries much greater risks of adverse developments and price movements in
such industries than a fund that invests in a wider variety of industries.
Because the Matthews Asia Innovators Fund concentrates in a group of industries,
there is also the risk that it will perform poorly during a slump in demand for
securities of companies in such industries.
Sector
Concentration Risk
From
time to time as a result of the implementation of a Fund’s investment
strategies, a Fund may invest a significant portion of its assets in a
particular sector. To the extent that a Fund emphasizes investments in a
particular sector, the Fund will be subject to a greater degree to the risks
particular to that sector. Market conditions, interest rates, and economic,
regulatory, or financial developments could significantly affect a single
sector. By focusing its investments in a particular sector, a Fund may face more
risks than if it were diversified broadly over numerous sectors.
Financial
Sector Risk
Certain
of the Funds may invest a significant portion of their assets in the financial
sector, and therefore the performance of those Funds could be negatively
impacted by events affecting this sector. Companies in the financial sector are
subject to extensive governmental regulation which may limit both the amounts
and types of loans and other financial commitments they can make, the interest
rates and fees they can charge, the scope of their activities, the prices they
can charge and the amount of capital they must maintain. Profitability is
largely dependent on the availability and cost of capital funds and can
fluctuate significantly when interest rates change or due to increased
competition. In addition, deterioration of the credit markets generally may
cause an adverse impact on a broad range of markets, including U.S. and
international credit and interbank money markets generally, thereby affecting a
wide range of financial institutions and markets. Certain events in the
financial sector may cause an unusually high degree of volatility in the
financial markets, both domestic and foreign, and cause certain financial
companies to incur large losses. Securities of financial companies may
experience a dramatic decline in value when such companies experience
substantial declines in the valuations of their assets, take actions to raise
capital (such as the issuance of debt or equity securities), or cease
operations. Credit losses resulting from financial difficulties of borrowers and
financial losses asso- ciated with investment activities can negatively impact
the sector. Adverse economic, business or political developments affecting real
estate could have a major effect on the value of real estate securities (which
include real estate investment trusts (REITs)). Declining real estate values
could adversely affect financial institutions engaged in mortgage finance or
other lending or investing activities directly or indirectly connected to the
value of real estate.
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Industrial
Sector Risk
Certain
of the Funds may invest a significant portion of their assets in the industrial
sector, and therefore the performance of those Funds could be negatively
impacted by events affecting this sector. Industrial companies are affected by
supply and demand both for their specific product or service and for industrial
sector products in general. Government regulation, world events, exchange rates
and economic conditions, technological developments and liabilities for
environmental damage and general civil liabilities will likewise affect the
performance of these companies.
Consumer
Discretionary Sector Risk
Certain
of the Funds may invest a significant portion of their assets in the consumer
discretionary sector, and therefore the performance of those Funds could be
negatively impacted by events affecting this sector. The success of consumer
product manufacturers and retailers is tied closely to the performance of the
overall local and international economies, interest rates, competition and
consumer confidence. Success of companies in the consumer discretionary sector
depends heavily on disposable household income and consumer spending. Changes in
demographics and consumer tastes can also affect the demand for, and success of,
consumer products and services in the marketplace.
Health
Care Sector Risk
Certain
of the Funds may invest a significant portion of their assets in the health care
sector, and therefore the performance of those Funds could be negatively
impacted by events affecting this sector. Companies in the health care sector
may be affected by various factors, including extensive government regulations,
heavy dependence on patent protection, pricing pressure, increased cost of
medical products and services, and product liability claims. Health care
companies may be thinly capitalized and may be susceptible to product
obsolescence.
Information
Technology Sector Risk
Certain
of the Funds may invest a significant portion of their assets in the information
technology sector, and therefore the performance of those Funds could be
negatively impacted by events affecting this sector. Information technology
companies may be significantly affected by aggressive pricing as a result of
intense competition and by rapid product obsolescence due to rapid development
of technological innovations and frequent new product introduction. Other
factors, such as short product cycle, possible loss or impairment of
intellectual property rights, and changes in government regulations, may also
adversely impact information technology companies.
Active
Management Risk
The
Fund is actively managed by Matthews. There is the risk that Matthews may select
securities that underperform the relevant stock market(s), the Fund’s benchmark
index or other funds with similar investment objectives and investment
strategies.
Underlying
ETF Risk
Each
of the Matthews Emerging Markets Equity Fund, Matthews Emerging Markets
Sustainable Future Fund, Matthews Pacific Tiger Fund, Matthews Asia Innovators
Fund and Matthews China Fund may invest in shares of an ETF that is a series of
the Trust with a substantially similar investment strategy to the applicable
Fund. A Fund that invests in an ETF is subject to additional risks that do not
apply to conventional mutual funds, including the risks that the market price of
the ETF’s shares may trade at a discount to its net asset value, an active
secondary trading market may not develop or be maintained, or trading may be
halted by the exchange in which the ETFs trade, which may impact the Fund’s
ability to sell its shares of an ETF.
Cybersecurity
Risk
Information
and technology systems relied upon by the Funds, Matthews, the Funds’ service
providers (including, but not limited to, Fund accountants, custodians, transfer
agents, administrators, distributors and other financial intermediaries) and/or
the issuers of securities in which a Fund invests may be vulnerable to damage or
interruption from computer viruses, network failures, computer and
telecommunication failures, infiltration by unauthorized persons, security
breaches, usage errors, power outages and catastrophic events such as fires,
tornadoes, floods, hurricanes and earthquakes. Although Matthews has implemented
measures to manage risks relating to these types of events, if these systems are
compromised, become inoperable for extended periods of time or cease to function
properly, significant investment may be required to fix or replace them. The
failure of these systems and/or of disaster recovery plans could cause
significant interruptions in the operations of the Funds, Matthews, the Funds’
service providers and/or issuers of securities in which a Fund invests and may
result in a failure to maintain the security, confidentiality or privacy of
sensitive data, including personal information relating to investors (and the
beneficial owners of investors). Such a failure could also harm the reputation
of the Funds, Matthews, the Funds’ service providers and/or issuers of
securities in which a Fund invests, subject such entities and their respective
affiliates to legal claims or otherwise affect their business and financial
performance.
Asia
Pacific Region—Regional and Country Risks
In
addition to the risks discussed above and elsewhere in this prospectus, there
are specific risks associated with investing in the Asia Pacific region,
including the risk of severe economic, political or military disruption. The
Asia Pacific region comprises countries in all stages of economic development.
Some Asia Pacific economies may experience overextension of credit, currency
devaluations and restrictions, rising unemployment, high inflation,
underdeveloped financial services sectors, heavy reliance on international trade
and prolonged economic recessions. Deflationary factors could also reemerge in
certain Asian markets, the potential effects of which are difficult to forecast.
While certain Asian governments will have the ability to offset deflationary
conditions through fiscal or budgetary measures, others will lack
the
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capacity
to do so. Many Asia Pacific countries are dependent on foreign supplies of
energy. A significant increase in energy prices could have an adverse impact on
these economies and the region as a whole. In addition, some countries in the
region are competing to claim or develop regional supplies of energy or other
natural resources. This competition could lead to economic, political or
military instability or disruption. Any military action or other instability
could adversely impact the ability of a Fund to achieve its investment
objective.
The
economies of many Asia Pacific countries (especially those whose development has
been export-driven) are dependent on the economies of the United States, Europe
and other Asian countries, and, as seen in the developments in global credit and
equity markets in 2008 and 2009, events in any of these economies could
negatively impact the economies of Asia Pacific countries.
Currency
fluctuations, devaluations and trading restrictions in any one country can have
a significant effect on the entire Asia Pacific region. Increased political and
social instability in any Asia Pacific country could cause further economic and
market uncertainty in the region, or result in significant downturns and
volatility in the economies of Asia Pacific countries. As an example, in the
late 1990s, the economies in the Asian region suffered significant downturns and
increased volatility in their financial markets.
The
development of Asia Pacific economies, and particularly those of China, Japan
and South Korea, may also be affected by political, military, economic and other
factors related to North Korea. Negotiations to ease tensions and resolve the
political division of the Korean peninsula have been carried on from time to
time producing sporadic and inconsistent results. There have also been efforts
to increase economic, cultural and humanitarian contacts among North Korea,
South Korea, Japan and other nations. There can be no assurance that such
negotiations or efforts will continue or will ease tensions in the region. Any
military action or other instability could adversely impact the ability of a
Fund to achieve its investment objective. Lack of available information
regarding North Korea is also a significant risk factor.
Some
companies in the region may have less established shareholder governance and
disclosure standards than in the U.S. Some companies are controlled by
family and financial institutional investors whose investment decisions may be
hard to predict based on standard U.S.-based equity analysis. Consequently,
investments may be vulnerable to unfavorable decisions by the management or
shareholders. Corporate protectionism (e.g., the adoption of poison pills and
restrictions on shareholders seeking to influence management) appears to be
increasing, which could adversely impact the value of affected companies. Many
Asian countries are considered emerging or frontier markets (newer or less
developed emerging markets are also sometimes referred to as frontier markets),
and the governments of these countries may be more unstable and more likely to
impose controls on market prices (including, for example, limitations on daily
price
movements),
which may negatively impact a Fund’s ability to acquire or dispose of a position
in a timely manner. Emerging market countries may also impose capital controls,
nationalize a company or industry, place restrictions on foreign ownership and
on withdrawing sale proceeds of securities from the country, and/or impose
punitive taxes that could adversely affect the prices of securities.
Additionally, there may be less publicly available information about companies
in many Asian countries, and the stock exchanges and brokerage industries in
many Asian countries typically do not have the level of government oversight as
do those in the United States. Securities markets of many Asian countries
are also less mature, substantially smaller, less liquid and more volatile than
securities markets in the U.S., and as a result, there may be increased
settlement risks for transactions in local securities.
Economies
in this region may also be more susceptible to natural disasters (including
earthquakes and tsunamis), or adverse changes in climate or weather. The risks
of such phenomena and resulting social, political, economic and environmental
damage (including nuclear pollution) cannot be quantified. These events can
exacerbate market volatility as well as impair economic activity, which can have
both short-and immediate-term effects on the valuations of the companies and
issuers in which a Fund invests. Economies in which agriculture occupies a
prominent position, and countries with limited natural resources (such as oil
and natural gas), may be especially vulnerable to natural disasters and climatic
changes.
There
are specific risks associated with a Fund’s concentration of its investments in
a country or group of countries within the Asia Pacific region. Provided below
are risks of investing in various countries within the Asia Pacific region and
are principal risks of a Fund to the extent such Fund’s portfolio is
concentrated in such country or countries.
Risks
Associated with China, Hong Kong and Macau
China. The Chinese government exercises
significant control over China’s economy through its industrial policies (e.g.,
allocation of resources and other preferential treatment), monetary policy,
management of currency exchange rates, and management of the payment of foreign
currency-denominated obligations. For over three decades, the Chinese government
has been reforming economic and market practices, providing a larger sphere for
private ownership of property, and interfering less with market forces. While
currently contributing to growth and prosperity, these reforms could be altered
or discontinued at any time. Changes in these policies could adversely impact
affected industries or companies in China. In addition, the Chinese government
may actively attempt to influence the operation of Chinese markets through
currency controls, direct investments, limitations on specific types of
transactions (such as short selling), limiting or prohibiting investors
(including foreign institutional investors) from selling holdings in Chinese
companies, or other similar actions. Such actions could adversely impact the
Funds’ ability to achieve their investment objectives and could result in the
Funds limiting or suspending
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shareholder
redemptions privileges (as legally permitted, see Selling (Redeeming) Shares,
page 122).
Military
conflicts, either in response to internal social unrest or conflicts with other
countries, could disrupt the economic
development
in China. China’s long-running conflict over Taiwan remains unresolved and
political tensions with Hong Kong have recently increased, while territorial
border disputes persist with several neighboring countries. While economic
relations with Japan have deepened, the political relationship between the two
countries has become more strained in recent years, which could weaken economic
ties. There is also a greater risk involved in currency fluctuations, currency
convertibility, interest rate fluctuations and higher rates of inflation. The
Chinese government also sometimes takes actions intended to increase or decrease
the values of Chinese stocks. China’s economy, particularly its export-oriented
sectors may be adversely impacted by trade or political disputes with China’s
major trading partners, including the U.S.
U.S.
governmental orders and sanctions with respect to Chinese military-related
companies not only restrict the companies eligible for investment but also may
apply to existing holdings and thus force the Funds to sell those holdings at a
time Matthews otherwise finds unattractive. In addition, any perceived actions
by China to assist Russia in evading sanctions imposed as a result of the
Ukraine invasion may result in new or expanded sanctions against China and
Chinese-related companies. New or existing sanctions may be complex and
difficult to interpret and could adversely affect the liquidity and value of the
Funds’ holdings.
In
addition, as China’s consumer class continues to grow, China’s domestically
oriented industries may be especially sensitive to changes in government policy
and investment cycles. Social cohesion in China is being tested by growing
income inequality and larger scale environmental degradation. Social instability
could threaten China’s political system and economic growth, which could
decrease the value of the Funds’ investments.
After
many years of steady growth, the growth rate of China’s economy slowed prior to
2020, including the once rapidly growing Chinese real estate market, and left
local governments with high debts with few viable means to raise revenue,
especially with the fall in demand for housing. Although these trends reversed
and demand grew within the real estate market during China’s initial recovery
from the COVID‑19 pandemic, it remains unclear whether these trends will
continue given global economic uncertainties caused by the pandemic and trade
relations and fears that the Chinese real estate market may be overheating. Any
further stresses in the Chinese real estate sector could adversely affect the
value of a Fund’s holdings.
Accounting,
auditing, financial, and other reporting standards, practices and disclosure
requirements in China are different, sometimes in fundamental ways, from those
in the U.S. and certain Western European countries. Although
the
Chinese
government adopted a new set of Accounting Standards for Business Enterprises
effective January 1, 2007, which are similar to the International Financial
Reporting Standards, the accounting practices in China continue to be frequently
criticized and challenged. In addition, China does not allow the Public Company
Accounting Oversight Board to inspect the work that auditors perform in China
for Chinese companies in which the Funds may invest. That inspection
organization conducts on‑going reviews of audits by U.S. accounting firms. As a
result, financial reporting by Chinese companies do not have the same degree of
transparency and regulatory oversight as reporting by companies in the
U.S. Because of Chinese governmental disagreements with the Public Company
Accounting Oversight Board concerning the inspection of audits of U.S.-listed
Chinese companies, it is possible those companies could be delisted from trading
in the U.S. if those disagreements are not resolved. Delisting would likely
adversely affect the liquidity and values of those shares.
Hong Kong. Hong Kong has been governed by the
Basic Law, which provides a high degree of autonomy from China in certain
matters until 2047. However, as demonstrated by Hong Kong protests in recent
years over political, economic, and legal freedoms, and the Chinese government’s
response to them, considerable political uncertainty continues to exist within
Hong Kong. Due to the interconnected nature of the Hong Kong and Chinese
economies, this instability in Hong Kong may cause uncertainty in the Hong Kong
and Chinese markets. If China were to exert its authority so as to alter the
economic, political or legal structures or the existing social policy of Hong
Kong, investor and business confidence in Hong Kong could be negatively
affected, which in turn could negatively affect markets and business performance
and have an adverse effect on the Funds’ investments. In addition, the
Hong Kong dollar trades within a fixed trading band rate to (or is “pegged”
to) the U.S. dollar. This fixed exchange rate has contributed to the growth and
stability of the Hong Kong economy. However, some market participants have
questioned the continued viability of the currency peg. It is uncertain what
effect any discontinuance of the currency peg and the establishment of an
alternative exchange rate system would have on capital markets generally and the
Hong Kong economy.
