Unassociated Document

As filed with the Securities and Exchange Commission on April 30, 2010

Securities Act of 1933 File No. 33-78960

Investment Company Act of 1940 File No. 811-08510

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

________________________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	/X/
Pre-Effective Amendment No.	/ /
Post-Effective Amendment No. 40	/X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	/X/
Amendment No. 43

Matthews International Funds

(Exact name of registrant as specified in charter)

Four Embarcadero Center, Suite 550

San Francisco, CA 94111

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: (415) 788-6036

________________________________

William J. Hackett, President

Four Embarcadero Center, Suite 550

San Francisco, CA 94111

(Name and Address of Agent for Service)

________________________________

Copies To:

David A. Hearth, Esq.

Paul, Hastings, Janofsky & Walker LLP

55 Second Street

San Francisco, CA 94105


It is proposed that this filing will become effective

___	immediately upon filing pursuant to paragraph (b)
X	on April 30, 2010 pursuant to paragraph (b)
___	60 days after filing pursuant to paragraph (a)(1)
___	on _____________ pursuant to paragraph (a)(1)
___	75 days after filing pursuant to paragraph (a)(2)
___	on _____________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

___	This post-effective amendment designates a new effective date
	for a previously filed post-effective amendment.

Matthews Asia Funds | Prospectus

April 30, 2010 | matthewsasia.com

	Asian Growth and Income Fund (MACSX) Asia Dividend Fund (MAPIX) China Dividend Fund (MCDFX) Asia Pacific Fund (MPACX) Pacific Tiger Fund (MAPTX) China Fund (MCHFX) India Fund (MINDX) Japan Fund (MJFOX) Korea Fund (MAKOX) Asia Small Companies Fund (MSMLX) Asia Science and Technology Fund (MATFX)

	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


FUND SUMMARIES
ASIA GROWTH AND INCOME STRATEGIES
Matthews Asian Growth and Income Fund	1
Matthews Asia Dividend Fund	4
Matthews China Dividend Fund	7

ASIA GROWTH STRATEGIES
Matthews Asia Pacific Fund	10
Matthews Pacific Tiger Fund	13
Matthews China Fund	16
Matthews India Fund	19
Matthews Japan Fund	22
Matthews Korea Fund	25

ASIA SMALL COMPANY STRATEGY
Matthews Asia Small Companies Fund	28

ASIA SPECIALTY STRATEGY
Matthews Asia Science and Technology Fund	31

Additional Fund Information	34
Important Information	34
Financial Highlights	35
Investment Objectives of the Funds	46
Principal Investment Strategies	46
Risks of Investing in the Funds	49
Management of the Funds	57

Investing in the Matthews Asia Funds	60
Pricing of Fund Shares	60
Purchasing Shares	60
Exchanging Shares	63
Selling (Redeeming) Shares	64
Market Timing Activities and Redemption Fees	66
Other Shareholder Information	67
Index Definitions	70
General Information	71
Privacy Statement	72

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 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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.48%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.17%

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 redeem 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: $119

Three years: $372

Five years: $644

Ten years: $1,420

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 18% of the average value of its portfolio.

MATTHEWS ASIAN GROWTH AND INCOME FUND 1

Principal Investment Strategy

Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in dividend-paying common stock, preferred stock and other equity securities and convertible securities, of any duration or quality, of companies located in Asia, which includes China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, Phil-ippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors.

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.

Principal Risks of Investment

Political, Social and Economic Risks: 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 Asian region, and particularly China, Japan and South Korea, may be adversely affected by political, military, economic and other factors related to North Korea. In addition, China’s long-running conflict over Taiwan, border disputes with many of its neighbors and historically strained relations with Japan could adversely impact economies in the region. 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. Certain Asian countries are highly dependent upon and may be affected by developments in the United States, Europe and other Asian economies.

Currency Risks: 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 dollar terms if that currency weakens against the 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 Markets: Many Asian countries are considered emerging markets. Emerging markets are often less stable politically and economically than developed markets such as the United States, and investing in emerging markets involves different and greater risks. There may be less publicly available information about companies in emerging markets. The stock exchanges and brokerage industries of emerging markets do not have the level of government oversight as do those in the United States. Securities markets of such countries are substantially smaller, less liquid and more volatile than securities markets in the United States.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including Ameri-can, European and Global Depositary Receipts. 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: 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 (NAV) to go up or down dramatically. Because of this volatility, it is recommended that you invest in the Fund only for the long term (at least five years).

Convertible Securities: 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 like Moody’s, S&P or Fitch, or, if they are rated, they may be rated below investment grade (“junk bonds”), which may have a greater risk of default. 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 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 Equities: 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. 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.

The prices of dividend-paying equity securities (and particularly of those issued by Asian 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.

2 matthewasia.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. 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 index performance does not take into consideration fees, expenses or taxes. The information presented below is past performance 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 800.789.2742.

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

21.57%

Worst Quarter

Q4 2008

-14.41%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
				(9/12/94 Fund)
	1 year	5 years	10 years	(8/31/94 Indices)
Matthews Asian Growth and Income Fund
Return before taxes	41.44%	10.77%	13.76%	11.18%
Return after taxes on distributions1	40.35%	8.89%	11.53%	8.83%
Return after taxes on distributions and sale of Fund shares1	27.23%	8.94%	11.16%	8.59%
MSCI All Country Asia ex Japan Index	72.53%	13.79%	6.55%	3.62%
MSCI All Country Far East ex Japan Index	69.39%	13.13%	5.92%	3.25%

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: Andrew Foster has been a Portfolio Manager of the Asian Growth and Income Fund since 2005.

Co-Manager: Robert Horrocks, PhD, is Chief Investment Officer and has been a Portfolio Manager of the Asian Growth and Income Fund since 2009.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS ASIAN GROWTH AND INCOME FUND 3

Matthews Asia Dividend Fund*

*To better reflect its investment strategy, the Fund’s name changed from Matthews Asia Pacific Equity Income Fund to Matthews Asia Dividend Fund on November 30, 2009.

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.58%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.27%

EXAMPLE OF FUND EXPENSES

One year: $129

Three years: $403

Five years: $697

Ten years: $1,534

PORTFOLIO TURNOVER

Principal Investment Strategy

Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in income-paying equity securities of companies located in Asia, which includes China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors.

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 NAV of the

4 matthewasia.com | 800.789.ASIA

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, the Fund expects that it will primarily invest 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.

Principal Risks of Investment

Risks Associated with Emerging Markets: Many Asian countries are considered emerging markets. Emerging markets are often less stable politically and economically, and their markets are smaller and less developed than that of the United States. There may be less publicly available information about companies in emerging markets. The stock exchanges and brokerage industries of emerging markets do not have the level of government oversight as do those in the United States. Securities markets of such countries are substantially smaller, less liquid and more volatile than securities markets in the United States.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. Although depositary receipts have risks similar to the securities that they represent, they may also involve higher expenses, and may lack fungibility, which may result in their trading 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: The smaller size and lower levels of liquidity in the markets of developing countries, as well as other factors may result in changes in the prices of Asian securities that are more dramatic, or volatile, than those of companies in more developed regions. This volatility can cause the price of the Fund’s shares (NAV) to go up or down dramatically. Because of this volatility, it is recommended that you invest in the Fund only for the long term (at least five years).

MATTHEWS ASIA DIVIDEND FUND 5

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. 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 index performance does not take into consideration fees, expenses or taxes. The information presented below is past performance 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 800.789.2742.

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

25.07%

Worst Quarter

Q3 2008

-12.30%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
		Since Inception
	1 year	(10/31/06)
Matthews Asia Dividend Fund
Return before taxes	47.59%	11.00%
Return after taxes on distributions1	45.90%	9.77%
Return after taxes on distributions and sale of Fund shares1	31.60%	8.89%
MSCI All Country Asia Pacific Index	37.86%	-0.56%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Jesper Madsen, CFA, has been a Portfolio Manager of the Asia Dividend Fund since the Fund’s inception in 2006.

Co-Manager: Andrew Foster has been a Portfolio Manager of the Asia Dividend Fund since the Fund’s inception in 2006.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

6 matthewasia.com | 800.789.ASIA

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		9.41%
Administration and Shareholder Servicing Fees	0.19%
Fee Waiver and Expense Reimbursement		(8.60)%¹
Total Annual Operating Expenses		1.50%

Matthews has contractually agreed to waive fees and reimburse expenses until November 30, 2012 to the extent needed to limit Total Annual Operating Expenses to 1.50%. The amount of the waiver is based on estimated Fund expenses. The fee waiver may be terminated at any time by the Funds on 60 days’ written notice.

EXAMPLE OF FUND EXPENSES

One year: $153

Three years: $854

PORTFOLIO TURNOVER

MATTHEWS CHINA DIVIDEND FUND 7

Principal Investment Strategy

Under normal market conditions, the Matthews China Dividend Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in income-paying equity securities of companies located in China and Taiwan. China also includes its administrative and other districts, such as Hong Kong. The Fund may also invest in convertible fixed-income securities. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

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 NAV of the Fund will decline and investors may lose some or all of the value of their investments.

Principal Risks of Investment

Political, Social and Economic Risks: 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; international relations with other nations; natural disasters; corruption and military activity. The economies of China, Hong Kong and Taiwan may differ from the economies of other countries, especially developed economies, 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.

Currency Risks: 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 dollar terms if that currency weakens against the 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.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including Amer-ican, European and Global Depositary Receipts. 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. 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 (NAV) to go up or down dramatically. Because of this volatility, it is recommended that you invest in the Fund only for the long term (at least five years).

8 matthewasia.com | 800.789.ASIA

Lower trading volume may also make it more difficult for the Funds to value such securities.

Risks Associated with China, Hong Kong and Taiwan

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. Changes in these policies could adversely impact affected industries or companies. 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 emerges, China’s domestically oriented industries may be especially sensitive to changes in government policy and investment cycles.

Hong Kong. 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.

Taiwan. The continuing hostility between China and Taiwan 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.

Past Performance

The Fund is new and does not have a full calendar year of performance or financial information to present. Once it has been in operation a full calendar year, performance (including total return) and financial information will be presented. The Fund’s primary benchmark index is the Morgan Stanley Capital International (“MSCI”) China Index, which is a free float–adjusted market capitalization–weighted index of Chinese equities that includes China-affiliated corporations and H shares listed on the Hong Kong exchange, and B shares listed on the Shanghai and Shenzhen exchanges.

It is not possible to invest directly in an index, and the performance of an index does not take into consideration fees, expenses or taxes.

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Jesper Madsen, CFA, has been a Portfolio Manager of the China Dividend Fund since the Fund’s inception in 2009.

Co-Manager: Richard Gao has been a Portfolio Manager of the China Dividend Fund since the Fund’s inception in 2009.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS CHINA DIVIDEND FUND 9

Matthews Asia Pacific 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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.58%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.27%

EXAMPLE OF FUND EXPENSES

One year: $129

Three years: $403

Five years: $697

Ten years: $1,534

PORTFOLIO TURNOVER

10 matthewasia.com | 800.789.ASIA

Principal Investment Strategy

Under normal market conditions, the Matthews Asia Pacific Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in the Asia Pacific region, which includes China, Hong Kong, India, Indonesia, Japan, Malay-sia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Vietnam, Australia and New Zealand. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors. The Fund may also invest in the convertible securities, of any duration or quality, of Asia Pacific companies.

Principal Risks of Investment

Political, Social and Economic Risks: 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 Asia Pacific 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 Asia Pacific region, and particularly China, Japan and South Korea, may be adversely affected by political, military, economic and other factors related to North Korea. In addition, China’s long-running conflict over Taiwan, border disputes with many of its neighbors and historically strained relations with Japan could adversely impact economies in the region. The economies of many Asia Pacific countries differ from the economies of more developed countries in many respects, such as rate of growth, infla-tion, capital reinvestment, resource self-sufficiency, financial system stability, the national balance of payments position and sensitivity to changes in global trade. Certain Asia Pacific countries are highly dependent upon and may be affected by developments in the United States, Europe and other Asia Pacific economies.

Currency Risks: 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 dollar terms if that currency weakens against the dollar. While the Fund is permitted to hedge currency risks, Matthews does not anticipate doing so at this time. Additionally, Asia Pacific 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 Markets: Many Asia Pacific countries are considered emerging markets. Emerging markets are often less stable politically and economically than developed markets such as the United States, and investing in emerging markets involves different and greater risks. There may be less publicly available information about companies in emerging markets. The stock exchanges and brokerage industries of emerging markets do not have the level of government oversight as do those in the United States. Securities markets of such countries are substantially smaller, less liquid and more volatile than securities markets in the United States.

Trading Markets and Depositary Receipts: Asia Pacific securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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: The smaller size and lower levels of liquidity in emerging markets, as well as other factors, may result in changes in the prices of Asia Pacific securities that are more volatile than those of companies in more developed regions. This volatility can cause the price of the Fund’s shares (NAV) to go up or down dramatically. Because of this volatility, it is recommended that you invest in the Fund only for the long term (at least five years).

Convertible Securities: 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 Asia Pacific convertible securities are not rated by rating agencies like Moody’s, S&P or Fitch, or, if they are rated, they may be rated below investment grade (“junk bonds”), which may have a greater risk of default. 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 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.

MATTHEWS ASIA PACIFIC FUND 11

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

33.81%

Worst Quarter

Q3 2008

-15.04%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
			Since Inception
	1 year	5 years	(10/31/03)
Matthews Asia Pacific Fund
Return before taxes	44.82%	7.18%	9.86%
Return after taxes on distributions1	44.58%	6.59%	9.36%
Return after taxes on distributions and sale of Fund shares1	29.72%	6.28%	8.70%
MSCI All Country Asia Pacific Index	37.86%	5.94%	8.51%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Taizo Ishida has been a Portfolio Manager of the Asia Pacific Fund since 2007.

Co-Manager: Sharat Shroff, CFA, has been a Portfolio Manager of the Asia Pacific Fund since 2007.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

12 matthewasia.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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.44%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.13%

EXAMPLE OF FUND EXPENSES

One year: $115

Three years: $359

Five years: $622

Ten years: $1,375

PORTFOLIO TURNOVER

MATTHEWS PACIFIC TIGER FUND 13

Principal Investment Strategy

Under normal market conditions, the Matthews Pacific Tiger Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia excluding Japan, which includes China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Phil-ippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam (the “Pacific Tiger countries”). The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors.

