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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08510
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) (Zip code)
William J. Hackett, President
Four Embarcadero Center, Suite 550
San Francisco, CA 94111
(Name and address of agent for service)
Registrant’s telephone number, including area code: 415-788-7553
Date of fiscal year end: December 31
Date of reporting period: December 31, 2015
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
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Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
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Matthews Asia Funds | Annual Report
December 31, 2015 | matthewsasia.com
'15
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Cover photo: Karaweik palace in Yangon, Myanmar
This report has been prepared for Matthews Asia Funds shareholders. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current Matthews Asia Funds prospectus, which contains more complete information about the Funds’ investment objectives, risks and expenses. Additional copies of the prospectus or summary prospectus may be obtained at matthewsasia.com. Please read the prospectus carefully before you invest or send money.
The views and opinions in this report were current as of December 31, 2015. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of a Fund’s future investment intent. Current and future portfolio holdings are subject to risk.
Statements of fact are from sources considered reliable, but neither the Funds nor the Investment Advisor makes any representation or guarantee as to their completeness or accuracy.
Investment Risk: Mutual fund shares are not deposits or obligations of, or guaranteed by, any depositary institution. Shares are not insured by the FDIC, Federal Reserve Board or any government agency and are subject to investment risks, including possible loss of principal amount invested. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. In addition, single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific industry, sector or geographic location. Investing in small and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than larger companies. Please see the Funds’ prospectus and Statement of Additional Information for more risk disclosure.
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Investor Class Performance and Expenses (December 31, 2015)
| Investor Class | Average Annual Total Return | Inception |
2015 Annual Operating Expenses |
2015 Annual Operating Expenses after Fee Waiver and Expense Reimbursement |
Prospectus Expense Ratios* |
Prospectus Expense Ratios after Fee Waiver and Expense Reimbursement* |
||||||||||||||||||||||||||||||
| 1 year | 5 years | 10 years | Since Inception |
|||||||||||||||||||||||||||||||||
| ASIA FIXED INCOME STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Strategic Income Fund (MAINX) |
-0.58% | n.a. | n.a. | 3.41% | 11/30/11 | 1.28% | 1.12% | 1 | 1.27% | 1.10% | 1 | |||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asian Growth and Income Fund (MACSX) |
-4.50% | 2.44% | 6.84% | 9.42% | 9/12/94 | 1.09% | 1.09% | 2,3 | 1.08% | n.a. | ||||||||||||||||||||||||||
| Asia Dividend Fund (MAPIX) |
3.86% | 4.75% | n.a. | 8.74% | 10/31/06 | 1.06% | 1.05% | 3 | 1.06% | 1.05% | 3 | |||||||||||||||||||||||||
| China Dividend Fund (MCDFX) |
9.54% | 6.50% | n.a. | 9.21% | 11/30/09 | 1.19% | n.a. | 1.19% | n.a. | |||||||||||||||||||||||||||
| ASIA VALUE STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Value Fund (MAVRX) |
n.a. | n.a. | n.a. | -1.35% | 11/30/15 | 36.42% | 6 | 1.50% | 4,6 | 2.11% | 1.45% | 4 | ||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Focus Fund (MAFSX) |
-12.07% | n.a. | n.a. | -4.12% | 4/30/13 | 2.07% | 1.50% | 4 | 2.16% | 1.50% | 4 | |||||||||||||||||||||||||
| Asia Growth Fund (MPACX) |
-0.05% | 4.42% | 6.48% | 8.87% | 10/31/03 | 1.11% | n.a. | 1.11% | n.a. | |||||||||||||||||||||||||||
| Pacific Tiger Fund (MAPTX) |
-1.30% | 4.15% | 9.19% | 8.52% | 9/12/94 | 1.09% | 1.07% | 3 | 1.09% | 1.08% | 3 | |||||||||||||||||||||||||
| Asia ESG Fund (MASGX) |
n.a. | n.a. | n.a. | -7.30% | 4/30/15 | 9.09% | 6 | 1.44% | 4,6 | 2.11% | 1.45% | 4 | ||||||||||||||||||||||||
| Emerging Asia Fund (MEASX) |
-2.56% | n.a. | n.a. | 4.92% | 4/30/13 | 1.75% | 1.50% | 4 | 1.78% | 1.48% | 4 | |||||||||||||||||||||||||
| China Fund (MCHFX) |
2.41% | -1.04% | 10.86% | 9.37% | 2/19/98 | 1.14% | n.a. | 1.13% | n.a. | |||||||||||||||||||||||||||
| India Fund (MINDX) |
0.90% | 5.37% | 11.10% | 12.27% | 10/31/05 | 1.11% | n.a. | 1.12% | n.a. | |||||||||||||||||||||||||||
| Japan Fund (MJFOX) |
20.83% | 9.53% | 2.16% | 5.88% | 12/31/98 | 0.99% | n.a. | 1.03% | n.a. | |||||||||||||||||||||||||||
| Korea Fund (MAKOX) |
15.16% | 7.87% | 6.31% | 6.29% | 1/3/95 | 1.10% | n.a. | 1.11% | n.a. | |||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGIES |
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| Asia Small Companies Fund (MSMLX) |
-9.43% | 1.39% | n.a. | 12.29% | 9/15/08 | 1.48% | 1.47% | 4 | 1.47% | n.a. | ||||||||||||||||||||||||||
| China Small Companies Fund (MCSMX) |
4.07% | n.a. | n.a. | 0.21% | 5/31/11 | 2.10% | 1.50% | 5 | 1.90% | 1.50% | 5 | |||||||||||||||||||||||||
| ASIA SPECIALTY STRATEGY |
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| Asia Science and Technology Fund (MATFX) |
4.48% | 7.88% | 8.29% | 2.69% | 12/27/99 | 1.18% | n.a. | 1.16% | n.a. | |||||||||||||||||||||||||||
| * | These figures are from the fund’s prospectus dated as of April 30, 2015, and may differ from the actual expense ratios for fiscal year 2015, as shown in the financial highlights section of this report. |
| 1 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 0.90% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 0.90% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 0.90%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 2 | Reimbursement was below 0.01%. |
| 3 | Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of the Fund that are over $3 billion, the advisory fee rate and the administrative and shareholder services fee rate for the Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%. Any amount waived by Matthews pursuant to this agreement may not be recouped by Matthews. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time (i) by the Trust on behalf of the Fund or by the Board of Trustees upon 60 days’ prior written notice to Matthews; or (ii) by Matthews upon 60 days’ prior written notice to the Trust, in each case without payment of any penalty. |
| 4 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017 for the Asia Focus Fund, Emerging Asia Fund, Asia Small Companies Fund and Asia ESG Fund, and until April 30, 2018 for the Asia Value Fund, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 5 | Matthews has contractually agreed to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) to 1.50%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 6 | Annualized expense ratios. |
| 2 | MATTHEWS ASIA FUNDS |
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Institutional Class Performance and Expenses (December 31, 2015)
| Institutional Class | Average Annual Total Return | Inception Date |
2015 Annual Operating Expenses |
2015
Annual Operating Expenses after Fee Waiver and Expense Reimbursement |
Prospectus Expense |
Prospectus and Expense |
||||||||||||||||||||||||||||||
| 1 year | 5 years | 10 years | Since Inception |
|||||||||||||||||||||||||||||||||
| ASIA FIXED INCOME STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Strategic Income Fund (MINCX) |
-0.27% | n.a. | n.a. | 3.61% | 11/30/11 | 1.09% | 0.90% | 1 | 1.07% | 0.90% | 1 | |||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asian Growth and Income Fund (MICSX) |
-4.33% | 2.60% | n.a. | 3.00% | 10/29/10 | 0.92% | 0.92% | 2,4 | 0.92% | n.a. | ||||||||||||||||||||||||||
| Asia Dividend Fund (MIPIX) |
3.93% | 4.85% | n.a. | 5.28% | 10/29/10 | 0.93% | 0.92% | 4 | 0.93% | n.a. | ||||||||||||||||||||||||||
| China Dividend Fund (MICDX) |
9.71% | 6.72% | n.a. | 7.28% | 10/29/10 | 1.00% | n.a. | 1.01% | n.a. | |||||||||||||||||||||||||||
| ASIA VALUE STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Value Fund (MAVAX) |
n.a. | n.a. | n.a. | -1.30% | 11/30/15 | 36.17% | 5 | 1.25% | 3,5 | 1.95% | 1.25% | 3 | ||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Focus Fund (MIFSX) |
-11.96% | n.a. | n.a. | -3.89% | 4/30/13 | 1.91% | 1.25% | 3 | 1.94% | 1.25% | 3 | |||||||||||||||||||||||||
| Asia Growth Fund (MIAPX) |
0.24% | 4.62% | n.a. | 5.01% | 10/29/10 | 0.91% | n.a. | 0.91% | n.a. | |||||||||||||||||||||||||||
| Pacific Tiger Fund (MIPTX) |
-1.15% | 4.33% | n.a. | 4.32% | 10/29/10 | 0.91% | 0.89% | 4 | 0.92% | 0.91% | 4 | |||||||||||||||||||||||||
| Asia ESG Fund (MISFX) |
n.a. | n.a. | n.a. | -7.14% | 4/30/15 | 8.90% | 5 | 1.25% | 3,5 | 1.95% | 1.25% | 3 | ||||||||||||||||||||||||
