-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L9+klu8aERK/WPnwXjQbkSzqm5Ft0gbnlrv20hlE6ycJLlBeHInbcM052Xd2K4PD 7dQ4FJanZT18BAKIH5tQeQ== 0000950109-96-002495.txt : 19960501 0000950109-96-002495.hdr.sgml : 19960501 ACCESSION NUMBER: 0000950109-96-002495 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960430 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATTHEWS INTERNATIONAL FUNDS CENTRAL INDEX KEY: 0000923184 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08510 FILM NUMBER: 96553584 BUSINESS ADDRESS: STREET 1: 2 W ELM ST STREET 2: C/O FUND/PLAN SERVICES INC CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 N-30D 1 MATTHEWS INTERNATIONAL FUNDS SEMI-ANNUAL REPORT Dear Fellow Shareholder, This report is the second semi-annual report for the Matthews International Funds and covers the six month period which ended on February 29, 1996. I am pleased to be able to report that the Matthews Pacific Tiger Fund and the Matthews Asian Convertible Securities Fund have provided positive returns in this six month period, gaining 12% and 10%, respectively. The third fund in the series, the Matthews Korea Fund, fared less well, declining by 8% during the first half of our fiscal year, reflecting continued weakness in the Korean stock market. I am also pleased to report that the assets in all three funds have been growing steadily during the period. The Matthews Pacific Tiger Fund has now qualified for inclusion in the mutual fund listings in the major newspapers and can be found in the Wall Street Journal under the heading Matth Tigr. Asia's Tiger economies have continued to grow at rates that are the envy of developed countries. Living standards throughout the region are rising at a rapid rate and we believe that this environment remains highly favorable for companies doing business in the region. The emergence of mainland China as a major economic power is adding to the dynamism of the region, with the nine Tiger countries in which we invest now representing 12% of global economic output. While China's emergence as an economic power is clearly very positive for the region, the recent escalation of tensions between China and Taiwan is a cause for concern. Following the elections in Taiwan it seems both countries are now intent on defusing the situation and we remain convinced that China's main priority is to increase domestic living standards through continued economic reforms. To achieve this goal, China is highly dependent on foreign capital, 60% of which has been provided by Hong Kong and Taiwanese business interests. Any further attempts to unsettle Taiwan are likely to affect this flow of capital and it would seem both Taiwan and China have every incentive to resolve their differences peacefully. We remain very optimistic for the Tiger region and thank you for your support. Yours sincerely, [ART] G. Paul Matthews President, Matthews International Funds MATTHEWS INTERNATIONAL FUNDS -- SCHEDULE OF INVESTMENTS February 29, 1996 (unaudited) - ------------------------------------------------------------------------------- MATTHEWS PACIFIC TIGER FUND
MARKET SHARES VALUE ------- ---------- EQUITIES -- 93.39% HONG KONG -- 40.07% ABC Communications Holdings Ltd............................. 494,000 $ 98,401 C P Pokphand Co. ........................................... 440,000 231,917 Cheung Kong................................................. 28,000 194,666 China Merchants Hai Hong Holdings........................... 640,000 217,301 China Travel International.................................. 490,000 108,379 Citic Pacific Ltd........................................... 40,000 155,733 Dao Heng Bank Group Ltd..................................... 31,500 129,159 Giordano International Ltd.................................. 242,000 258,239 Harbour Centre Development.................................. 135,000 169,379 Hopewell Holdings........................................... 362,025 264,570 HSBC Holdings PLC........................................... 12,000 192,467 JCG Holdings Ltd. .......................................... 196,000 191,406 Joyce Boutique.............................................. 750,000 269,201 Shangri-La Asia Ltd. ....................................... 124,000 169,210 Sun Hung Kai Properties..................................... 17,000 151,723 Tingyi Holdings Co. **...................................... 804,000 220,988 Varitronix International Ltd. .............................. 106,000 204,289 Wharf Holdings.............................................. 45,000 174,326 ---------- TOTAL HONG KONG............................................. 3,401,354 ---------- INDONESIA -- 8.15% Pt Bakrie & Brothers........................................ 43,000 75,642 Pt Bank Bali................................................ 57,000 141,485 Pt Bank International Indonesia............................. 17,000 71,368 Pt Hero Supermarket......................................... 35,000 80,078 Pt Semen Cibinong........................................... 20,000 62,379 Pt Steady Safe Transportation............................... 208,000 260,393 ---------- TOTAL INDONESIA............................................. 691,345 ---------- KOREA -- 4.87% Dae Han City Gas Co. ....................................... 