Principal Risks of Investment

14 matthewasia.com | 800.789.ASIA

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

41.53%

Worst Quarter

Q3 2001

-21.63%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
				(9/12/94 Fund)
	1 year	5 years	10 years	(8/31/94 Indices)
Matthews Pacific Tiger Fund
Return before taxes	75.37%	14.50%	11.55%	9.13%
Return after taxes on distributions1	75.22%	13.18%	10.29%	8.23%
Return after taxes on distributions and sale of Fund shares1	49.31%	12.57%	9.77%	7.81%
MSCI All Country Asia ex Japan Index	72.53%	13.79%	6.55%	3.62%
MSCI All Country Far East ex Japan Index	69.39%	13.13%	5.92%	3.25%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Richard Gao has been a Portfolio Manager of the Pacific Tiger Fund since 2006.

Lead Manager: Sharat Shroff, CFA, has been a Portfolio Manager of the Pacific Tiger Fund since 2008.

Co-Manager: Mark Headley is Chairman of the Board of Directors of Matthews and has been a Portfolio Manager of the Pacific Tiger Fund since 1996.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS PACIFIC TIGER FUND 15

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.52%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.21%

EXAMPLE OF FUND EXPENSES

One year: $123

Three years: $384

Five years: $665

Ten years: $1,466

PORTFOLIO TURNOVER

16 matthewasia.com | 800.789.ASIA

Principal Investment Strategy

Under normal market conditions, the Matthews China Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in China and Taiwan. China includes its administrative and other districts, such as Hong Kong. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

Principal Risks of Investment

Political, Social and Economic Risks: 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; international relations with other nations; natural disasters; corruption and military activity. The economies of China, Hong Kong and Taiwan may differ from the economies of other countries, especially developed economies, 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.

Currency Risks: 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 dollar terms if that currency weakens against the 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.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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 China, Hong Kong and Taiwan

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. Changes in these policies could adversely impact affected industries or companies. 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 emerges, China’s domestically oriented industries may be especially sensitive to changes in government policy and investment cycles.

Hong Kong: 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.

Taiwan: The continuing hostility between China and Taiwan 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.

MATTHEWS CHINA FUND 17

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

34.28%

Worst Quarter

Q3 2001

-27.11%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
				(2/19/98 Fund)
	1 year	5 years	10 years	(2/28/98 Indices)
Matthews China Fund
Return before taxes	78.30%	22.23%	17.18%	13.53%
Return after taxes on distributions1	78.23%	20.88%	16.05%	12.50%
Return after taxes on distributions and sale of Fund shares1	50.99%	19.31%	15.04%	11.72%
MSCI China Index	62.63%	23.83%	9.72%	4.14%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Richard Gao has been a Portfolio Manager of the China Fund since 1999.

Co-Manager: Henry Zhang, CFA, has been a Portfolio Manager of the China Fund since 2010.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

18 matthewasia.com | 800.789.ASIA

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.58%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.27%

EXAMPLE OF FUND EXPENSES

One year: $129

Three years: $403

Five years: $697

Ten years: $1,534

PORTFOLIO TURNOVER

MATTHEWS INDIA FUND 19

Principal Investment Strategy

Under normal market conditions, the Matthews India Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in publicly traded common stocks, preferred stocks and convertible securities of companies located in India. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

Principal Risks of Investment

Currency Risks: 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 dollar terms if that currency weakens against the 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.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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.

Non-diversified: The Fund is a “non-diversified” investment company, which means that it may invest a larger portion of its assets in the securities of a single issuer compared with a diversified fund. An investment in the Fund therefore will entail greater risk than an investment in a diversified fund.

Risks Associated with India: Government actions, bureaucratic obstacles and inconsistent economic reform within the Indian government have had a significant effect on the economy and could adversely affect market conditions, deter economic growth and the profitability of private enterprises. 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.

20 matthewasia.com | 800.789.ASIA

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q2 2009

66.04%

Worst Quarter

Q4 2008

-31.17%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
		Since Inception
	1 year	(10/31/05)
Matthews India Fund
Return before taxes	97.25%	16.43%
Return after taxes on distributions1	96.75%	15.79%
Return after taxes on distributions and sale of Fund shares1	63.63%	14.22%
Bombay Stock Exchange 100 Index	95.83%	21.63%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Sharat Shroff, CFA, has been a Portfolio Manager of the India Fund since 2006.

Co-Manager: Andrew Foster has been a Portfolio Manager of the India Fund since the Fund’s inception in 2005.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS INDIA FUND 21

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.60%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.29%

EXAMPLE OF FUND EXPENSES

One year: $131

Three years: $409

Five years: $708

Ten years: $1,556

PORTFOLIO TURNOVER

22 matthewasia.com | 800.789.ASIA

Principal Investment Strategy

Under normal market conditions, the Matthews Japan Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Japan. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

Principal Risks of Investment

Risks associated with Japan: Poor performance of the global economy has negatively affected equity returns in Japan, and may continue to do so. Japan’s economy and stock market have in the recent past had a strong correlation with the U.S. economic cycle and U.S. stock markets, and thus Japan’s economy may continue to be affected by current economic problems in the U.S. 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).

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.

MATTHEWS JAPAN FUND 23

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q3 2003

37.26%

Worst Quarter

Q4 2000

-21.54%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
	1 year	5 years	10 years	(12/31/98)
Matthews Japan Fund
Return before taxes	10.06%	-5.49%	-3.85%	3.11%
Return after taxes on distributions1	9.68%	-5.78%	-4.43%	2.45%
Return after taxes on distributions and sale of Fund shares1	7.21%	-4.53%	-3.39%	2.42%
MSCI Japan Index	6.39%	-0.70%	-3.55%	1.10%
Tokyo Stock Price Index	5.22%	-1.21%	-4.17%	1.43%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Taizo Ishida has been a Portfolio Manager of the Japan Fund since 2006.

Co-Manager: Kenichi Amaki has been a Portfolio Manager of the Japan Fund since 2010.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

24 matthewasia.com | 800.789.ASIA

Matthews Korea 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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.61%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.30%

EXAMPLE OF FUND EXPENSES

One year: $132

Three years: $412

Five years: $713

Ten years: $1,568

PORTFOLIO TURNOVER

MATTHEWS KOREA FUND 25

Principal Investment Strategy

Under normal market conditions, the Matthews Korea Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in South Korea. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

Principal Risks of Investment

Currency Risks: 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 dollar terms if that currency weakens against the dollar. While the Fund is permitted to hedge currency risks, Matthews does not anticipate doing so at this time. Additionally, South Korea 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.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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 South Korea: Investing in South Korean securities has special risks, including political, economic and social instability, and the potential for increasing militarization in North Korea. The market capitalization and trading volume of issuers in South Korean securities markets are concentrated in a 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 any 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.

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. The South Korean government has sought to minimize excessive price volatility on the South Korean Stock Exchange through various steps, including the imposition of limitations on daily price movements of securities, although there is no assurance that this would prevent the value of an investment from declining over time.

26 matthewasia.com | 800.789.ASIA

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q4 2001

50.51%

Worst Quarter

Q4 2000

-24.72%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
	1 year	5 years	10 years	(1/3/95)
Matthews Korea Fund
Return before taxes	62.92%	10.47%	8.98%	4.81%
Return after taxes on distributions1	61.99%	9.20%	5.65%	2.36%
Return after taxes on distributions and sale of Fund shares1	42.10%	9.26%	6.01%	2.76%
Korea Composite Stock Price Index	66.56%	11.36%	5.16%	1.22%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Michael Oh has been a Portfolio Manager of the Korea Fund since 2007.

Co-Manager: Michael Han, CFA, has been a Portfolio Manager of the Korea Fund since 2008.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS KOREA FUND 27

Matthews Asia 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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		1.00%
Distribution (12b-1) Fees		None
Other Expenses		1.10%
Administration and Shareholder Servicing Fees	0.19%
Fee Waiver and Expense Reimbursement		(0.10%)1
Total Annual Operating Expenses		2.00%

Matthews has contractually agreed to waive fees and reimburse expenses until April 30, 2012 to the extent needed to limit Total Annual Operating Expenses to 2.00%. The amount of the waiver is based on estimated Fund expenses. The fee waiver may be terminated at any time by the Funds on 60 days’ written notice.

EXAMPLE OF FUND EXPENSES

One year: $203

Three years: $638

Five years: $1,110

Ten years: $2,415

PORTFOLIO TURNOVER

28 matthewasia.com | 800.789.ASIA

Principal Investment Strategy

Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of Small Companies located in Asia excluding Japan, which includes China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors.

The Fund intends to invest in smaller companies that Matthews believes have growth prospects. Matthews determines whether a company should be considered to be a small company based on the size of its revenues, number of employees, net assets, the size and depth of its product line, level of development, and other factors compared to other companies in its industry, sector or region (“Small Companies”). The Fund shall not invest in any company that has a market capitalization (the number of the company’s shares outstanding times the market price per share for such securities) higher than the greater of $3 billion or the market capitalization of the largest company included in the Fund’s primary benchmark index, if, at the time of purchase, more than 20% of the Fund’s assets are invested in such companies. The Fund may continue to hold a security if its market capitalization increases above these levels after purchase.

Principal Risks of Investment

Political, Social and Economic Risks: 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 Asian region, and particularly China, Japan and South Korea, may be adversely affected by political, military, economic and other factors related to North Korea. In addition, China’s long-running conflict over Taiwan, border disputes with many of its neighbors and historically strained relations with Japan could adversely impact economies in the region. The economies of many Asian countries differ from the economies of more developed countries in many respects, such as rate of growth, infla-tion, capital reinvestment, resource self-sufficiency, financial system stability, the national balance of payments position and sensitivity to changes in global trade. Certain Asian countries are highly dependent upon and may be affected by developments in the United States, Europe and other Asian economies.

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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 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) may be greater than in 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 such 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.

MATTHEWS ASIA SMALL COMPANIES FUND 29

Past Performance

The bar chart below shows the Fund’s performance for the first complete calendar year of operations. 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 index performance does not take into consideration fees, expenses or taxes. The information presented below is past performance 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 800.789.2742.

ANNUAL RETURN FOR YEAR ENDED 12/31

Best Quarter

Q2 2009

45.91%

Worst Quarter

Q1 2009

0.89%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
		Since Inception
	1 year	(9/15/08)
Matthews Asia Small Companies Fund
Return before taxes	103.00%	44.05%
Return after taxes on distributions1	102.32%	43.64%
Return after taxes on distributions and sale of Fund shares1	67.17%	37.54%
MSCI All Country Asia ex Japan Small Cap Index	113.48%	34.33%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Lydia So has been a Portfolio Manager of the Asia Small Companies Fund since the Fund’s inception in 2008.

Co-Manager: Michael Han, CFA, has been a Portfolio Manager of the Asia Small Companies Fund since 2010.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

30 matthewasia.com | 800.789.ASIA

Matthews Asia Science and Technology Fund*

*To better reflect its investment strategy, the Fund’s name changed from Matthews Asian Technology Fund to Matthews Asia Science and Technology Fund on April 30, 2010.

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 and hold shares of this Fund.

SHAREHOLDER FEES
(fees paid directly from your investment)
Redemption Fee
(as a percentage of amount redeemed on shares held fewer than 90 days)		2.00%

ANNUAL OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
Management Fees		0.69%
Distribution (12b-1) Fees		None
Other Expenses		0.70%
Administration and Shareholder Servicing Fees	0.19%
Total Annual Operating Expenses		1.39%

EXAMPLE OF FUND EXPENSES

One year: $142

Three years: $440

Five years: $761

Ten years: $1,669

PORTFOLIO TURNOVER

MATTHEWS ASIA SCIENCE AND TECHNOLOGY FUND 31

Principal Investment Strategy

Under normal market conditions, the Matthews Asia Science and Technology Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia that derive more than 50% of their revenues from the sale of products or services in science- and technology-related industries and services. Asia includes China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. The location of a company can be determined by where it is organized, where its revenues and profits are derived, where its assets are located, or other factors.

Matthews considers science- and technology-related industries and services to include, but not be limited to, the following: 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.

Principal Risks of Investment

Trading Markets and Depositary Receipts: Asian securities may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. 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.

Science and Technology: As a fund that invests in science and technology companies, the Fund is subject to the risks associated with these sectors. 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 governmental policies.

32 matthewasia.com | 800.789.ASIA

Past Performance

ANNUAL RETURNS FOR YEARS ENDED 12/31

Best Quarter

Q4 2001

34.50%

Worst Quarter

Q4 2000

-32.78%

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2009
				Since Inception
				(12/27/99 Fund)
	1 year	5 years	10 years	(12/31/99 Index)
Matthews Asia Science and Technology Fund
Return before taxes	70.28%	8.03%	-1.78%	-1.64%
Return after taxes on distributions1	70.28%	8.03%	-1.99%	-1.85%
Return after taxes on distributions and sale of Fund shares1	45.68%	6.97%	-1.64%	-1.53%
MSCI/Matthews Asian Technology Index	40.59%	4.69%	-6.32%	-6.31%

Investment Advisor

Matthews International Capital Management, LLC (“Matthews”)

Portfolio Managers

Lead Manager: Michael Oh has been a Portfolio Manager of the Asia Science and Technology Fund since 2006.

Co-Manager: Lydia So has been a Portfolio Manager of the Asia Science and Technology Fund since 2008.

For important information about the Purchase and Sale of Fund Shares; Taxes; and Payments to Broker-Dealers and Other Financial Intermediaries, please turn to page 34.

MATTHEWS ASIA SCIENCE AND TECHNOLOGY FUND 33

Important Information

Purchase and Sale of Fund Shares

You may purchase and sell shares directly through the Fund’s transfer agent by calling 800.789.ASIA (2742) or online at matthewsasia.com. Shares of the Fund may also be purchased and sold through various securities brokers and benefit plan administrators or their sub-agents (“Third-Party Intermediaries”). You may purchase and redeem shares by electronic bank transfer, check, or wire. You buy and redeem shares at the Fund’s next-determined net asset value (NAV) after the Fund receives your request in good order. NAVs are determined only on days when the NYSE is open for regular trading. The minimum initial and subsequent investment amounts for various types of accounts offered by the Fund are shown below.

Type of Account	Minimum Initial Investment	Subsequent Investments
Non-retirement	$2,500	$100
Retirement and Coverdell	$500	$50

Tax Information

The Fund’s 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. Ordinary income and capital gains for such accounts are taxed on a deferred basis.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase shares of the Fund 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 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 web site for more information.