| Emerging Asia Fund (MIASX) |
-2.33% | n.a. | n.a. | 5.14% | 4/30/13 | 1.57% | 1.25% | 3 | 1.59% | 1.25% | 3 | |||||||||||||||||||||||||
| China Fund (MICFX) |
2.50% | -0.88% | n.a. | -1.16% | 10/29/10 | 0.99% | n.a. | 0.97% | n.a. | |||||||||||||||||||||||||||
| India Fund (MIDNX) |
1.12% | 5.55% | n.a. | 4.95% | 10/29/10 | 0.90% | n.a. | 0.94% | n.a. | |||||||||||||||||||||||||||
| Japan Fund (MIJFX) |
20.94% | 9.65% | n.a. | 11.59% | 10/29/10 | 0.87% | n.a. | 0.90% | n.a. | |||||||||||||||||||||||||||
| Korea Fund (MIKOX) |
15.27% | 8.04% | n.a. | 9.47% | 10/29/10 | 0.93% | n.a. | 0.93% | n.a. | |||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGY |
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| Asia Small Companies Fund (MISMX) |
-9.23% | n.a. | n.a. | 0.55% | 4/30/13 | 1.30% | 1.25% | 3 | 1.25% | n.a. | ||||||||||||||||||||||||||
| ASIA SPECIALTY STRATEGY |
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| Asia Science and Technology Fund (MITEX) |
4.63% | n.a. | n.a. | 14.40% | 4/30/13 | 0.97% | n.a. | 0.95% | n.a. | |||||||||||||||||||||||||||
| * | These figures are from the fund’s prospectus dated as of April 30, 2015, and may differ from the actual expense ratios for fiscal year 2015, as shown in the financial highlights section of this report. |
| 1 | Matthews has contractually agreed to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 0.90%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 2 | Reimbursement was below 0.01%. |
| 3 | Matthews has contractually agreed to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017 for the Asia Focus Fund, Emerging Asia Fund, Asia Small Companies Fund and Asia ESG Fund, and until April 30, 2018 for the Asia Value Fund, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 4 | Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of the Fund that are over $3 billion, the advisory fee rate and the administrative and shareholder services fee rate for the Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%. Any amount waived by Matthews pursuant to this agreement may not be recouped by Matthews. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time (i) by the Trust on behalf of the Fund or by the Board of Trustees upon 60 days’ prior written notice to Matthews; or (ii) by Matthews upon 60 days’ prior written notice to the Trust, in each case without payment of any penalty. |
| 5 | Annualized expense ratios. |
Past Performance: All performance quoted in this report is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the returns quoted. If certain of the Funds’ fees and expenses had not been waived, returns would have been lower. For the Funds’ most recent month-end performance, please call 800.789.ASIA (2742) or visit matthewsasia.com.
| matthewsasia.com | 800.789.ASIA | 3 |
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| 4 | MATTHEWS ASIA FUNDS |
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Message to Shareholders from the Investment Advisor
Dear Valued Investors,
A couple years ago, I expressed a concern over the chase for yield in markets and remarked, “There are times when there is actually safety in growth!” Such has been the story this year. Higher-yielding equities have struggled somewhat. Companies with faster growth profiles have done well. “Developing Asia” has outperformed “Developed Asia” and small-capitalization stocks have outperformed large-caps. In our dividend-focused portfolios, these have largely concentrated in growth in dividends, rather than yield and that has helped deal with the headwinds for such strategies. Elsewhere, our focus on high return-on-capital businesses with secular (if not always remarkable) growth has done well. Of course, we are not trying to rotate across different styles—we are convinced that both ways of looking at the region can provide good long-term, risk-adjusted returns. But the volatilities inherent in the portfolios are different, and they can suit different periods in the markets. But what is common across all our portfolios is a belief that Asia’s long-term growth prospects remain strong, and investing in businesses that grow with the development of the region’s middle-class lifestyles provides a good backdrop for returns. This year, despite all the concerns over slowing headline growth rates in China and a strengthening U.S. dollar, our conviction that Asia will continue to press for growth-oriented reforms has been further buttressed.
This has certainly been India’s year—at least according to the short-term verdict of the markets. There has been plenty of excitement generated by, first, the appointment in September of 2013, of Raghuram Rajan to be the Governor of India’s central bank. Part of India’s Achilles heel, in the eyes of foreign investors at least, has been fiscal and monetary irresponsibility. Governor Rajan, as a Chicago Booth School of Business economist, exudes the kind of sensible, apolitical expertise that reassures foreign investors. In addition, India’s politics have often appeared hopelessly divided and a clear political “win” for a single candidate has given investors further reassurance. The fact that the winner was the reform candidate has added further spice to the story. And if that wasn’t enough, India began the year at what appeared to be the turning point, i.e., the trough of a credit and earnings cycle.
All of this means that the main India market benchmarks are up about 30% year-to-date. There has surely been some earnings growth, but valuations have risen quickly. None of which is to say that the rise in India is unjustified. If we are going to be able to look back on Prime Minister Narendra Modi’s reforms as a success in about a decade’s time, the markets have not yet fully reflected this. Current valuations are surely not discounting much more than a strong rebound in short-term earnings and at least a successful start to the reform process. India remains a country where much can be achieved over the next decade to improve people’s standards of living, spending power and productivity. If it can achieve better rates of savings and more efficient mobilization of those savings into much-needed infrastructure projects, why can’t it mimic the growth of its giant neighbor China?
But it is still an open question. Now more than ever, investors interested in India should decide if they are in it for the long haul. There may be plenty of opportunities for disappointment either on the political front or in terms of short-run earnings momentum.
These days, the media would have us believe China is not for the faint of heart. Yet, China has initiated its own reform process. Its leaders have also become comfortable with the slower rates of real GDP growth demanded by the markets as a sign of responsible economic management. Have earnings in China not compounded at 12% in U.S. dollar terms since December 2010 as the markets have derated? All of this leaves China trading at the lows last seen during crises past.
Japan has also impressed with its aggressive monetary easing. There are plenty of Abenomics critics in financial circles, but for those that believe economies “can get stuck in a rut” when policy rates are at or near zero, aggressive central banking is what is needed to set the economy back on course. Neither has Abenomics always achieved great popularity in Japan, but the recent snap election seems to have boosted Abe’s mandate and at least been a vote of confidence in the monetary and other reforms that appear to be starting to show results in an improved labor market and strong profitability in corporate Japan.
The one cloud this year has been the strengthening U.S. dollar. But, as we wrote earlier this year, this does seem to have been a case of dollar strength, not Asian weakness. So, we reach the end of the year with the momentum still behind the U.S. markets in terms of rising prices and rising valuations. Asia, on the other hand, has been more listless, but has started to see better operational results as margins have stabilized and sales growth remains robust. Who knows what will happen next year, but the momentum still seems to be behind the “growthier” elements of the markets in Asia. But there is real relative value emerging in Asia, where portfolios with growth far in excess of the broad market indices in the U.S. and Europe can be had for the same valuations or even discounts of 20% or 30%. Periods of tighter money (a strong U.S. dollar) and weaker growth (e.g. China, Europe) have typically been harder times for Asia’s stock markets—and this is what we have been facing for the past year or more. But Asia’s markets have been resilient and, furthermore, continue to lay the groundwork for future growth in its reform plans. I remain optimistic based on the region’s long-term growth that can still be accessed at reasonable valuations.