Macau. Although Macau is a Special
Administrative Region (SAR) of China, it maintains a high degree of autonomy
from China in economic matters. Macau’s economy is heavily dependent on the
gaming sector and tourism industries, and its exports are dominated by textiles
and apparel. Accordingly, Macau’s growth and development are highly dependent
upon external economic conditions, particularly those in China.
Variable Interest Entities. Certain of the
Funds (currently including the Matthews Asia Growth Fund, Matthews Asia
Innovators Fund and Matthews China Fund) invest a substantial portion of their
assets, and the other Funds may invest to a lesser extent, in certain operating
companies in China through legal structures known as variable interest entities
(“VIEs”). In China, ownership of companies in certain sectors
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by
foreign individuals and entities (including U.S. persons and entities such as
the Funds) is prohibited. In order to facilitate foreign investment in these
businesses, many Chinese companies have created VIEs. In such an arrangement, a
China-based operating company typically establishes an offshore shell company in
another jurisdiction, such as the Cayman Islands. That shell company enters into
service and other contracts with the China-based operating company, then issues
shares on a foreign exchange, such as the New York Stock Exchange. Foreign
investors hold stock in the shell company rather than directly in the
China-based operating company. This arrangement allows U.S. investors to obtain
economic exposure to the China-based company through contractual means rather
than through formal equity ownership.
VIEs
are a longstanding industry practice and well known to officials and regulators
in China; however, VIEs are not formally recognized under Chinese law. Recently,
the government of China provided new guidance to and placed restrictions on
China-based companies raising capital offshore, including through VIE
structures. Investors face uncertainty about future actions by the government of
China that could significantly affect an operating company’s financial
performance and the enforceability of the shell company’s contractual
arrangements. It is uncertain whether Chinese officials or regulators will
withdraw their implicit acceptance of the VIE structure, or whether any new
laws, rules or regulations relating to VIE structures will be adopted or, if
adopted, what impact they would have on the interests of foreign shareholders.
Under extreme circumstances, China might prohibit the existence of VIEs, or
sever their ability to transmit economic and governance rights to foreign
individuals and entities; if so, the market value of the Funds’ associated
portfolio holdings would likely suffer significant, detrimental, and possibly
permanent effects, which could result in substantial investment losses.
Risks
Associated with Taiwan
The
political reunification of China and Taiwan, over which China continues to claim
sovereignty, is a highly complex issue and is unlikely to be settled in the near
future. Although the relationship between China and Taiwan has been improving,
there is the potential for future political or economic disturbances that may
have an adverse impact on the values of investments in either China or Taiwan,
or make investments in China and Taiwan impractical or impossible. Any
escalation of hostility between China and Taiwan would likely distort Taiwan’s
capital accounts, as well as have a significant adverse impact on the value of
investments in both countries and the region, which could negatively affect the
value and liquidity of a Fund’s investments.
Risks
Associated with Other Asian Countries
India. In India, the government has exercised
and continues to exercise significant influence over many aspects of the
economy. Government actions, bureaucratic obstacles and inconsistent economic
reform within the Indian government have had a significant effect on its economy
and could
adversely
affect market conditions, economic growth and the profitability of private
enterprises in India. Global factors and foreign actions may inhibit the flow of
foreign capital on which India is dependent to sustain its growth. Large
portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of
family-controlled companies may be weaker and less transparent, which increases
the potential for loss and unequal treatment of investors. India experiences
many of the risks associated with developing economies, including relatively low
levels of liquidity, which may result in extreme volatility in the prices of
Indian securities.
Religious,
cultural and military disputes persist in India, and between India and Pakistan
(as well as sectarian groups within each country). The longstanding border
dispute with Pakistan remains unresolved. Terrorists believed to be based in
Pakistan have struck Mumbai (India’s financial capital) in the past, further
damaging relations between the two countries. If the Indian government is unable
to control the violence and disruption associated with these tensions (including
both domestic and external sources of terrorism), the result may be military
conflict, which could destabilize the economy of India. Both India and Pakistan
have tested nuclear arms, and the threat of deployment of such weapons could
hinder development of the Indian economy, and escalating tensions could impact
the broader region, including China.
Indian
securities may be subject to a short-term capital gains tax in India on gains
realized upon disposition of securities lots held less than one year. The Fund
accrues for this potential expense, which reduces its net asset values. For
further information regarding this tax, please see page 126.
Japan. The Japanese yen has shown volatility
over the past two decades and such volatility could affect returns in the
future. The yen may also be affected by currency volatility elsewhere in Asia,
especially Southeast Asia. Depreciation of the yen, and any other currencies in
which the Funds’ securities are denominated, will decrease the value of the
Funds’ holdings. Japan’s economy could be negatively impacted by many factors,
including rising interest rates, tax increases and budget deficits.
In
the longer term, Japan will have to address the effects of an aging population,
such as a shrinking workforce and higher welfare costs. To date, Japan has had
restrictive immigration policies that, combined with other demographic concerns,
appear to be having a negative impact on the economy. Japan’s growth prospects
appear to be dependent on its export capabilities. Japan’s neighbors, in
particular China, have become increasingly important export markets. Despite a
deepening in the economic relationship between Japan and China, the countries’
political relationship has at times been strained in recent years. Should
political tension increase, it could adversely affect the economy, especially
the export sector, and destabilize the region as a whole. Japan also remains
heavily dependent on oil imports, and higher commodity prices could therefore
have a negative impact on the economy. Japan is located in a region
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that
is susceptible to natural disasters, which could also negatively impact the
Japanese economy.
Risks
Associated with Other Regions
Europe
Investing
in Europe involves risks not typically associated with investments in the United
States. A majority of western European countries and a number of eastern
European countries are members of the European Union (“EU”), an
intergovernmental union aimed at developing economic and political coordination
and cooperation among its member states. European countries that are members of
the Economic and Monetary Union of the European Union (“EMU”) are subject to
restrictions on inflation rates, interest rates, deficits, and debt levels. The
EMU sets out different stages and commitments for member states to follow in an
effort to achieve greater coordination of economic, fiscal and monetary
policies. A member state that participates in the third (and last) stage is
permitted to adopt a common currency, the Euro. EMU member states that have
adopted the Euro are referred to as the “Eurozone.” As a condition to adopting
the Euro, EMU member states must also relinquish control of their monetary
policies to the European Central Bank and become subject to certain monetary and
fiscal controls imposed by the EMU. As economic conditions across member states
may vary widely, it is possible that these controls may not adequately address
the needs of all EMU member states from time to time. These controls remove EMU
member states’ flexibility in implementing monetary policy measures to address
regional economic conditions, which may impair their ability to respond to
crises. In addition, efforts by the EU and the EMU to unify economic and
monetary policies may also increase the potential for similarities in the
movements of European markets and reduce the potential investment benefits of
diversification within the region. Conversely, any failure of these efforts may
increase volatility and uncertainty in European financial markets and negatively
affect the value of a Fund’s investments in European issuers.
European
financial markets are vulnerable to volatility and losses arising from concerns
about the potential exit of member countries from the EU and/or the Eurozone
and, in the latter case, the reversion of those countries to their national
currencies. Defaults by EMU member countries on sovereign debt, as well as any
future discussions about exits from the Eurozone, may negatively affect a Fund’s
investments in the defaulting or exiting country, in issuers, both private and
governmental, with direct exposure to that country, and in European issuers
generally. The United Kingdom (“UK”) formally withdrew from the EU on
January 31, 2020 (a process commonly referred to as “Brexit”). While the
long-term consequences of Brexit remain unclear, Brexit has already resulted in
periods of volatility in European and global financial markets. There remains
significant market uncertainty regarding Brexit’s ramifications, and the range
and potential implications of possible political, regulatory, economic and
market outcomes are difficult to predict. The
UK
and Europe may be less stable than they have been in recent years, and
investments in the UK and the EU may be difficult to value, or subject to
greater or more frequent volatility. The UK and European economies and the
broader global economy could be significantly impacted, which could potentially
have an adverse effect on the value of a Fund’s investments. Brexit may also
cause additional member states to contemplate departing from the EU, which would
likely perpetuate political and economic instability in the region and cause
additional market disruption in global financial markets. The consequences of
the UK’s or another country’s exit from the EU and/or Eurozone could also
threaten the stability of the Euro for remaining countries and could negatively
affect the financial markets of other countries in the European region and
beyond.
Emerging Market Countries in Europe. While many
countries in western Europe are considered to have developed markets, many
eastern European countries are less developed. Investments in eastern European
countries, even if denominated in Euros, may involve special risks associated
with investments in emerging markets. Economic and political structures in many
emerging European countries are in the early stages of economic development and
developing rapidly, and these countries may lack the social, political, and
economic stability characteristics of many more developed countries. In
addition, the small size and inexperience of the securities markets in emerging
European countries and the limited volume of trading in securities in those
markets may make a Fund’s investments in these countries illiquid and more
volatile than investments in more developed countries and may make obtaining
prices on portfolio securities from independent sources more difficult than in
other, more developed markets. In the past, certain emerging European countries
have failed to recognize private property rights and at times have nationalized
or expropriated the assets of private companies. There may also be little
financial or accounting information available with respect to companies located
in certain eastern European countries, which, as a result, may make it difficult
to assess the value or prospects of an investment in those
companies.
The
European financial markets have been experiencing volatility and adverse trends
due to concerns about economic downturns or rising government debt levels in
both emerging and developed European countries. These events have adversely
affected currency exchange rates and may continue to significantly affect every
country in Europe, including countries that do not use the Euro. Defaults or
restructurings by governments could have adverse effects on economies, financial
markets, and asset valuations throughout Europe and lead to additional countries
abandoning the Euro or withdrawing from the European Union. During periods of
instability or upheaval, a country’s government may act in a detrimental or
hostile manner toward private enterprise or foreign investment.
In
addition, the ongoing war in Ukraine and the resulting sanctions against Russia
have adversely affected and may
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continue
to adversely affect global energy and financial markets and thus could affect
the value of a Fund’s investments, even beyond any direct exposure a Fund may
have to Russian issuers or the adjoining geographic regions. The extent and
duration of the military action, sanctions and resulting market disruptions are
impossible to predict, but could be substantial.
At
certain times, a Fund may have to “fair value” certain securities by determining
value on the basis of factors other than market quotations. Portfolio holdings
that are valued using techniques other than market quotations, including “fair
valued” securities, may be subject to greater fluctuation than if market
quotations had been used, and there is no assurance that a Fund could sell or
close out a portfolio position for the value established for it at any
time.
Latin
America
Latin
American economies are generally considered emerging markets and have in the
past experienced considerable difficulties, including high inflation rates, high
interest rates, high unemployment, government overspending and political
instability. Similar conditions in the present or future could impact a Fund’s
performance. Because Latin American countries are highly reliant on the
exportation of commodities such as oil and gas, minerals, and metals, their
economies may be significantly impacted by fluctuations in commodity prices and
the global demand for certain commodities. Investments in Latin American
countries may be subject to currency risks, such as restrictions on the flow of
money in and out of a country, extreme volatility relative to the U.S. dollar,
and devaluation, all of which could decrease the value of a Fund’s investments.
Other Latin American investment risks may include inadequate investor
protection, less developed regulatory, accounting, auditing and financial
standards, unfavorable changes in laws or regulations, natural disasters,
corruption and military activity. The governments of many Latin American
countries may also exercise substantial influence over many aspects of the
private sector, and any such exercise could have a significant effect on
companies in which a Fund invests. A relatively small number of Latin American
companies represents a large portion of Latin America’s total market and thus
may be more sensitive to adverse political or economic circumstances and market
movements. Securities of companies in Latin American countries may be subject to
significant price volatility, which could impact a Fund’s performance. During
periods of instability or upheaval, a country’s government may act in a
detrimental or hostile manner toward private enterprise or foreign investment.
In addition, at certain times, a Fund may have to “fair value” certain
securities by assigning a value on the basis of factors other than market
quotations. Portfolio holdings that are valued using techniques other than
market quotations, including “fair valued” securities, may be subject to greater
fluctuation than if market quotations had been used, and there is no assurance
that a Fund could sell or close out a portfolio position for the value
established for it at any time.
Additional Risks
The
following additional or non‑principal risks also apply to investments in the
Funds.
Risks
Associated with Other Asia Pacific and Emerging Market Countries
Australia. The Australian economy is dependent,
in particular, on the price and demand for agricultural products and natural
resources. The United States and China are Australia’s largest trade and
investment partners, which may make the Australian markets sensitive to economic
and financial events in those two countries. Australian markets may also be
susceptible to sustained increases in oil prices as well as weakness in
commodity and labor markets.
Bangladesh. Bangladesh is facing many economic
hurdles, including weak political institutions, poor infrastructure, lack of
privatization of industry and a labor force that has outpaced job growth in the
country. High poverty and inflationary tensions may cause social unrest, which
could weigh negatively on business sentiment and capital investment.
Bangladesh’s developing capital markets rely primarily on domestic investors.
The recent overheating of the stock market and subsequent correction underscored
weakness in capital markets and regulatory oversight. Corruption remains a
serious impediment to investment and economic growth in Bangladesh, and the
country’s legal system makes debt collection unpredictable, dissuading foreign
investment. Bangladesh is geographically located in a part of the world that is
historically prone to natural disasters and is economically sensitive to
environmental events.
Brazil. Brazilian issuers are subject to
possible regulatory and economic interventions by the Brazilian government,
including the imposition of wage and price controls and the limitation of
imports. In addition, the market for Brazilian securities is directly influenced
by the flow of international capital and economic and market conditions of
certain countries, especially other emerging market countries in Central and
South America. The Brazilian economy historically has been exposed to high rates
of inflation and a high level of debt, each of which may reduce and/or prevent
economic growth. Brazil also has suffered from chronic structural public sector
deficits. Such challenges have contributed to a high degree of price volatility
in both the Brazilian equity and foreign currency markets. A rising unemployment
rate could also have the same effect.
Cambodia. Cambodia is experiencing a period of
political stability and relative peace following years of violence under the
Khmer Rouge regime. Despite its recent growth and stability, Cambodia faces
risks from a weak infrastructure (particularly power generation capacity and the
high cost of electric power), a poorly developed education system, inefficient
bureaucracy and charges of government corruption. Very low foreign exchange
reserves make Cambodia vulnerable to sudden capital flight, and the banking
system suffers from a lack of oversight and very high dollarization.
Further,
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destruction
of land-ownership records during the Khmer Rouge regime has resulted in numerous
land disputes, which strain the country’s institutional capacity and threaten
violence and demonstrations.
Indonesia. Indonesia’s political institutions
and democracy have a relatively short history, increasing the risk of political
instability. Indonesia has in the past faced political and militant unrest
within several of its regions, and further unrest could present a risk to the
local economy and stock markets. The country has also experienced acts of
terrorism, predominantly targeted at foreigners, which has had a negative impact
on tourism. Corruption and the perceived lack of a rule of law in dealings with
international companies in the past may have discouraged much needed foreign
direct investment. Should this issue remain, it could negatively impact the
long-term growth of the economy. In addition, many economic development problems
remain, including high unemployment, a developing banking sector, endemic
corruption, inadequate infrastructure, a poor investment climate and unequal
resource distribution among regions.