34 matthewasia.com | 800.789.ASIA

Financial Highlights

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
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	11.50		$	19.78		$	18.68		$	17.14		$	15.82
Income (loss) from investment operations
Net investment income		0.48	¹		0.54	¹		1.07			0.46			0.45
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		4.23			(6.73	)		2.93			3.47			2.02
Total from investment operations		4.71			(6.19	)		4.00			3.93			2.47
Less distributions from:
Net investment income		(0.44	)		(0.42	)		(0.90	)		(0.62	)		(0.43	)
Net realized gains on investments		—			(1.67	)		(2.00	)		(1.77	)		(0.72	)
Total distributions		(0.44	)		(2.09	)		(2.90	)		(2.39	)		(1.15	)
Paid-in capital from redemption fees		—	2		—	2		—	2		—	2		—	2
Net Asset Value, end of year	$	15.77		$	11.50		$	19.78		$	18.68		$	17.14
Total return		41.44	%		(32.07	%)		21.54	%		23.38	%		15.76	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	2,547,411		$	1,089,712		$	2,273,408		$	2,021,363		$	1,676,559
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.18	%		1.16	%		1.16	%		1.20	%		1.28	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.18	%		1.16	%		1.15	%		1.19	%		1.27	%
Ratio of net investment income to average net assets		3.47	%		3.19	%		2.59	%		2.27	%		2.60	%
Portfolio turnover		17.51	%		25.16	%		27.93	%		28.37	%		20.16	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

The information for the fiscal years ending December 31, 2009, 2008, and 2007 has been derived from the Fund’s financial statements, which have been audited by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. Their report, along with the Fund’s financial statements, is available without charge upon request. The audited financial statements for all prior fiscal periods were performed by the Fund’s prior independent registered public accounting firm.

FINANCIAL HIGHLIGHTS 35

Financial Highlights

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									Period ended
	2009			2008			2007			12/31/061
Net Asset Value, beginning of period	$	8.61		$	12.00		$	10.77		$	10.00
Income (loss) from investment operations
Net investment income		0.32	2		0.38	2		0.27			0.02
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		3.67			(3.47	)		1.67			0.77
Total from investment operations		3.99			(3.09	)		1.94			0.79
Less distributions from:
Net investment income		(0.55	)		(0.30	)		(0.27	)		(0.02	)
Net realized gains on investments		—			(0.02	)		(0.45	)		—
Total distributions		(0.55	)		(0.32	)		(0.72	)		(0.02	)
Paid-in capital from redemption fees		0.01			0.02			0.01			—	3
Net Asset Value, end of period	$	12.06		$	8.61		$	12.00		$	10.77
Total return		47.59	%		(25.97	%)		18.05	%		7.90	%4

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)	$	322,003		$	141,951		$	81,624		$	25,740
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.28	%		1.35	%		1.42	%		2.93	%5
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.30	%		1.32	%		1.39	%		1.50	%5
Ratio of net investment income to average net assets		3.16	%		3.74	%		2.66	%		1.34	%5
Portfolio turnover		32.41	%		25.07	%		26.95	%		0.00	%4

1	The Matthews Asia Dividend Fund commenced operations on October 31, 2006.

2	Calculated using the average daily shares method.

3	Less than $0.01 per share.

4	Not Annualized.

5	Annualized.

36 matthewasia.com | 800.789.ASIA

Financial Highlights

Matthews China Dividend Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

	Period ended
	12/31/091
Net Asset Value, beginning of period	$	10.00
Income (Loss) from investment operations
Net investment loss		(0.01	)2
Net realized gain and unrealized appreciation/depreciation on investments and foreign currency		0.19
Total from investment operations		0.18
Paid-in capital from redemption fees		—	3
Net Asset Value, end of period	$	10.18
Total return		1.80	%4

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)	$	7,134
Ratio of expenses to average net assets before reimbursement, or waiver of expenses by Advisor		10.05	%5
Ratio of expenses to average net assets after reimbursement, or waiver of expenses by Advisor		1.50	%5
Ratio of net investment loss to average net assets		(0.81	%)5
Portfolio turnover		0.00	%4

1	The Matthews China Dividend Fund commenced operations on November 30, 2009.

2	Calculated using the average daily shares method.

3	Less than $0.01 per share

4	Not annualized.

5	Annualized.

This information has been derived from the Fund’s financial statements, which have been audited by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. Their report, along with the Fund’s financial statements, is available without charge upon request.

FINANCIAL HIGHLIGHTS 37

Financial Highlights

Matthews Asia Pacific Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

	Year ended Dec. 31
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	10.03		$	17.29		$	16.92		$	14.89		$	12.58
Income (loss) from investment operations
Net investment income		0.06	1		0.13	1		0.09			0.07			0.07
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		4.44			(6.64	)		2.02			2.50			2.30
Total from investment operations		4.50			(6.51	)		2.11			2.57			2.37
Less distributions from:
Net investment income		(0.24	)		—			(0.09	)		(0.07	)		(0.06	)
Net realized gains on investments		—			(0.76	)		(1.66	)		(0.48	)		—
Total distributions		(0.24	)		(0.76	)		(1.75	)		(0.55	)		(0.06	)
Paid-in capital from redemption fees		—	2		0.01			0.01			0.01			—	2
Net Asset Value, end of year	$	14.29		$	10.03		$	17.29		$	16.92		$	14.89
Total return		44.82	%		(37.44	%)		11.92	%		17.39	%		18.84	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	227,651		$	168,031		$	471,054		$	449,699		$	285,169
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.28	%		1.23	%		1.20	%		1.26	%		1.35	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.28	%		1.23	%		1.20	%		1.24	%		1.34	%
Ratio of net investment income to average net assets		0.50	%		0.93	%		0.60	%		0.47	%		0.67	%
Portfolio turnover		58.10	%		37.10	%		40.49	%		40.45	%		15.84	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

38 matthewasia.com | 800.789.ASIA

Financial Highlights

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
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	11.05		$	27.86		$	23.71		$	19.27		$	15.90
Income (loss) from investment operations
Net investment income		0.06	1		0.24	1		0.30			0.22			0.14
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		8.27			(13.31	)		7.78			5.01			3.43
Total from investment operations		8.33			(13.07	)		8.08			5.23			3.57
Less distributions from:
Net investment income		(0.15	)		(0.30	)		(0.31	)		(0.21	)		(0.12	)
Net realized gains on investments		—			(3.44	)		(3.62	)		(0.58	)		(0.09	)
Total distributions		(0.15	)		(3.74	)		(3.93	)		(0.79	)		(0.21	)
Paid-in capital from redemption fees		—			—	2		—	2		—	2		0.01
Net Asset Value, end of year	$	19.23		$	11.05		$	27.86		$	23.71		$	19.27
Total return		75.37	%		(46.12	%)		33.66	%		27.22	%		22.51	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	3,565,745		$	1,202,441		$	3,806,714		$	3,303,717		$	2,031,995
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.13	%		1.12	%		1.11	%		1.18	%		1.31	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.13	%		1.12	%		1.10	%		1.16	%		1.31	%
Ratio of net investment income to average net assets		0.41	%		1.10	%		1.12	%		1.12	%		1.10	%
Portfolio turnover		13.22	%		16.76	%		24.09	%		18.80	%		3.03	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

FINANCIAL HIGHLIGHTS 39

Financial Highlights

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
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	14.34		$	39.73		$	24.16		$	14.76		$	14.01
Income (loss) from investment operations
Net investment income		0.09	1		0.30	1		0.12			0.15			0.22
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		11.12			(19.78	)		16.85			9.39			0.74
Total from investment operations		11.21			(19.48	)		16.97			9.54			0.96
Less distributions from:
Net investment income		(0.07	)		(0.33	)		(0.11	)		(0.15	)		(0.22	)
Net realized gains on investments		—			(5.62	)		(1.37	)		—			—
Return of capital		—			—			—			—	2		—
Total distributions		(0.07	)		(5.95	)		(1.48	)		(0.15	)		(0.22	)
Paid-in capital from redemption fees		0.02			0.04			0.08			0.01			0.01
Net Asset Value, end of year	$	25.50		$	14.34		$	39.73		$	24.16		$	14.76
Total return		78.30	%		(48.95	%)		70.14	%		64.81	%		6.91	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	2,566,005		$	781,104		$	2,335,402		$	966,528		$	388,950
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.21	%		1.23	%		1.18	%		1.27	%		1.31	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.21	%		1.23	%		1.17	%		1.26	%		1.30	%
Ratio of net investment income to average net assets		0.46	%		1.03	%		0.49	%		0.96	%		1.46	%
Portfolio turnover		5.28	%		7.91	%		22.13	%		11.65	%		11.82	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

40 matthewasia.com | 800.789.ASIA

Financial Highlights

Matthews India Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

													Period
	Year ended Dec. 31												ended
	2009			2008			2007			2006			12/31/051
Net Asset Value, beginning of period	$	8.37		$	24.44		$	15.45		$	11.32		$	10.00
Income (loss) from investment operations
Net investment income (loss)		0.07	2		0.03	2		(0.01	)		(0.01	)		(0.01	)
Net realized gain (loss) and unrealized appreciation/
depreciation on investments and foreign currency		8.06			(15.33	)		9.87			4.11			1.33
Total from investment operations		8.13			(15.30	)		9.86			4.10			1.32
Less distributions from:
Net investment income		(0.10	)		(0.11	)		(0.21	)		—			—
Net realized gains on investments		(0.12	)		(0.69	)		(0.68	)		—			—
Total distributions		(0.22	)		(0.80	)		(0.89	)		—			—
Paid-in capital from redemption fees		0.01			0.03			0.02			0.03			—	3
Net Asset Value, end of period	$	16.29		$	8.37		$	24.44		$	15.45		$	11.32
Total return		97.25	%		(62.32	%)		64.13	%		36.48	%		13.20	%4

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)	$	720,925		$	317,516		$	1,311,072		$	669,643		$	80,897
Ratio of expenses to average net assets before
reimbursement, waiver or recapture of expenses by
Advisor and Administrator		1.27	%		1.29	%		1.29	%		1.41	%		2.75	%5
Ratio of expenses to average net assets after
reimbursement, waiver or recapture of expenses by
Advisor and Administrator		1.27	%		1.29	%		1.28	%		1.41	%		2.00	%5
Ratio of net investment income (loss) to average net assets		0.59	%		0.16	%		(0.04	%)		(0.08	%)		(1.17	%)5
Portfolio turnover		18.09	%		26.68	%		25.59	%		21.57	%		0.00	%4

1	The Matthews India Fund commenced operations on 10/31/05.

2	Calculated using the average daily shares method.

3	Less than $0.01 per share.

4	Not Annualized.

5	Annualized.

FINANCIAL HIGHLIGHTS 41

Financial Highlights

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
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	10.19		$	14.55		$	17.29		$	18.48		$	16.12
Income (loss) from investment operations
Net investment income (loss)		0.10	1		0.11	1		0.03			(0.08	)		0.02
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		0.92			(4.26	)		(1.86	)		(1.12	)		2.36
Total from investment operations		1.02			(4.15	)		(1.83	)		(1.20	)		2.38
Less distributions from:
Net investment income		(0.31	)		—			(0.01	)		—			(0.03	)
Net realized gains on investments		—			(0.22	)		(0.91	)		—			—
Total distributions		(0.31	)		(0.22	)		(0.92	)		—			(0.03	)
Paid-in capital from redemption fees		0.01			0.01			0.01			0.01			0.01
Net Asset Value, end of year	$	10.91		$	10.19		$	14.55		$	17.29		$	18.48
Total return		10.06	%		(28.38	%)		(10.96	%)		(6.44	%)		14.83	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	88,334		$	123,674		$	166,860		$	276,656		$	367,618
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.31	%		1.23	%		1.24	%		1.25	%		1.29	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.31	%		1.23	%		1.23	%		1.24	%		1.28	%
Ratio of net investment income (loss) to average net assets		0.97	%		0.84	%		(0.01	%)		(0.29	%)		(0.10	%)
Portfolio turnover		126.75	%		88.97	%		45.51	%		59.95	%		20.88	%

1	Calculated using the average daily shares method.

42 matthewasia.com | 800.789.ASIA

Financial Highlights

Matthews Korea Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

	Year ended Dec. 31
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	2.75		$	6.56		$	6.23		$	6.37		$	4.08
Income (loss) from investment operations
Net investment income (loss)		(0.01	)1		(0.02	)1		0.07			0.01			0.01
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		1.74			(3.48	)		1.15			0.80			2.39
Total from investment operations		1.73			(3.50	)		1.22			0.81			2.40
Less distributions from:
Net investment income		—			(0.06	)		(0.02	)		(0.01	)		—
Net realized gains on investments		(0.17	)		(0.25	)		(0.87	)		(0.95	)		(0.11	)
Total distributions		(0.17	)		(0.31	)		(0.89	)		(0.96	)		(0.11	)
Paid-in capital from redemption fees		—	2		—	2		—	2		0.01			—	2
Net Asset Value, end of year	$	4.31		$	2.75		$	6.56		$	6.23		$	6.37
Total return		62.92	%		(52.66	%)		18.90	%		12.99	%		58.76	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	138,371		$	87,253		$	250,421		$	241,003		$	269,925
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.30	%		1.27	%		1.21	%		1.30	%		1.35	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.30	%		1.27	%		1.21	%		1.28	%		1.35	%
Ratio of net investment income (loss) to average net assets		(0.36	%)		(0.34	%)		1.17	%		(0.09	%)		0.27	%
Portfolio turnover		52.47	%		28.70	%		24.20	%		25.82	%		10.13	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

FINANCIAL HIGHLIGHTS 43

Financial Highlights

Matthews Asia Small Companies Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

	Year ended			Period ended
	12/31/09			12/31/081
Net Asset Value, beginning of period	$	7.89		$	10.00
Income (loss) from investment operations
Net investment income		0.02	2		0.01	2
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency		8.04			(2.16	)
Total from investment operations		8.06			(2.15	)
Less distributions from:
Net investment income		(0.05	)		(0.02	)
Net realized gains on investments		(0.15	)		—
Total distributions		(0.20	)		(0.02	)
Paid-in capital from redemption fees		0.04			0.06
Net Asset Value, end of period	$	15.79		$	7.89
Total return		103.00	%		(21.03	%)3

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s)	$	109,726		$	3,173
Ratio of expenses to average net assets before reimbursement, waiver or recapture of expenses by
Advisor and Administrator		2.09	%		14.31	%4
Ratio of expenses to average net assets after reimbursement, waiver or recapture of expenses by
Advisor and Administrator		2.00	%		2.00	%4
Ratio of net investment income to average net assets		0.13	%		0.15	%4
Portfolio turnover		21.39	%		3.10	%3

1	The Matthews Asia Small Companies Fund commenced operations on September 15, 2008.

2	Calculated using the average daily shares method.

3	Not annualized.

4	Annualized.

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Financial Highlights

Matthews Asia Science and Technology Fund

The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.