It is a privilege to serve as your advisor for Asia investments.
Robert Horrocks, PhD
Chief Investment Officer
Matthews International Capital Management, LLC
| matthewsasia.com | 800.789.ASIA | 5 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 0.90% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 0.90% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 0.90%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | Modified duration measures the percent change in value of the fixed income portion of the portfolio in response to a 1% change in interest rates. In a multi-currency denominated portfolio with sensitivities to different interest rate regimes, modified duration will not accurately reflect the change in value of the overall portfolio from a change in any one interest rate regime. |
| 4 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 6 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||
| 3 Months |
1 Year |
3 Years |
Since |
Inception |
||||||||||||||||
| Investor Class (MAINX) |
2.61% | -0.58% | 0.48% | 3.41% | 11/30/11 | |||||||||||||||
| Institutional Class (MINCX) |
2.78% | -0.27% | 0.72% | 3.61% | 11/30/11 | |||||||||||||||
| HSBC Asian Local Bond Index5 |
2.32% | -3.17% | -1.60% | 1.10% | ||||||||||||||||
| Lipper Emerging Markets Hard Currency Debt Category Average6 |
0.68% | -2.98% | -2.33% | 2.73% | ||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance visit matthewsasia.com.
| INCOME DISTRIBUTION HISTORY | ||||||||||||||||||||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||||||||||
| Investor (MAINX) |
$ | 0.00 | $ | 0.10 | $ | 0.08 | $ | 0.11 | $ | 0.29 | $ | 0.10 | $ | 0.09 | $ | 0.07 | $ | 0.10 | $ | 0.38 | ||||||||||||||||||||||
| Inst’l (MINCX) |
$ | 0.01 | $ | 0.10 | $ | 0.09 | $ | 0.11 | $ | 0.31 | $ | 0.11 | $ | 0.10 | $ | 0.08 | $ | 0.11 | $ | 0.40 | ||||||||||||||||||||||
Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding. For income distribution history, visit matthewsasia.com.
| 30-DAY YIELD: Investor Class: 5.45% (5.31% excluding expense waiver) Inst’l Class: 5.67% (5.46% excluding expense waiver)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/15, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate.
Source: BNY Mellon Investment Servicing (US) Inc. |
YIELD TO WORST: 6.81% Yield to worst is the lowest yield that can be received on a bond assuming that the issuer does not default. It is calculated by utilizing the worst case assumptions for a bond with respect to certain income-reducing factors, including prepayment, call or sinking fund provisions. It does not represent the yield that an investor should expect to receive. Past yields are no guarantee of future yields.
Source: FactSet Research Systems |
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 5 | It is not possible to invest directly in an index. Source: Index data from HSBC, and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definitions. |
| 6 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS | ||||||||
| Sector | Currency | % of Net Assets | ||||||
| Longfor Properties Co., Ltd., 6.875%, 10/18/2019 | Financials | U.S. Dollar | 4.6% | |||||
| DFCC Bank PLC, 9.625%, 10/31/2018 | Financials | U.S. Dollar | 4.5% | |||||
| Shimao Property Holdings, Ltd., 6.625%, 01/14/2020 | Financials | U.S. Dollar | 3.3% | |||||
| Bank of Baroda, 6.625%, 05/25/2022 | Financials | U.S. Dollar | 3.3% | |||||
| Ctrip.com International, Ltd., Cnv., 1.000%, 07/01/2020 | Consumer Discretionary | U.S. Dollar | 3.3% | |||||
| TML Holdings Pte, Ltd., 5.750%, 05/07/2021 | Consumer Discretionary | U.S. Dollar | 3.3% | |||||
| ICICI Bank, Ltd., 6.375%, 04/30/2022 | Financials | U.S. Dollar | 3.3% | |||||
| PT Perusahaan Listrik Negara, 5.250%, 10/24/2042 | Utilities | U.S. Dollar | 3.2% | |||||
| E-House China Holdings, Ltd., Cnv., 2.750%, 12/15/2018 | Financials | U.S. Dollar | 3.1% | |||||
| Global Logistic Properties, Ltd., 3.375%, 05/11/2016 | Financials | Chinese Renminbi | 3.0% | |||||
| % OF ASSETS IN TOP TEN | 34.9% | |||||||
| matthewsasia.com | 800.789.ASIA | 7 |
Table of Contents
| 8 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Strategic Income Fund
December 31, 2015
Schedule of Investmentsa
NON-CONVERTIBLE CORPORATE BONDS: 68.7%
| matthewsasia.com | 800.789.ASIA | 9 |
Table of Contents
Matthews Asia Strategic Income Fund
December 31, 2015
Schedule of Investmentsa (continued)
| FOREIGN GOVERNMENT OBLIGATIONS (continued) | COMMON EQUITIES: 1.2% |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
| Currency |
Currency Sold | Counterparty | Settlement Date |
Unrealized Appreciation (Depreciation) |
||||||||||||
| LONG |
IDR 55,822,000,000 |
USD 3,800,000 | Deutsche Banc Alex Brown, Inc. | 01/08/16 | $233,735 | |||||||||||
| MYR 24,068,000 |
USD 5,500,000 | Deutsche Banc Alex Brown, Inc. | 01/08/16 | 101,112 | ||||||||||||
| KRW 6,890,020,000 |
USD 5,900,000 | Deutsche Banc Alex Brown, Inc. | 01/08/16 | (38,273 | ) | |||||||||||
|
|
|
|||||||||||||||
| $296,574 | ||||||||||||||||
|
|
|
|||||||||||||||
See accompanying notes to financial statements.
| 10 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of the Fund that are over $3 billion, the advisory fee rate and the administrative and shareholder services fee rate for the Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%. Any amount waived by Matthews pursuant to this agreement may not be recouped by Matthews. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time (i) by the Trust on behalf of the Fund or by the Board of Trustees upon 60 days’ prior written notice to Matthews; or (ii) by Matthews upon 60 days’ prior written notice to the Trust, in each case without payment of any penalty. Reimbursement was below 0.01% |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 11 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months |
1 Year |
3 Years |
5 Years |
10 Years |
Since |
Inception |
||||||||||||||||||||||
| Investor Class (MACSX) |
2.87% | -4.50% | -0.18% | 2.44% | 6.84% | 9.42% | 9/12/94 | |||||||||||||||||||||
| Institutional Class (MICSX) |
2.97% | -4.33% | 0.00% | 2.60% | n.a. | 3.00% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia ex Japan Index3 |
3.87% | -8.90% | -0.35% | 0.14% | 6.46% | 3.50% | 4 | |||||||||||||||||||||
| Lipper Pacific Region Funds Category Average5 |
5.29% | -3.12% | 1.96% | 2.37% | 3.88% | 3.65% | ||||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
| INCOME DISTRIBUTION HISTORY | ||||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||||
| June |
December |
Total |
June |
December |
Total |
|||||||||||||||||||||
| Investor (MACSX) | $ | 0.21 | $ | 0.21 | $ | 0.42 | $ | 0.15 | $ | 0.20 | $ | 0.35 | ||||||||||||||
| Inst’l (MICSX) | $ | 0.23 | $ | 0.22 | $ | 0.45 | $ | 0.16 | $ | 0.21 | $ | 0.38 | ||||||||||||||
Note: This table does not include capital gains distributions. Totals may differ by $0.01 due to rounding. For income distribution history, visit matthewsasia.com.
| 30-DAY YIELD: 1.75% (Investor Class) 1.88% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/15, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate.
Source: BNY Mellon Investment Servicing (US) Inc. |
DIVIDEND YIELD: 3.54%
The dividend yield (trailing) for the portfolio is the weighted average sum of the dividends paid by each equity security held by the Fund over the 12 months ended 12/31/15 divided by the current price of each equity as of 12/31/15. The annualized dividend yield for the Fund is for the equity-only portion of the portfolio. Please note that this is based on gross equity portfolio holdings and does not reflect the actual yield an investor in the Fund would receive. Past yields are no guarantee of future yields.