2,100 160,207 Hanil Bank.................................................. 2,000 24,382 Samsung Electronics Co.**................................... 363 59,767 Samsung Securities Co. Ltd. ................................ 5,000 169,318 ---------- TOTAL KOREA................................................. 413,674 ---------- MALAYSIA -- 13.73% Arab Malaysian Finance...................................... 42,000 194,445 Berjaya Sports Toto Berhad.................................. 57,000 157,662 Cycle & Carriage Bintang Berhad............................. 40,000 227,558 DCB Holdings Berhad......................................... 54,000 164,195 Kedah Cement Berhad......................................... 50,000 99,066 Star Publications**......................................... 85,000 205,097 Tenaga Nasional Berhad...................................... 29,000 117,192 ---------- TOTAL MALAYSIA.............................................. 1,165,215 ---------- PHILIPPINES -- 3.96% Filinvest Land, Inc. **..................................... 172,500 74,197 Metropolitan Bank & Trust................................... 4,194 94,607 Republic Glass Holdings Corp. **............................ 240,000 86,255 Southeast Asia Cement Holdings**............................ 550,000 80,960 ---------- TOTAL PHILIPPINES........................................... 336,019 ----------
MARKET SHARES VALUE -------- ---------- SINGAPORE -- 11.08% Courts Ltd. ............................................... 32,000 $ 57,106 DBS Land................................................... 31,000 121,840 Far East Levingston Shipbuilding........................... 35,000 208,201 Osprey Maritime Ltd. **.................................... 105,000 246,750 Overseas Union Bank........................................ 15,000 109,412 Wing Tai Holdings.......................................... 82,000 197,436 ---------- TOTAL SINGAPORE............................................ 940,745 ---------- THAILAND -- 11.53% Bank Of Ayudhya............................................ 24,900 170,873 Banpu Public Co. Ltd. ..................................... 3,000 82,348 Central Pattana Public Co. ................................ 54,000 214,201 Hemaraj Land Development Co. .............................. 28,000 165,490 Industrial Finance Corp. **................................ 40,066 139,857 MDX Public Co. Ltd. ....................................... 39,000 67,295 Precious Shipping PLC...................................... 24,900 138,278 ---------- TOTAL THAILAND............................................. 978,342 ---------- TOTAL EQUITIES (Cost $7,407,594)......................................... 7,926,694 ---------- FACE MARKET AMOUNT VALUE -------- ---------- INTERNATIONAL DOLLAR BONDS (NOTE 1-A) -- 5.86% Acer, Inc. 4.000%, due 06/10/01...................................... $ 50,000 136,750 President Enterprises 0.000%, due 07/22/01**.................................... 120,000 157,500 Yangming Marine Transportation 2.000%, due 10/06/01........ 130,000 139,750 Banpu Coal Co. Ltd. 3.500%, due 08/25/04...................................... 45,000 63,450 ---------- TOTAL INTERNATIONAL DOLLAR BONDS (Cost $499,857)........... 497,450 ---------- TOTAL INVESTMENTS -- 99.25%* (Cost $7,907,451)......................................... 8,424,144 ---------- CASH AND OTHER ASSETS, LESS LIABILITIES -- 0.75%................................. 63,573 ---------- NET ASSETS -- 100%......................................... $8,487,717 ==========
* Cost for Federal income tax purposes is $7,907,451 and net unrealized appreciation consists of: Gross unrealized appreciation........... $ 623,471 Gross unrealized depreciation........... (106,778) --------- Net unrealized appreciation .......... $ 516,693 =========
** Non-income producing securities See accompanying notes to financial statements MATTHEWS INTERNATIONAL FUNDS -- SCHEDULE OF INVESTMENTS February 29, 1996 (unaudited) - -------------------------------------------------------------------------------- MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND
MARKET SHARES VALUE -------- -------- EQUITIES -- 11.83% HONG KONG -- 7.71% China Hong Kong Photo Products............................... 41,387 $ 24,223 Citic Pacific (UBS) Warrants**............................... 140,000 24,265 Cross-Harbour Tunnel Co. .................................... 20,000 39,192 Merrill Lynch-HSBC Holdings Warrants**....................... 40,000 20,437 Peregrine Investment Holdings................................ 14,000 23,903 South China Morning Post..................................... 42,000 29,607 Swire Pacific Class "A" Warrants**........................... 100,000 19,143 -------- TOTAL HONG KONG.............................................. 180,770 -------- SOUTH KOREA -- 3.25% JP Morgan Jersey Warrants**.................................. 300 10,050 Korea Kumho Petrochemical-Preferred**........................ 5,000 31,627 Samsung Electronics Co. **................................... 210 34,618 -------- TOTAL SOUTH KOREA............................................ 76,295 -------- THAILAND -- 0.87% Industrial Finance Corp. Warrants**.......................... 