Laos. Laos is a poor, developing country ruled
by an authoritarian, Communist, one‑party government. It is politically stable,
with political power centralized in the Lao People’s Revolutionary Party. Laos’
economic growth is driven largely by the construction, mining and hydroelectric
sectors. However, the increased development of natural resources could lead to
social imbalances, particularly in light of Laos’ underdeveloped health care and
education systems. Laos is a poorly regulated economy with limited rule of law.
Corruption, patronage and a weak legal system threaten to slow economic
development. Another major risk for Laos is the stability of its banks, which,
despite the significant credit growth since 2009, are under-capitalized and
inadequately supervised.
Malaysia. Malaysia has previously imposed
currency controls and a 10% “exit levy” on profits repatriated by foreign
entities such as the Funds and has limited foreign ownership of Malaysian
companies (which may artificially support the market price of such companies).
The Malaysian capital controls have been changed in significant ways since they
were first adopted without prior warning on September 1, 1998. Malaysia has
also abolished the exit levy. However, there can be no assurance that the
Malaysian capital controls will not be
changed
adversely in the future or that the exit levy will not be re‑established,
possibly to the detriment of the Funds and their shareholders. In addition,
Malaysia is currently exhibiting political instability which could have an
adverse impact on the country’s economy.
Mexico. The Mexican economy is dependent upon
external trade with other economies, specifically with the United States and
certain Latin American countries. As a result, Mexico is dependent on the U.S.
economy, and any change in the price or demand for Mexican exports may have an
adverse impact on the Mexican economy. Recently, Mexico has experienced an
outbreak of violence related to drug trafficking. Incidents involving Mexico’s
security may have an adverse effect on the
Mexican
economy and cause uncertainty in its financial markets. In the past, Mexico has
experienced high interest rates, economic volatility, and high unemployment
rates. In addition, one political party dominated its government until the
elections of 2000, when political reforms were put into place to improve the
transparency of the electoral process. Since then, competition among political
parties has increased, resulting in elections that have been contentious, and
this continued trend could lead to greater market volatility.
Mongolia. Mongolia has experienced political
instability in conjunction with its election cycles. Mongolian governments have
had a history of cycling favorable treatment among China, Russia, Japan, the
United States and Europe and may at any time abruptly change current policies in
a manner adverse to investors. In addition, assets in Mongolia may be subject to
nationalization, requisition or confiscation (whether legitimate or not) by any
government authority or body. Government corruption and inefficiencies are also
a problem. Mongolia’s unstable economic policies and regulations towards foreign
investors threaten to impede necessary growth of production capacity.
Additionally, the Mongolian economy is extremely dependent on the price of
minerals and Chinese demand for Mongolian exports.
Myanmar. Myanmar (formerly Burma) is emerging
from nearly half a century of isolation under military rule and from the gradual
suspension of sanctions imposed for human-rights violations. However, Myanmar
struggles with rampant corruption, poor infrastructure (including basic
infrastructure, such as transport, telecoms and electricity), ethnic tensions, a
shortage of technically proficient workers and a dysfunctional bureaucratic
system. Myanmar has no established corporate bond market or stock exchange and
has a limited banking system. Additionally, despite democratic trends and
progress on human rights, Myanmar’s political situation remains fluid, and there
remains the possibility of reinstated sanctions.
New Zealand. New Zealand is generally
considered to be a developed market, and investments in New Zealand
generally do not have risks associated with them that are present with
investments in developing or emerging markets. New Zealand is a country
heavily dependent on free trade, particularly in agricultural products. This
makes New Zealand particularly vulnerable to international commodity prices
and global economic slowdowns. Its principal export industries are agriculture,
horticulture, fishing and forestry.
Pakistan. Changes in the value of investments
in Pakistan and in companies with significant economic ties to that country
largely depend on continued economic growth and reform in Pakistan, which
remains uncertain and subject to a variety of risks. Pakistan has faced, and
continues to face, high levels of political instability and social unrest at
both the regional and national levels. Ongoing border disputes with India may
result in armed conflict between the two nations, and Pakistan’s geographic
location and its shared borders with Afghanistan and Iran increase the risk that
it will be involved
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in,
or otherwise affected by, international conflict. Pakistan’s economic growth is
in part attributable to high levels of international support, which may be
significantly reduced or terminated in response to changes in the political
leadership of Pakistan. Pakistan faces a wide range of other economic problems
and risks, such as the uncertainty over the privatization efforts, the
substantial natural resource constraints it is subject to, its large budgetary
and current account deficits as well as trade deficits, its judicial system that
is still developing and widely perceived as lacking transparency, and
inflation.
Papua New Guinea. Papua New Guinea is a small
country that faces challenges in maintaining political stability. The government
intrudes in many aspects of the economy through state ownership and regulation.
Despite promises from the government to address rampant corruption, corruption
and nepotism remain pervasive and often go unpunished. Other challenges facing
Papua New Guinea include providing physical security for foreign investors,
regaining investor confidence, restoring integrity to state institutions,
privatizing state institutions, improving its legal system and maintaining good
relations with Australia. Exploitation of Papua New Guinea’s natural resources
is limited by terrain, land tenure issues and the high cost of developing
infrastructure. Papua New Guinea has several thousand distinct and heterogeneous
indigenous communities, which create additional challenges in dealing with
tribal conflicts, some of which have been going on for millennia.
Philippines. Philippines’ consistently large
budget deficit has produced a high debt level and has forced the country to
spend a large portion of its national government budget on debt service. Large,
unprofitable public enterprises, especially in the energy sector, contribute to
the government’s debt because of slow progress on privatization.
Singapore. As a small open economy, Singapore
is particularly vulnerable to external economic influences, such as the Asian
economic crisis of the late 1990s. Singapore has been a leading manufacturer of
electronics goods. However, competition from other countries in this and related
industries, and adverse Asian economic influences generally, may negatively
affect Singapore’s economy.
South Korea. Investing in South Korean
securities has special risks, including those related to political, economic and
social instability in South Korea and the potential for increased militarization
in North Korea (see Regional and Country Risks above). Securities trading on
South Korean securities markets are concentrated in a relatively small number of
issuers, which results in potentially fewer investment opportunities for the
Funds. South Korea’s financial sector has shown certain signs of systemic
weakness and illiquidity, which, if exacerbated, could prove to be a material
risk for investments in South Korea. South Korea is dependent on foreign
sources for its energy needs. A significant increase in energy prices could have
an adverse impact on South Korea’s economy. There are also a number of risks to
the Funds associated with the South Korean government. The South Korean
government has
historically
exercised and continues to exercise substantial influence over many aspects of
the private sector. The South Korean government from time to time has
informally influenced the prices of certain products, encouraged companies to
invest or to concentrate in particular industries and induced mergers between
companies in industries experiencing excess capacity.
Sri Lanka. Civil war and terrorism have
disrupted the economic, social and political stability of Sri Lanka for decades.
While these tensions appear to have lessened, there is the potential for
continued instability resulting from ongoing ethnic conflict. Sri Lanka faces
severe income inequality, high inflation and a sizable public debt load. Sri
Lanka relies heavily on foreign assistance in the form of grants and loans from
a number of countries and international organizations such as the World Bank and
the Asian Development Bank. Changes in international political sentiment may
have significant adverse effects on the Sri Lankan economy.
Thailand. In recent years Thailand has
experienced increased political, social and militant unrest, negatively
impacting tourism and the broader economy. Thailand’s political institutions
remain unseasoned, increasing the risk of political instability. Since 2005,
Thailand has experienced several rounds of political turmoil, including a
military coup in September 2006 that replaced Thailand’s elected government with
new leadership backed by a military junta. Political and social unrest have
continued following the 2006 coup and have resulted in disruptions, violent
protests and clashes between citizens and the government. In May 2014, after
months of large-scale anti-government protests, another military coup was
staged, and a new military junta was established to govern the nation. In March
2019, after many rounds of delays, the first general election since the 2014
coup was held in Thailand. The election has been widely considered a contest
between the pro‑military and pro‑democracy forces, and the outcome of the
election could lead to further political instability in Thailand. These events
have negatively impacted the Thai economy, and the long-term effect of these
developments remains unclear. The Thai government has historically imposed
investment controls apparently designed to control volatility in the Thai baht
and to support certain export-oriented Thai industries. These controls have
largely been suspended, although there is no guarantee that such controls will
not be re‑imposed. However, partially in response to these controls, an offshore
market for the exchange of Thai baht developed. The depth and transparency of
this market have been uncertain.
Vietnam. In 1992, Vietnam initiated the process
of privatization of state-owned enterprises, and expanded that process in 1996.
However, some Vietnamese industries, including commercial banking, remain
dominated by state-owned enterprises, and for most of the private enterprises, a
majority of the equity is owned by employees and management boards and on
average more than one‑third of the equity is owned by the government with only a
small percentage of the equity being owned by investors. In addition, Vietnam
continues to impose limitations on foreign ownership of
Vietnamese
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companies
and has in the past imposed arbitrary repatriation taxes on foreign owners.
Although Vietnam has experienced significant economic growth in the past three
decades, Vietnam continues to face various challenges, including corruption,
lack of transparency, uniformity and consistency in governmental regulations,
heavy dependence on exports, a growing population, and increasing pollution.
Inflation threatens long-term economic growth and may deter foreign investment
in the country. In addition, foreign currency reserves in Vietnam may not be
sufficient to support conversion into the U.S. dollar (or other more liquid
currencies). Vietnamese markets have relatively low levels of liquidity, which
may result in extreme volatility in the prices of Vietnamese securities. Market
volatility may also be heightened by the actions of a small number of
investors.
Risks
Associated with Other Regions
Africa
and the Middle East
The
economies of certain African and Middle Eastern countries are in the earliest
stages of economic development, which may result in a high concentration of
trading volume and market capitalization in a small number of issuers or a
limited number of industries. There are typically fewer brokers in African and
Middle Eastern countries, and they are typically less well capitalized than
brokers in the United States or other developed markets. Many African nations
have a history of military intervention, dictatorship, civil war, and
corruption, which all limit the effectiveness of markets in those countries.
Many Middle Eastern countries are facing political and economic uncertainty,
with little or no democratic tradition or free market history, which could
result in significant economic downturn. Recently, the Israel-Hamas war has
resulted in significant loss of life and increased volatility in the Middle
East, and there is a risk that the war could spread within the region. The
conflict between Israel and Hamas and the involvement of the U.S. and other
countries could present material uncertainty and risk with respect to a Fund’s
performance and ability to achieve its investment objective. The extent and
duration of the military action and any market disruptions are impossible to
predict, but could be substantial.
During
periods of instability or upheaval, a country’s government may act in a
detrimental or hostile manner toward private enterprise or foreign investment.
Portfolio holdings that are valued using techniques other than market
quotations, including “fair valued” securities, may be subject to greater
fluctuation than if market quotations had been used, and there is no assurance
that a Fund could sell or close out a portfolio position for the value
established for it at any time. Further, the economies of many Middle Eastern
and African countries are largely dependent on, and linked together by, certain
commodities (such as gold, silver, copper, diamonds, and oil). As a result,
African and Middle Eastern economies are vulnerable to changes in commodity
prices, and fluctuations in demand for these commodities could significantly
impact economies in these regions. A downturn in one country’s economy could
have a disproportionally large effect on others in the region.
U.S.
Securities Risk
Certain
Funds invest to a limited extent in stocks issued by U.S. companies. U.S. stocks
have certain risks similar to equity securities issued in other countries, such
as declines in value over short or extended periods as a result of changes in a
company’s financial condition or the overall market as well as economic and
political conditions. Although U.S. stocks have enjoyed many years of favorable
returns, they have more recently experienced volatility based on political and
economic events such as trade disputes. In addition, interest rate increases in
the U.S. may adversely affect stocks.
Risks
Associated with Investment in a Smaller Number of Companies or Industries
From
time to time, a relatively small number of companies and industries may
represent a large portion of the total stock market in a particular country or
region, and these companies and industries may be more sensitive to adverse
social, political, economic or regulatory developments than funds whose
portfolios are more diversified. Events affecting a small number of companies or
industries may have a significant and potentially adverse impact on your
investment in the Funds, and the Funds’ performance may be more volatile than
that of funds that invest globally.
Credit
Ratings Risk
In
this prospectus, references are made to credit ratings of debt securities, which
measure an issuer’s expected ability to pay principal and interest over time
(but not other risks, including market risks). Credit ratings are determined by
rating organizations, such as Moody’s, S&P, and Fitch, based on their view
of past and potential developments related to an issuer (or security). Such
potential developments may not reflect actual developments and a rating
organization’s evaluation may be incomplete or inaccurate. For a further
description of credit ratings, see “Appendix: Bond Ratings” in the Funds’
SAI.
Passive
Foreign Investment Companies Risk
The
Funds may invest in PFICs. Investments in PFICs may subject the Funds to taxes
and interest charges that cannot be avoided, or that can be avoided only through
complex methods that may have the effect of imposing a less favorable tax rate
or accelerating the recognition of gains and payment of taxes.
Initial
Public Offerings (“IPOs”) Risk
IPOs
of securities issued by unseasoned companies with little or no operating history
are risky, and their prices are highly volatile, but they can result in very
large gains in their initial trading. Attractive IPOs are often oversubscribed
and may not be available to the Funds or may be available only in very limited
quantities. Thus, when a Fund’s size is smaller, any gains or losses from IPOs
may have an exaggerated impact on the Fund’s performance than when it is larger.
The Funds’ portfolio managers are permitted to engage in short-term trading of
IPOs. Although IPO investments have had a positive impact on the performance of
some Funds, there can be no assurance that a Fund will have favorable IPO
investment
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opportunities
in the future or that a Fund’s investments in IPOs will have a positive impact
on its performance.
Market
Timing and Other Short-Term Trading Risk
The
Funds are not intended for short-term trading by investors. Investors who hold
shares of the Funds for the short term, including market-timers, may harm the
Funds and other shareholders by diluting the value of their shares, disrupting
management of a Fund’s portfolio and causing a Fund to incur additional costs,
which are borne by non‑redeeming shareholders. The Funds attempt to discourage
time-zone arbitrage and similar market-timing activities, which seek to benefit
from any differences between a Fund’s NAV and the fair value of its holdings
that may occur between the closing times of foreign and U.S. markets, with the
latter generally used to determine when each Fund’s NAV is calculated. See
page 123 for additional information on the Funds’ policies and procedures
related to short-term trading and market-timing activity.
Risks
Associated with Investment in China A Shares
Matthews
has applied for and received a license as a Qualified Foreign Investor (“QFI”)
from the China Securities Regulatory Commission and has been registered with the
State Administration of Foreign Exchange of China for the inward and outward
remittance of funds in foreign currencies and/or offshore renminbi (the “QFI
Status”), by which Matthews may invest in stocks of Chinese companies listed on
the Shanghai Stock Exchange and the Shenzhen Stock Exchange and traded and
denominated in the currency of China, the renminbi (“China A Shares”) on behalf
of clients whose portfolios it manages, including for this purpose any series,
sub‑fund, sleeve, or other sub‑account of such client (each an “A Share
Investor”). For a further discussion of China A Shares and risks associated with
investing in China A Shares, see “Risks Associated with Investing in China A
Shares” in the Funds’ SAI.