Source: FactSet Research Systems, Bloomberg, MICM |
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 8/31/94. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Taiwan Semiconductor Manufacturing Co., Ltd. |
Information Technology | Taiwan | 3.3% | |||||
| AIA Group, Ltd. |
Financials | China/Hong Kong | 3.1% | |||||
| Jardine Matheson Holdings, Ltd. |
Industrials | China/Hong Kong | 2.8% | |||||
| CapitaLand, Ltd., Cnv., 1.950%, 10/17/2023 |
Financials | Singapore | 2.8% | |||||
| Yum! Brands, Inc. |
Consumer Discretionary | China/Hong Kong | 2.7% | |||||
| Japan Tobacco, Inc. |
Consumer Staples | Japan | 2.5% | |||||
| Vietnam Dairy Products JSC |
Consumer Staples | Vietnam | 2.5% | |||||
| Ascendas REIT |
Financials | Singapore | 2.4% | |||||
| Genting Malaysia BHD |
Consumer Discretionary | Malaysia | 2.4% | |||||
| Guangdong Investment, Ltd. |
Utilities | China/Hong Kong | 2.3% | |||||
| % OF ASSETS IN TOP TEN |
26.8% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 12 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 13 |
Table of Contents
Matthews Asian Growth and Income Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 86.2%
| 14 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asian Growth and Income Fund
December 31, 2015
Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 3.9%
| matthewsasia.com | 800.789.ASIA | 15 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of the Fund that are over $3 billion, the advisory fee rate and the administrative and shareholder services fee rate for the Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%. Any amount waived by Matthews pursuant to this agreement may not be recouped by Matthews. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time (i) by the Trust on behalf of the Fund or by the Board of Trustees upon 60 days’ prior written notice to Matthews; or (ii) by Matthews upon 60 days’ prior written notice to the Trust, in each case without payment of any penalty. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 16 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns | |||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MAPIX) | 4.85% | 3.86% | 4.83% | 4.75% | 8.74% | 10/31/06 | ||||||||||||||||||
| Institutional Class (MIPIX) | 4.81% | 3.93% | 4.95% | 4.85% | 5.28% | 10/29/10 | ||||||||||||||||||
| MSCI AC Asia Pacific Index4 | 6.99% | -1.68% | 3.42% | 1.96% | 2.63% | 5 | ||||||||||||||||||
| Lipper Pacific Region Funds Category Average6 | 5.29% | -3.12% | 1.96% | 2.37% | 3.33% | 5 | ||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
| INCOME DISTRIBUTION HISTORY |
||||||||||||||||||||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||||||||||
| Investor (MAPIX) | $ | 0.02 | $ | 0.18 | $ | 0.03 | $ | 0.04 | $ | 0.27 | $ | 0.03 | $ | 0.11 | $ | 0.17 | $ | 0.00 | $ | 0.30 | ||||||||||||||||||||||
| Inst’l (MIPIX) | $ | 0.02 | $ | 0.19 | $ | 0.04 | $ | 0.04 | $ | 0.29 | $ | 0.03 | $ | 0.11 | $ | 0.17 | $ | 0.00 | $ | 0.32 | ||||||||||||||||||||||
Note: This table does not include capital gains distributions but does include return of capital totaling $0.065 (Investor Class) and $0.068 (Institutional Class) for 2014. Totals may differ by $0.01 due to rounding. For distribution history please visit matthewsasia.com.
| 30-DAY YIELD: 1.55% (Investor Class) 1.66% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/15, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate.
Source: BNY Mellon Investment Servicing (US) Inc. |
DIVIDEND YIELD: 3.04%
The dividend yield (trailing) for the portfolio is the weighted average sum of the dividends paid by each equity security held by the Fund over the 12 months ended 12/31/15 divided by the current price of each equity as of 12/31/15. The annualized dividend yield for the Fund is for the equity-only portion of the portfolio. Please note that this is based on gross equity portfolio holdings and does not reflect the actual yield an investor in the Fund would receive. Past yields are no guarantee of future yields.
Source: FactSet Research Systems, Bloomberg, MICM. |
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | Calculated from 10/31/06. |
| 6 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS7 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| LG Chem, Ltd., Pfd. |
Materials | South Korea | 3.4% | |||||
| Japan Tobacco, Inc. | Consumer Staples | Japan | 3.4% | |||||
| Shenzhou International Group Holdings, Ltd. | Consumer Discretionary | China/Hong Kong | 3.3% | |||||
| Suntory Beverage & Food, Ltd. | Consumer Staples | Japan | 3.3% | |||||
| Hoya Corp. | Health Care | Japan | 3.1% | |||||
| Bridgestone Corp. | Consumer Discretionary | Japan | 2.9% | |||||
| Kao Corp. | Consumer Staples | Japan | 2.6% | |||||
| Minth Group, Ltd. | Consumer Discretionary | China/Hong Kong | 2.5% | |||||
| Sumitomo Mitsui Financial Group, Inc. | Financials | Japan | 2.4% | |||||
| NTT DoCoMo, Inc. | Telecommunication Services | Japan | 2.4% | |||||
| % OF ASSETS IN TOP TEN | 29.3% | |||||||
| 7 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 17 |
Table of Contents
| 18 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Dividend Fund
December 31, 2015
Consolidated Schedule of Investmentsa
COMMON EQUITIES: 94.6%
| matthewsasia.com | 800.789.ASIA | 19 |
Table of Contents
Matthews Asia Dividend Fund
December 31, 2015
Consolidated Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 3.4%
| 20 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long- term securities. |
| matthewsasia.com | 800.789.ASIA | 21 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Year | 5 Year | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MCDFX) | 8.46% | 9.54% | 7.82% | 6.50% | 9.21% | 11/30/09 | ||||||||||||||||||
| Institutional Class (MICDX) | 8.58% | 9.71% | 8.05% | 6.72% | 7.28% | 10/29/10 | ||||||||||||||||||
| MSCI China Index3 | 4.03% | -7.62% | 1.31% | 0.91% | 1.61% | 4 | ||||||||||||||||||
| Lipper China Region Funds Category Average5 | 7.29% | -3.02% | 2.98% | 0.36% | 2.86% | 4 | ||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
| INCOME DISTRIBUTION HISTORY | ||||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||||
| June | December | Total | June | December | Total | |||||||||||||||||||||
| Investor (MCDFX) | $ | 0.27 | $ | 0.01 | $ | 0.28 | $ | 0.16 | $ | 0.20 | $ | 0.36 | ||||||||||||||
| Inst’l (MICDX) | $ | 0.28 | $ | 0.03 | $ | 0.30 | $ | 0.17 | $ | 0.21 | $ | 0.38 | ||||||||||||||
Note: This table does not include capital gains distributions. Totals may differ by $0.01 due to rounding. For income distribution history, visit matthewsasia.com.
| 30-DAY YIELD: 0.97% (Investor Class) 1.25% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/15, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate.
Source: BNY Mellon Investment Servicing (US) Inc. |
DIVIDEND YIELD: 2.84%
The dividend yield (trailing) for the portfolio is the weighted average sum of the dividends paid by each equity security held by the Fund over the 12 months ended 12/31/15 divided by the current price of each equity as of 12/31/15. The annualized dividend yield for the Fund is for the equity-only portion of the portfolio. Please note that this is based on gross equity portfolio holdings and does not reflect the actual yield an investor in the Fund would receive. Past yields are no guarantee of future yields.
Source: FactSet Research Systems, Bloomberg, MICM. |
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 11/30/09. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | % of Net Assets | |||||||
| New Oriental Education & Technology Group, Inc. | Consumer Discretionary | 3.7% | ||||||
| Sercomm Corp. | Information Technology | 3.3% | ||||||
| China Construction Bank Corp. | Financials | 3.3% | ||||||
| AIA Group, Ltd. | Financials | 3.1% | ||||||
| HKBN, Ltd. | Telecommunication Services | 3.1% | ||||||
| China Merchants Bank Co., Ltd. | Financials | 3.0% | ||||||
| Kweichow Moutai Co., Ltd. | Consumer Staples | 2.9% | ||||||
| China Mobile, Ltd. | Telecommunication Services | 2.9% | ||||||
| China Medical System Holdings, Ltd. | Health Care | 2.7% | ||||||
| China Power International Development, Ltd. | Utilities | 2.7% | ||||||
| % OF ASSETS IN TOP TEN | 30.7% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 22 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 23 |
Table of Contents
Matthews China Dividend Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 97.8%
| 24 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Dividend Fund
December 31, 2015
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| matthewsasia.com | 800.789.ASIA | 25 |
Table of Contents
| 1 | Annualized expense ratio. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2018, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | Not annualized. The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 26 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||
|
|
Actual 1 Month Total Return |
|
||||||
| Since Inception |
Inception Date |
|||||||
| Investor Class (MAVRX) |
-1.35% | 11/30/15 | ||||||
| Institutional Class (MAVAX) |
-1.30% | 11/30/15 | ||||||
| MSCI AC Asia ex Japan Index4 |
-0.42% | |||||||
| Lipper Pacific Region Funds Category Average5 |
-0.28% | |||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance visit matthewsasia.com.