12,000 20,349 -------- TOTAL EQUITIES (COST $263,514)............................................. 277,414 -------- FACE MARKET AMOUNT VALUE -------- -------- INTERNATIONAL DOLLAR BONDS (NOTE 1-A) -- 82.38% HONG KONG -- 29.13% Goldlion Capital (BVI) 4.875%, due 02/01/99........................................ $ 30,000 40,575 Hysan Development Finance 6.750%, due 06/01/00........................................ 80,000 90,600 Wharf Capital International, Ltd. 5.000%, due 07/15/00........................................ 30,000 36,150 New World Development (BVI) 4.375%, due 12/11/00........................................ 60,000 66,225 Hon Kwok Land Treasury 4.875%, due 12/15/00........................................ 40,000 37,000 Shangri-La Asia Capital 2.875%, due 12/16/00........................................ 70,000 61,075 Hong Kong and Shanghai Hotels 5.000%, due 01/06/01........................................ 40,000 41,500 Hong Kong Land Co. 4.000%, due 02/23/01........................................ 35,000 30,363 Sino Land 5.000%, due 02/26/01........................................ 60,000 59,250
FACE MARKET AMOUNT VALUE -------- -------- China Resources Enterprises 3.000%, due 11/24/05........................................ $ 50,000 $ 57,750 Regal Hotels International Holdings 5.250%, due 12/13/08........................................ 75,000 72,375 Amoy Properties, Ltd. 5.500%, due 12/29/49........................................ 100,000 90,375 -------- TOTAL HONG KONG.............................................. 683,238 -------- INDONESIA -- 2.54% Pt Indocement 2.000%, due 02/27/06........................................ 60,000 59,550 -------- MALAYSIA -- 7.91% United Engineers Berhad 2.000%, due 03/01/04........................................ 50,000 58,250 Commerce Asset Holdings 1.750%, due 09/26/04........................................ 60,000 69,900 Renong Berhad 2.500%, due 01/15/05........................................ 50,000 57,375 -------- TOTAL MALAYSIA............................................... 185,525 -------- SINGAPORE -- 8.61% Jardine Strategic Holdings 7.500%, due 05/07/49........................................ 90,000 106,200 Dairy Farm International Holdings 6.500%, due 05/10/49........................................ 115,000 95,881 -------- TOTAL SINGAPORE.............................................. 202,081 -------- SOUTH KOREA -- 3.07% Samsung Display Devices 0.500%, due 04/12/02........................................ 40,000 47,200 Daewoo Electronics Co. 3.500%, due 12/31/07........................................ 20,000 24,800 -------- TOTAL SOUTH KOREA............................................ 72,000 -------- TAIWAN -- 11.85% Acer, Inc. 4.000%, due 06/10/01........................................ 10,000 27,350 Far Eastern Department Stores 3.000%, due 07/06/01........................................ 50,000 43,500 President Enterprises 0.000%. due 07/22/01**...................................... 70,000 91,875 Yangming Marine Transportation 2.000%, due 10/06/01........................................ 50,000 53,750 Walsin Lihwa Corp. 3.250%, due 06/16/04........................................ 70,000 61,600 -------- TOTAL TAIWAN................................................. 278,075 --------
See accompanying notes to financial statements. MATTHEWS INTERNATIONAL FUNDS -- SCHEDULE OF INVESTMENTS February 29, 1996 (unaudited) - ------------------------------------------------------------------------------- MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND (continued)
FACE MARKET AMOUNT VALUE ------- ---------- THAILAND -- 19.27% Finance One PLC 2.000%, due 08/31/01....................................... $40,000 $ 41,950 Hemaraj Land Development 3.500%, due 09/09/03....................................... 40,000 38,200 MDX Public Co., Ltd. 4.750%, due 09/17/03....................................... 65,000 35,913 Sino-Thai Engineering & Construction PLC 1.750%, due 12/17/03....................................... 30,000 31,050 Siam Commercial Bank Co. 3.250%, due 01/24/04....................................... 40,000 51,600 Tanayong Public Co., Ltd. 3.500%, due 03/01/04....................................... 60,000 47,700 Bangkok Bank Public Co. 3.250%, due 03/03/04....................................... 70,000 79,625 Banpu Coal Co., Ltd. 3.500%, due 08/25/04....................................... 60,000 84,600 Loxley Public Co. 3.500%, due 04/20/05....................................... 30,000 33,225 NTS Steel Group Public 4.000%, due 12/16/08....................................... 15,000 8,250 ---------- TOTAL THAILAND.............................................. 452,113 ---------- TOTAL INTERNATIONAL DOLLAR BONDS (Cost $1,866,575).......................................... 1,932,582 ----------
MARKET SHARES VALUE ------ ---------- INVESTMENT COMPANY -- 1.68% (Cost $39,673) The India Fund............................................... 4,000 $ 39,500 ---------- TOTAL INVESTMENTS -- 95.89%* (Cost $2,169,762)........................................... 2,249,496 ---------- CASH AND OTHER ASSETS, LESS LIABILITIES -- 4.11%............. 96,310 ---------- NET ASSETS -- 100%........................................... $2,345,806 ==========