Matthews,
as a QFI license holder, maintains custody of China A Share assets with a local
custodian in its own name for the benefit of the A Share Investors (the “A Share
Account”). In addition, the local Chinese custodian will maintain, on its books
and records, a sub‑account on behalf of each A Share Investor with respect to
the China A Share assets held by each individual A Share Investor.
Matthews
has agreed with each A Share Investor that Matthews has and shall have no
beneficial interest in such China A Share assets and that they belong
exclusively to the individual A Share Investors in whose name they are held on
the books and records of the Chinese custodian. In addition, each A Share
Investor has agreed that such A Share Investor has an interest solely in the
China A Share assets held through the QFI Status of Matthews that are registered
in its name on the books and records of the Chinese custodian, and that they
have no interest in any China A Share assets held on the books and records of
the Chinese custodian in the name of any other A Share Investor.
A
Share Investors, including the Funds, bear the costs of maintaining their
sub‑account on the books and records of the Chinese custodian, as well as their
share of the costs of maintaining the A Share Account.
Although
China A Shares generally trade in liquid markets, because of the repatriation
requirements imposed by the Chinese government, a Fund’s investment in China A
Shares may be illiquid and subject to the Fund’s policy of investing no more
than 15% of its net assets in illiquid securities.
Investing in China A Shares through Stock
Connect. A Fund may purchase China A Shares through the Shanghai and
Shenzhen—Hong Kong Stock Connect (“Stock Connect”). The Stock Connect program is
a mutual market access program designed to enable foreign investment in the
People’s Republic of China (“PRC”) via brokers in Hong Kong. There are
significant risks inherent in investing in China A Shares through Stock Connect.
Specifically, trading can be affected by market or bank closures, quota limits,
and certain pre‑delivery and pre‑validation requirements, such that a Fund may
not be able to purchase or dispose of its shares in a timely manner. In
addition, a Fund’s purchase of China A Shares through Stock Connect may only be
subsequently sold through Stock Connect and is not otherwise transferable. A
Fund’s shares will be registered in its custodian’s name on the Hong Kong
Central Clearing and Settlement System, which may limit Matthews’ ability to
effectively manage a Fund’s holdings, including the potential enforcement of
equity owner rights.
General
Risks Associated with Public Health Emergencies
Pandemics
and other local, national, and international public health emergencies,
including outbreaks of infectious diseases such as SARS, H1N1/09 Flu, the Avian
Flu, Ebola and the recent novel coronavirus (COVID‑19) pandemic, can result in
market volatility and disruption, and any similar future emergencies may
materially and adversely impact economic production and activity in ways that
cannot be predicted, all of which could result in substantial investment
losses.
The
extent of the ongoing impact of COVID‑19 (and the resulting decline and
disruption in economic and commercial activity across many of the world’s
economies), including new strains of the underlying virus, on global economic
conditions, and on the operations, financial condition, and performance of any
particular market, industry or business, is impossible to predict. However,
ongoing and potential additional materially adverse effects, including further
global, regional and local economic downturns (including recessions) of
indeterminate duration and severity, are possible.
The
ongoing COVID‑19 crisis and any other public health emergency could have a
significant adverse impact on the Funds’ investments and result in significant
investment losses.
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Management
of the Funds
Matthews
International Capital Management, LLC is the investment advisor to the Funds.
Matthews is located at Four Embarcadero Center, Suite 550, San Francisco,
California 94111 and can be reached toll free by telephone at 800.789.ASIA
(2742). Matthews was founded in 1991 by G. Paul Matthews. Since its
inception, Matthews has specialized in managing portfolios of Asian securities.
Matthews invests the Funds’ assets, manages the Funds’ business affairs,
supervises the Funds’ overall day‑to‑day operations, and provides the personnel
needed by the Funds with respect to Matthews’ responsibilities pursuant to an
Investment Advisory Agreement dated as of February 1, 2016 between Matthews
and the Trust, on behalf of the Funds (as amended from time to time, the
“Advisory Agreement”). Matthews also furnishes the Funds with office space and
provides certain administrative, clerical and shareholder services to the Funds
pursuant to the Services Agreement (as defined below).
Pursuant
to the Advisory Agreement, the Funds, other than the Matthews Emerging Markets
Small Companies Fund and Matthews China Small Companies Fund (such Funds
collectively, the “Family-Priced Funds”), in the aggregate, pay Matthews 0.75%
of the aggregate average daily net assets of the Family-Priced Funds up to
$2 billion, 0.6834% of the aggregate average daily net assets of the
Family-Priced Funds over $2 billion up to $5 billion, 0.65% of the
aggregate average daily net assets of the Family-Priced Funds over
$5 billion up to $25 billion, 0.64% of the aggregate average daily net
assets of the Family-Priced Funds over $25 billion up to $30 billion,
0.63% of the aggregate average daily net assets of the Family-Priced Funds over
$30 billion up to $35 billion, 0.62% of the aggregate average daily
net assets of the Family-Priced Funds over $35 billion up to
$40 billion, 0.61% of the aggregate average daily net assets of the
Family-Priced Funds over $40 billion up to $45 billion, and 0.60% of
the aggregate average daily net assets of the Family-Priced Funds over
$45 billion. The Family-Priced Funds pay Matthews a monthly fee at the
annual rate using the applicable management fee calculated based on the actual
number of days of that month and based on the Funds’ average daily net assets
for the month.
Pursuant
to the Advisory Agreement, each of the Matthews Emerging Markets Small Companies
Fund and Matthews China Small Companies Fund pays Matthews a fee equal to 0.85%
of its average daily net assets. Each of the Matthews Emerging Markets Small
Companies Fund and the Matthews China Small Companies Fund pays Matthews a
monthly fee at the annual rate using the applicable management fee calculated
based on the actual number of days of that month and based on such Fund’s
average daily net assets for the month.
A
discussion regarding the basis for the Board’s approval of the Advisory
Agreement with respect to the Funds is available
in
the Funds’ Annual Report to Shareholders for the fiscal year ended
December 31, 2023.
For
the fiscal year ended December 31, 2023, the Funds paid investment
management fees to Matthews as follows (as a percentage of average net
assets):
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Matthews
Emerging Markets Equity Fund, Matthews Emerging Markets Sustainable Future
Fund, Matthews Asian Growth and Income Fund, Matthews Asia Dividend Fund,
Matthews China Dividend Fund, Matthews Asia Growth Fund, Matthews Pacific
Tiger Fund, Matthews Asia Innovators Fund, Matthews China Fund, Matthews
India Fund, Matthews Japan Fund |
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0.68% |
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Matthews Emerging Markets Small Companies
Fund, Matthews China Small Companies Fund |
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0.85% |
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Matthews
may delegate certain portfolio management activities with respect to one or more
Funds to a wholly owned subsidiary based outside of the United States. Any such
participating affiliate would enter into a participating affiliate agreement
with Matthews related to the affected Fund, and Matthews would remain fully
responsible for the participating affiliate’s services as if Matthews had
performed the services directly. Any delegation of services in this manner would
not increase the fees or expenses paid by the Fund, and would normally be used
only where a portfolio manager or other key professional is located in the
country where the subsidiary is based.
Pursuant
to an administration and shareholder services agreement dated as of
August 13, 2004 (as amended from time to time, the “Services Agreement”),
the Matthews Asia Funds in the aggregate pay Matthews 0.25% of the aggregate
average daily net assets of the Matthews Asia Funds up to $2 billion,
0.1834% of the aggregate average daily net assets of the Matthews Asia Funds
over $2 billion up to $5 billion, 0.15% of the aggregate average daily
net assets of the Matthews Asia Funds over $5 billion up to
$7.5 billion, 0.125% of the aggregate average daily net assets of the
Matthews Asia Funds over $7.5 billion up to $15 billion, 0.11% of the
aggregate average daily net assets of the Matthews Asia Funds over
$15 billion up to $22.5 billion, 0.10% of the aggregate average daily
net assets of the Matthews Asia Funds over $22.5 billion up to
$25 billion, 0.09% of the aggregate average daily net assets of the
Matthews Asia Funds over $25 billion up to $30 billion, 0.08% of the
aggregate average daily net assets of the Matthews Asia Funds over
$30 billion up to $35 billion, 0.07% of the aggregate average daily
net assets of the Matthews Asia Funds over $35 billion up to
$40 billion, 0.06% of the aggregate average daily net assets of the
Matthews Asia Funds over $40 billion up to $45 billion, and 0.05% of
the aggregate average daily net assets of the Matthews Asia Funds over
$45 billion. Matthews receives this compensation for providing certain
administrative and shareholder services to the Matthews Asia Funds and current
shareholders of the
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Matthews
Asia Funds, including overseeing the activities of the Matthews Asia Funds’
transfer agent, accounting agent, custodian and administrator; assisting with
the daily calculation of the Matthews Asia Funds’ net asset values; overseeing
each Matthews Asia Fund’s compliance with its legal, regulatory and ethical
policies and procedures; assisting with the preparation of agendas and other
materials drafted by the Matthews Asia Funds’ third-party administrator and
other parties for Board meetings; coordinating and executing fund launches and
closings (as applicable); general oversight of the vendor community at large as
well as industry trends to ensure that shareholders are receiving quality
service and technology; responding to shareholder communications including
coordinating shareholder mailings, ordinary proxy statements, annual reports,
prospectuses and other correspondence from the Matthews Asia Funds to
shareholders; providing regular communications and investor education materials
to shareholders, which may include communications via electronic means, such as
electronic mail; providing certain shareholder services not handled by the
Matthews Asia Funds’ transfer agent or other intermediaries (such as fund
supermarkets); communicating with investment advisors whose clients own or hold
shares of the Matthews Asia Funds; and providing such other information and
assistance to shareholders as may be reasonably requested by such
shareholders.
Pursuant
to an operating expenses agreement, dated as of November 4, 2003 (as
amended from time to time, the “Operating Expenses Agreement”), for all Funds
other than the Matthews Emerging Markets Equity Fund, Matthews Emerging Markets
Sustainable Future Fund, and the Matthews Emerging Markets Small Companies Fund,
Matthews has agreed (i) to waive fees and reimburse expenses to the extent
needed to limit total annual 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 to 1.20%, 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 non‑class specific expenses of the Institutional
Class are waived for the Institutional Class, Matthews has also agreed to
waive an equal amount of non‑class specific expenses for the Investor Class.
Because certain expenses of the Investor Class may be higher than those of
the Institutional Class and because no class specific expenses will be
waived for the Investor Class, the total annual operating expenses after fee
waiver and expense reimbursement for the Investor Class would be 1.20% plus
the sum of (i) the amount (in annual percentage terms) of the class
specific expenses
incurred
by the Investor Class that exceed those incurred by the Institutional
Class; and (ii) the amount (in annual percentage terms) of the class
specific expenses reduced for the Institutional Class and not the
Investor Class. For the Matthews Emerging Markets Equity Fund, Matthews Emerging
Markets Sustainable Future Fund, and the Matthews Emerging Markets Small
Companies Fund, Matthews has agreed to reduce this expense limitation to 0.90%,
1.15% and 1.15%, respectively, for the Institutional Class.
In
turn, if a Fund’s expenses fall below the expense limitation within three years
after Matthews has made such a waiver or reimbursement, the Fund may reimburse
Matthews up to an amount not to 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. For each Fund, this agreement will continue
through April 30, 2025 and may be extended for additional periods not
exceeding one year, 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.
Pursuant
to a fee waiver letter agreement (the “Fee Waiver Agreement”), effective as of
September 1, 2014, as amended, between the Trust, on behalf of the
Family-Priced Funds, and Matthews, for each Family-Priced Fund, Matthews has
contractually agreed to waive a portion of the fee payable under the Advisory
Agreement and a portion of the fee payable under the Services Agreement, if any
Family-Priced Fund’s average daily net assets are over $3 billion, as
follows: for every $2.5 billion average daily net assets of a Family-Priced
Fund that are over $3 billion, the fee rates under the Advisory Agreement
and the Services Agreement for such Family-Priced Fund with respect to such
excess average daily net assets will be each reduced by 0.01%, in each case
without reducing such fee rate below 0.00%. Matthews may not recoup fees waived
pursuant to the Fee Waiver Agreement. The Board has approved the Fee Waiver
Agreement for an additional one‑year term through April 30, 2025 and may
terminate the agreement at any time upon 60 days’ written notice to Matthews.
Matthews may decline to renew the Fee Waiver Agreement by providing written
notice to the Trust at least 60 days before its annual expiration
date.
Each
Fund offers Investor and Institutional Class shares to eligible investors.
Investor Class shares and Institutional Class shares have different
expenses, which will result in different performance for each class of shares.
Shares of the two classes of each Fund otherwise have identical rights and vote
together except for matters affecting only a specific class.
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Portfolio Managers
Each
of the Funds is managed by one or more Portfolio Managers. A Portfolio Manager
of a Fund is primarily responsible for its day‑to‑day investment management
decisions. Lead Managers are supported by and consult with Co‑Managers.
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SEAN
TAYLOR |
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Sean Taylor is Chief Investment
Officer and Portfolio Manager at Matthews, and manages the firm’s Pacific
Tiger, Emerging Markets Equity and Asia ex Japan Total Return Equity
Strategies and co‑manages the firm’s Emerging Markets ex China Strategy.
Prior to joining Matthews in October 2023, he was Chief Investment Officer
APAC, Global Head of Emerging Markets Equity at DWS Group based in Hong
Kong since 2013. From 2004 to 2011, he was an Investment Director at GAM
Investments, based in London and Dubai. From 1997 to 2004, he was at
Societe Generale as Head of International and Emerging Markets. Sean has
over 30 years of experience, including more than a decade as a CIO. He has
overseen a number of emerging markets active strategies, including Latin
America, India, China, Brazil, Russia as well as international and global
strategies during his career. He received his MBA from Manchester Business
School and is a graduate of the Royal Military Academy, Sandhurst. Sean
has been a Portfolio Manager of the Matthews Pacific Tiger Fund, Matthews
Pacific Tiger Active ETF, Matthews Emerging Markets Equity Fund, Matthews
Emerging Markets Equity Active ETF and Matthews Emerging Markets ex China
Active ETF since 2023. |
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Lead
Manager
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF
Matthews
Emerging Markets Equity Fund
Matthews
Emerging Markets Equity Active ETF
Co‑Manager
Matthews
Emerging Markets ex China Active ETF |
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SIDDHARTH
BHARGAVA |
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Siddharth Bhargava is a Portfolio
Manager at Matthews and co‑manages the firm’s Asian Growth and Income and
Asia Dividend Strategies. Prior to joining the firm in 2011, he was an
Investment Analyst at Navigator Capital. Siddharth also served as a credit
and debt market research assistant to Dr. Edward Altman at the
New York University Salomon Center. From 2005 to 2008, he was a
Credit Analyst at Sandell Asset Management. Siddharth received a B.A. in
Economics from the University of Virginia and an MBA from the Stern School
of Business at New York University. He is fluent in Hindi and
conversational in German. Siddharth has been a Portfolio Manager of the
Matthews Asian Growth and Income Fund since 2021, of the Matthews Asia
Dividend Fund since 2022, and of the Matthews Asia Dividend Active ETF
since its inception in 2023. |
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Co‑Manager
Matthews
Asian Growth and Income Fund
Matthews
Asia Dividend Fund
Matthews
Asia Dividend Active ETF |
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WINNIE
CHWANG |
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Winnie Chwang is a Portfolio Manager
at Matthews and manages the firm’s China Small Companies, China Discovery
and China Dividend Strategies and co‑manages the firm’s China, China
A-Shares, Pacific Tiger and Asia Dividend Strategies. She joined the firm
in 2004 and has built her investment career at the firm. Winnie earned an
M.B.A. from the Haas School of Business and received her B.A. in Economics
with a minor in Business Administration from the University of California,
Berkeley. She is fluent in Mandarin and conversational in Cantonese.