The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Kweichow Moutai Co., Ltd. |
Consumer Staples | China/Hong Kong | 5.0% | |||||
| Samsung Electronics Co., Ltd., Pfd. |
Information Technology | South Korea | 4.5% | |||||
| Shandong Weigao Group Medical Polymer Co., Ltd. |
Health Care | China/Hong Kong | 3.8% | |||||
| CK Hutchison Holdings, Ltd. |
Industrials | China/Hong Kong | 3.5% | |||||
| Hyundai Motor Co., Ltd., 2nd Pfd. |
Consumer Discretionary | South Korea | 3.0% | |||||
| Daqin Railway Co., Ltd. |
Industrials | China/Hong Kong | 2.9% | |||||
| Qualcomm, Inc. |
Information Technology | China/Hong Kong | 2.6% | |||||
| DGB Financial Group, Inc. |
Financials | South Korea | 2.5% | |||||
| Power Mate Technology Co., Ltd. |
Industrials | Taiwan | 2.2% | |||||
| Genting BHD |
Consumer Discretionary | Malaysia | 2.1% | |||||
| % OF ASSETS IN TOP TEN |
32.1% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 7 | Not all countries where the Fund may invest are included in the benchmark index. |
| 8 | Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent; the values may not sum to 100% due to rounding. |
| matthewsasia.com | 800.789.ASIA | 27 |
Table of Contents
Matthews Asia Value Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 66.9%
| 28 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 29 |
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||
| 3 Months | 1 Year | Since Inception |
Inception Date |
|||||||||||||
| Investor Class (MAFSX) | 4.79% | -12.07% | -4.12% | 4/30/13 | ||||||||||||
| Institutional Class (MIFSX) | 4.85% | -11.96% | -3.89% | 4/30/13 | ||||||||||||
| MSCI AC Asia ex Japan Index4 | 3.87% | -8.90% | -0.89% | |||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 | 4.37% | -6.61% | -1.60% | |||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| AIA Group, Ltd. | Financials | China/Hong Kong | 6.0% | |||||
| Singapore Telecommunications, Ltd. | Telecommunication Services | Singapore | 4.2% | |||||
| Techtronic Industries Co., Ltd. | Consumer Discretionary | China/Hong Kong | 4.1% | |||||
| Jardine Matheson Holdings, Ltd. | Industrials | China/Hong Kong | 4.1% | |||||
| Baidu, Inc. | Information Technology | China/Hong Kong | 3.8% | |||||
| Samsonite International SA | Consumer Discretionary | China/Hong Kong | 3.8% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. | Information Technology | Taiwan | 3.6% | |||||
| Mead Johnson Nutrition Co. | Consumer Staples | USA | 3.4% | |||||
| CK Hutchison Holdings, Ltd. | Industrials | China/Hong Kong | 3.3% | |||||
| Tata Motors, Ltd. | Consumer Discretionary | India | 3.3% | |||||
| % OF ASSETS IN TOP TEN | 39.6% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 30 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 31 |
Table of Contents
Matthews Asia Focus Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 96.2%
| 32 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 33 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MPACX) | 11.35% | -0.05% | 6.58% | 4.42% | 6.48% | 8.87% | 10/31/03 | |||||||||||||||||||||
| Institutional Class (MIAPX) | 11.50% | 0.24% | 6.81% | 4.62% | n.a. | 5.01% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia Pacific Index3 | 6.99% | -1.68% | 3.42% | 1.96% | 3.37% | 6.44% | 4 | |||||||||||||||||||||
| Lipper Pacific Region Funds Category Average5 | 5.29% | -3.12% | 1.96% | 2.37% | 3.88% | 6.67% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 10/31/03. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Sysmex Corp. |
Health Care | Japan | 4.5% | |||||
| Omron Corp. |
Information Technology | Japan | 3.5% | |||||
| Shenzhou International Group Holdings, Ltd. |
Consumer Discretionary | China/Hong Kong | 3.5% | |||||
| Baidu, Inc. |
Information Technology | China/Hong Kong | 3.4% | |||||
| PT Bank Rakyat Indonesia Persero |
Financials | Indonesia | 3.3% | |||||
| Emami, Ltd. |
Consumer Staples | India | 3.0% | |||||
| Kakaku.com, Inc. |
Information Technology | Japan | 3.0% | |||||
| ORIX Corp. |
Financials | Japan | 2.7% | |||||
| M3, Inc. |
Health Care | Japan | 2.6% | |||||
| Daikin Industries, Ltd. |
Industrials | Japan | 2.6% | |||||
| % OF ASSETS IN TOP TEN |
32.1% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 34 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 35 |
Table of Contents
Matthews Asia Growth Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 97.9%
| 36 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Growth Fund
December 31, 2015
Schedule of Investmentsa (continued)
| matthewsasia.com | 800.789.ASIA | 37 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of the Fund that are over $3 billion, the advisory fee rate and the administrative and shareholder services fee rate for the Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%. Any amount waived by Matthews pursuant to this agreement may not be recouped by Matthews. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time (i) by the Trust on behalf of the Fund or by the Board of Trustees upon 60 days’ prior written notice to Matthews; or (ii) by Matthews upon 60 days’ prior written notice to the Trust, in each case without payment of any penalty. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 38 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
3 Months | 1 Year | Average Annual Total Returns | Inception Date |
||||||||||||||||||||||||
| 3 Years | 5 Years | 10 Years | Since Inception |
|||||||||||||||||||||||||
| Investor Class (MAPTX) |
8.36% | -1.30% | 4.57% | 4.15% | 9.19% | 8.52% | 9/12/94 | |||||||||||||||||||||
| Institutional Class (MIPTX) |
8.39% | -1.15% | 4.74% | 4.33% | n.a. | 4.32% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia ex Japan Index4 |
3.87% | -8.90% | -0.35% | 0.14% | 6.46% | 3.50% | 5 | |||||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average6 |
4.37% | -6.61% | -0.13% | 0.80% | 6.06% | 5.54% | 5 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | Calculated from 8/31/94. |
| 6 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS7 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Naver Corp. |
Information Technology | South Korea | 3.5% | |||||
| Baidu, Inc. |
Information Technology | China/Hong Kong | 3.1% | |||||
| Orion Corp. |
Consumer Staples | South Korea | 3.0% | |||||
| Dongbu Insurance Co., Ltd. |
Financials | South Korea | 2.9% | |||||
| Kotak Mahindra Bank, Ltd. |
Financials | India | 2.7% | |||||
| DKSH Holding, Ltd. |
Industrials | Switzerland | 2.6% | |||||
| Central Pattana Public Co., Ltd. |
Financials | Thailand | 2.6% | |||||
| Ping An Insurance Group Co. of China, Ltd. |
Financials | China/Hong Kong | 2.5% | |||||
| Tata Power Co., Ltd. |
Utilities | India | 2.5% | |||||
| Amorepacific Corp. |
Consumer Staples | South Korea | 2.4% | |||||
| % OF ASSETS IN TOP TEN |
27.8% | |||||||
| 7 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 39 |
Table of Contents
| 40 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Pacific Tiger Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 99.2%
| matthewsasia.com | 800.789.ASIA | 41 |
Table of Contents
Matthews Pacific Tiger Fund
December 31, 2015
Schedule of Investmentsa (continued)
WARRANTS: 0.0%
| 42 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Annualized expense ratios. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25%, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | Not annualized. The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 43 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||
|
|
Actual Returns, Not Annualized |
|
||||||||||
| 3 Months | Since Inception |
Inception Date |
||||||||||
| Investor Class (MASGX) |
4.63% | -7.30% | 4/30/15 | |||||||||
| Institutional Class (MISFX) |
4.69% | -7.14% | 4/30/15 | |||||||||
| MSCI AC Asia ex Japan Index4 |
3.87% | -19.02% | ||||||||||
| Lipper Pacific Funds Category Average5 |
5.29% | -17.22% | ||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted Monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Total Access Communication Public Co., Ltd. NVDR |
Telecommunication Services | Thailand | 4.2% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. |
Information Technology | Taiwan | 3.9% | |||||
| Sino Biopharmaceutical, Ltd. |
Health Care | China/Hong Kong | 3.2% | |||||
| Bharti Infratel, Ltd. |
Telecommunication Services | India | 3.2% | |||||
| JD.com, Inc. |
Consumer Discretionary | China/Hong Kong | 3.1% | |||||
| Bata India, Ltd. |