	Year ended Dec. 31
	2009			2008			2007			2006			2005
Net Asset Value, beginning of year	$	4.71		$	9.80		$	7.92		$	6.53		$	5.45
Income (loss) from investment operations
Net investment income (loss)		—	1,2		0.01	1		—	2		(0.02	)		—	2
Net realized gain (loss) and unrealized appreciation/depreciation
on investments and foreign currency		3.31			(5.11	)		1.87			1.40			1.08
Total from investment operations		3.31			(5.10	)		1.87			1.38			1.08
Paid-in capital from redemption fees		—²			0.01			0.01			0.01			—	2
Net Asset Value, end of year	$	8.02		$	4.71		$	9.80		$	7.92		$	6.53
Total return		70.28	%		(51.94	%)		23.74	%		21.29	%		19.82	%

The total return represents the rate that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions.

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s)	$	130,367		$	74,476		$	252,304		$	129,819		$	50,426
Ratio of expenses to average net assets before reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.40	%		1.33	%		1.26	%		1.41	%		1.49	%
Ratio of expenses to average net assets after reimbursement,
waiver or recapture of expenses by Advisor and Administrator		1.40	%		1.33	%		1.25	%		1.39	%		1.48	%
Ratio of net investment income (loss) to average net assets		0.30	%		0.08	%		(0.30	%)		(0.29	%)		0.08	%
Portfolio turnover		83.27	%		44.84	%		33.21	%		34.77	%		29.76	%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

FINANCIAL HIGHLIGHTS 45

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 (each a “Fund” and collectively the “Funds”) offers a range of regional and country-specific funds with the following objective(s):

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
ASIA GROWTH STRATEGIES
Matthews Asia Pacific Fund	Long-term capital appreciation
Matthews Pacific Tiger Fund	Long-term capital appreciation
Matthews China Fund	Long-term capital appreciation
Matthews India Fund	Long-term capital appreciation
Matthews Japan Fund	Long-term capital appreciation
Matthews Korea Fund	Long-term capital appreciation

ASIA SMALL COMPANY STRATEGY
Matthews Asia Small Companies Fund	Long-term capital appreciation

ASIA SPECIALTY STRATEGY
Matthews Asia Science and Technology Fund	Long-term capital appreciation

Principal Investment Strategies

Matthews International Capital Management, LLC (“Matthews”) is the investment advisor to each Fund. Matthews invests in the Asia Pacific region (as defined on the next page) based on its assessment of the future development and growth prospects of companies located in that region. Matthews believes that the region’s countries 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 markets and create 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 region’s economic evolution. Matthews uses a range of approaches to participate in the anticipated growth of the Asia Pacific region 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 long-term growth, and to assess whether it is generally consistent with Matthews’ expectations for the region’s economic evolution. Matthews evaluates potential portfolio holdings on the basis of their individual merits, and invests in those companies that it believes are positioned to help a Fund achieve its investment objectives.

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.

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Matthews Seeks to Invest in the Long-Term Growth Potential of the Asia Pacific Region

○	Matthews believes that the countries of the Asia Pacific region will continue to benefit from economic development over longer investment horizons.

○	Matthews seeks to invest in those companies that it believes will benefit from the long-term economic evolution of the region and that will help each Fund achieve its investment objective.

○	Matthews generally does not hedge currency risks.

Matthews and the Funds Believe in Investing for the Long Term

○	Matthews constructs portfolios with long investment horizons—typically five to ten years.

Matthews Is an Active Investor with Strong Convictions

○	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.

○	Matthews invests in individual companies based on fundamental analysis that aims to develop an understanding of a company’s long-term business prospects.

○	Matthews monitors the composition of benchmark indices but is not constrained by their composition or weightings, and constructs portfolios independently of indices.

○	Matthews believes that investors benefit in the long term when the Funds are fully invested.

Matthews Is a Fundamental Investor

○

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.

○	Matthews may also consider factors such as:

–

Management: Does the 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?

–

Valuation: Is the company’s valuation reasonable in relation to its growth prospects and relative to other similar companies in the region or globally?

○	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

○	Matthews develops views about the course of growth in the region over the long term.

○	Matthews then seeks to combine these beliefs with its analysis of individual companies and their fundamental characteristics.

○	Matthews then seeks to invest in companies and securities that it believes are positioned to help a Fund achieve its investment objective.

Each of the Funds concentrates its investments in individual countries or in groups of countries within the Asia Pacific region. A company is considered to be “located” in a country if it (i) is organized under the laws of that country; (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made, services performed, or has at least 50% of its assets located within that country; (iii) has the primary trading markets for its securities in that country; or (iv) is a governmental entity or an agency, instrumentality or a political subdivision of that country.

THE ASIA PACIFIC REGION

IS DIVIDED INTO THE

FOLLOWING GROUPS:

PACIFIC TIGER

China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. Japan is not included.

ASIA

Pacific Tiger countries plus Japan

ASIA PACIFIC

Countries of Asia plus Australia and New Zealand

PRINCIPAL INVESTMENT STRATEGIES 47

○

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 Asia 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. The Matthews Asia Small Companies Fund invests at least 80% of its assets in Small Companies, as defined in the Summary for that Fund.

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 shareholders to do so. As of the date of this Prospectus, this has never occurred; but if it were to occur, the investment goals of the Funds may not be achieved.

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Risks of Investing in the Funds

The main risks associated with investing in the Funds are described below and 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 (“NAV”) per share of that Fund will decline and investors may lose some or all of the value of their investment.

Foreign securities held by the Funds may be traded on days and at times when the NYSE is closed and the NAV of the Funds is therefore not calculated. Accordingly, the NAV 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’ NAV, see page 60.

Your investment in the Funds is exposed to many different financial, market, regional and country-related risks, including, but not limited to, the lower degree of economic development in some countries, less developed and more uncertain legal and financial systems, unusual or unique political structures, unpredictable foreign relations, the state of international economics and the global financial system, natural resources dependencies, and the effect of climate and environmental conditions.

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 (at least five years), so that you can better manage volatility in a 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.

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 any Fund’s benchmark index) or of the broader markets generally. As a result, investors should expect that changes in the Funds’ net asset values 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 net asset value (see page 60).

Concentration Risk

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 especially sensitive to adverse social, political, economic or regulatory developments. Therefore, events affecting a small number of companies or industries may have a significant and potentially adverse impact on your investment in the Funds. Additionally, because the Funds concentrate their investments in a single region of the world (or in a single country within that region), the Funds’ performance may be more volatile than that of funds that invest globally. If securities of Asia Pacific countries (or the securities of companies from individual countries in the region) fall out of favor, it may cause a Fund to underperform funds that do not concentrate in a single region or country.

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. An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

RISKS OF INVESTING IN THE FUNDS 49

Developments in Global Credit and Equity Markets

Global capital markets in 2008 and 2009 experienced credit and valuation problems and the mass liquidation of investment portfolios. These conditions have generated extreme volatility and illiquidity. Volatility and illiquidity were exacerbated by, among other things, uncertainty regarding the extent of the problems in the mortgage industry and financial institutions, decreased risk tolerance by investors, significantly tightened availability of credit and global deleveraging. This financial crisis caused a significant decline in the value and liquidity of many securities, and made valuation of the Funds’ portfolios more difficult.

Although market conditions started to improve in 2009, many difficult conditions remain or may return. Because of the expansive scope of these conditions, 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 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.

The Funds attempt to remain fully invested at all times and do not anticipate hedging interest rate or currency risks. These practices may make the Funds’ performance more volatile, especially during periods of distress in financial and credit markets.

Preferred Stocks

Preferred stock represents an equity or ownership interest in a company. Preferred stock normally pays dividends at a speci-fied 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. Preferred stock, unlike common stock, often has a stated dividend rate payable from the corporation’s earnings. Preferred stock dividends may be cumulative or non-cumulative, participating, or auction rate. If interest rates rise, the fixed 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.

Certain Risks of Fixed-Income Securities

Fixed-income securities (such as bonds) are subject to a variety of risks, including credit and interest rate risks. “Credit risk” refers to the likelihood that an issuer will 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 which are rated by rating agencies are often reviewed and may be subject to downgrade. “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.

Credit Ratings

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 Investors Service, Inc. (“Moody’s”), Standard & Poor’s Corporation (“S&P”) or Fitch Inc. (“Fitch”), based on their view of past and potential developments related to an issuer (or security). Such potential developments may not reflect actual developments or a rating organization’s evaluation may be incomplete or inaccurate. The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by Matthews:

○	High quality

○	Investment grade

○	Below investment grade (“high-yield securities” or “junk bonds”)

For a further description of credit ratings, see the Funds’ SAI “Appendix: Bond Ratings.” As noted in the Appendix to the Funds’ SAI, Moody’s, S&P and Fitch may modify their ratings of securities to show relative standing within a rating category, with the addition of numerical modifiers (1, 2 or 3) in the case of Moody’s, and with the addition of a plus (+) or minus (-) sign in the case of S&P or Fitch. A Fund may purchase a security, regardless of any rating modification, provided the security is rated at or above the Fund’s minimum rating category. For example, a Fund may purchase a security rated B3 by Moody’s, B- by S&P, or B- by Fitch, to the extent that the Fund may purchase securities rated B.

Convertible Securities

As part of their investment strategies, the Matthews Asia Dividend Fund, Matthews China Dividend Fund, Matthews Asia Pacific Fund, Matthews Asian Growth and Income Fund and Matthews India Fund may invest in convertible preferred stocks, and convertible bonds and debentures. 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.

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Convertible bonds and debentures carry different kinds of risks than those of common and preferred stocks. These risks 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 a Fund losing its investment. 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. In addition, many Asia Pacific convertible securities are not rated by rating agencies like Moody’s, S&P or Fitch, or, if they are rated, they may be rated below investment grade. These securities are commonly referred to as “junk bonds” and may have a greater risk of default. Investing in a convertible security denominated in a currency different from that of the security into which it is convertible may expose a 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.

High-Yield Securities

Securities rated lower than Baa by Moody’s, or equivalently rated by S&P or 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. While offering a greater potential opportunity for capital appreciation and higher yields, 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 real or perceived adverse economic and competitive industry conditions than higher-rated securities. An economic downturn or 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 be subject to greater levels of credit and liquidity risk than funds that do not invest in such securities.

Dividend-Paying Equities

Each of the Funds, including the Matthews Asia Dividend Fund, Matthews China Dividend Fund and Matthews Asian Growth and Income 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 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.

Initial Public Offerings (IPOs)

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 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 a Fund’s performance than when a Fund is larger. 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 opportunities in the future, or that a Fund’s investments in IPOs will have a positive impact on a Fund’s performance.

Risks Associated with Smaller Companies

The Matthews Asia Small Companies Fund invests in securities of small companies and each of the other Funds may invest in the securities of small 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) may be greater than in 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. Small companies also may be unable to generate funds necessary for growth or development, or be developing or marketing new 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 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 such 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 companies, the lower degree of liquidity in the markets for such securities, and the greater sensitivity of smaller companies to changing economic conditions. For these and other reasons, 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.

RISKS OF INVESTING IN THE FUNDS 51

Market Timing and Other Short-Term Trading

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 minimize the financial impact of market-timing transactions through the imposition of short-term redemption fees. In addition, 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 66 for additional information on the Funds’ policies and procedures related to short-term trading and market-timing activity.

Regional and Country Risks

In addition to the risks discussed above, 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.

Global economies and financial markets are becoming increasingly interconnected. This increases the possibility that conditions in one country or region might adversely impact the issuers of securities in a different country or region. The economies of many Asia Pacific countries are dependent on the economies of the United States, Europe and other Asian countries, and, as seen in the recent developments in global credit and equity markets, 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. Since 1953, the United States has maintained a military force in South Korea to help deter the ongoing military threat from North Korean forces. The situation remains a source of tension and is currently volatile, particularly as North Korea appears to continue to develop nuclear capabilities, and tactical and strategic missile systems. 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. Recently, 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.

Military action or the risk of military action or strains on the economy of North Korea could have a materially adverse effect on all countries in the region, particularly China, Japan and South Korea. Consequently, 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., 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.

China, Hong Kong and Taiwan

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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. Military conflicts, either in response to internal social unrest or conflicts with other countries, could disrupt economic development. China’s long-running conflict over Taiwan remains unresolved, 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. Development of the Chinese economy is also vulnerable to developments on the Korean peninsula. Should political tension increase or military actions be precipitated, it could adversely affect the economy and destabilize the region as a whole. 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 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 emerges, 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 Fund’s investments.

Hong Kong. Since Hong Kong reverted to Chinese sovereignty in 1997, it has been governed by the Basic Law, a “quasi-constitution.” The Basic Law guarantees a high degree of autonomy in certain matters until 2047, while defense and foreign affairs are the responsibility of the central government in Beijing. 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. There is uncertainty as to whether China will continue to respect the relative independence of Hong Kong and refrain from exerting a tighter grip on Hong Kong’s political, economic and social concerns. The economy of Hong Kong may be significantly affected by increasing competition from the emerging economies of Asia, including that of China itself. 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 affect 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.

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. The continuing hostility between China and Taiwan may have an adverse impact on the values of investments in both China and 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.

Taiwan’s growth has to a significant degree been export-driven. While the percentage of Taiwan’s exports purchased by the United States has been declining recently, the United States has remained a key export market. Accordingly, Taiwan is affected by changes in the economies of the United States and other main trading partners, by protectionist impulses in those countries and by the development of export sectors in lower-wage economies. In the event that growth in the export sector declines in the future, the burden of future growth will increasingly be placed on domestic demand.

Taiwan has limited natural resources, resulting in dependence on foreign sources for certain raw materials and vulnerability to global fluctuations of price and supply. This dependence is especially pronounced in the energy sector. In recent years, over half of Taiwan’s crude oil has been supplied by Kuwait and Saudi Arabia. A significant increase in energy prices could have an adverse impact on Taiwan’s economy.

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 the economy and could adversely affect market conditions, deter economic growth and the profitability of private enterprises. 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 dispute with Pakistan over the bordering Indian state of Jammu and Kashmir remains unresolved. In recent years, terrorists believed to be based in Pakistan struck Mumbai (India’s financial capital), 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.

RISKS OF INVESTING IN THE FUNDS 53

Japan. The Japanese economy and financial markets have produced disappointing returns over the past two decades. Despite significant monetary and fiscal action by the government of Japan as well as the Bank of Japan (BoJ), the Japanese stock market, as measured by the Tokyo Stock Price Index, has been volatile, and the footing of the Japanese economy remains uncertain. The Japanese yen has also shown volatility over this period. Such currency volatility could affect returns in the future. The Japanese 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.

Poor performance of the global economy has negatively affected equity returns in Japan, and may continue to do so. Japan’s economy and stock market have in the recent past had a strong correlation with the U.S. economic cycle and U.S. stock markets, and thus Japan’s economy may continue to be affected by current economic problems in the U.S. 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).