* Cost for Federal income tax purposes is $2,169,762 and net unrealized appreciation consists of: Gross unrealized appreciation............ $115,201 Gross unrealized depreciation............ (35,467) -------- Net unrealized appreciation............ $ 79,734 ========
**Non-income producing securities See accompanying notes to financial statements MATTHEWS INTERNATIONAL FUNDS -- SCHEDULE OF INVESTMENTS February 29, 1996 (unaudited) - ------------------------------------------------------------------------------- MATTHEWS KOREA FUND
MARKET SHARES VALUE ------ ---------- EQUITIES -- KOREA 89.03% Asia Paper Manufacturing Co. ................................. 1,433 $ 31,130 Commercial Bank of Korea...................................... 4,000 46,259 Dae Duck Electronics Co.**.................................... 1,200 41,710 Dae Won Kang Up Co.**......................................... 36 653 Dae Han Paint and Ink Co.**................................... 923 34,087 Dong-A Pharmaceutical Co.**................................... 1,224 32,064 Dong-Ah Construction Ind Co. ................................. 885 32,797 Han Il Cement Mfg. Co. ....................................... 700 38,464 Hanjin Shipping**............................................. 1,085 29,117 Hankook New .................................................. 74 3,470 Hankook Tire Mfg. Co. ........................................ 800 38,234 Hotel Shilla Co. ............................................. 3,000 37,761 Hyundai Precision Industry**.................................. 2,200 41,889 Hyundai Motor Service Co.**................................... 700 27,104 Inchon Iron & Steel Co.**..................................... 800 26,375 Inchon Iron & Steel Co. Rights**.............................. 800 0 Keyang Electric Machinery Co.**............................... 1,250 32,586 Kookmin Bank.................................................. 1,312 28,166 Korea Electronics Co.**....................................... 700 23,615 Korea Industrial Leasing...................................... 2,200 44,138 Korea Reinsurance............................................. 1,000 43,064 LG Chemical Co. Ltd. ......................................... 1,000 16,996 Namkwang Engineering & Construction**......................... 3,000 42,937 Oriental Fire & Marine Insurance**............................ 800 28,318
MARKET SHARES VALUE ------ ---------- Sam Lip Industrial Co. ...................................... 170 $ 6,952 Samsung Electronics Co.**.................................... 255 42,036 Samsung Heavy Industries..................................... 1,000 20,574 Samsung Moolsan Corp.**...................................... 1,500 38,336 Samsung Securities Co. Ltd. ................................. 1,200 40,636 Seoul Bank**................................................. 6,000 51,600 Tongyang Investment & Finance**.............................. 2,500 47,601 ---------- 968,669 ---------- TOTAL EQUITIES (Cost $1,078,218)........................................... 968,669 ---------- TOTAL INVESTMENTS -- 89.03% (Cost $1,078,218)................ 968,669 ---------- CASH AND OTHER ASSETS, LESS LIABILITIES -- 10.97%............ 119,369 ---------- NET ASSETS -- 100%........................................... $1,088,038 ==========
* Cost for Federal income tax purposes is $1,078,218 and net unrealized depreciation consists of: Gross unrealized appreciation........... $ 28,995 Gross unrealized depreciation........... (138,544) --------- Net unrealized depreciation........... $(109,549) =========
**Non-income producing securities See accompanying notes to financial statements STATEMENT OF ASSETS AND LIABILITIES February 29, 1996 (unaudited) - --------------------------------------------------------------------------------
MATTHEWS MATTHEWS ASIAN PACIFIC CONVERTIBLE MATTHEWS TIGER SECURITIES KOREA FUND FUND FUND ---------- ----------- ---------- ASSETS: Investments, at market value (Cost $7,907,451, $2,169,762 and $1,078,218, respectively).......................... $8,424,144 $2,249,496 $ 968,669 Cash.................................... 1,132,044 69,331 95,175 Dividends and interest receivable....... 13,588 17,358 3,306 Receivable for securities sold.......... 145,761 27,420 4,288 Receivable for capital stock sold....... 72,008 0 0 Deferred organization costs (Note 1-E).. 23,821 23,821 12,341 Due from Advisor........................ 20,409 20,319 6,831 Other assets............................ 670 552 260 ---------- ---------- ---------- Total assets........................... 9,832,445 2,408,297 1,090,870 ---------- ---------- ---------- LIABILITIES: Payable for securities purchased........ 1,344,728 60,000 2,832 Payable for capital stock redeemed...... 0 2,491 0 ---------- ---------- ---------- Total liabilities...................... 1,344,728 62,491 2,832 ---------- ---------- ---------- NET ASSETS: Applicable to 775,963, 219,656 and 130,616 shares outstanding, respectively........................... $8,487,717 $2,345,806 $1,088,038 ========== ========== ========== NET ASSETS CONSIST OF: Capital paid-in......................... $7,979,562 $2,250,745 $1,206,385 Undistributed net investment income (loss)................................. (1,890) 3,637 67 Accumulated realized gain (loss) on investments and foreign currency related transactions................... (6,648) 11,690 (8,865) Net unrealized appreciation (depreciation) on investments and foreign currency related transactions.. 516,693 79,734 (109,549) ---------- ---------- ---------- $8,487,717 $2,345,806 $1,088,038 ========== ========== ========== NET ASSET VALUE AND REDEMPTION PRICE PER SHARE.................................. $ 10.94 $ 10.68 $ 8.33 ========== ========== ==========