Consumer Discretionary | India | 3.1% | |||||
| Inner Mongolia Yili Industrial Group Co., Ltd. |
Consumer Staples | China/Hong Kong | 3.1% | |||||
| MTR Corp., Ltd. |
Industrials | China/Hong Kong | 3.1% | |||||
| CSPC Pharmaceutical Group, Ltd. |
Health Care | China/Hong Kong | 2.8% | |||||
| Puregold Price Club, Inc. |
Consumer Staples | Philippines | 2.7% | |||||
| % OF ASSETS IN TOP TEN |
32.4% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 44 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 45 |
Table of Contents
Matthews Asia ESG Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 98.1%
| 46 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia ESG Fund
December 31, 2015
Schedule of Investmentsa (continued)
| matthewsasia.com | 800.789.ASIA | 47 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 48 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||
|
|
|
|
Average Annual Total Return |
|
||||||||||||
| 3 Months | 1 Year | Since Inception |
Inception Date |
|||||||||||||
| Investor Class (MEASX) |
4.76% | -2.56% | 4.92% | 4/30/13 | ||||||||||||
| Institutional Class (MIASX) |
4.81% | -2.33% | 5.14% | 4/30/13 | ||||||||||||
| MSCI Emerging Markets Asia Index4 |
3.53% | -9.47% | -1.01% | |||||||||||||
| Lipper Emerging Markets Funds Category Average5 |
0.54% | -14.08% | -7.13% | |||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| The Searle Company, Ltd. |
Health Care | Pakistan | 5.1% | |||||
| British American Tobacco Bangladesh Co., Ltd. |
Consumer Staples | Bangladesh | 2.9% | |||||
| Olympic Industries, Ltd. |
Consumer Staples | Bangladesh | 2.8% | |||||
| PT Gudang Garam |
Consumer Staples | Indonesia | 2.8% | |||||
| PC Jeweller, Ltd. |
Consumer Discretionary | India | 2.8% | |||||
| Square Pharmaceuticals, Ltd. |
Health Care | Bangladesh | 2.7% | |||||
| Sampath Bank PLC |
Financials | Sri Lanka | 2.5% | |||||
| K-Electric, Ltd. |
Utilities | Pakistan | 2.4% | |||||
| Shenzhou International Group Holdings, Ltd. |
Consumer Discretionary | China/Hong Kong | 2.3% | |||||
| PT Matahari Department Store |
Consumer Discretionary | Indonesia | 2.3% | |||||
| % OF ASSETS IN TOP TEN |
28.6% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 49 |
Table of Contents
| 50 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Emerging Asia Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 97.3%
| matthewsasia.com | 800.789.ASIA | 51 |
Table of Contents
Matthews Emerging Asia Fund
December 31, 2015
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| Shares | Value | |||||||
| AUSTRALIA: 1.0% | ||||||||
| Oil Search, Ltd. |
349,221 | $1,699,778 | ||||||
|
|
|
|||||||
| Total Australia |
1,699,778 | |||||||
|
|
|
|||||||
| TOTAL COMMON EQUITIES | 165,171,840 | |||||||
|
|
|
|||||||
| (Cost $158,973,147) |
||||||||
| RIGHTS: 0.0% |
||||||||
| PAKISTAN: 0.0% | ||||||||
| Shifa International Hospitals, Ltd., expires 1/29/16b |
55,184 | 24,050 | ||||||
|
|
|
|||||||
| Total Pakistan |
24,050 | |||||||
|
|
|
|||||||
| TOTAL RIGHTS | 24,050 | |||||||
|
|
|
|||||||
| (Cost $0) |
||||||||
| WARRANTS: 0.0% |
||||||||
| THAILAND: 0.0% | ||||||||
| Srisawad Power 1979 Public Co., Ltd., expires 6/11/20b |
50,336 | 17,485 | ||||||
|
|
|
|||||||
| Total Thailand |
17,485 | |||||||
|
|
|
|||||||
| TOTAL WARRANTS | 17,485 | |||||||
|
|
|
|||||||
| (Cost $0) |
||||||||
| TOTAL INVESTMENTS: 97.3% | 165,213,375 | |||||||
| (Cost $158,973,147c) |
||||||||
| CASH AND OTHER ASSETS, LESS LIABILITIES: 2.7% |
4,655,120 | |||||||
|
|
|
|||||||
| NET ASSETS: 100.0% |
$169,868,495 | |||||||
|
|
|
|||||||
| a | Certain securities were fair valued under the valuation polices approved by the Board of Trustees (Note 2-A). |
| b | Non-income producing security. |
| c | Cost for federal income tax purposes is $158,973,147 and net unrealized appreciation consists of: |
| Gross unrealized appreciation |
$25,659,723 | |||
| Gross unrealized depreciation |
(19,419,495 | ) | ||
|
|
|
|||
| Net unrealized appreciation |
$6,240,228 | |||
|
|
|
| ADR | American Depositary Receipt |
| JSC | Joint Stock Co. |
See accompanying notes to financial statements.
| 52 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 53 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
3 Months |
1 Year |
Average Annual Total Returns | Inception |
||||||||||||||||||||||||
| 3 Years | 5 Years | 10 Years | Since Inception |
|||||||||||||||||||||||||
| Investor Class (MCHFX) | 10.33% | 2.41% | 1.50% | -1.04% | 10.86% | 9.37% | 2/19/98 | |||||||||||||||||||||
| Institutional Class (MICFX) | 10.33% | 2.50% | 1.65% | -0.88% | n.a. | -1.16% | 10/29/10 | |||||||||||||||||||||
| MSCI China Index3 | 4.03% | -7.62% | 1.31% | 0.91% | 10.31% | 3.27% | 4 | |||||||||||||||||||||
| Lipper China Region Funds Category Average5 | 7.29% | -3.02% | 2.98% | 0.36% | 7.97% | 6.82% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 2/28/98. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | % of Net Assets | |||||||
| Tencent Holdings, Ltd. |
Information Technology | 8.2% | ||||||
| Ping An Insurance Group Co. of China, Ltd. | Financials | 5.5% | ||||||
| China Construction Bank Corp. | Financials | 4.3% | ||||||
| China Life Insurance Co., Ltd. | Financials | 3.6% | ||||||
| China Overseas Land & Investment, Ltd. | Financials | 3.3% | ||||||
| China Resources Land, Ltd. | Financials | 3.3% | ||||||
| China State Construction International Holdings, Ltd. | Industrials | 3.1% | ||||||
| JD.com, Inc. | Consumer Discretionary | 2.9% | ||||||
| NetEase, Inc. | Information Technology | 2.8% | ||||||
| China Vanke Co., Ltd. | Financials | 2.8% | ||||||
| % OF ASSETS IN TOP TEN | 39.8% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 54 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 55 |
Table of Contents
Matthews China Fund
December 31, 2015
Consolidated Schedule of Investmentsa
COMMON EQUITIES: CHINA/HONG KONG: 99.8%
| 56 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Fund
December 31, 2015
Consolidated Schedule of Investmentsa (continued)
COMMON EQUITIES: CHINA/HONG KONG (continued)
| matthewsasia.com | 800.789.ASIA | 57 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 58 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MINDX) |
-1.26% | 0.90% | 15.84% | 5.37% | 11.10% | 12.27% | 10/31/05 | |||||||||||||||||||||
| Institutional Class (MIDNX) |
-1.23% | 1.12% | 16.04% | 5.55% | n.a. | 4.95% | 10/29/10 | |||||||||||||||||||||
| S&P Bombay Stock Exchange 100 Index3 |
-0.65% | -6.41% | 5.43% | -1.00% | 8.20% | 9.95% | 4 | |||||||||||||||||||||
| Lipper India Region Funds Category Average5 |
-0.36% | -3.85% | 7.61% | -1.34% | 6.77% | 8.22% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 10/31/05. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||
| Sector | % of Net Assets | |||||
| Taro Pharmaceutical Industries, Ltd. |
Health Care | 5.1% | ||||
| ITC, Ltd. |
Consumer Staples | 4.8% | ||||
| IndusInd Bank, Ltd. |
Financials | 4.7% | ||||
| Shriram City Union Finance, Ltd. |
Financials | 4.6% | ||||
| eClerx Services, Ltd. |
Information Technology | 4.5% | ||||
| Cognizant Technology Solutions Corp. |
Information Technology | 4.3% | ||||
| Mindtree, Ltd. |
Information Technology | 4.1% | ||||
| Kotak Mahindra Bank, Ltd. |
Financials | 4.1% | ||||
| Ajanta Pharma, Ltd. |
Health Care | 4.0% | ||||
| Housing Development Finance Corp., Ltd. |
Financials | 3.7% | ||||
| % OF ASSETS IN TOP TEN |
43.9% | |||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 59 |
Table of Contents
| 60 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews India Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 100.1%
| matthewsasia.com | 800.789.ASIA | 61 |
Table of Contents
Matthews India Fund
December 31, 2015
Schedule of Investmentsa (continued)
| 62 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 63 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
3 Months | 1 Year | Average Annual Total Returns | Inception Date |
||||||||||||||||||||||||
| 3 Years | 5 Years | 10 Years | Since Inception |
|||||||||||||||||||||||||
| Investor Class (MJFOX) |
10.42% | 20.83% | 16.41% | 9.53% | 2.16% | 5.88% | 12/31/98 | |||||||||||||||||||||
| Institutional Class (MIJFX) |
10.47% | 20.94% | 16.56% | 9.65% | n.a. | 11.59% | 10/29/10 | |||||||||||||||||||||
| MSCI Japan Index3 |
9.38% | 9.90% | 10.45% | 4.61% | 1.08% | 2.93% | 4 | |||||||||||||||||||||
| Lipper Japanese Funds Category Average5 |