Winnie has been a Portfolio Manager of the Matthews China Fund since 2014,
of the Matthews China Small Companies Fund since 2020, of the Matthews
Pacific Tiger Fund since 2021, of the Matthews Asia Dividend Fund since
2022, of the Matthews China Active ETF since its inception in 2022, of the
Matthews Pacific Tiger Active ETF and Matthews Asia Dividend Active ETF
since their inception in 2023, and of the Matthews China Discovery Active
ETF since its inception in 2024. |
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Lead
Manager
Matthews
China Small Companies Fund
Matthews
China Discovery Active ETF
Matthews
China Dividend Fund
Co‑Manager
Matthews
China Fund
Matthews
China Active ETF
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF
Matthews
Asia Dividend Fund
Matthews
Asia Dividend Active ETF |
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SWAGATO GHOSH |
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Swagato Ghosh is a Portfolio Manager
at Matthews and co‑manages the firm’s India Strategy. Prior to joining the
firm in 2022, he was an investment analyst at Franklin Templeton India,
where he was the lead cement, real estate and consumer discretionary
analyst. From 2016 to 2018, he was an investment analyst at Goldman Sachs
Asset Management researching the U.S. health care sector. From 2013 to
2015, Swagato was an equity research analyst at Jefferies India. He
received his B.Tech in Mining Engineering from Indian Institute of
Technology Kharagpur and his MBA from Indian Institute of Management
Calcutta. Swagato is fluent in Hindi and Bengali. Swagato has been a
Portfolio Manager of the Matthews India Fund and Matthews India Active ETF
since 2023. |
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Co‑Manager
Matthews
India Fund
Matthews
India Active ETF |
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DONGHOON
HAN |
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Donghoon Han is a Portfolio Manager
at Matthews and manages the firm’s Japan Strategy. Prior to joining the
firm in 2020, Donghoon was Vice President and portfolio manager at Goldman
Sachs Asset Management in Tokyo, responsible for investments in
technology, automotive and transportation sectors in Japan. From 2014 to
2016, he worked as a Senior Associate at Citadel Global Equities covering
technology and industrial sectors in Japan. From 2010 to 2014, he also
worked as a Senior Associate at Dodge & Cox covering global
technology sector with a focus on semiconductors and electronic
components. Donghoon is fluent in Japanese and Korean. He received his
B.A. in International Liberal Arts from Waseda University in Tokyo.
Donghoon is a Chartered Member of the Securities Analysts Association of
Japan. Donghoon has been a Portfolio Manager of the Matthews Japan Fund
since 2023 and of the Matthews Japan Active ETF since its inception in
2023. |
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Lead
Manager
Matthews
Japan Fund
Matthews
Japan Active ETF |
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ROBERT J. HORROCKS, PhD |
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Robert Horrocks is a Portfolio
Manager at Matthews and manages the firm’s Asian Growth and Income and
Asia Dividend Strategies. Before joining Matthews in 2008, Robert was Head
of Research at Mirae Asset Management in Hong Kong. From 2003 to 2006,
Robert served as Chief Investment Officer for Everbright Pramerica in
China, establishing its quantitative investment process. He started his
career as a Research Analyst with WI Carr Securities in Hong Kong before
moving on to spend eight years working in several different Asian
jurisdictions for Schroders, including stints as Country General Manager
in Taiwan, Deputy Chief Investment Officer in Korea and Designated Chief
Investment Officer in Shanghai. Robert earned his PhD in Chinese Economic
History from Leeds University in the United Kingdom and is fluent in
Mandarin. Robert has been a Portfolio Manager of the Matthews Asian Growth
and Income Fund since 2009, of the Matthews Asia Dividend Fund since 2013,
and of the Matthews Asia Dividend Active ETF since its inception in
2023. |
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Lead
Manager
Matthews
Asian Growth and Income Fund
Matthews
Asia Dividend Fund
Matthews
Asia Dividend Active ETF |
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ELLI
LEE |
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Elli Lee is a Portfolio Manager at
Matthews and manages the firm’s Korea Strategy and co‑manages the firm’s
Asia Dividend, China Dividend and Asian Growth and Income Strategies.
Prior to joining the firm in 2016, Elli worked at Bank of America Merrill
Lynch for 10 years, most recently in Korean Equity Sales and previously as
an Equity Research Analyst covering South Korea’s engineering,
construction, steel and education sectors. From 2003 to 2005, Elli was an
Investor Relations Specialist at Hana Financial Group in Seoul. She earned
a Master of Science in Global Finance from the Hong Kong University of
Science and Technology Business School and New York University Stern
School of Business, and received a B.A. in Economics from Bates College.
Elli is fluent in Korean. Elli has been a Portfolio Manager of the
Matthews Asia Dividend Fund since 2022, of the Matthews Asian Growth and
Income Fund since 2023, and of the Matthews Korea Active ETF and Matthews
Asia Dividend Active ETF since their inception in 2023. |
|
Lead
Manager
Matthews
Korea Active ETF
Co‑Manager
Matthews
Asia Dividend Fund
Matthews
Asia Dividend Active ETF
Matthews
China Dividend Fund
Matthews
Asian Growth and Income Fund |
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KENNETH LOWE,
CFA |
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Kenneth Lowe is a Portfolio Manager
at Matthews and manages the firm’s Asian Growth and Income and Asia
Dividend Strategies. Prior to joining Matthews in 2010, he was an
Investment Manager on the Asia and Global Emerging Market Equities Team at
Martin Currie Investment Management in Edinburgh, Scotland. Kenneth
received an M.A. in Applied Mathematics and Economics from the University
of Glasgow. Kenneth has been a Portfolio Manager of the Matthews Asian
Growth and Income Fund since 2011, of the Matthews Asia Dividend Fund
since 2022, and of the Matthews Asia Dividend Active ETF since its
inception in 2023. |
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Lead
Manager
Matthews
Asian Growth and Income Fund
Matthews
Asia Dividend Fund
Matthews
Asia Dividend Active ETF |
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ANDREW MATTOCK,
CFA |
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Andrew Mattock is a Portfolio Manager
at Matthews and manages the firm’s China, China Small Companies and China
Discovery Strategies, and co‑manages the firm’s Pacific Tiger, China
Dividend, and Emerging Markets Equity Strategies. Prior to joining the
firm in 2015, he was a Fund Manager at Henderson Global Investors for 15
years, first in London and then in Singapore, managing Asia Pacific
equities. Andrew holds a Bachelor of Business majoring in Accounting from
ACU. He began his career at PricewaterhouseCoopers and qualified as a
Chartered Accountant. Andrew has been a Portfolio Manager of the Matthews
China Fund since 2015, of the Matthews China Small Companies Fund since
2020, of the Matthews China Dividend Fund and Matthews Pacific Tiger Fund
since 2022, of the Matthews China Active ETF since its inception in 2022,
of the Matthews Emerging Markets Equity Fund and Matthews Emerging Markets
Equity Active ETF since 2023, and of the Matthews China Discovery Active
ETF and Matthews Pacific Tiger Active ETF since their inception in
2023. |
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Lead
Manager
Matthews
China Fund
Matthews
China Active ETF
Matthews
China Small Companies Fund
Matthews
China Discovery Active ETF
Co‑Manager
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF
Matthews
China Dividend Fund
Matthews
Emerging Markets Equity Fund
Matthews
Emerging Markets Equity Active ETF |
| |
PEEYUSH MITTAL,
CFA |
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|
Peeyush Mittal is a Portfolio Manager
at Matthews and manages the firm’s India Strategy and co‑manages the
firm’s Emerging Markets Equity, Emerging Markets ex China, Pacific Tiger
and Asia Growth Strategies. Prior to joining the firm in 2015, he spent
over three years at Franklin Templeton Asset Management India, most
recently as a Senior Research Analyst. Previously, he was with Deutsche
Asset & Wealth Management New York, from 2009 to 2011,
researching U.S. and European stocks in the industrials and materials
sectors. Peeyush began his career in 2003 with Scot Forge as an Industrial
Engineer, and was responsible for implementing Lean Manufacturing systems
on the production shop floor. Peeyush earned his M.B.A from The University
of Chicago Booth School of Business. He received a Master of Science in
Industrial Engineering from The Ohio State University and received a
Bachelor of Technology in Metallurgical Engineering from The Indian
Institute of Technology Madras. He is fluent in Hindi. Peeyush has been a
Portfolio Manager of the Matthews India Fund since 2018, of the Matthews
Emerging Markets Equity Fund, Matthews Emerging Markets Equity Active ETF,
Matthews Emerging Markets ex China Active ETF, Matthews Pacific Tiger Fund
and Matthews Asia Growth Fund since 2023, and of the Matthews India Active
ETF, Matthews Pacific Tiger Active ETF since their inception in
2023. |
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Lead
Manager
Matthews
India Fund
Matthews
India Active ETF
Co‑Manager
Matthews
Emerging Markets Equity Fund
Matthews
Emerging Markets Equity Active ETF
Matthews
Emerging Markets ex China Active ETF
Matthews
Asia Growth Fund
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF |
| |
MICHAEL J. OH,
CFA |
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|
Michael Oh is a Portfolio Manager at
Matthews and manages the firm’s Asia Innovators and Asia Growth
Strategies, and co‑manages the firm’s Korea Strategy. Michael joined
Matthews in 2000 and has built his investment career at the firm. Michael
received a B.A. in Political Economy of Industrial Societies from the
University of California, Berkeley. He is fluent in Korean. Michael has
been a Portfolio Manager of the Matthews Asia Innovators Fund since 2006,
of the Matthews Asia Growth Fund since 2020, of the Matthews Asia
Innovators Active ETF since its inception in 2022, and of the Matthews
Korea Active ETF since its inception in 2023. |
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Lead
Manager
Matthews
Asia Innovators Fund
Matthews
Asia Innovators Active ETF
Matthews
Asia Growth Fund
Co‑Manager
Matthews
Korea Active ETF |
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INBOK SONG |
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Inbok Song is a Portfolio Manager at
Matthews and manages the firm’s Pacific Tiger Strategy and co‑manages the
firm’s Emerging Markets Sustainable Future and Asia Innovators Strategies.
Prior to rejoining the firm in 2019, Inbok spent three years at Seafarer
Capital Partners as a portfolio manager, the firm’s Director of Research
and chief data scientist. Previously she was at Thornburg Investment
Management as an associate portfolio manager. From 2007 to 2015, she was
at Matthews, most recently as a portfolio manager. From 2005 to 2006,
Inbok served as an Analyst and Technology Specialist at T. Stone
Corp., a private equity firm in Seoul, South Korea. From 2004 to 2005, she
was a research engineer for Samsung SDI in Seoul. Inbok received both a
B.A. and Masters in Materials Science and Engineering from Seoul National
University. She received a Masters in International Management from the
University of London, King’s College, and also an M.A. in Management
Science and Engineering, with a concentration in finance from Stanford
University. Inbok is fluent in Korean. Inbok has been a Portfolio Manager
of the Matthews Pacific Tiger Fund since 2019, and of the Matthews Pacific
Tiger Active ETF, Matthews Emerging Markets Sustainable Future Fund,
Matthews Asia Innovators Fund, and Matthews Asia Innovators Active ETF
since 2023, and of the Matthews Emerging Markets Sustainable Future Active
ETF since its inception in 2023. |
|
Lead
Manager
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF
Co‑Manager
Matthews
Emerging Markets Sustainable Future Fund
Matthews
Emerging Markets Sustainable Future Active ETF
Matthews
Asia Innovators Fund
Matthews
Asia Innovators Active ETF |
| |
JEREMY SUTCH,
CFA |
|
|
Jeremy Sutch is a Portfolio Manager
at Matthews and manages the firm’s Emerging Markets ex China Strategy, and
co‑manages the Emerging Markets Equity, Emerging Markets Small Companies,
Emerging Markets Discovery, Asia Small Companies, Asia ex Japan Total
Return Equity and Pacific Tiger Strategies. Prior to joining the firm in
2015, he was Director and Global Head of Emerging Companies at Standard
Chartered Bank in Hong Kong from 2012 to 2015, responsible for the
fundamental analysis of companies in Asia, with a particular focus on
small- and mid‑capitalization companies. From 2009 to 2012, he was
Managing Director at MJP Capital in Hong Kong, which he co‑founded. His
prior experience has included managing small‑cap equities at Indus Capital
Advisors and serving as Head of Hong Kong Research for ABN AMRO Asia
Securities. Jeremy earned an M.A. in French and History from the
University of Edinburgh. Jeremy has been a Portfolio Manager of the
Matthews Emerging Markets Small Companies Fund since 2021, and of the
Matthews Emerging Markets Equity Fund, Matthews Emerging Markets Equity
Active ETF, Matthews Emerging Markets ex China Active ETF, Matthews
Emerging Markets Discovery Active ETF, Matthews Pacific Tiger Fund and
Matthews Pacific Tiger Active ETF since 2023. |
|
Lead
Manager
Matthews
Emerging Markets ex China Active ETF
Co‑Manager
Matthews
Emerging Markets Equity Fund
Matthews
Emerging Markets Equity Active ETF
Matthews
Emerging Markets Small Companies Fund
Matthews
Emerging Markets Discovery Active ETF
Matthews
Pacific Tiger Fund
Matthews
Pacific Tiger Active ETF |
| |
SHUNTARO
TAKEUCHI |
|
|
Shuntaro Takeuchi is Head of Research
and a Portfolio Manager at Matthews, and manages the firm’s Japan Strategy
and co‑manages the Asia Growth Strategy. Prior to joining the firm in
2016, he was an Executive Director for Japan Equity Sales at UBS
Securities LLC in New York. Beginning in 2003, he worked on both Japanese
Equity and International Equity Sales at UBS Japan Securities, based in
Tokyo, and held the position of Special Situations Analyst from 2006 to
2008, and Head of International Equity Sales from 2009 to 2013. Before
that, he worked at Merrill Lynch Japan from 2001 to 2003 in U.S. Equity
Sales. Shuntaro received a B.A. in Commerce and Management from
Hitotsubashi University in Tokyo. He is fluent in Japanese. Shuntaro has
been a Portfolio Manager of the Matthews Japan Fund since 2019, of the
Matthews Japan Active ETF since its inception in 2023 and of the Matthews
Asia Growth Fund since 2023. |
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Lead
Manager
Matthews
Japan Fund
Matthews
Japan Active ETF
Co‑Manager
Matthews
Asia Growth Fund |
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VIVEK
TANNEERU |
|
|
Vivek Tanneeru is a Portfolio Manager
at Matthews and manages the firm’s Emerging Markets Sustainable Future,
Emerging Markets Discovery, and Emerging Markets Small Companies
Strategies. Prior to joining Matthews in 2011, Vivek was an Investment
Manager on the Global Emerging Markets team of Pictet Asset Management in
London. While at Pictet, he also worked on the firm’s Global Equities
team, managing Japan and Asia ex Japan markets. Before earning his M.B.A.
from the London Business School in 2006, Vivek was a Business Systems
Officer at The World Bank and served as a Consultant at Arthur Andersen
Business Consulting and Citicorp Infotech Industries. He interned at
Generation Investment Management while studying for his M.B.A. Vivek
received his Master’s in Finance from the Birla Institute on
Technology & Science in India. He is fluent in Hindi and Telugu.