Japan is largely dependent on foreign economies for raw materials. International trade is important to Japan’s economy, as exports provide the means to pay for many of the raw materials it must import. Because of the concentration of Japa-nese exports in highly visible products such as automobiles, machine tools and semiconductors, and the large trade surplus ensuing from there, Japan has entered a difficult phase in its relations with its trading partners, particularly with respect to the United States, with whom its trade imbalance is the greatest. The export-sector of the Japanese economy is heavily dependent on exports to the United States and other countries whose currencies are tied to or that utilize the U.S. dollar for foreign exchange. Changes in the dollar/yen exchange rate could adversely affect the profitability and value of export-oriented Japanese companies.

South Korea. Investing in South Korean securities has special risks, including political, economic and social instability, and the potential for increasing militarization in North Korea (see Regional and Country Risks on page 52). The market capitalization and trading volume of issuers in South Korean securities markets are concentrated in a 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 any investments in South Korea.

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 influ-enced 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. The South Korean government has sought to minimize excessive price volatility on the South Korean Stock Exchange through various steps, including the imposition of limitations on daily price movements of securities, although there is no assurance that this would prevent the value of an investment from declining over time.

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.

Singapore. As a small open economy, Singapore is particularly vulnerable to external economic influences, such as the Asian economic crisis of the late 1990s. Although Singapore has been a leading manufacturer of electronics goods, the extent to which other countries can successfully compete with Singapore in this and related industries, and adverse Asian economic influences generally, may negatively affect Singapore’s 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. In September 2006, Thailand’s elected government was overthrown in a military coup and replaced by new leadership backed by a military junta. Political and social unrest have continued following the coup and have resulted in ongoing disruptions, violent protests and clashes between citizens and the government. 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 been revised and updated since their initial imposition, and more recently 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.

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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.

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 fragile banking sector, endemic corruption, inadequate infrastructure, a poor investment climate and unequal resource distribution among regions.

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.

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. Adverse developments can result in substantial declines in the value of investments. Pakistan has and continues to face high levels of political instability and social unrest at both the regional and national levels. Such instability has and may erupt again into wide-scale disorder. The Pakistan government recently imposed a state of emergency following riots and the deaths of opposition leaders. Social and political instability may also result in increased levels of terrorism, prolonged economic disruption and may discourage foreign investment.

Ongoing disputes with India over the Kashmir border region may result in armed conflict between the two nations, both of which possess nuclear capabilities. Even in the absence of armed conflict, the lingering threat of war with India may depress economic growth and investment in Pakistan. Additionally, Pakistan’s geographic location and its shared borders with Afghanistan and Iran increase the risk that it will be involved in, or otherwise affected by, international conflict. Pakistan’s recent economic growth is in part attributable to high levels of foreign aid, loans and debt forgiveness. Such international support, however, 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. Pakistan had undertaken a privatization initiative, but recently halted that effort. There is substantial uncertainty over whether privatization will continue and whether existing efforts will be reversed. Pakistan is subject to substantial natural resource constraints, which both hamper development and make Pakistan’s economy vulnerable to price fluctuations in these resources. Pakistan maintains large budgetary and current account deficits. The resulting high levels of national debt may not be sustainable. Pakistan also maintains a trade deficit, which could be worsened if relations with the United States, the largest market for Pakistani exports, deteriorate. The rights of investors and other property owners in Pakistan are subject to protection by a developing judicial system that is widely perceived as lacking transparency. Inflation threatens long-term economic growth and may deter foreign investment in the country. Leaders of the recently installed civil government have previously adopted policies that increased legal and economic uncertainty and inhibited foreign investment.

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. Some credit rating agencies have expressed concerns about Philippines’ ability to sustain its debt.

Sri Lanka. Civil war and terrorism have disrupted the economic, social and political stability of Sri Lanka for decades. On May 19, 2009, the Sri Lankan government announced that it had achieved victory over the Liberation Tigers of Tamil Eelam (LTTE), an armed insurgency group that had been active for many years. Nonetheless, remnants of the LTTE remain and there is potential for continued instability resulting from ongoing ethnic conflict. Sri Lanka faces severe income inequality, high inflation and a sizable public debt load. Additionally, Sri Lanka’s economy is dependent on a strong global economy for foreign investment and a market for its exports, which have suffered during the global economic decline. 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. Sri Lanka also faces a number of threats related to weather and climate, and certain coastal regions of the country were devastated by the 2004 Asian tsunami.

RISKS OF INVESTING IN THE FUNDS 55

For additional information about strategies and risks, see individual Fund descriptions in the 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 SEC’s website at sec.gov and access the EDGAR database.

Vietnam. In 1992, Vietnam initiated the process of privatization of state-owned enterprises, and expanded that process in 1996. The Vietnamese government has exercised and continues to exercise significant influence over many aspects of the economy. Accordingly, government and bureaucratic actions have a significant effect on the economy and could adversely affect market conditions, deter economic growth and the profitability of private enterprises. Some Vietnamese industries, including commercial banking, remain dominated by state-owned enterprises. To date, economic, political and legal reform has proceeded at a slow pace, and foreign direct investment remains at a developmental stage. Currently, employees and management boards hold a majority of the equity of most privatized enterprises. In addition, the government of Vietnam continues to hold, on average, more than one-third of the equity in such firms. Only a small percentage of the shares of privatized companies are held by investors. In addition, Vietnam continues to impose limitations on foreign ownership of Vietnamese companies. Vietnamese authorities have in the past imposed arbitrary repatriation taxes on foreign owners, and the government may levy withholding and other taxes on dividends, interest and gains. There can be no guarantee that Vietnam’s privatization process, or its efforts to reform its economic, political or legal systems will continue.

The development of Vietnam’s economy is dependent on export markets and is vulnerable to events in these markets. There is also a greater risk involved in currency fluctua-tions and interest rate fluctuations. 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), which may result in a fund being unable to repatriate proceeds from the sales of Vietnamese holdings. Business and overseas investment patterns may exacerbate currency conversion and repatriation at certain times of the year. The Funds may attempt to repatriate from the Vietnamese Dong using a third currency (e.g. Hong Kong Dollar or Euro), which could expose the Funds to risks associated with that currency and additional costs. Perhaps to a greater extent than markets in other emerging market countries, 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.

Foreign investors in Vietnam are currently required to purchase and sell securities of Vietnamese companies through a single, pre-selected broker-dealer. This procedure decreases transparency in the market, may result in higher execution costs and limits the Funds’ ability to utilize competition amongst broker-dealers to enhance the quality of execution. Use of a single broker also increases the risk to a Fund if the broker cannot fulfill its obligations (known as counterparty risk). That risk is enhanced further because of the requirement to pay for securities purchased before receiving them. This procedure may also decrease the confidentiality of the Funds’ transactions, exposing the Funds to a greater potential for front-running and similar practices.

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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 with the Funds (the “Advisory Agreement”). Matthews also furnishes the Funds with office space and provides certain administrative, clerical and shareholder services to the Funds pursuant to an administration and shareholder servicing agreement with the Funds.

Under an amendment to the Advisory Agreement effective September 1, 2007, the Funds, other than the Matthews Asia Small Companies Fund, pay Matthews 0.75% of the annual aggregate average daily net assets of such Funds up to $2 billion, 0.6834% of the annual aggregate average daily net assets of such Funds between $2 billion and $5 billion, and 0.65% of the annual aggregate average daily net assets of such Funds over $5 billion. The Funds pay Matthews a monthly fee of one-twelfth (1/12) of the management fee of the Funds’ average daily net asset value for the month. The Matthews Asia Small Companies Fund, under an amendment to the Advisory Agreement, dated as of September 15, 2008, pays Matthews a fee equal to 1.00% of its annual average daily net assets. The Matthews Asia Small Companies Fund pays Matthews a monthly fee of one-twelfth (1/12) of the management fee of its average daily net asset value for the month. A discussion regarding the basis for the Board of Trustees’ approval of the Advisory Agreement of the Funds is available in the Funds’ Annual Report to Shareholders for the year ended December 31, 2009. Accordingly, the Fund paid investment manager fees to Matthews as follows:

Matthews China Dividend Fund	0.67%
Matthews Asian Growth and Income Fund , Matthews
Asia Dividend Fund, Matthews Pacific Tiger Fund,
Matthews China Fund, Matthews India Fund,
Matthews Korea Fund, Matthews Asia Science and
Technology Fund	0.69%
Matthews Asia Pacific Fund, Matthews Japan Fund	0.70%
Matthews Asia Small Companies Fund	0.99%

Pursuant to an Administration and Shareholder Services Agreement dated as of August 13, 2004, as amended, (the “Services Agreement”) effective September 1, 2007, the Funds pay Matthews 0.25% of the aggregate average daily net assets of the Funds up to $2 billion, 0.1834% of the aggregate average daily net assets of the Funds between $2 billion and $5 billion, 0.15% of the aggregate average daily net assets within the Funds between $5 billion and $7.5 billion, and 0.125% of the aggregate average daily net assets of the Funds over $7.5 billion. Matthews receives this compensation for providing certain administrative and shareholder services to the Funds and current shareholders of the Funds, including overseeing the activities of the Funds’ transfer agent, accounting agent, custodian and administrator; assisting with the daily calculation of the Funds’ net asset values; overseeing each Fund’s compliance with its legal, regulatory and ethical policies and procedures; assisting with the preparation of agendas and other materials drafted by the Funds’ third-party administrator and other parties for the Trust’s 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, proxy statements, annual reports, prospectuses and other correspondence from the 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 Funds’ transfer agent or other intermediaries (such as fund supermarkets); communicating with investment advisors whose clients own or hold shares of the Funds; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders.

Under a written agreement between the Funds and Matthews, Matthews agrees to waive fees and reimburse expenses to a Fund if its expense ratio exceeds a certain percentage level. For Matthews Asia Science and Technology Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund and Matthews Asia Small Companies Fund, this level is 2.00%. For Matthews Asia Pacific Fund, Matthews Pacific Tiger Fund and Matthews Asian Growth and Income Fund, this level is 1.90%. For Matthews Asia Dividend Fund and Matthews China Dividend Fund, this level is 1.50%. In turn, if a Fund’s expenses fall below the level noted above within three years after Matthews has made such a waiver or reimbursement, a Fund may reimburse Matthews up to an amount not to exceed its expense limitation. For each Fund other than the Matthews Asia Small Companies Fund and Matthews China Dividend Fund, this agreement will continue through at least August 31, 2011. For the Matthews Asia Small Companies Fund and Matthews China Dividend Fund, this agreement will continue through at least April 30, 2012 and November 30, 2012, respectively. These agreements may be extended for additional periods for each of the Funds.

MANAGEMENT OF THE FUNDS 57

Portfolio Managers

Each of the Funds is managed by one or more Lead Portfolio Managers, who are supported by and consult with, for most of the Funds, one or more Co-Portfolio Managers. A Lead Portfolio Manager of a Fund is responsible for its day-to-day investment management decisions.

	ROBERT J. HORROCKS, PhD
Co-Manager Asian Growth and Income Fund	Robert Horrocks is Chief Investment Officer at Matthews and a Portfolio Manager. As Chief Investment Officer, Robert oversees the firm’s investment process and investment professionals and sets the research agenda for the investment team. Before joining Matthews in August 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 Asian Growth and Income Fund since 2009.

	KENICHI AMAKI
Co-Manager Japan Fund	Kenichi Amaki is a Portfolio Manager at Matthews. Prior to joining Matthews in 2008 as a Research Analyst, he was an investment officer for a family trust based in Monaco, researching investment oppor- tunities primarily in Japan. From 2001 to 2004, he worked on the International Pension Fund Team at Nomura Asset Management in Tokyo, Japan. Kenichi received a B.A. in Law from Keio University in Japan and an M.B.A. from the University of California at Berkeley, and is fluent in Japanese. He has been a Portfolio Manager of the Japan Fund since 2010.

	ANDREW FOSTER
Lead Manager Asian Growth and Income Fund Co-Manager Asia Dividend Fund India Fund	Andrew Foster is a Portfolio Manager at Matthews. He joined Matthews in 1998 as a Research Analyst, and has held a number of positions at the firm during his tenure, including Director of Research and acting Chief Investment Officer. Andrew began his career in Singapore, where he worked as a management consultant in A.T. Kearney’s Financial Institutions Group. He holds an A.B. in Public Policy and a secondary degree in Economics from Stanford University and an M.B.A. from INSEAD in France. Andrew has been a Portfolio Manager of the Asian Growth and Income Fund since 2005, of the India Fund since the Fund’s inception in 2005 and of the Asia Dividend Fund since the Fund’s inception in 2006.

	RICHARD H. GAO
Lead Manager Pacific Tiger Fund China Fund Co-Manager China Dividend Fund	Richard Gao is a Portfolio Manager at Matthews. He joined Matthews in 1997 as a China Analyst. Richard began his career at the Bank of China in 1989, first as a loan officer, then as a FOREX Trader in the Treasury Department. In 1993, he became Assistant Manager at the Bank of China, where he was in charge of FOREX trading for import/export companies. Richard received a B.A. in Literature from Guangdong University of Foreign Studies and an M.B.A. in International Business from the Dominican University of California. He is fluent in Mandarin, Cantonese and Shanghainese. Richard has been a Portfolio Manager of the Pacific Tiger Fund since 2006, of the China Fund since 1999 and of the China Dividend Fund since the Fund’s inception in 2009.

	MICHAEL B. HAN, CFA
Co-Manager Korea Fund Asia Small Companies Fund	Michael Han is a Portfolio Manager at Matthews. Prior to joining Matthews in 2007 as a Senior Research Ana- lyst, he was a buy-side Equity Analyst at Luxor Capital Group, researching investment opportunities in Asian markets, including Korea, Japan, Hong Kong and China. From 2002 to 2005, he was an Investment Manager at Crystal Investment Group, a private equity firm in Seoul. Michael started his career as a Consultant in the Seoul office of KPMG. Michael received a B.A. in Business from Yonsei University in Seoul and an M.B.A. from Columbia University, and is fluent in Korean. Michael has been a Portfolio Manager of the Korea Fund since 2008 and of the Asia Small Companies Fund since 2010.

	MARK W. HEADLEY
Co-Manager Pacific Tiger Fund	Mark Headley is Chairman of the Board of Directors of Matthews and a Portfolio Manager. Mark joined Matthews in 1995 and has been actively involved in the Asian markets since 1989. He was an original member of the team that launched the first SEC-registered open-ended Asia (ex Japan) fund. Mark received a B.A. in Economics and Politics from the University of California, Santa Cruz. Mark has been a Portfolio Manager of the Pacific Tiger Fund since 1996.