8.97% | 12.03% | 11.65% | 5.95% | 0.63% | 4.01% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definitions. |
| 4 | Calculated from 12/31/98. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||
| Sector | % of Net Assets | |||||
| Kao Corp. |
Consumer Staples | 3.0% | ||||
| Toyota Motor Corp. |
Consumer Discretionary | 2.6% | ||||
| Tokio Marine Holdings, Inc. |
Financials | 2.5% | ||||
| Pigeon Corp. |
Consumer Staples | 2.5% | ||||
| Asahi Intecc Co., Ltd. |
Health Care | 2.4% | ||||
| Nihon M&A Center, Inc. |
Industrials | 2.3% | ||||
| Keyence Corp. |
Information Technology | 2.2% | ||||
| Ryohin Keikaku Co., Ltd. |
Consumer Discretionary | 2.2% | ||||
| Hoya Corp. |
Health Care | 2.2% | ||||
| COOKPAD, Inc. |
Information Technology | 2.2% | ||||
| % OF ASSETS IN TOP TEN |
24.1% | |||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 64 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 65 |
Table of Contents
Matthews Japan Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: JAPAN: 95.5%
| 66 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Japan Fund
December 31, 2015
Schedule of Investmentsa (continued)
COMMON EQUITIES : JAPAN (continued)
| matthewsasia.com | 800.789.ASIA | 67 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 68 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MAKOX) |
4.27% | 15.16% | 7.97% | 7.87% | 6.31% | 6.29% | 1/3/95 | |||||||||||||||||||||
| Institutional Class (MIKOX) |
4.43% | 15.27% | 8.06% | 8.04% | n.a. | 9.47% | 10/29/10 | |||||||||||||||||||||
| Korea Composite Stock Price Index3 |
0.55% | -4.61% | -2.95% | -0.66% | 3.39% | 2.64% | 4 | |||||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 |
4.37% | -6.61% | -0.13% | 0.80% | 6.06% | 5.92% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | Korea Composite Stock Price Index performance data may be readjusted periodically by the Korea Exchange due to certain factors, including the declaration of dividends. It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 1/3/95. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||
| Sector | % of Net Assets | |||||
| LG Household & Health Care, Ltd., Pfd. |
Consumer Staples | 4.2% | ||||
| BGF Retail Co., Ltd. |
Consumer Staples | 3.9% | ||||
| Amorepacific Corp., Pfd. |
Consumer Staples | 3.7% | ||||
| Samsung Electronics Co., Ltd., Pfd. |
Information Technology | 3.7% | ||||
| Samsung Electronics Co., Ltd. |
Information Technology | 3.5% | ||||
| Shinhan Financial Group Co., Ltd. |
Financials | 3.5% | ||||
| Orion Corp. |
Consumer Staples | 3.1% | ||||
| Samsung Fire & Marine Insurance Co., Ltd., Pfd. |
Financials | 3.1% | ||||
| Dongbu Insurance Co., Ltd. |
Financials | 2.9% | ||||
| Naver Corp. |
Information Technology | 2.8% | ||||
| % OF ASSETS IN TOP TEN |
34.4% | |||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 69 |
Table of Contents
| 70 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Korea Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: SOUTH KOREA: 75.1%
| matthewsasia.com | 800.789.ASIA | 71 |
Table of Contents
Matthews Korea Fund
December 31, 2015
Schedule of Investmentsa (continued)
PREFERRED EQUITIES: SOUTH KOREA: 21.8%
| 72 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., Rule 12b-1 fees or shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.25% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.25%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 73 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MSMLX) | 3.55% | -9.43% | 2.64% | 1.39% | 12.29% | 9/15/2008 | ||||||||||||||||||
| Institutional Class (MISMX) | 3.62% | -9.23% | n.a. | n.a. | 0.55% | 4/30/2013 | ||||||||||||||||||
| MSCI AC Asia ex Japan Small Cap Index3 | 4.83% | -3.28% | 2.06% | -0.87% | 7.95% | 4 | ||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 | 4.37% | -6.61% | -0.13% | 0.80% | 7.14% | 6 | ||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 9/15/08. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| 6 | Calculated from 9/30/08. |
| TOP TEN POSITIONS7 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Vitasoy International Holdings, Ltd. |
Consumer Staples | China/Hong Kong | 3.3% | |||||
| Fairwood Holdings, Ltd. | Consumer Discretionary | China/Hong Kong | 2.4% | |||||
| Kerry Logistics Network, Ltd. | Industrials | China/Hong Kong | 2.4% | |||||
| PChome Online, Inc. | Information Technology | Taiwan | 2.2% | |||||
| Lee’s Pharmaceutical Holdings, Ltd. | Health Care | China/Hong Kong | 2.2% | |||||
| Karex BHD | Consumer Staples | Malaysia | 2.1% | |||||
| Clear Media, Ltd. | Consumer Discretionary | China/Hong Kong | 1.9% | |||||
| i-SENS, Inc. | Health Care | South Korea | 1.9% | |||||
| Interpark Corp. | Consumer Discretionary | South Korea | 1.9% | |||||
| Lifetech Scientific Corp. | Health Care | China/Hong Kong | 1.8% | |||||
| % OF ASSETS IN TOP TEN | 22.1% | |||||||
| 7 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 74 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 75 |
Table of Contents
Matthews Asia Small Companies Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 96.9%
| 76 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Small Companies Fund
December 31, 2015
Schedule of Investmentsa (continued)
RIGHTS: 0.0%
| matthewsasia.com | 800.789.ASIA | 77 |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | Matthews has contractually agreed to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) to 1.50%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or to exceed any other agreed upon expense limitation for that year. This agreement will remain in place until April 30, 2017, may be renewed for additional periods not exceeding one year and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date. |
| 3 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 78 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||
| 3 Months | 1 Year | 3 Years | Since Inception |
Inception date |
||||||||||||||||
| Investor Class (MCSMX) |
11.06% | 4.07% | 9.03% | 0.21% | 5/31/2011 | |||||||||||||||
| MSCI China Small Cap Index4 |
10.33% | 3.48% | 6.97% | -0.47% | ||||||||||||||||
| Lipper China Region Funds Category Average5 |
7.29% | -3.02% | 2.98% | -0.11% | ||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data does not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 4 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||
| Sector | % of Net Assets | |||||
| China Biologic Products, Inc. |
Health Care | 5.5% | ||||
| Voltronic Power Technology Corp. |
Industrials | 4.4% | ||||
| Lee’s Pharmaceutical Holdings, Ltd. |
Health Care | 4.3% | ||||
| SITC International Holdings Co., Ltd. |
Industrials | 3.9% | ||||
| Sunny Optical Technology Group Co., Ltd. |
Information Technology | 3.6% | ||||
| KWG Property Holding, Ltd. |
Financials | 3.5% | ||||
| Boer Power Holdings, Ltd. |
Industrials | 3.2% | ||||
| Yuexiu Transport Infrastructure, Ltd. |
Industrials | 3.0% | ||||
| Sporton International, Inc. |
Industrials | 3.0% | ||||
| China Distance Education Holdings, Ltd. |
Consumer Discretionary | 2.9% | ||||
| % OF ASSETS IN TOP TEN |
37.3% | |||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 79 |
Table of Contents
| 80 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Small Companies Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 98.1%
| matthewsasia.com | 800.789.ASIA | 81 |
Table of Contents
Matthews China Small Companies Fund
December 31, 2015
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| 82 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2015 expense ratios. |
| 2 | The lesser of fiscal year 2015 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 83 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2015 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MATFX) |
15.33% | 4.48% | 15.67% | 7.88% | 8.29% | 2.69% | 12/27/1999 | |||||||||||||||||||||
| Institutional Class (MITEX) |
15.39% | 4.63% | n.a. | n.a. | n.a. | 14.40% | 4/30/2013 | |||||||||||||||||||||
| MSCI AC Asia Index3 |
6.54% | -0.36% | 4.53% | 2.23% | 2.95% | 1.76% | 4 | |||||||||||||||||||||
| MSCI AC Asia Information Technology Index3 |
7.88% | -2.45% | 7.19% | 3.33% | 3.44% | -1.54% | 4 | |||||||||||||||||||||
| Lipper Global Science and Technology Funds Category Average5 |
11.17% | 6.65% | 16.65% | 10.52% | 9.48% | 1.66% | 4 | |||||||||||||||||||||
Performance assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. For the Fund’s most recent month-end performance, visit matthewsasia.com.