Vivek has been a Portfolio Manager of the Matthews Emerging Markets
Sustainable Future Fund since its inception in 2015, of the Matthews
Emerging Markets Small Companies Fund since 2020, and of the Matthews
Emerging Markets Sustainable Future Active ETF and Matthews Emerging
Markets Discovery Active ETF since their inception in 2023. |
|
Lead
Manager
Matthews
Emerging Markets Sustainable Future Fund
Matthews
Emerging Markets Sustainable Future Active ETF
Matthews
Emerging Markets Small Companies Fund
Matthews
Emerging Markets Discovery Active ETF |
| |
ALEX
ZARECHNAK |
|
|
Alex Zarechnak is a Portfolio Manager
at Matthews and manages the firm’s Emerging Markets Equity and Emerging
Markets ex China Strategies and co‑manages the firm’s Emerging Markets
Small Companies, Emerging Markets Discovery and Emerging Markets
Sustainable Future Strategies. Prior to joining the firm in 2020, he spent
a total of 15 years (1998–2006 and 2012–2019) at Wellington Management as
an analyst for the firm’s flagship Emerging Markets Equity Fund as a
generalist first covering CEEMEA, then Latin America. From 2006-2012, he
was a regional equity analyst at Capital Group, covering Emerging Markets
with a focus on energy, telecoms and consumer sectors in Latin America and
CEEMEA. Alex began his Emerging Markets career as a Russia equity analyst
with Templeton Emerging Markets, based in Moscow. He earned a B.A. in
Economics and Government from the College of William and Mary. Alex is
fluent in Russian. Alex has been a Portfolio Manager of the Matthews
Emerging Markets Equity Fund since 2022, of the Matthews Emerging Markets
Equity Active ETF since its inception in 2022, of the Matthews Emerging
Markets ex China Active ETF since its inception in 2023, of the Matthews
Emerging Markets Small Companies Fund since 2023, of the Matthews Emerging
Markets Discovery Active ETF since its inception in 2023, and of the
Matthews Emerging Markets Sustainable Future Fund and Matthews Emerging
Markets Sustainable Future Active ETF since 2024. |
|
Lead
Manager
Matthews
Emerging Markets Equity Fund
Matthews
Emerging Markets Equity Active ETF
Matthews
Emerging Markets ex China Active ETF
Co‑Manager
Matthews
Emerging Markets Small Companies Fund
Matthews
Emerging Markets Discovery Active ETF
Matthews
Emerging Markets Sustainable Future Fund
Matthews
Emerging Markets Sustainable Future Active ETF |
| |
SHERWOOD ZHANG,
CFA |
|
|
Sherwood Zhang is a Portfolio Manager
at Matthews and manages the firm’s China Dividend and China A-Shares
Strategies and co‑manages the firm’s China, China Small Companies, China
Discovery, and Asia ex Japan Total Return Equity Strategies. Prior to
joining Matthews in 2011, Sherwood was an analyst at Passport Capital from
2007 to 2010, where he focused on such industries as property and basic
materials in China as well as consumer-related sectors. Before earning his
M.B.A. in 2007, Sherwood served as a Senior Treasury Officer for Hang Seng
Bank in Shanghai and Hong Kong, and worked as a Foreign Exchange Trader at
Shanghai Pudong Development Bank in Shanghai. He received his M.B.A. from
the University of Maryland and his Bachelor of Economics in Finance from
Shanghai University. Sherwood is fluent in Mandarin and speaks
conversational Cantonese. Sherwood has been a Portfolio Manager of the
Matthews China Dividend Fund since 2014, of the Matthews China Fund since
2022, of the Matthews China Active ETF since its inception in 2022, of the
Matthews China Discovery Active ETF and Matthews China Small Companies
Fund since 2024. |
|
Lead
Manager
Matthews
China Dividend Fund
Co‑Manager
Matthews
China Fund
Matthews
China Active ETF
Matthews
China Small Companies Fund
Matthews
China Discovery Active ETF |
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HARDY
ZHU |
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Hardy Zhu is a Portfolio Manager at
Matthews and co-manages the firm’s Emerging Markets Small Companies,
Emerging Markets Discovery, China, China Small Companies, China Discovery,
China Dividend and China A-Share Strategies. Prior to joining the firm in
2011, Hardy was an Equity Analyst with Delaware Investments researching
Chinese equities. Before earning his MBA from Duke University in 2007,
Hardy was a senior accountant at PNC Global Investment Servicing from 2000
to 2005. Hardy began his career at China National Nonferrous Metals Import
& Export Co., one of the largest state-owned international trading
companies in China. He received a Master of Accounting degree from the
Virginia Polytechnic Institute and State University and a B.S. in
Industrial Foreign Trade from Shenyang Polytechnic University in China.
Hardy is fluent in Mandarin. Hardy has been a Portfolio Manager of the
Matthews Emerging Markets Small Companies Fund, Matthews Emerging Markets
Discovery Active ETF, Matthews China Fund, Matthews China Active ETF,
Matthews China Small Companies Fund, Matthews China Discovery Active ETF
and Matthews China Dividend Fund since 2024. |
|
Co‑Manager
Matthews
Emerging Markets Small Companies Fund
Matthews
Emerging Markets Discovery Active ETF
Matthews
China Fund
Matthews
China Active ETF
Matthews
China Small Companies Fund
Matthews
China Discovery Active ETF
Matthews
China Dividend Fund |
Except
in times of restricted travel such as during the COVID‑19 pandemic, the
investment team travels extensively to Asian and emerging market countries to
conduct research relating to those markets. The Funds’ SAI provides additional
information about the Portfolio Managers’ compensation, other accounts managed
by the Portfolio Managers, and the Portfolio Managers’ ownership of securities
in each Fund.
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MANAGEMENT OF THE FUNDS |
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Investing
in the Matthews Asia Funds
Pricing of Fund Shares
The
price at which the Funds’ shares are bought or sold is called the net asset
value per share, or NAV. The NAV is computed once daily as of the close of
regular trading on the NYSE, generally 4:00 PM Eastern Time, on each day that
the exchange is open for trading. In addition to Saturday and Sunday, the NYSE
is closed on the days that the following holidays are observed: New Year’s Day,
Martin Luther King, Jr. Day, Washington’s Birthday, Good Friday, Memorial
Day, Juneteenth National Independence Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The
NAV of a Fund is computed by adding the value of all securities and other assets
of the Fund attributable to the relevant class, deducting any liabilities of the
Fund, and dividing by the total number of outstanding shares of the relevant
class. A Fund’s expenses are generally accounted for by estimating the total
expenses for the year and applying each day’s estimated expense when the NAV
calculation is made.
The
value of the Funds’ exchange-traded securities is based on market quotations for
those securities, or on their fair value determined under the oversight of the
Board of Trustees (as described below). Market quotations are provided by
pricing services that are independent of the Funds and Matthews. Foreign
exchange-traded securities are valued as of the close of trading of the primary
exchange on which they trade. Securities that trade in over‑the‑counter markets,
including most debt securities (bonds), may be valued using indicative bid
quotations from bond dealers or market makers, or other available market
information, or on their fair value as determined by Matthews as the Funds’
valuation designee (as described below). The Funds may also utilize independent
pricing services to assist it in determining a current market value for each
security based on sources believed to be reliable.
Foreign
values of the Funds’ securities are converted to U.S. dollars using exchange
rates determined as of the close of trading on the NYSE and in accordance with
the Funds’ Pricing and Valuation Policy and Procedures. The Funds generally use
the foreign currency exchange rates deemed to be most appropriate by a foreign
currency pricing service that is independent of the Funds and Matthews.
When
market quotations are not readily available or are believed by Matthews to be
unreliable, a Fund’s investments are valued at fair value. The Funds value any
exchange-traded security for which market quotations are unavailable (e.g., when trading of a security is suspended)
or have become unreliable, and any over‑the‑counter security for which
indicative quotes are unavailable, at that security’s fair market value. In
general, the fair value of such securities is determined, in accordance with the
Funds’ Pricing and Valuation Policy and Procedures and subject to the Board’s
oversight, by a pricing service retained by the Funds that is independent of the
Funds and Matthews. There may be circumstances in which
the
Funds’ independent pricing service is unable to provide a reliable price of a
security.
In
addition, when establishing a security’s fair value, the independent pricing
service may not take into account events that occur after the close of Asian and
other foreign markets but prior to the time the Funds calculate their NAVs.
Similarly, there may be circumstances in which a foreign currency exchange rate
is deemed inappropriate for use by the Funds or multiple appropriate rates
exist. In such circumstances, the Board of Trustees has delegated the
responsibility of making fair-value determinations to Matthews, the Funds’
valuation designee, which makes those determinations through its Valuation
Committee composed of employees of Matthews (some of whom may also be officers
of the Funds). In these circumstances, the Valuation Committee will determine
the fair value of a security, or a fair exchange rate, in good faith, in
accordance with the Funds’ Pricing and Valuation Policy and Procedures and
subject to the oversight of the Board. When fair value pricing is employed
(whether through the Funds’ independent pricing service or the Valuation
Committee), the prices of a security used by a Fund to calculate its NAV
typically differ from quoted or published prices for the same security for that
day. The Funds generally fair value securities daily to avoid, among other
things, the use of stale prices. In addition, changes in a Fund’s NAV may not
track changes in published indices of, or benchmarks for, Asia Pacific and other
foreign market securities. Similarly, changes in a Fund’s NAV may not track
changes in the value of closed‑end investment companies, exchange-traded funds
or other similar investment vehicles.
Foreign
securities held by the Funds may be traded on days and at times when the NYSE is
closed, and the NAVs are therefore not calculated. Accordingly, the NAVs of the
Funds may be significantly affected on days when shareholders have no access to
the Funds. For valuation purposes, quotations of foreign portfolio securities,
other assets and liabilities, and forward contracts stated in foreign currency
are translated into U.S. dollar equivalents at the prevailing market
rates.
Indian
securities in the Funds may be subject to a short-term capital gains tax in
India on gains realized upon disposition of securities lots held less than one
year. The Funds accrue for this potential expense, which reduces their net asset
values. For further information regarding this tax, please see
page 126.
Purchasing Shares
The
Funds are open for business each day the NYSE is open. You may purchase shares
directly from the Funds by mail, by telephone, online or by wire without paying
any sales charge. The price for each share you buy will be the NAV calculated
after your order is received in good order by the Fund. “In good order” means
that payment for your purchase and all the information needed to complete your
order must be received by the Fund before your order is processed. If your order
is
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INDIVIDUAL RETIREMENT
ACCOUNTS
The
Funds offer Individual Retirement Accounts (IRAs). Applications for IRAs may be
obtained by calling 800.789.ASIA (2742) or by visiting
matthewsasia.com.
Traditional
IRA
A
Traditional IRA is an IRA with contributions that may or may not be deductible
depending on your circumstances. Assets grow tax‑deferred; withdrawals and
distributions are taxable in the year made.
Spousal
IRA
A
Spousal IRA is an IRA funded by a working spouse in the name of a non‑working
spouse.
Roth
IRA
A
Roth IRA is an IRA with non‑deductible contributions and tax‑free growth of
assets and distributions to pay retirement expenses, provided certain conditions
are met.
OTHER ACCOUNTS
Coverdell
Education Savings Account
Similar
to a non‑deductible IRA, a Coverdell Education Savings Account (ESA) allows you
to make non‑deductible contributions that can grow tax‑free and if used for
qualified educational expenses can be withdrawn free of federal
income taxes.
For
more complete IRA or Coverdell ESA information or to request applications,
please call 800.789.ASIA (2742) to speak with a Fund representative or
visit matthewsasia.com.
received
before the close of regular trading on the NYSE (generally 4:00 PM Eastern Time)
on a day the Funds’ NAVs are calculated, the price you pay will be that day’s
NAV. If your order is received after the close of regular trading on the NYSE,
the price you pay will be the next NAV calculated.
You
may purchase shares of the Funds directly through the Funds’ transfer agent by
calling 800.789.ASIA (2742). Shares of the Funds may also be purchased through
various securities brokers and benefit plan administrators or their sub‑agents
(“Third-Party Intermediaries”). These Third-Party Intermediaries may charge you
a commission or other service or transaction fee for their services. Each share
class may have a different or no such commission or fee. You should contact them
directly for information regarding how to invest or redeem through them. If you
purchase or redeem shares through the Funds’ transfer agent or a Third-Party
Intermediary, you will receive the NAV calculated after receipt of the order by
it on any day the NYSE is open. A Fund’s NAV is calculated as of the close of
regular trading on the NYSE (generally, 4:00 PM Eastern Time) on each day that
the NYSE is open. If your order is received by the Fund or a Third-Party
Intermediary after that time, it will be purchased or redeemed at the
next-calculated NAV.
The
Funds may reject for any reason, or cancel as permitted or required by law, any
purchase order at any time.
Brokers
and benefit plan administrators who perform transfer agency and shareholder
servicing for the Funds may receive fees from the Funds for these services.
Brokers and benefit plan administrators who also provide distribution services
to the Funds may be paid by Matthews (out of its own resources) for providing
these services. For further information, please see Additional Information about Shareholder
Servicing and Other Compensation to
Intermediaries on page 125.
You
may purchase shares of the Funds by mail, by telephone, online or by wire. New
accounts may be opened online or by mailing a completed application. Please see
Opening an Account on page 120, and
Telephone and Online Transactions
on page 123. Call 800.789.ASIA (2742) or visit matthewsasia.com
for details.
The
Funds do not accept third-party checks, temporary (or starter) checks, bank
checks, cash, credit card checks, traveler’s checks, cashier’s checks, official
checks or money orders. If the Funds receive notice of insufficient funds for a
purchase made by check, the purchase will be cancelled and you will be liable
for any related losses or fees the Fund or its transfer agent incurs. The Funds
may reject any purchase order or stop selling shares of the Funds at any time.
Also, the Funds may vary or waive the initial investment minimum and minimums
for additional investments.
Additionally,
if any transaction is deemed to have the potential to adversely impact any of
the Funds, the Funds reserve the right to, among other things, reject any
purchase order or exchange request, limit the amount of any exchange, or revoke
a shareholder’s privilege to purchase Fund shares (including exchanges).