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TAIZO ISHIDA
Taizo Ishida is a Portfolio Manager at Matthews. Prior to joining Matthews in 2006, Taizo spent six years on the global and international teams at Wellington Management Company as a Vice President and Portfolio Manager. From 1997 to 2000, he was a Senior Securities Analyst and a member of the international investment team at USAA Investment Management Company. From 1987 to 1997, he held positions at Sanford Bernstein & Co. and Yamaichi International (America), Inc. Prior to beginning his investment career, Taizo spent three years in Dhaka, Bangladesh as a Program Officer with the United Nations Development Program. Taizo received a B.A. in Social Science from International Christian University in Tokyo, Japan and an M.A. in International Relations from The City College of New York. He is fluent in Japanese. Taizo has been a Portfolio Manager of the Asia Pacific Fund since 2007, and of the Japan Fund since 2006.		Lead Manager Asia Pacific Fund Japan Fund

JESPER MADSEN, CFA
Jesper Madsen is a Portfolio Manager at Matthews. Prior to joining Matthews in 2004, he was an Analyst at Charter Equity Research. He has also worked at Barclays Global Investors in the Fixed Income group as well as at Chemoil Corporation in oil-related sales. Jesper has traveled extensively, including living and working in China. He received a B.A. in Politics, Philosophy and Economics from the University of York in the United Kingdom. Jesper has been a Portfolio Manager of the Asia Dividend Fund since the Fund’s inception in 2006, and of the China Dividend Fund since its inception in 2009.		Lead Manager Asia Dividend Fund China Dividend Fund

J. MICHAEL OH
Michael Oh is a Portfolio Manager at Matthews. Michael joined Matthews in 2000 as a Research Analyst and has built his investment career at the firm, arriving at his current role as Portfolio Manager in 2006. 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 Korea Fund since 2007, and of the Asia Science and Technology Fund since 2006.		Lead Manager Korea Fund Asia Science and Technology Fund

SHARAT SHROFF, CFA
Sharat Shroff is a Portfolio Manager at Matthews. Prior to joining Matthews as a Research Analyst in 2005, Sharat spent five years in the San Francisco office and seven months in the Hong Kong office of Morgan Stanley as an Equity Research Associate. Sharat received a Bachelor of Technology from the Institute of Technology in Varanasi, India and an M.B.A. from the Indian Institute of Management, in Calcutta, India. He is fluent in Hindi and Bengali. Sharat has been a Portfolio Manager of the Pacific Tiger Fund since 2008, of the Asia Pacific Fund since 2007, and of the India Fund since 2006.		Lead Manager Pacific Tiger Fund India Fund Co-Manager Asia Pacific Fund

LYDIA SO
Lydia So is a Portfolio Manager at Matthews. Prior to joining Matthews in 2004, she was a Portfolio Associate at RCM Capital Management. Lydia started her investment career at Kochis Fitz Wealth Management in 1999. Lydia received a B.A. in Economics from the University of California, Davis. She is fluent in Cantonese and conversational in Mandarin. Lydia has been a Portfolio Manager of the Asia Small Companies Fund since the Fund’s inception in 2008, and of the Asia Science and Technology Fund since 2008.		Lead Manager Asia Small Companies Fund Co-Manager Asia Science and Technology Fund

HENRY ZHANG, CFA
Henry Zhang is a Portfolio Manager at Matthews. Prior to joining Matthews in 2007 as a Research Analyst, Henry served as an Application Consultant and Project Manager at Gifford Fong Associates for five years, where he was responsible for derivative security valuation, portfolio strategy investigation and investment risk analysis. Prior to moving to the United States, Henry worked for more than four years at Huaneng Power International, Inc., a NYSE-listed corporation, in China. Henry received a Master’s degree in Financial Engineering from the University of California, Berkeley and a B.S. in Finance from San Francisco State University. Henry is fluent in Mandarin, and has been a Portfolio Manager of the China Fund since 2010.		Co-Manager China Fund

The investment team travels extensively to Asia to conduct research relating to the region’s 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.

MANAGEMENT OF THE FUNDS 59

Investing in 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 New York Stock Exchange (“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, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day.

The NAV is computed by adding the value of all securities and other assets of a Fund, deducting any liabilities, and dividing by the total number of outstanding shares. The Funds’ 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 by or under the direction of the Funds’ 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 and ask quotations from bond dealers or market makers, or other available market information, or on their fair value as determined by or under the direction of the Funds’ Board of Trustees (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 Policies. 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.

The Funds value any exchange-traded security for which market quotations are unavailable 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 Policies 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 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 a Valuation Committee composed of employees of Matthews (some of whom may also be officers of the Funds) and at least one independent Trustee 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 Policies 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. In addition, changes in a Fund’s NAV may not track changes in published indices of, or benchmarks for, Asia Pacific 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 NAV is therefore not calculated. Accordingly, the NAV of the Funds may be sig-nificantly 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 value. For further information regarding this tax, please see page 69.

Purchasing Shares

The Funds are open for business each day the NYSE is open. You may purchase Fund shares directly from the Funds by mail, 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 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

60 matthewasia.com | 800.789.ASIA

securities brokers and benefit plan administrators or their sub-agents (“Third-Party Intermediaries”). These Third-Party Intermediaries may charge you a fee for their services. You should contact them directly for information regarding how to invest or redeem through them. In addition, certain Third-Party Intermediaries may charge you service or transaction fees. If you purchase or redeem shares through the Funds’ transfer agent or a Third-Party Intermediary, you will, generally, receive the NAV calculated after receipt of the order by them 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. There may also be times when, notwithstanding that your order is received by a Third-Party Intermediary before the close of regular trading on the NYSE, you receive the NAV for a Fund calculated on the following business day. This circumstance may arise because your Third-Party Intermediary has failed to transmit your order prior to a deadline that may apply to the Third-Party Intermediary or the Funds.

The Funds may reject for any reason, or cancel as permitted or required by law, any purchase 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 68.

You may purchase shares of the Funds by telephone or online. New accounts may be opened online or by mailing a completed application. Please see Purchasing Shares on page 60, and Telephone and Online Transactions on page 64. 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 or exchange request, limit the amount of any exchange, or revoke a shareholder’s privilege to purchase Fund shares (including exchanges).

MINIMUM INVESTMENTS IN THE F UNDS (U.S. RESIDENTS *)
Non-retirement plan accounts
Initial investment:	$2,500
Subsequent investments:	$100
Retirement and Coverdell plan accounts**
Initial investment:	$500
Subsequent investments:	$50

*Additional limitations apply to non-U.S. residents. Please contact a Fund representative at 800.789.ASIA (2742) for information and assistance.

**Retirement plan accounts include IRAs and 401(k) plans. Speak with a Fund representative for information about the retirement plans available.

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.

INVESTING IN MATTHEWS ASIA FUNDS 61

OPENING AN ACCOUNT (Initial Investment)
By Mail	You can obtain an account application by calling 800.789.ASIA (2742) between 9:00 AM–7:00 PM ET, Monday through Friday, or by downloading an application at matthewsasia.com.

	Mail your personal check payable to Matthews Asia Funds and a completed application to:

	Regular Mail:	Overnight Mail:
	Matthews Asia Funds	Matthews Asia Funds
	P.O. Box 9791	101 Sabin Street
	Providence, RI 02940	Pawtucket, RI 02860-1427

Online	You may establish a new account by visiting matthewsasia.com, selecting “Open an Account” and following the instructions.
By Broker/	You may contact your broker or intermediary, who may charge you a fee for their services.
Intermediary
By Wire	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 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. Your bank should transmit the funds by wire to:

	PNC Bank
	ABA #031000053
	Credit: [name of specific Matthews Asia Fund]
	Account: #8606905986
	FBO: [your name and account number]

	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 71.

62 matthewasia.com | 800.789.ASIA

ADDING TO AN ACCOUNT (Subsequent Investment)

Existing shareholders may purchase additional shares for all authorized accounts through the methods described below.


By Mail	Please send your personal check payable to Matthews Asia Funds and a statement stub indicating your fund(s) selection via:

	Regular Mail:	Overnight Mail:
	Matthews Asia Funds	Matthews Asia Funds
	P.O. Box 9791	101 Sabin Street
	Providence, RI 02940	Pawtucket, RI 02860-1427

Online	As a first time user, you will need your Fund account number and your Social Security 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. Note: When you open your account, you must complete the Online Account Access section of the application to be able to use this feature.
Via Automatic Investment Plan	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.
By Broker/ Intermediary	You may contact your broker or intermediary, who may charge you a fee for their services.
By Wire	Please call us at 800.789.ASIA (2742) between 9:00 AM–7:00 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. Your bank should then transmit the funds by wire to:

	PNC Bank
	ABA #031000053
	Credit: [name of specific Matthews Asia Fund]
	Account: #8606905986
	FBO: [your name and account number]

	Note that wire fees are charged by most banks.

Exchanging Shares

You may exchange your shares of one Matthews Asia Fund for another. If you exchange your shares, minimum investment requirements and redemption fees 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 64, or call 800.789.ASIA (2742) for more information. Because excessive exchanges can harm a Fund’s performance, the exchange privilege may be terminated if the Funds believe it is in the best interest of all shareholders to do so.

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 an indefinite period.

The Funds may reject for any reason, or cancel as permitted or required by law, any purchase or exchange at any time. 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 exchange request or limit the amount of any exchange.

INVESTING IN MATTHEWS ASIA FUNDS 63

Selling (Redeeming) Shares

You may redeem shares on any day the NYSE is open for business. To receive a specific day’s NAV, your request must be received by the Funds’ 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.

If you are redeeming shares 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.

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 exchange request, limit the amount of any exchange, or 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 the Fund by calling 800.789.ASIA (2742), or through an online order at the Funds’ website at matthewsasia.com. To gain the ability to place orders online, complete the Online Account Access section of the New Account Application or make subsequent arrangements with the Funds in writing. 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 ordinarily be processed at the Fund’s NAV calculated as of 4:00 PM Eastern Time on your placement date. Shareholders of IRAs and Coverdell ESAs are not eligible for online or telephone redemptions, as well as shareholders who previously declined these privileges.

In times of extreme market conditions or heavy shareholder activity, you may have difficulty getting through to the Funds. 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.

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SELLING (REDEEMING) SHARES
By Mail	Send a letter to the Funds via:

	Regular Mail:	Overnight Mail:
	Matthews Asia Funds	Matthews Asia Funds
	P.O. Box 9791	101 Sabin Street
	Providence, RI 02940	Pawtucket, RI 02860-1427

	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: ○ Your written request is for an amount over $100,000; or ○ A change of address was received by the Funds’ transfer agent within the last 30 days; or ○ 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.

By Phone	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. Note: Redemption by phone is not available for retirement or education savings accounts.

By Wire	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).

Online	As a first time user, you will need your Fund account number and your Social Security 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. Note: When you open your account, you must complete the Online Account Access section of the application to be able to use this feature.

Through a Broker or Intermediary	Contact your broker or intermediary, who may charge you a fee for their services.

INVESTING IN MATTHEWS ASIA FUNDS 65

Market Timing Activities and Redemption Fees

The Funds’ Board of Trustees has adopted 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”). Funds that invest in small-cap securities and other types of investments that are not frequently traded, including high-yield bonds, also can be the targets of market timers.

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 (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, 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’ imposition of redemption fees pursuant to their Short-Term Trading Redemption Fee Policy, may also assist the Funds in discouraging market timing activity.

The Funds may reject for any reason, or cancel as permitted or required by law, any purchase or exchange, 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 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 adopted 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 the Fund’s 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.

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Many intermediaries have adopted their own market timing policies. These policies may result in a shareholder’s privileges to purchase or exchange the Funds’ shares being terminated or restricted independently of the 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 Fees. Because of the risks associated with an investment in the Funds, and so that you can better manage volatility in a Fund’s NAV, the Funds recommend that you invest in a Fund only for the long term. Short-term buying and selling of shares of the Funds may also have detrimental effects on the Funds and other shareholders. Short-term trading and market timing can disrupt the management of a Fund’s investment portfolio and cause the Fund to incur costs, which are borne by non-redeeming shareholders. The Funds attempt to allocate these costs, to the extent permissible, to redeeming shareholders through the assessment of a redemption fee of 2.00% of the total redemption proceeds. This fee is payable directly to the Funds.

For these purposes, the Funds deem most sales and exchanges of Fund shares taking place within 90 calendar days after purchase to involve market timing. To determine whether the redemption fee applies, the Funds do not count the day that you purchased your shares, and first redeem the shares that you have held the longest. The redemption fee does not apply to shares purchased through reinvested dividends or capital gains. If you purchase shares through an intermediary, consult your intermediary to determine how the 90-calendar day holding period will be applied.

A redemption fee will be assessed on any exchange of your shares from one Matthews Asia Fund to another within 90 days of purchase. In addition, following an exchange, the 90-calendar day holding period begins anew. Occasionally, when accounts are transferred from one intermediary to another, shares may not be properly aged within the new account. If you believe you have been charged a redemption fee in error, please contact your financial intermediary or Matthews Asia Funds at 800.789.ASIA (2742).

The Funds may grant exemptions from the redemption fee where the Funds have previously received assurances (that they in their discretion deem to be appropriate in the circumstances) that transactions to be entered into by an account will not involve market timing activity. Types of accounts that may be considered for this exemption include asset allocation programs that offer automatic re-balancing; wrap-fee accounts, or similar types of accounts or programs; and certain types of 401(k) or other retirement accounts that provide default investment options. The Funds may also waive the imposition of redemption fees in cases of death; and otherwise where the Funds, in their discretion, believe it is appropriate in the circumstances.

The Funds attempt to monitor aggregate trading activity of transactions in accounts for which an exemption has been granted to attempt to identify activity that may involve market timing. In the event that the Funds believe they have identi-fied such activity, they will take appropriate action, which may include revoking the exemption, heightened monitoring and termination of the privilege of purchasing or exchanging shares of the Funds.

The Funds reserve the right at any time to restrict purchases or exchanges or impose conditions that are more restrictive on excessive or disruptive trading than those stated in this prospectus. The Funds reserve the right to modify or eliminate the redemption fee at any time, without notice to shareholders. You will receive notice of any material changes to the Funds’ redemption fee policies.

Redemption in Kind

Under certain circumstances, you could receive your redemption proceeds as a combination of cash and securities. Receiving securities instead of cash is called “redemption in kind.” Note that if you receive securities as well, you will incur transaction charges if you sell them.

Medallion Signature Guarantees

The Funds require a medallion signature guarantee on any written redemption 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.

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 available in the Funds’ Statement of Additional Information, 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 accounts (excluding IRAs) that fall below $2,500 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. Accounts that fall below $2,500 due to market volatility will not be affected.