See accompanying notes to financial statements. STATEMENT OF OPERATIONS For the Six Months Ended February 29, 1996 (unaudited) - --------------------------------------------------------------------------------
MATTHEWS MATTHEWS ASIAN PACIFIC CONVERTIBLE MATTHEWS TIGER SECURITIES KOREA FUND FUND FUND -------- ----------- -------- INVESTMENT INCOME: Dividends..................................... $ 18,092 $ 6,247 $ 3,460 Interest...................................... 7,268 21,972 2,422 -------- -------- -------- Total investment income...................... 25,360 28,219 5,882 -------- -------- -------- EXPENSES: Investment advisory fees (Note 2)............. 15,210 6,672 3,907 Transfer agent fees........................... 13,996 13,047 12,521 Administration fees........................... 11,827 11,402 11,161 Accounting fees............................... 21,320 20,017 17,250 Custodian fees................................ 25,010 6,675 6,540 Directors fees (Note 2)....................... 2,083 2,083 2,083 Insurance expense............................. 412 323 188 Amortization of organization costs (Note 1-E). 3,358 3,358 1,558 Printing expense.............................. 715 604 1,343 Registration expenses......................... 8,709 6,112 9,465 Miscellaneous expenses........................ 7 7 7 -------- -------- -------- Total expenses............................... 102,647 70,300 66,023 Expenses reimbursed and waived (Note 2)....... (74,474) (57,237) (57,989) -------- -------- -------- Net expenses................................. 28,173 13,063 8,034 -------- -------- -------- NET INVESTMENT INCOME (LOSS).................. (2,813) 15,156 (2,152) -------- -------- -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized gain (loss) on investments....... 14,021 16,668 (3,234) Net realized loss on foreign currency related transactions................................. (2,486) (187) (4,314) Net change in unrealized appreciation (depreciation) on investments and foreign currency related transactions................ 507,687 78,064 (83,691) -------- -------- -------- Net realized and unrealized gain (loss) on investments and foreign currency related transactions................................. 519,222 94,545 (91,239) -------- -------- -------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................................... $516,409 $109,701 $(93,391) ======== ======== ========
See accompanying notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
MATTHEWS PACIFIC MATTHEWS ASIAN CONVERTIBLE MATTHEWS KOREA TIGER FUND SECURITIES FUND FUND ----------------------- ----------------------------- ----------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED PERIOD ENDED PERIOD ENDED PERIOD FEBRUARY 29, ENDED FEBRUARY 29, ENDED FEBRUARY 29, ENDED 1996 AUGUST 31, 1996 AUGUST 31, 1996 AUGUST 31, (UNAUDITED) 1995 * (UNAUDITED) 1995 * (UNAUDITED) 1995 ** ------------ ---------- -------------- ------------ ------------ ---------- OPERATIONS: Net investment income (loss)................. $ (2,813) $ 2,361 $ 15,156 $ 14,571 $ (2,152) $ 2,219 Net realized gain (loss) on investments and foreign currency related transactions... 11,535 (18,241) 16,481 6,074 (7,548) 5,811 Net change in unrealized appreciation (depreciation) on investments and foreign currency related transactions........... 507,687 9,065 78,064 1,669 (83,691) (25,857) ---------- ---------- -------------- ------------ ---------- -------- Increase (Decrease) in net assets from operations............. 516,409 (6,815) 109,701 22,314 (93,391) (17,827) ---------- ---------- -------------- ------------ ---------- -------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: From net investment income................. 0 (1,439) (13,473) (12,617) 0 0 From realized gains on investments............ 0 0 (10,864) 0 (7,128) 0 ---------- ---------- -------------- ------------ ---------- -------- 0 (1,439) (24,337) (12,617) (7,128) 0 ---------- ---------- -------------- ------------ ---------- -------- CAPITAL SHARE TRANSACTIONS (NET)-- NOTE 1-H............... 6,888,943 1,040,619 1,397,765 802,980 684,456 421,928 ---------- ---------- -------------- ------------ ---------- -------- Total increase in net assets................. 7,405,352 1,032,365 1,483,129 812,677 583,937 404,101 NET ASSETS: Beginning of period..... 1,082,365 50,000 862,677 50,000 504,101 100,000 ---------- ---------- -------------- ------------ ---------- -------- End of period........... $8,487,717 $1,082,365 $ 2,345,806 $ 862,677 $1,088,038 $504,101 ========== ========== ============== ============ ========== ========
*The Funds commenced operations on September 13, 1994. **The Fund commenced operations on January 3, 1995. See accompanying notes to financial statements. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.