MINIMUM
INVESTMENTS IN SHARES OF THE FUNDS
(U.S. RESIDENTS*)
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Type of Account |
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Investor Class |
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Institutional Class** |
Non‑retirement plan accounts |
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Initial investment: |
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$2,500 |
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$100,000 |
Subsequent
investments: |
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$100 |
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$100 |
Retirement and Coverdell plan accounts† |
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Initial investment: |
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$500 |
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$100,000 |
Subsequent investments: |
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$50 |
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$100 |
*
Generally, non‑U.S. residents may not invest in the Funds. Please contact a Fund
representative at 800.789.ASIA (2742) for information and assistance.
**
Minimum amount for Institutional Class Shares may be lower for purchases
through certain financial intermediaries and different minimums may apply for
retirement plans and other arrangements subject to criteria set by
Matthews.
† Retirement plan
accounts include IRAs and 401(k) plans. Speak with a Fund representative for
information about the retirement plans available.
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If
you invest in Institutional Class shares through a financial intermediary,
the minimum initial investment requirement may be met if that financial
intermediary aggregates investments of multiple clients to meet the minimum.
Additionally, different minimums may apply for retirement plans and model-based
programs that invest through a single account, subject to criteria set by
Matthews. Financial intermediaries or plan recordkeepers may require retirement
plans to meet certain other conditions, such as plan size or a minimum level of
assets per participant, in order to be eligible to purchase Institutional
Class shares.
The
minimum investment requirements for both the Investor Class and
Institutional Class do not apply to Trustees, officers and employees of the
Funds and Matthews, and their immediate family members.
OPENING AN ACCOUNT (Initial
Investment)
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By Mail |
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You
can obtain an account application by calling 800.789.ASIA
(2742) between 9:00 AM–4:30 PM ET, Monday through Friday, or by
downloading an application at matthewsasia.com.
Mail
your check payable to Matthews Asia Funds and a completed application
to: |
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Regular
Mail:
Matthews Asia Funds
P.O.
Box 534475
Pittsburgh, PA 15253‑4475 |
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Overnight
Mail:
Matthews
Asia Funds
Attention:
534475
500
Ross Street, 154‑0520
Pittsburgh,
PA 15262 |
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Online
(Investor Class Only) |
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You may establish a new account by visiting matthewsasia.com, selecting “Open an Account” and following the
instructions. |
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Through Broker/
Intermediary |
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You may contact your broker or intermediary, who may charge you
a fee for their services. |
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By Wire |
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To
open an account and make an initial investment by wire, a completed
application is required before your wire can be accepted. After a
completed account application is received by mail at one of the addresses
listed above, you will receive an account number. Please be sure to inform
your bank of this account number as part of the instructions.
For
specific wiring instructions, please visit matthewsasia.com or call
800.789.ASIA (2742) between 9:00 AM–4:30 PM ET, Monday through
Friday.
Note
that wire fees are charged by most banks. |
Please
note that when opening your account the Funds follow identity verification
procedures outlined on page 128.
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ADDING TO AN ACCOUNT (Subsequent
Investment)
Existing
shareholders may purchase additional shares of the relevant class for all
authorized accounts through the methods described below.
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By Mail |
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Please send your check payable
to Matthews Asia Funds and a statement stub indicating your fund(s)
selection via: |
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Regular Mail:
Matthews
Asia Funds
P.O.
Box 534475
Pittsburgh, PA 15253‑4475 |
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Overnight
Mail:
Matthews
Asia Funds
Attention:
534475
500
Ross Street, 154‑0520
Pittsburgh,
PA 15262 |
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By
Phone |
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Call 800.789.ASIA (2742). When you open your account, you will
automatically have the ability to purchase shares by telephone unless you
specify otherwise on your New Account Application. |
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Online |
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As a first time user, you will need your Fund account number and
your Tax Identification Number to establish online account access. Visit
matthewsasia.com and select
Account Login, where you will be able to create a login ID and
password. |
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Via Automatic
Investment Plan (Investor Class Only) |
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You
may establish an Automatic Investment Plan when you open your account. To
do so, please complete the Automatic Investment Plan section of the
application.
Additionally,
you may establish an Automatic Investment Plan by completing an Automatic
Investment Plan form or visiting matthewsasia.com. |
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Through Broker/
Intermediary |
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You may contact your broker or intermediary, who may charge you
a fee for their services. |
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By Wire |
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Please
call us at 800.789.ASIA (2742) between 9:00 AM–4:30 PM ET,
Monday through Friday, and inform us that you will be wiring funds.
Please also be sure to inform your bank of your Matthews account number as
part of the instructions.
Note
that wire fees are charged by most banks. |
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Exchanging Shares
You
may exchange your shares of one Matthews Asia Fund for another Matthews Asia
Fund of the same class. If you exchange your shares, minimum investment
requirements apply. To receive that day’s NAV, any request must be received by
the close of regular trading on the NYSE that day (generally, 4:00 PM Eastern
Time). Such exchanges may be made by telephone or online if you have so
authorized on your application. Please see Telephone and Online Transactions on page 123
or call 800.789.ASIA (2742) for more information. Because excessive
exchanges can harm a Matthews Asia Fund’s performance, the exchange privilege
may be terminated if the Matthews Asia Funds believe it is in the best interest
of all shareholders to do so.
The
Matthews Asia Funds may reject for any reason, or cancel as permitted or
required by law, any purchase order or exchange request at any time.
Additionally, if any transaction is deemed to have the potential to adversely
impact any of the Matthews Asia Funds, the Matthews Asia Funds reserve
the right to, among other things, reject any exchange request or limit the
amount of any exchange. In the event that a shareholder’s exchange privilege is
terminated, the share-
holder
may still redeem his, her or its shares. An exchange is treated as a taxable
event on which gain or loss may be recognized.
Selling (Redeeming)
Shares
You
may redeem shares of a Fund on any day the NYSE is open for business. To receive
a specific day’s NAV, your request must be received by the Fund’s agent before
the close of regular trading on the NYSE that day (generally, 4:00 PM Eastern
Time). If your request is received after the close of regular trading on the
NYSE, you will receive the next NAV calculated.
In
extreme circumstances, such as the imposition of capital controls that
substantially limit repatriation of the proceeds of sales of portfolio holdings,
the Funds may suspend shareholders’ redemption privileges for a period of not
more than seven days unless otherwise permitted by applicable law.
If
you are redeeming shares of a Fund recently purchased by check, the Fund may
delay sending your redemption proceeds until your check has cleared. This may
take up to 15 calendar days after we receive your check.
SELLING
(REDEEMING) SHARES
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By Mail |
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Send a letter to the Funds
via: |
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Regular
Mail:
Matthews
Asia Funds
P.O.
Box 534475
Pittsburgh,
PA 15253-4475 |
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Overnight
Mail:
Matthews
Asia Funds
Attention:
534475
500
Ross Street, 154‑0520
Pittsburgh,
PA 15262 |
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The
letter must include your name and account number, the name of the Fund and
the amount you want to sell in dollars or shares. This letter must be
signed by each owner of the account.
For
security purposes, a medallion signature guarantee will be required if
(among others):
T Your written request is
for an amount over $100,000; or
T A change of address was
received by the Funds’ transfer agent within the last 30 days; or
T The money is to be sent to
an address that is different from the registered address or to a bank
account other than the account that was preauthorized. |
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By
Phone |
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Call 800.789.ASIA (2742). When you open your account you will
automatically have the ability to exchange and redeem shares by telephone
unless you specify otherwise on your New Account Application. |
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By Wire |
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If
you have wiring instructions already established on your account, contact
us at 800.789.ASIA (2742) to request a redemption form. Please note
that the Funds charge $9.00 for wire redemptions, in addition to a wire
fee that may be charged by your bank.
Note: When you opened your account
you must have provided the wiring instructions for your bank with your
application.*
*
If your account has already been opened, you may send us a written request
to add wiring instructions to your account. Please complete the Banking
Instructions Form available on matthewsasia.com or call 800.789.ASIA
(2742). |
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Online
(Investor Class Only) |
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As a first time user, you will need your Fund account number and
your Tax Identification Number to establish online account access. Visit
matthewsasia.com and select Account Login, where you will be able to
create a login ID and password. |
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Through Broker/
Intermediary |
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Contact your broker or
intermediary, who may charge you a fee for their
services. |
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If
any transaction is deemed to have the potential to adversely impact any of the
Matthews Asia Funds, the Matthews Asia Funds reserve the right to, among other
things, delay payment of immediate cash redemption proceeds for up to seven
calendar days.
You
may redeem your shares by telephone or online. Please see Telephone and Online Transactions below, or
call 800.789.ASIA (2742) for more information.
Telephone
and Online Transactions
Investors
can establish new accounts online via matthewsasia.com by selecting Open an
Account and following the instructions. Shareholders with existing accounts may
purchase additional shares, or exchange or redeem shares, directly with a Fund
by calling 800.789.ASIA (2742), or through an online order at the Funds’ website
at matthewsasia.com. Only bank accounts held at domestic institutions that are
Automated Clearing House (ACH) members may be used for online
transactions.
Telephone
or online orders to purchase or redeem shares of a Fund, if received in good
order before 4:00 PM Eastern Time (your “placement date”), will be processed at
the Fund’s NAV calculated as of 4:00 PM Eastern Time on your placement
date.
In
times of extreme market conditions or heavy shareholder activity, you may have
difficulty getting through to the Funds, and in such event, you may still
purchase or redeem shares of the Funds using a method other than telephone or
online. If the Funds believe that it is in the best interest of all
shareholders, it may modify or discontinue telephone and/or online transactions
without notice.
The
convenience of using telephone and/or online transactions may result in
decreased security. The Funds employ certain security measures as they process
these transactions. If such security procedures are used, the Funds or their
agents will not be responsible for any losses that you incur because of a
fraudulent telephone or online transaction.
Market Timing Activities
The
Board of Trustees has approved policies and procedures applicable to most
purchases, exchanges and redemptions of Fund shares to discourage market timing
by shareholders (the “Market Timing Procedures”). Market timing can harm other
shareholders because it may dilute the value of their shares. Market timing may
also disrupt the management of a Fund’s investment portfolio and cause the
targeted Fund to incur costs, which are borne by non‑redeeming
shareholders.
The
Funds, because they invest in overseas securities markets, are particularly
vulnerable to market timers who may take advantage of time zone differences
between the close of the foreign markets on which each Fund’s portfolio
securities trade and the U.S. markets that generally determine the time as of
which the Fund’s NAV is calculated (this is sometimes referred to as “time zone
arbitrage”). The Funds also can be
the
targets of market timers if they invest in small‑cap securities and other types
of investments that are not frequently traded, including high-yield bonds.
The
Funds deem market timing activity to refer to purchase and redemption
transactions in shares of the Funds that have the effect of (i) diluting
the interests of long-term shareholders; (ii) harming the performance of
the Funds by compromising portfolio management strategies or increasing Fund
expenses for non‑redeeming shareholders; or (iii) otherwise disadvantaging
the Funds or their shareholders. Market timing activity includes time zone
arbitrage (i.e., seeking to take
advantage of differences between the closing times of foreign markets on which
portfolio securities of each Fund may trade and the U.S. markets that generally
determine when each Fund’s NAV is calculated), market cycle trading (i.e.,
buying on market down days and selling on market up days); and other types of
trading strategies.
The
Funds and their agents have adopted procedures to assist them in identifying and
limiting market timing activity. The Funds have also adopted and implemented a
Pricing and Valuation Policy and Procedures, which the Funds believe may reduce
the opportunity for certain market timing activity by fair valuing the Funds’
portfolios. However, there is no assurance that such practices will eliminate
the opportunity for time zone arbitrage or prevent or discourage market timing
activity.
The
Funds may reject for any reason, or cancel as permitted or required by law, any
purchase order or exchange request, including transactions deemed to represent
excessive trading, at any time.
Identification
of Market Timers
The
Funds have adopted procedures to identify transactions that appear to involve
market timing. However, the Funds do not receive information on all transactions
in their shares and may not be able to identify market timers. Moreover,
investors may elect to invest in a Fund through one or more financial
intermediaries that use a combined or omnibus account. Such accounts obscure,
and may be used to facilitate, market timing transactions. The Funds or their
agents request representations or other assurances related to compliance with
the Market Timing Procedures from parties involved in the distribution of Fund
shares and administration of shareholder accounts. In addition, the Funds have
entered into agreements with intermediaries that permit the Funds to request
greater information from intermediaries regarding transactions. These
arrangements may assist the Funds in identifying market timing activities.
However, the Funds will not always know of, or be able to detect, frequent
trading (or other market timing activity).
Omnibus
accounts, in which shares are held in the name of an intermediary on behalf of
multiple investors, are a common form of holding shares among retirement plans
and financial intermediaries such as brokers, investment advisors and
third-party administrators. Individual trades in omnibus
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INVESTING IN THE MATTHEWS ASIA
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accounts
are often not disclosed to the Funds, making it difficult to determine whether a
particular shareholder is engaging in excessive trading. Excessive trading in
omnibus accounts may not be detected by the Funds and may increase costs to the
Funds and disrupt their portfolio management.
Under
policies approved by the Board of Trustees, the Funds may rely on intermediaries
to apply the Funds’ Market Timing Procedures and, if applicable, their own
similar policies. In these cases, the Funds will typically not request or
receive individual account data but will rely on the intermediary to monitor
trading activity in good faith in accordance with its or the Funds’ policies.
Reliance on intermediaries increases the risk that excessive trading may go
undetected. For some intermediaries, the Funds will generally monitor trading
activity at the omnibus account level to attempt to identify disruptive trades.
The Funds may request transaction information, as frequently as daily, from any
intermediary at any time, and may apply the Funds’ Market Timing Procedures to
such transactions. The Funds may prohibit purchases of Fund shares by an
intermediary or request that the intermediary prohibit the purchase of Fund
shares by some or all of its clients. There is no assurance that the Funds will
request data with sufficient frequency, or that the Funds’ analysis of such data
will enable them to detect or deter market timing activity effectively.
The
Funds (or their agents) attempt to contact shareholders whom the Funds (or their
agents) believe have violated the Market Timing Procedures and notify them that
they will no longer be permitted to buy (or exchange) shares of the Funds. When
a shareholder has purchased shares of the Funds through an intermediary, the
Funds may not be able to notify the shareholder of a violation of the Funds’
policies or that the Funds have taken steps to address the situation (for
example, the Funds may be unable to notify a shareholder that his or her
privileges to purchase or exchange shares of the Funds have been terminated).
Nonetheless, additional purchase and exchange orders for such investors will not
be accepted by the Funds.
Many
intermediaries have adopted their own market timing policies. These policies may
result in a shareholder’s privileges to purchase or exchange the Matthews Asia
Funds’ shares being terminated or restricted independently of the Matthews Asia
Funds. Such actions may be based on other factors or standards that are
different than or in addition to the Funds’ standards. For additional
information, please contact your intermediary.
Redemption
in Kind and Funding Redemptions
The
Funds generally pay redemption proceeds in cash. The Funds typically expect to
satisfy redemption requests by selling portfolio assets or by using holdings of
cash or cash equivalents. In some circumstances, it may be necessary for a Fund
to borrow in order to pay redemption proceeds. The Funds may use these methods
during both normal and stressed market conditions.
During
conditions that make the payment of cash unwise and/or in order to protect the
interests of a Fund’s remaining shareholders, you could receive your redemption
proceeds as a combination of cash and securities. Receiving securities instead
of cash is called “redemption in kind.” The Funds may redeem shares in kind
during both normal and stressed market conditions. Generally, in‑kind
redemptions will be effected through a pro rata distribution of the Fund’s
portfolio securities. Note that if you receive securities as part of your
redemption proceeds, you will bear any market risks associated with investments
in these securities, and you will incur transaction charges if you sell the
securities to convert them to cash.