INVESTING IN MATTHEWS ASIA FUNDS 67

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 servicing generally known as “sub-transfer agency” or “shareholder servicing.” For shareholders who open accounts directly, PNC Global Investment Servicing (U.S.) Inc. (“PNC”), the Funds’ transfer agent, performs these services as part of the various services it provides to the Funds under an agreement between the Funds and PNC. 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 the 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.

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 Mat-thews 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 confirma-tion 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.

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 only summarizes some income tax considerations that may affect your investment in the Funds. You are urged to consult your tax advisor regarding the effects of an investment on your tax situation. An investment in the Funds has certain tax consequences, depending on the type of account that you have. Distributions are subject to federal income tax and may also be subject to state and local income taxes. 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 the Fund has held specific securities.

Make sure you 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 IRS forms, as required, indicating the tax status of any distributions made to you. This information will be

68 matthewasia.com | 800.789.ASIA

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, including the Matthews India Fund, 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.

INVESTING IN MATTHEWS ASIA FUNDS 69

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 the Fund and, unlike the Fund’s NAV, is not adjusted to reflect fair value at the close of regular trading on the New York Stock Exchange (generally 4:00 PM Eastern Time) on each day that the exchange is open for trading.

The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock of markets of China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

The MSCI All Country Far East ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, 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 China-affiliated corporations and H shares listed on the Hong Kong Exchange, and B shares listed on the Shanghai and Shenzhen exchanges.

The Bombay Stock Exchange 100 (BSE 100) Index is a free float–adjusted market capitalization–weighted index of the 100 stocks listed on the Bombay Stock Exchange. The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.

The Tokyo Stock Price Index (TOPIX) is a market capitalization–weighted index of all companies listed on the First Section of the Tokyo Stock Exchange.

The Korea Composite Stock Price Index (KOSPI) is a market capitalization–weighted index of all common stocks listed on the Korea Stock Exchange.

The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

The MSCI/Matthews Asian Technology Index is a free float–adjusted market capitalization–weighted index of Asian equities tracking a broad range of technology stocks including semiconductor equipment and products, communications equipment, computers and peripherals, electronic equipment and instruments, office electronics, software, IT consulting and services, Internet software and services, diversified telecommunications services, and wireless telecommunications services.

70 matthewasia.com | 800.789.ASIA

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 on page 72.

Shareholder Reports

The Funds provide an annual report (audited by independent accountants), a semi-annual report and two quarterly reports each year. 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 financial 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 financial reports on our website. If you prefer to receive individual copies of the Funds’ prospectus or financial reports, please call us at 800.789.ASIA (2742).

Statement of Additional Information (SAI)

The Statement of Additional Information, which is incorporated into this prospectus by reference and dated April 30, 2010, is available to you without charge. It contains more detailed information about the Funds.

HOW TO OBTAIN ADDITIONAL INFORMATION
Contacting Matthews Asia Funds	You can obtain free copies of the publications described by visiting the Funds’ website at matthewsasia.com. To request additional information or to speak to a Fund representative, contact the Funds at: Matthews Asia Funds P.O. Box 9791 Providence, RI 02940 800.789.ASIA (2742)

Obtaining Information from the SEC	You can visit the SEC’s website at sec.gov to view the SAI and other information. You can also view and copy information about the Funds at the SEC’s Public Reference Room in Washington, D.C. Also, you can obtain copies of this information by sending your request and duplication fee to: SEC Public Reference Room, Washington, D.C. 20549-0102. To find out more about the Public Reference Room, call the SEC at 800-SEC-0330. You may also e-mail the SEC at publicinfo@sec.gov to obtain additional information about a Fund.

GENERAL INFORMATION 71

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.

72 matthewasia.com | 800.789.ASIA

Investment Advisor

Matthews International Capital Management, LLC

800.789.ASIA (2742)

Account Services

PNC Global Investment Servicing (U.S.) Inc.

P.O. Box 9791

Providence, RI 02940

800.789.ASIA (2742)

Custodian

Brown Brothers Harriman & Co.

50 Milk Street

Boston, MA 02109

Shareholder Service Representatives are available from 9:00 AM to 7:00 PM ET, Monday through Friday.

For additional information about

Matthews Asia Funds:

matthewsasia.com

800.789.ASIA (2742)

Matthews Asia Funds

P.O. Box 9791

Providence, RI 02940

Investment Company Act File Number: 811-08510

Distributed by PFPC Distributors, Inc.

P.O. Box 9791 | Providence, RI 02940 | matthewsasia.com | 800.789.ASIA (2742)

PS-0410

Table of Contents	Page

Fund History	3
Description of the Funds	3
Investment Objective	4
Investment Process	4
Risks of Investment	7
Political, Social and Economic Risks	7
Risks of Emerging Markets	7
Risks of Foreign Currency	9
Risks of Securities Rated Below Investment Grade	10
Risks of Investing in Technology Companies	11
Risks of Investing in Foreign Countries	11
Additional Investment Strategies	15
Funds Policies	26
Temporary Defensive Position	28
Portfolio Turnover	28
Disclosure of Portfolio Holdings	28
Management of the Funds	30
Shareholders’ Voting Powers	37
Approval of Investment Advisory Agreement	37
Compensation	37
Code of Ethics	38
Proxy Voting Policies and Procedures	38
Control Persons and Principal Holders of Securities	40
Investment Advisor, Underwriter and other Service Providers	44
Investment Advisor	44
Principal Underwriter	54
Shareholder Servicing and Administration, and other Service Providers	54
Brokerage Allocation and Other Practices	59
Shares of Beneficial Interest	60
Purchase, Redemption and Pricing of Shares	61
Purchase of Shares	61
Determination of Net Asset Value	61
Redemption in Kind	63
Equalization	63
Dividends and Distributions	63
Taxation of the Funds	64
In General	64
Taxes Regarding Options, Futures and Foreign Currency Transactions	65
Other Foreign Tax Issues	66
Other Information	67
Reports to Shareholders	67
Financial Statements	67
Appendix: Bond Ratings	68

	(ii)	The Funds will also release top ten holdings on a monthly basis via the Funds’ website and written communication within approximately 21 days of each month end;

	(iii)	The Funds or a Service Provider do not disclose the Funds’ portfolio security holdings in advance of general release and without delay except to the Funds’ custodian bank, independent public accountant, independent legal counsel, proxy voting agent, financial printers, technical writers who assist with the preparation of disclosure materials, technology service providers and pricing service providers. The Funds also disclose their portfolio security holdings to third parties in connection with their on-going efforts to analyze their trading activity, and in connection with their periodic reviews of the performance of existing fund agents and advisors or the retention of new agents and advisors. In addition, the Funds may make such disclosure on a confidential basis to selected third parties when the Funds have a legitimate business purpose for doing so. Examples of legitimate business purposes in which selective disclosure of the Funds’ portfolio securities may be appropriate include disclosure for due diligence purposes to an investment advisor that is in merger or acquisition talks with Matthews; disclosure to a newly hired investment advisor or sub-advisor prior to its commencing its duties; and disclosure to a rating or ranking organization. Currently the Funds have no such disclosure arrangements in place.

Name and Year of Birth	Position(s) Held with the Trust	Term of Office and Length of Time Served1	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Trusteeships/ Directorships (number of portfolios) Held by Trustee
INDEPENDENT TRUSTEES
Geoffrey H. Bobroff Born 1944	Chairman of the Board of Trustees and Trustee	Since 2006	President, Bobroff Consulting, Inc. (since 1993).	11	None.
Richard K. Lyons Born 1961	Trustee; Trustee and Chairman of the Board (1994 – 2006)	Since 2010	Dean (since 2008), Haas School of Business, UC Berkeley; Chief Learning Officer (2006 – 2008), Goldman Sachs; Executive Associate Dean (2005 – 2006), Acting Dean (2004 - 2005), Professor (2000 - 2004), Associate Professor (1996 – 2000), Assistant Professor (1993 – 1996), Haas School of Business, UC Berkeley.	11	Director (2000 – 2006), iShares Fund Complex, consisting of iShares, Inc. (24 portfolios) and iShares Trust (over 70 portfolios) managed by Barclays Global Investors; Trustee (2001 – 2006), Barclays Global Investor Fund Complex, consisting of Barclays Global Investor Funds and Barclays Master Investment Portfolios (15 portfolios).
Rhoda Rossman Born 1958	Trustee	Since 2006	Vice President, Corporate Investment Officer (2007 - 2010); and Senior Vice President and Treasurer (2003 - 2007), The PMI Group, Inc.	11	None.

Toshi Shibano Born 1950	Trustee	Since 2003	President, Strategic Financial Literacy, Inc. (since 1995); Adjunct Professor, Columbia Graduate School of Business (since 2001); Associate Professor, Thunderbird American Graduate School of International Management (2000-2004); Faculty, General Electric Corporate Leadership Development Center (since 2000); Executive Education Lecturer, Haas School of Business, UC Berkeley (since 1995).	11	None.
Jonathan F. Zeschin Born 1953	Trustee	Since 2007	Partner, Essential Investment Partners, LLC (since 2009); President, Essential Advisers Inc. (since 2000); Managing Partner, JZ Partners LLC (since 1998)	11	Independent Chairman of the Board of Trustees, DCA Total Return Fund (since 2005) (1 Portfolio) and DCW Total Return Fund (since 2007) (1 Portfolio); Independent Trustee, ICON Funds (2002-2007) (17 Portfolios); Independent Director, Wasatch Funds (2002-2004) (10 Portfolios).
INTERESTED TRUSTEES2
G. Paul Matthews Born 1956	Trustee	Since 2007	Director and Portfolio Manager (since 2009), Chairman and Portfolio Manager (1991 – 2009), Chief Investment Officer (1991 – 2007), Matthews; President of the Funds (1994 – 2007).	11	Director (since 2004), Matthews Asian Selections Funds Plc (1 Portfolio).

Lydia So Born 1978	Vice President	Since 2009	Portfolio Manager (since 2008), Senior Research Analyst (2007), Research Analyst (2006 - 2007), Research Associate (2004-2006), Matthews; Portfolio Associate (2001 - 2004), RCM Capital Management.
Timothy B. Parker Born 1958	Vice President	Since 2008	General Counsel (since 2005), Matthews; Partner (2003 - 2005), Kirkpatrick & Lockhart Nicholson Graham LLP; Global Head of Compliance and Risk Management (2001 - 2003), Allianz Dresdner Asset Management; Managing Director (1993 - 2001), RCM Global Investors; Director (2010-Present), Matthews Asia Funds Société d’investissement à capital variable, Luxembourg; Director (2010-Present), Matthews Global Investors S.àr.l., Luxembourg.
Manoj K. Pombra Born 1964	Chief Compliance Officer	Since 2005	Chief Compliance Officer (since 2005), Matthews; Senior Manager, Mutual Fund Compliance/Manager Portfolio Compliance (2001 - 2005), Franklin Templeton Investments.

Audit Committee Mr. Shibano, Chairman	The Audit Committee has the responsibility, among other things, to (1) recommend the selection of the Funds’ independent registered public accounting firm; (2) review and approve the scope of the independent registered public accounting firm’s audit activity; (3) review the financial statements which are the subject of the independent registered public accounting firm’s certifications; and (4) review with such independent registered public accounting firm the adequacy of the Funds’ basic accounting system and the effectiveness of the Funds’ internal accounting controls. The Audit Committee met two times during the fiscal year ended December 31, 2009.

Nominating Committee Mr. Bobroff, Chairman	The Nominating Committee has the responsibility, among other things, to consider and nominate new Trustees to serve on the Funds’ Board. The Nominating Committee does not currently consider nominations from shareholders, but will do so if required by any applicable law, in which case the Nominating Committee will provide shareholders with information as to how their nominations may be submitted for consideration. The Nominating Committee met once during the fiscal year ended December 31, 2009.

Name of Trustee	Dollar Range of Equity Securities in each of the Funds		Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Trustee within the Family of Investment Companies
INDEPENDENT TRUSTEES
Geoffrey H. Bobroff	▪ Matthews Growth and Income Fund ▪ Matthews China Dividend Fund ▪ Matthews Pacific Tiger Fund ▪ Matthews Japan Fund ▪ Matthews Asia Science and Technology Fund	$10,000-$50,000 $10,000-$50,000 $10,000-$50,000 $1-$10,000 $1-$10,000	$50,000-$100,000
Richard K. Lyons	▪ Matthews Growth and Income Fund	$10,000-$50,000	$10,000-$50,000
Rhoda Rossman	▪ Matthews Growth and Income Fund ▪ Matthews Asia Dividend Fund ▪ Matthews India Fund ▪ Matthews Japan Fund ▪ Matthews Asia Small Companies Fund	$10,000-$50,000 $1-$10,000 $10,000-$50,000 $10,000-$50,000 $10,000-$50,000	$10,000-$50,000
Toshi Shibano	▪ Matthews China Fund ▪ Matthews India Fund	Above $100,000 $50,000-$100,000	Above $100,000
Jonathan F. Zeschin	▪ Matthews Asia Dividend Fund ▪ Matthews China Fund	Above $100,000 $10,000-$50,000	Above $100,000
INTERESTED TRUSTEES
G. Paul Matthews	▪ Matthews Growth and Income Fund ▪ Matthews Asia Dividend Fund ▪ Matthews Asia Pacific Fund ▪ Matthews Pacific Tiger Fund ▪ Matthews China Fund ▪ Matthews India Fund ▪ Matthews Japan Fund ▪ Matthews Korea Fund ▪ Matthews Asia Small Companies Fund ▪ Matthews Asia Science and Technology Fund	Above $100,000 Above $100,000 Above $100,000 Above $100,000 $50,000-$100,000 $1-$10,000 $50,000-$100,000 $10,000-$50,000 Above $100,000 $10,000-$50,000	Above $100,000

	Fiscal Year End of 12-31-09
Independent Trustee	Aggregate Compensation from the Trust	Pension or Retirement Benefits Accrued as Part of Fund Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation From Fund Complex Paid to Trustees
Geoffrey H. Bobroff	$86,250	None	None	$86,250
Richard K. Lyons*	None	None	None	None
Rhoda Rossman	$69,000	None	None	$69,000
Toshi Shibano	$74,200	None	None	$74,200
Jonathan F. Zeschin	$69,000	None	None	$69,000

Fund	Account Holders Name, Address	Percentage of Shares
Matthews Asian Growth and Income Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	44.66%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	22.06%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	6.97%

Matthews Asia Dividend Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	40.15%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	28.16%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	6.34%
	Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001	5.67%
Matthews China Dividend Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	34.10%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	33.55%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	8.75%
Matthews Asia Pacific Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	36.44%