MATTHEWS PACIFIC MATTHEWS ASIAN CONVERTIBLE MATTHEWS KOREA TIGER FUND SECURITIES FUND FUND ----------------------- --------------------------------- ----------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED PERIOD ENDED PERIOD ENDED PERIOD FEBRUARY 29, ENDED FEBRUARY 29, ENDED FEBRUARY 29, ENDED 1996 AUGUST 31, 1996 AUGUST 31, 1996 AUGUST 31, (UNAUDITED) 1995* (UNAUDITED) 1995* (UNAUDITED) 1995** ------------ ---------- -------------- ------------- ------------ ---------- Net Asset Value, beginning of period..... $ 9.77 $10.00 $ 9.88 $ 10.00 $ 9.13 $10.00 ------ ------ ------------- ------------- ------ ------ INCOME FROM INVESTMENT OPERATIONS Net investment income.... 0.38 0.02 0.28 0.23 0.32 0.08 Net realized and unrealized gain (loss) on investments and foreign currency........ 0.79 (0.23) 0.72 (0.14) (1.04) (0.95) ------ ------ ------------- ------------- ------ ------ Total from investment operations............. 1.17 (0.21) 1.00 0.09 (0.72) (0.87) ------ ------ ------------- ------------- ------ ------ LESS DISTRIBUTIONS: From net investment income.................. 0.00 (0.02) (0.11) (0.21) 0.00 0.00 From realized gains on investments............. 0.00 0.00 (0.09) 0.00 (0.08) 0.00 ------ ------ ------------- ------------- ------ ------ Total distributions..... 0.00 (0.02) (0.20) (0.21) (0.08) 0.00 ------ ------ ------------- ------------- ------ ------ Net Asset Value, end of period.................. $10.94 $ 9.77 $ 10.68 $ 9.88 $ 8.33 $ 9.13 ====== ====== ============= ============= ====== ====== TOTAL RETURN............. 24.02%+ (2.07)% 20.58%+ 0.89% (15.95)%+ (8.70)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in 000's).............. $8,488 $1,082 $ 2,346 $ 863 $1,088 $ 504 Ratio of expenses to average net assets before reimbursement and waiver of expenses by Advisor and Administrator........... 6.74%+ 25.95% 10.52%+ 23.11% 16.88%+ 42.87% Ratio of expenses to average net assets after reimbursement and waiver of expenses by Advisor and Administrator (Note 5)...................... 1.85%+ 2.17% 1.96%+ 2.26% 2.05%+ 0.24% Ratio of net investment loss to average net assets before reimbursement and waiver of expenses by Advisor and Administrator....... (5.07)%+ (23.41)% (6.30)%+ (18.68)% (15.38)%+ (41.79)% Ratio of net investment income to average net assets after reimbursement and waiver of expenses by Advisor and Administrator....... (0.18)%+ 0.36% 2.26%+ 2.17% (0.55)%+ 0.84% Portfolio turnover....... 52.68% 92.53% 36.31% 121.63% 85.06% 42.16%
+ Annualized * The Funds commenced operations on September 13, 1994. ** The Fund commenced operations on January 3, 1995. See accompanying notes to financial statements. MATTHEWS INTERNATIONAL FUNDS--NOTES TO FINANCIAL STATEMENTS February 29, 1996 (unaudited) - ------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Matthews International Funds (the "Company") is a no-load, open-end investment management company registered under the Investment Company Act of 1940, as amended, as a series company. The Company currently consists of three separate investment series (each a "Fund" and collectively, the "Funds"): Matthews Pacific Tiger Fund, Matthews Asian Convertible Securities Fund and Matthews Korea Fund. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. A. SECURITY VALUATION: Securities listed on any national securities exchange are valued at their last sale price on the exchange where the securities are principally traded or, if there has been no sale on that date, at the mean between the last reported bid and asked prices. Securities traded over-the-counter are priced at the mean of the last bid and asked prices. Securities are valued through valuations obtained from a commercial pricing service or at the most recent mean of the bid and asked prices provided by investment dealers in accordance with procedures established by the Board of Trustees. Options, futures and options on futures are valued at the price as determined by the appropriate clearing corporation. The books and records of the Funds are maintained in U.S. dollars. Transactions denominated in foreign currencies are recorded at the current prevailing exchange rates. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the current exchange rate. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Funds do not isolate that portion of gains and losses on investments in equity securities which is due to changes in the foreign exchange rate from that which is due to changes in market prices of equity securities. International dollar bonds are denominated in U.S. dollars. Portfolio securities traded on a foreign exchange are generally valued at the respective current prevailing exchange rates. The securities' values are translated into U.S. dollars using these rates. If subsequent to the time a rate has been established and it has been determined to have materially changed, the fair value of those securities, (considering the changing conditions) will be determined by (or under the direction of) the Funds' Board of Trustees. B. RISKS ASSOCIATED WITH FOREIGN SECURITIES: Investments by the Funds in the securities of foreign issuers may involve investment risks different from those of U.S. issuers including possible political or economic instability of the country of the issuer, the difficulty of predicting international trade patterns, the possibility of currency exchange controls, the possible imposition of foreign withholding tax on the interest income payable on such instruments, the possible establishment of foreign controls, the possible seizure or nationalization of foreign deposits or assets, or the adoption of other foreign government restrictions that might adversely affect the foreign securities held by the Funds. Foreign securities may also be subject to greater fluctuations in price than securities of domestic corporations or the U. S. Government. C. FEDERAL INCOME TAXES: It is the policy of the Funds to comply with all requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. The Funds have met the requirements of the Code applicable to regulated investment companies for the six months ended February 29, 1996. Therefore, no federal income tax provision is required. D. DETERMINATION OF GAINS OR LOSSES ON SALES OF SECURITIES: Gains or losses on the sale of securities are determined on the identified cost basis. E. ORGANIZATION COSTS: Organization costs are being amortized on a straight-line basis over five years from each Fund's respective commencement of operations. F. DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of Matthews Asian Convertible Securities Fund to distribute their respective net investment income on a semi-annual basis and capital gains annually. Matthews Pacific Tiger Fund and Matthews Korea Fund distribute net investment income and capital gains annually. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. G. OTHER: Securities transactions are accounted for on the date the securities are purchased or sold. Interest income is recorded on the accrual basis and dividend income on the ex-dividend date. MATTHEWS INTERNATIONAL FUNDS--NOTES TO FINANCIAL STATEMENTS February 29, 1996 (unaudited) (continued) - ------------------------------------------------------------------------------- H. CAPITAL SHARE TRANSACTIONS: Each Fund is authorized to issue an unlimited number of shares of beneficial interest with a par value of $0.001 per share. Transactions in shares of beneficial interest from the commencement of investment operations were as follows:
PACIFIC TIGER FUND ASIAN CONVERTIBLE SECURITIES FUND ------------------ --------------------------------- SIX MONTHS ENDED SIX MONTHS ENDED FEBRUARY 29,1996 PERIOD ENDED FEBRUARY 29,1996 PERIOD ENDED (UNAUDITED) AUGUST 31,1995 (UNAUDITED) AUGUST 31,1995 ------------------- ------------------- ------------------- ------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ------- ---------- ------- ---------- ------- ---------- ------- ---------- Shares sold............. 682,047 $7,061,718 138,867 $1,365,306 151,026 $1,592,938 126,985 $1,254,801 Shares issued through reinvestment of dividends.............. 0 0 144 1,365 2,309 22,935 1,196 11,927 Shares redeemed......... (16,820) (172,775) (28,275) (276,052) (20,998) (218,108) (40,862) (413,748) ------- ---------- ------- ---------- ------- ---------- ------- ---------- Net Increase............ 665,227 $6,888,943 110,736 $1,090,619* 132,337 $1,397,765 87,319 $ 852,980* ======= ========== ======= ========== ======= ========== ======= ========== KOREA FUND ---------- SIX MONTHS ENDED FEBRUARY 29,1996 PERIOD ENDED (UNAUDITED) AUGUST 31,1995 ------------------- ------------------- SHARES AMOUNT SHARES AMOUNT ------- ---------- ------- ---------- Shares sold............. 76,007 $ 689,108 59,910 $ 565,969 Shares issued through reinvestment of dividends.............. 801 6,952 0 0 Shares redeemed......... (1,378) (11,604) (4,724) (44,041) ------- ---------- ------- ---------- Net Increase............ 75,430 $ 684,456 55,186 $ 521,928* ======= ========== ======= ==========