After
the Funds have received your redemption request and all proper documents,
payment for shares tendered will generally be made within (i) one to three
business days for redemptions made by wire, and (ii) three to five business
days for ACH redemptions. Redemption payments by check will generally be issued
on the business day following the redemption date; however, your actual receipt
of the check will be subject to postal delivery schedules and timing. If you are
redeeming shares of a Fund recently purchased by check, the Fund may delay
sending your redemption proceeds until your check has cleared, which may take up
to 15 calendar days after we receive your check. It may take up to several weeks
for the initial portion of the in‑kind securities to be delivered to you, and
substantially longer periods for the remainder of the in‑kind securities to be
delivered to you, in payment of your redemption in kind.
Medallion
Signature Guarantees
The
Funds require a medallion signature guarantee on any written redemption of the
Investor Class shares over $100,000 (but may require additional
documentation or a medallion signature guarantee on any redemption request to
help protect against fraud); the redemption of corporate, partnership or
fiduciary accounts; or for certain types of transfer requests or account
registration changes. A medallion signature guarantee may be obtained from a
domestic bank or trust company, broker, dealer, clearing agency, savings
association or other financial institution that is participating in a medallion
program recognized by the Securities Transfer Association. The three
“recognized” medallion programs are Securities Transfer Agents Medallion Program
(STAMP), Stock Exchanges Medallion Program (SEMP), and NYSE, Inc. Medallion
Signature Program (NYSE MSP). Please call 800.789.ASIA (2742) for
information on obtaining a signature guarantee. The Funds and/or Matthews
reserve the right to waive the medallion signature guarantee requirement,
provided they have obtained sufficient evidence to grant the waiver.
Other Shareholder
Information
Disclosure
of Portfolio Holdings
A
description of the Funds’ policies and procedures with respect to the disclosure
of the Funds’ portfolio securities is
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available
in the Funds’ SAI, which is available on the Matthews Asia Funds website at
matthewsasia.com.
Minimum
Size of an Account
The
Funds reserve the right to redeem small Investor Class accounts (excluding
IRAs) that fall below $2,500, or Institutional Class accounts that fall
below $100,000, due to redemption activity. If this happens to your account, you
may receive a letter from the Funds giving you the option of investing more
money into your account or closing it. Investor Class accounts that fall
below $2,500 and Institutional Class accounts that fall below $100,000 due
to market volatility will not be affected.
Confirming
Your Transactions
The
Funds will send you a written confirmation following each purchase, sale and
exchange of Fund shares, except for systematic purchases and redemptions.
Additional
Information about Shareholder Servicing
The
operating expenses of each Fund include the cost of maintaining shareholder
accounts, generating shareholder statements, providing taxpayer information, and
performing related recordkeeping and administrative services. For shareholders
who open accounts directly with the Funds, BNY Mellon Investment Servicing (US)
Inc. (“BNY Mellon”), the Funds’ transfer agent, performs these services as part
of the various services it provides to the Funds under an agreement between the
Trust, on behalf of the Funds, and BNY Mellon. For shareholders who purchase
shares through a broker or other financial intermediary, some or all of these
services may be performed by that intermediary. For performing these services,
the intermediary seeks compensation from the Funds or Matthews. In some cases,
the services for which compensation is sought may be bundled with services not
related to shareholder servicing, and may include distribution fees. The Board
of Trustees has made a reasonable allocation of the portion of bundled fees, and
Matthews pays from its own resources that portion of the fees that the Board of
Trustees determines may represent compensation to intermediaries for
distribution services.
Other
Compensation to Intermediaries
Matthews,
out of its own resources and without additional cost to a Fund or its
shareholders, may provide additional cash payments or non‑cash compensation to
intermediaries who sell shares of the Fund. Such payments and compensation are
in addition to service fees or sub‑transfer agency fees paid by the Fund. The
level of payments will vary for each particular intermediary. These additional
cash payments generally represent some or all of the following:
(a) payments to intermediaries to help defray the costs incurred to educate
and train personnel about the Fund; (b) marketing support fees for
providing assistance in promoting the sale of Fund shares; (c) access to
sales meetings, sales representatives and management representatives of the
intermediary; and (d) inclusion of the Fund on the sales list, including a
preferred or select sales list, or other sales program of the
intermediary.
A number of factors will be considered in determining the level of payments,
including the intermediary’s sales, assets and redemption rates, as well as the
nature and quality of the intermediary’s relationship with Matthews. Aggregate
payments may change from year to year and Matthews will, on an annual basis,
determine the advisability of continuing these payments. Shareholders who
purchase or hold shares through an intermediary may inquire about such payments
from that intermediary.
Rule
12b‑1 Plan
The
Trust’s mutual fund 12b‑1 Plan (the “Plan”) is inactive. The Plan authorizes the
use of the Funds’ assets to compensate parties that provide distribution
assistance or shareholder services, including, but not limited to, printing and
distributing prospectuses to persons other than shareholders, printing and
distributing advertising and sales literature and reports to shareholders used
in connection with selling shares of the Funds, and furnishing personnel and
communications equipment to service shareholder accounts and prospective
shareholder inquiries. Although the Plan currently is not active, it is reviewed
by the Board annually in case the Board decides to re‑activate the Plan. The
Plan would not be re‑activated without prior notice to shareholders. If the Plan
were re‑activated, the fee would be up to 0.25% for the Investor Class and
because these fees would be paid out of the Fund’s assets on an on‑going basis,
over time these fees would increase the cost of your investment and could cost
you more than paying other types of sales charges.
Distributions
All
of the Funds, except the Matthews Asia Dividend Fund, Matthews China Dividend
Fund, and the Matthews Asian Growth and Income Fund, generally distribute their
net investment income once annually in December. The Matthews Asia Dividend Fund
generally distributes net investment income quarterly in March, June, September
and December. The Matthews China Dividend Fund and Matthews Asian Growth and
Income Fund generally distribute net investment income semi-annually in June and
December. Any net realized gain from the sale of portfolio securities and net
realized gains from foreign currency transactions are distributed at least once
each year unless they are used to offset losses carried forward from prior
years. All such distributions are reinvested automatically in additional shares
at the current NAV, unless you elect to receive them in cash. If you hold the
shares directly with the Funds, the manner in which you receive distributions
may be changed at any time by writing to the Funds. Additionally, details of
distribution-related transactions will be reported on quarterly account
statements. You may not receive a separate confirmation statement for these
transactions.
Any
check in payment of dividends or other distributions that cannot be delivered by
the post office or that remains uncashed for a period of more than one year will
be reinvested in your account.
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Distributions
are treated the same for tax purposes whether received in cash or reinvested. If
you buy shares when a Fund has realized but not yet distributed ordinary income
or capital gains, you will be “buying a dividend” by paying the full price of
the shares and then receiving a portion of the price back in the form of a
taxable dividend.
Taxes
This
section summarizes certain income tax considerations that may affect your
investment in the Funds. You are urged to consult your tax advisor regarding the
tax effects to you of an investment in the Funds based on your individual tax
situation. The tax consequences of an investment in the Funds depend on the type
of account that you have and your particular tax circumstances. Distributions
are subject to federal income tax and may also be subject to state and local
income taxes. The Funds intend to make distributions that may be taxed as
ordinary income and capital gains (which may be taxable at different rates
depending on the length of time the Funds hold their assets). Distributions are
generally taxable when they are paid, whether in cash or by reinvestment.
Distributions declared in October, November or December and paid the following
January are taxable as if they were paid on December 31.
The
exchange of one Matthews Asia Fund for another is a taxable event, which means
that if you have a gain, you may be obligated to pay tax on it. If you have a
qualified retirement account, taxes are generally deferred until distributions
are made from the retirement account.
Part
of a distribution may include realized capital gains, which may be taxed at
different rates depending on how long a Fund has held specific securities.
You
must have an accurate Social Security Number or taxpayer I.D. number on file
with the Funds. If you do not, you may be subject to backup withholding on your
distributions.
In
mid‑February, if applicable, you will be sent a Form 1099‑DIV or other
Internal Revenue Service (“IRS”) forms, as required, indicating the tax status
of any distributions made to you. This information will be reported to the IRS.
If the total distributions you received for the year are less than $10, you may
not receive a Form 1099‑DIV. Please note retirement account shareholders will
not receive a Form 1099‑DIV.
Speak
with your tax advisor concerning state and local tax laws, which may produce
different consequences than those under federal income tax laws.
In
addition, the Funds may be subject to short-term capital gains tax in India on
gains realized upon disposition of Indian securities held less than one year.
The tax is computed on net realized gains; any realized losses in excess of
gains may be carried forward for a period of up to eight years to offset future
gains. Any net taxes payable must be remitted to the Indian government prior to
repatriation of sales proceeds. The Funds accrue a deferred tax liability for
net unrealized short-term gains in excess of available carryforwards on Indian
securities. This accrual may reduce a Fund’s net asset value.
You
should read the tax information in the Statement of Additional information,
which supplements the information above and is a part of this prospectus. The
Funds do not expect to request an opinion of counsel or rulings from the IRS
regarding their tax status or the tax consequences to investors in the
Funds.
Cost
Basis Reporting
As
part of the Emergency Economic Stabilization Act of 2008, the Funds are
responsible for tracking and reporting cost basis information to the IRS on the
sale or exchange of shares acquired on or after January 1, 2012 (“Covered
Shares”). Cost basis is the cost of the shares you purchased, including
reinvested dividends and capital gains distributions. Where applicable, the cost
is adjusted for sales charges or transaction fees. When you sell Covered Shares
in a taxable account, the cost basis accounting method you choose determines how
your gain or loss is calculated. Matthews’ default cost basis accounting method
is Average Cost. If you and your financial or tax advisor determine another
method to be more beneficial to your situation, you will be able to change your
default setting to another IRS‑accepted cost basis method by notifying the
Funds’ transfer agent in writing or by phone at 800.789.ASIA (2742), Monday
through Friday, 9:00 AM to 4:30 PM ET. When you redeem Covered Shares from
your account, we will calculate the cost basis on those shares according to your
cost basis method election. Again, please consult your tax professional to
determine which method should be considered for your individual tax
situation.
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Index
Definitions
It
is not possible to invest directly in an index. The performance of foreign
indices may be based on different exchange rates than those used by a Fund and,
unlike the Fund’s NAV, is not adjusted to reflect fair value at the close of
regular trading on the NYSE (generally 4:00 PM Eastern Time) on each day that
the exchange is open for trading.
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,
Kuwait, 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 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, Hungary, 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
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 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 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 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
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 India Index is a free float-adjusted market capitalization-weighted index
of Indian equities listed in India.
The
MSCI Japan Index is a free float-adjusted market capitalization-weighted index
of Japanese equities listed in Japan.
General
Information
Identity
Verification Procedures Notice
The
USA PATRIOT Act requires financial institutions, including mutual funds, to
adopt certain policies and programs to prevent money laundering activities,
including procedures to verify the identity of customers opening new accounts.
When completing the New Account Application, you will be required to supply the
Funds with information, such as your taxpayer identification number, that will
assist the Funds in verifying your identity. Until such verification is made,
the Funds may limit additional share purchases. In addition, the Funds may limit
additional share purchases or close an account if they are unable to verify a
customer’s identity. As required by law, the Funds may employ various
procedures, such as comparing the information to fraud databases or requesting
additional information or documentation from you, to ensure that the information
supplied by you is correct. Your information will be handled by us as discussed
in our Privacy Statement below.
Privacy
Statement
Matthews
Asia Funds will never sell your personal information and will only share it for
the limited purposes described below. While it is necessary for us to collect
certain non‑public personal information about you when you open an account (such
as your address and Social Security Number), we protect this information and use
it only for communication purposes or to assist us in providing the information
and services necessary to address your financial needs. We respect your privacy
and are committed to ensuring that it is maintained.
As
permitted by law, it is sometimes necessary for us to share your information
with companies that perform administrative or marketing services on our behalf,
such as transfer agents and/or mail facilities that assist us in shareholder
servicing or distribution of investor materials. These companies are not
permitted to use or share this information for any other purpose.
We
restrict access to non‑public personal information about you to those employees
who need to know that information to provide products or services to you. We
maintain physical, electronic and procedural safeguards that comply with federal
standards to protect your personal information.
When
using Matthews Asia Funds’ Online Account Access, you will be required to
provide personal information to gain access to your account. For your
protection, the login screen resides on a secure server.
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Investment Advisor
Matthews
International Capital Management, LLC
800.789.ASIA
(2742)
Account Services
BNY
Mellon Investment Servicing (US) Inc.
P.O.
Box 534475
Pittsburgh,
PA 15253-4475
800.789.ASIA
(2742)
Custodian
Brown
Brothers Harriman & Co.
50
Post Office Square
Boston,
MA 02110
Administrator and
Transfer Agent
BNY
Mellon
Wilmington,
DE 19809
Shareholder
Service Representatives are available
from
9:00 AM to 4:30 PM ET, Monday through Friday.
For
additional information about
Matthews
Asia Funds:
matthewsasia.com
800.789.ASIA (2742)
Matthews Asia Funds
P.O. Box 534475
Pittsburgh, PA 15253-4475
Shareholder
Reports
Additional
information about the Funds’ investments is available in the Funds’ annual
reports (audited by independent accountants) and semi-annual reports. These
reports contain a discussion of the market conditions and investment strategies
that significantly affected each Fund’s performance during its reporting period.
To reduce the Funds’ expenses, we try to identify related shareholders in a
household and send only one copy of the Funds’ prospectus and annual and
semi-annual reports to that address. This process, called “householding,” will
continue indefinitely unless you instruct us otherwise. At any time you may view
the Funds’ current prospectus and annual and semi-annual reports, free of
charge, on the Funds’ website at matthewsasia.com. The Funds’ current
prospectus and annual and semi-annual reports are also available to you, without
charge, upon request.
Statement
of Additional Information (SAI)
The
SAI, which is incorporated into this prospectus by reference and dated
April 29, 2024, is available to you, without charge, upon request or
through the Funds’ website at matthewsasia.com. It contains additional
information about the Funds.
HOW
TO OBTAIN ADDITIONAL INFORMATION
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Contacting Matthews Asia Funds |
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You
can obtain free copies of the publications described above by visiting the
Funds’ website at matthewsasia.com. To request the
SAI, the Funds’ annual and semi-annual reports and other information about
the Funds or to make shareholder inquiries, contact the Funds at:
Matthews
Asia Funds
P.O.
Box 534475
Pittsburgh,
PA 15253-4475
800.789.ASIA
(2742) |
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Obtaining Information from the SEC |
|
Reports and other information about the
Funds are available on the EDGAR Database on the SEC’s Internet site at
http://www.sec.gov, and copies of this information may be obtained, after
paying a duplication fee, by electronic request at the following
E‑mail address: [email protected]. |
Investment
Company Act File Number: 811-08510
Distributed
in the United States by Foreside Funds Distributors LLC
Distributed
in Latin America by Picton S.A.
P.O. Box 534475 | Pittsburgh, PA 15253‑4475 | matthewsasia.com | 800.789.ASIA (2742)
PS‑0424