	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	27.09%
	Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001	5.89%
Matthews Pacific Tiger Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	27.22%
	National Financial Services Corp. FBO Exclusive Benefit of our customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	17.13%
Matthews China Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	36.45%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	34.99%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	5.91%
Matthews India Fund	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	36.47%

	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	26.62%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	8.33%
Matthews Japan Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	40.60%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	16.24%
	Charles Atwood Company 136 E Michigan Ave., Ste. 1201 Kalamazoo, MI 49007	10.55%
	RCAB Collective Investment Partnership 66 Brooks Drive Braintree, MA 02184-3839	9.69%
Matthews Korea Fund	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	29.49%
	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	26.64%

	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	6.89%
Matthews Asia Small Companies Fund	National Financial Services Corp. For Exclusive Benefit of our Customers 200 Liberty St. New York, NY 10281-1003	36.67%
	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	29.66%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	12.13%
Matthews Asia Science and Technology Fund	Charles Schwab & Co. Inc. FBO Special Custody Acct for Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122	39.11%
	National Financial Services Corp. FBO Exclusive Benefit of our Customers Attn: Mutual Funds, 5th Floor 200 Liberty St. New York, NY 10281-1003	28.07%
	TD Ameritrade Inc. FEBO Our Customers P.O. Box 2226 Omaha, NE 68103-2226	8.38%

1.	The fees and expenses of the Funds’ Independent Trustees;

2.	The salaries and expenses of any of the Funds’ officers or employees who are not affiliated with Matthews;

Fiscal Year Ended December 31	Aggregate Advisory Fees Earned by Matthews (before Waivers)	Aggregate Advisory Fees Earned by Matthews (after Waivers)

2007	$64,659,052	$64,312,636

2008	$51,365,915	$51,277,039

2009	$46,039,523	$46,008,747

	FYE 12-31-09
Matthews Fund	Gross Advisory Fees Earned	Advisor Fee Waivers and Expenses Waived, Reimbursed or Recaptured	Net Advisory Fees
Asian Growth and Income Fund	$11,768,584	$0	$11,768,584
Asia Dividend Fund	$1,243,079	$30,160	$1,273,239
China Dividend Fund	$2,392*	$(30,662)*	$(28,270)*
Asia Pacific Fund	$1,221,346	$0	$1,221,346
Pacific Tiger Fund	$15,346,132	$0	$15,346,132
China Fund	$10,678,650	$0	$10,678,650
India Fund	$3,305,116	$0	$3,305,116
Japan Fund	$752,042	$0	$752,042
Korea Fund	$733,098	$0	$733,098
Asia Small Companies	$344,183	$(30,274)	$313,909
Asia Science and Technology Fund	$644,901	$0	$644,901

	FYE 12-31-08
Matthews Fund	Gross Advisory Fees Earned	Advisor Fee Waivers and Expenses Waived, Reimbursed or Recaptured	Net Advisory Fees
Asian Growth and Income Fund	$12,362,781	0	$12,362,781
Asia Dividend Fund	$636,250	($24,543)	$611,707
China Dividend Fund	N/A*	N/A*	N/A*
Asia Pacific Fund	$2,324,677	0	$2,324,677
Pacific Tiger Fund	$18,120,660	0	$18,120,660
China Fund	$9,131,795	0	$9,131,795
India Fund	$5,406,179	0	$5,406,179
Japan Fund	$1,188,880	0	$1,188,880
Korea Fund	$1,063,450	0	$1,063,450
Asia Small Companies	$5,204**	($64,333)**	($59,129)**
Asia Science and Technology Fund	$1,126,039	0	$1,126,039

	FYE 12-31-07
Matthews Fund	Gross Advisory Fees Earned	Advisor Fee Waivers and Expenses Waived, Reimbursed or Recaptured	Net Advisory Fees
Asian Growth and Income Fund	$14,961,706	($82,082)	$14,879,624
Asia Dividend Fund	$403,018	($12,048)	$390,970
China Dividend Fund	N/A*	N/A*	N/A*
Asia Pacific Fund	$3,260,012	($18,095)	$3,241,917
Pacific Tiger Fund	$24,797,262	($132,815)	$24,664,447
China Fund	$10,913,883	($48,009)	$10,865,874
India Fund	$5,723,352	($27,949)	$5,695,403
Japan Fund	$1,748,733	($10,749)	$1,737,984
Korea Fund	$1,635,352	($8,768)	$1,626,584
Asia Small Companies	N/A**	N/A**	N/A**
Asia Science and Technology Fund	$1,215,734	($5,901)	$1,209,833

Name of Portfolio Manager	Account Category	Number of Accounts	Total Assets in Accounts	Number of Accounts Where Advisory Fee is Based on Account Performance	Total Assets in Accounts Where Advisory Fee is Based on Account Performance
Kenichi Amaki	Registered Investment Companies	0	$0	0	0
Co-Portfolio Manager of	Other Pooled Investment Vehicles	0	$0	0	0
the Matthews Japan Fund	Other Accounts	0	$0	0	0
Andrew T. Foster Lead Portfolio Manager	Registered Investment Companies	0	$0	0	0
of the Matthews Asian Growth and Income	Other Pooled Investment Vehicles	1	$340,801,682	0	0
Fund; Co-Portfolio Manager of the Matthews Asia Dividend and India Funds	Other Accounts	0	$0	0	0

Richard H. Gao Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Pacific Tiger and China Funds;	Other Pooled Investment Vehicles	0	$0
Co-Portfolio Manager of the Matthews China Dividend Fund	Other Accounts	2	$220,107,482
Michael Han, CFA Co-Portfolio Manager of	Registered Investment Companies	0	$0
the Matthews Korea and	Other Pooled Investment Vehicles	0	$0
Asia Small Companies Funds	Other Accounts	0	$0
Mark W. Headley Co-Portfolio Manager of	Registered Investment Companies	0	$0
the Matthews Pacific Tiger and Korea Funds	Other Pooled Investment Vehicles	0	$0
	Other Accounts	0	$0
Robert Horrocks Co-Portfolio Manager of	Registered Investment Companies	0	$0
the Matthews Asian Growth and Income	Other Pooled Investment Vehicles	1	$340,801,682
Fund	Other Accounts	0	$0
Taizo Ishida Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Asia Pacific and Japan Funds	Other Pooled Investment Vehicles	1	$6,856,712
	Other Accounts	0	$0
Jesper Madsen, CFA Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Asia Dividend and China	Other Pooled Investment Vehicles	0	$0
Dividend Fund	Other Accounts	0	$0
J. Michael Oh Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Asia Science and Technology	Other Pooled Investment Vehicles	0	$0
and Korea Funds	Other Accounts	0	$0

Sharat Shroff, CFA, Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Pacific Tiger and India Funds;	Other Pooled Investment Vehicles	1	$6,856,712
Co-Portfolio Manager of the Matthews Asia Pacific Fund	Other Accounts	2	$220,107,482
Lydia So Lead Portfolio Manager	Registered Investment Companies	0	$0
of the Matthews Asia Small Companies Fund;	Other Pooled Investment Vehicles	0	$0
Co-Portfolio Manager of the Matthews Asia Science and Technology Fund	Other Accounts	0	$0
Henry Zhang Co-Portfolio Manager of	Registered Investment Companies	0	$0
the Matthews China Fund	Other Pooled Investment Vehicles	0	$0
	Other Accounts	0	$0

Name of	Dollar Range of
Portfolio Manager	Equity Securities in each Fund

Kenichi Amaki	§	Matthews China Dividend Fund	$1-$10,000
	§	Matthews Asia Science and Technology Fund*	$1-$10,000
	§	Matthews China Fund*	$50,001-$100,000
	§	Matthews India Fund*	$1-$10,000
	§	Matthews Japan Fund	$10,001-$50,000
	§	Matthews Korea Fund*	$50,001-$100,000
	§	Matthews Asia Small Companies Fund*	$10,001-$50,000

Andrew T. Foster	§	Matthews Asia Dividend Fund	$50,001-$100,000
	§	Matthews China Dividend Fund	$10,001-$50,000
	§	Matthews Asian Growth and Income Fund	$100,001-$500,000
	§	Matthews Asia Pacific Fund*	$1-$10,000
	§	Matthews Pacific Tiger Fund*	$50,001-$100,000
	§	Matthews Asia Science and Technology Fund*	$10,001-$50,000
	§	Matthews China Fund*	$100,001-$500,000
	§	Matthews India Fund	$100,001-$500,000
	§	Matthews Japan Fund*	$10,001-$50,000
	§	Matthews Korea Fund*	$50,001-$100,000
	§	Matthews Asia Small Companies Fund*	$100,001-$500,000

Richard H. Gao	§	Matthews Asia Dividend Fund*	$1-$10,000
	§	Matthews China Dividend Fund	$10,001-$50,000
	§	Matthews Asian Growth and Income Fund*	$10,001-$50,000
	§	Matthews Asia Pacific Fund*	$10,001-$50,000
	§	Matthews Pacific Tiger Fund	$10,001-$50,000
	§	Matthews Asia Science and Technology Fund*	$10,001-$50,000
	§	Matthews China Fund	$50,001-$100,000
	§	Matthews India Fund*	$1-$10,000
	§	Matthews Japan Fund*	$1-$10,000
	§	Matthews Korea Fund*	$10,001-$50,000

Michael Han, CFA	§	Matthews China Dividend Fund*	$1-$10,000
	§	Matthews Korea Fund	$10,001-$50,000
	§	Matthews Asia Small Companies Fund*	$1-$10,000

Matthews Fund	Fees Paid to Administrator During FYE 12-31-07*	Fees Paid to Administrator During FYE 12-31-08	Fees Paid to Administrator During FYE 12-31-09
Asia Dividend Fund	$10,614	$16,724	$32,562
China Dividend Fund	N/A	N/A	$62**
Asian Growth and Income Fund	$439,316	$323,267	$308,692
Asia Pacific Fund	$95,714	$60,755	$32,059
Pacific Tiger Fund	$725,239	$473,270	$402,575
Asia Science and Technology Fund	$34,336	$29,398	$16,931
China Fund	$307,484	$238,301	$280,167
India Fund	$164,443	$140,871	$86,729
Japan Fund	$52,185	$31,151	$19,794
Korea Fund	$47,174	$27,741	$19,254
Asia Small Companies Fund	N/A	$99†	$6,155

Matthews Fund	Brokerage Commissions Paid During FYE 12-31-07	Brokerage Commissions Paid During FYE 12-31-08	Brokerage Commissions Paid During FYE 12-31-09
Asian Growth and Income Fund	$1,739,207	$1,942,518	$1,576,400
Asia Dividend Fund	$136,038	$254,112	$429,377
China Dividend Fund	N/A*	N/A*	$10,450*
Asia Pacific Fund	$687,287	$682,640	$372,231
Pacific Tiger Fund	$4,099,788	$3,655,021	$3,181,470
China Fund	$1,508,360	$1,174,206	$1,410,313
India Fund	$1,141,449	$1,237,658	$491,147
Japan Fund	$351,730	$443,332	$375,501
Korea Fund	$317,723	$342,451	$224,265
Asia Small Companies Fund	N/A**	$6,250**	$165,851
Asia Science and Technology Fund	$305,167	$352,168	$244,264

Matthews Fund	Issuer	Value of Fund’s Aggregate Holdings of Issuer
Asian Growth and Income Fund	HSBC Holdings PLC	$59,757,987
China Dividend Fund	HSBC Holdings PLC	$268,323
India Fund	Kotak Mahindra Bank (Kotak Securities, Inc.)	$18,520,937
Japan Fund	Nomura Holdings, Inc. (Nomura Securities International)	$2,591,681
Korea Fund	Samsung Securities Co., LTD	$2,092,279

Name and Position with Matthews	Other Company	Position With Other Company
G. Paul Matthews Director and Portfolio Manager	Matthews Asian Selections Funds PLC Floor 3 Brooklawn House Crampton Ave. Ballsbridge Dublin 4, Ireland	Director
Mark W. Headley Director, Chairman and Portfolio Manager	Matthews Asian Selections Funds PLC Floor 3 Brooklawn House Crampton Ave. Ballsbridge Dublin 4, Ireland	Director
William J. Hackett Chief Executive Officer, President and Secretary	Matthews Asian Selections Funds PLC Floor 3 Brooklawn House Crampton Ave. Ballsbridge Dublin 4, Ireland	Director
	Matthews Asia Funds SICAV 6, route de Treves L-2633 Senningerberg Grand Duchy of Luxembourg	Director
	Matthews Global Investors S.àr.l. 19, rue de Bitbourg L-1273 Luxembourg Grand Duchy of Luxembourg	Director

Robert Horrocks Chief Investment Officer and Portfolio Manager	Mirae Asset Global Investments (Hong Kong) Limited Level 15, Three Pacific Place, 1 Queen’s Road East Hong Kong	Head of Research
John P. McGowan Senior Vice President of Business Administration	Matthews Asian Selections Funds PLC Floor 3 Brooklawn House Crampton Ave. Ballsbridge Dublin 4, Ireland	Director
	Matthews Asia Funds SICAV 6, route de Treves L-2633 Senningerberg Grand Duchy of Luxembourg	Director
	Matthews Global Investors S.àr.l. 19, rue de Bitbourg L-1273 Luxembourg Grand Duchy of Luxembourg	Director

Timothy B. Parker General Counsel	Matthews Asia Funds SICAV 6, route de Treves L-2633 Senningerberg Grand Duchy of Luxembourg	Director
	Matthews Global Investors S.àr.l. 19, rue de Bitbourg L-1273 Luxembourg Grand Duchy of Luxembourg	Director and Conducting Officer
Manoj Pombra Chief Compliance Officer	N/A
James E. Walter Executive Vice President	N/A
Paul F. Pelosi Director	Fairfield Associates 235 Montgomery Street San Francisco, CA 94104	Managing General Partner
	Financial Leasing Service, Inc. 235 Montgomery Street San Francisco, CA 94104	President
	45 Belden Corp. 235 Montgomery Street San Francisco, CA 94104	President
	City Car Services 235 Montgomery Street San Francisco, CA 94104	Director
Christopher J. Carey Director	City National Bank 555 South Flower Street Los Angeles, CA 90071	Chief Financial Officer

	Board of Directors

Name	Position
Nicholas M. Marsini, Jr.	Director
Michael DeNofrio	Director
Steven Turowski	Director
T. Thomas Deck	Director
Dennis J. Westley	Director

	Officers

Name	Position
T. Thomas Deck	President and Chief Executive Officer
Bruno DiStefano	Vice President
Susan K. Moscaritolo	Vice President, Secretary and Clerk
Matthew O. Tierney	Treasurer and Financial Operations Principal, Chief Financial Officer