*Included in these amounts are $50,000, $50,000 and $100,000 in seed money for the Matthews Pacific Tiger Fund, Matthews Asian Convertible Securities Fund and Matthews Korea Fund, respectively. 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Matthews International Capital Management (the "Advisor"), a registered investment advisor, provides the Funds with investment management services. As compensation for these services, the Advisor charges the Funds a fee of 1/12 of 1% on each Fund's respective average daily net assets. In accordance with Blue Sky limitations, the Advisor has agreed to waive its fees and voluntarily reimburse each Fund to the extent total annualized expenses exceed permissible limits applicable to each Fund in any state in which its shares are then qualified for sale. Certain officers and trustees of the Funds are also officers and directors of the Advisor. All officers serve without direct compensation from the Funds. Investment advisory fees and other transactions with affiliates, for the six months ended February 29, 1996, are as follows:
EXPENSES INVESTMENT PERMISSIBLE WAIVED AND ADVISORY EXPENSE ADVISORY REIMBURSED DUE FROM DAEWOO FEE RATE LIMITATION FEES BY ADVISOR ADVISOR SECURITIES ---------- ----------- -------- ---------- -------- ---------- Pacific Tiger Fund...... 1.00% 1.90% $15,210 $74,474 $20,409 -- Asian Convertible Securities Fund........ 1.00 1.90 6,672 57,237 20,319 -- Korea Fund.............. 1.00 2.50 3,907 57,989 6,831 $2,384+
+Daewoo Securities is the affiliated broker for the Fund. This amount is the affiliated brokerage commissions paid. MATTHEWS INTERNATIONAL FUNDS--NOTES TO FINANCIAL STATEMENTS February 29, 1996 (unaudited) (continued) - ------------------------------------------------------------------------------- 3. INVESTMENT TRANSACTIONS Investment transactions for the six months ended February 29, 1996, excluding temporary short-term investments, are as follows:
PROCEEDS PURCHASES FROM SALES ---------- ---------- Pacific Tiger Fund....................................... $8,627,398 $1,732,246 Asian Convertible Securities Fund........................ 1,830,668 455,748 Korea Fund............................................... 1,216,268 589,177
4. CAPITAL LOSS CARRYOVER At August 31, 1995, the Matthews Pacific Tiger Fund had a capital loss carryover of $17,122 expiring in 2003 to offset possible future capital gains of the Fund. 5. EXPENSE RATIOS The ratio of expenses to average net assets after reimbursement and waiver of expenses by Advisor at February 29, 1996 is 1.96% for the Matthews Asian Convertible Securities Fund. This amount is greater than the 1.90% limitation indicated in Note 2. The Fund was accruing expenses at a 2.50% limitation at year-end August 31, 1995. At November 20, 1995, the Fund began accruing at a ratio of 1.77%. This expense ratio was calculated using the current expense ratios (commencing September 1, 1995) to determine the necessary amount to reflect an annual expense ratio of 1.90% for the fiscal year ending August 31, 1996. BOARD OF TRUSTEES G. Paul Matthews John H. Dracott Richard K. Lyons Robert K. Connolly Dong Wook Park OFFICERS G. Paul Matthews John H. Dracott Carol Chuang INVESTMENT ADVISOR Matthews International Capital Management 655 Montgomery Street, Suite 1438 San Francisco, CA 94111 (800) 789-ASIA KOREAN ADVISOR Daewoo Capital Management Co., Ltd. 34-3, Yoido-dong, Yungdungpo-gu Seoul, 150-010 Korea UNDERWRITER Fund/Plan Broker Services, Inc. 2 W. Elm Street Conshohocken, PA 19428 (800) 892-0382 SHAREHOLDER SERVICES Fund/Plan Services, Inc. 2 W. Elm Street Conshohocken, PA 19428 (800) 892-0382 CUSTODIAN The Bank of New York 90 Washington Street New York, NY 10286 LEGAL COUNSEL Shartsis, Friese & Ginsburg One Maritime Plaza, 18th Floor San Francisco, CA 94111 AUDITORS Coopers & Lybrand L.L.P 2400 Eleven Penn Center Philadelphia, PA 19103 FOR ADDITIONAL INFORMATION ABOUT THE MATTHEWS INTERNATIONAL FUNDS CALL: (800) 789-ASIA This report is submitted for general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective Prospectus which includes details regarding the Funds' objectives, policies, expenses and other information. - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT FEBRUARY 29, 1996 (ART) MATTHEWS PACIFIC TIGER FUND MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND MATTHEWS KOREA FUND - ------------------------------------------------------------------------------- MATTHEWS INTERNATIONAL FUNDS - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----