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 3 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 87 for index definition. |
| 4 | Calculated from 12/31/99. |
| 5 | The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods. |
| TOP TEN POSITIONS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Baidu, Inc. |
Information Technology | China/Hong Kong | 8.5% | |||||
| Ctrip.com International, Ltd. |
Consumer Discretionary | China/Hong Kong | 4.9% | |||||
| JD.com, Inc. |
Consumer Discretionary | China/Hong Kong | 4.8% | |||||
| LG Household & Health Care, Ltd., Pfd. |
Consumer Staples | South Korea | 4.0% | |||||
| NetEase, Inc. |
Information Technology | China/Hong Kong | 3.4% | |||||
| China Biologic Products, Inc. |
Health Care | China/Hong Kong | 2.9% | |||||
| Naver Corp. |
Information Technology | South Korea | 2.9% | |||||
| Info Edge India, Ltd. |
Information Technology | India | 2.9% | |||||
| Qunar Cayman Islands, Ltd. |
Consumer Discretionary | China/Hong Kong | 2.7% | |||||
| CITIC Telecom International Holdings, Ltd. |
Telecommunication Services | China/Hong Kong | 2.5% | |||||
| % OF ASSETS IN TOP TEN |
39.5% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 84 | MATTHEWS ASIA FUNDS |
Table of Contents
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Table of Contents
Matthews Asia Science and Technology Fund
December 31, 2015
Schedule of Investmentsa
COMMON EQUITIES: 88.2%
| 86 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 87 |
Table of Contents
Disclosure of Fund Expenses (unaudited)
| 88 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2015
| INVESTOR CLASS | INSTITUTIONAL CLASS | |||||||||||||||||||||||||||||||||
| Beginning Value 7/1/15 |
Ending Value |
Expense Ratio1 |
Operating Expenses Paid During Period 7/1/15– 12/31/152 |
Beginning Value |
Ending Value |
Expense Ratio1 |
Operating Expenses Paid During Period 7/1/15– 12/31/152 |
|||||||||||||||||||||||||||
| ASIA FIXED INCOME STRATEGY | ||||||||||||||||||||||||||||||||||
| Matthews Asia Strategic Income Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $990.50 | 1.12% | $5.62 | $1,000.00 | $992.60 | 0.90% | $4.52 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.56 | 1.12% | $5.70 | $1,000.00 | $1,020.67 | 0.90% | $4.58 | ||||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES | ||||||||||||||||||||||||||||||||||
| Matthews Asian Growth and Income Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $923.10 | 1.09% | $5.28 | $1,000.00 | $924.00 | 0.92% | $4.46 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.71 | 1.09% | $5.55 | $1,000.00 | $1,020.57 | 0.92% | $4.69 | ||||||||||||||||||||||||||
| Matthews Asia Dividend Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $922.00 | 1.05% | $5.09 | $1,000.00 | $922.00 | 0.92% | $4.46 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.91 | 1.05% | $5.35 | $1,000.00 | $1,020.57 | 0.92% | $4.69 | ||||||||||||||||||||||||||
| Matthews China Dividend Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $892.50 | 1.26% | $6.01 | $1,000.00 | $893.50 | 1.01% | $4.82 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,018.85 | 1.26% | $6.41 | $1,000.00 | $1,020.11 | 1.01% | $5.14 | ||||||||||||||||||||||||||
| ASIA VALUE STRATEGY | ||||||||||||||||||||||||||||||||||
| Matthews Asia Value Fund* |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,013.50 | 1.50% | $1.28 | $1,000.00 | $1,013.00 | 1.25% | 3 | $1.07 | |||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.64 | 1.50% | $7.63 | $1,000.00 | $1,018.90 | 1.25% | 3 | $6.36 | |||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES | ||||||||||||||||||||||||||||||||||
| Matthews Asia Focus Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $887.30 | 1.51% | $7.18 | $1,000.00 | $888.40 | 1.25% | $5.95 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.59 | 1.51% | $7.68 | $1,000.00 | $1,018.90 | 1.25% | $6.36 | ||||||||||||||||||||||||||
| Matthews Asia Growth Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $956.40 | 1.14% | $5.62 | $1,000.00 | $958.00 | 0.91% | $4.49 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.46 | 1.14% | $5.80 | $1,000.00 | $1,020.62 | 0.91% | $4.63 | ||||||||||||||||||||||||||
| Matthews Pacific Tiger Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $912.80 | 1.09% | $5.26 | $1,000.00 | $913.80 | 0.90% | $4.34 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.71 | 1.09% | $5.55 | $1,000.00 | $1,020.67 | 0.90% | $4.58 | ||||||||||||||||||||||||||
| Matthews Asia ESG Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $942.10 | 1.44% | $7.05 | $1,000.00 | $943.70 | 1.25% | $6.12 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.95 | 1.44% | $7.32 | $1,000.00 | $1,018.90 | 1.25% | $6.36 | ||||||||||||||||||||||||||
| Matthews Emerging Asia Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $976.90 | 1.53% | $7.62 | $1,000.00 | $977.60 | 1.22% | $6.08 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.49 | 1.53% | $7.78 | $1,000.00 | $1,019.06 | 1.22% | $6.21 | ||||||||||||||||||||||||||
| Matthews China Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $866.00 | 1.15% | $5.41 | $1,000.00 | $866.30 | 1.00% | $4.70 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.41 | 1.15% | $5.85 | $1,000.00 | $1,020.16 | 1.00% | $5.09 | ||||||||||||||||||||||||||
| Matthews India Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $947.70 | 1.15% | $5.65 | $1,000.00 | $948.90 | 0.91% | $4.47 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.41 | 1.15% | $5.85 | $1,000.00 | $1,020.62 | 0.91% | $4.63 | ||||||||||||||||||||||||||
| Matthews Japan Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $988.00 | 0.99% | $4.96 | $1,000.00 | $988.50 | 0.86% | $4.31 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,020.21 | 0.99% | $5.04 | $1,000.00 | $1,020.87 | 0.86% | $4.38 | ||||||||||||||||||||||||||
| Matthews Korea Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $994.90 | 1.11% | $5.58 | $1,000.00 | $995.10 | 0.93% | $4.68 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.61 | 1.11% | $5.65 | $1,000.00 | $1,020.52 | 0.93% | $4.74 | ||||||||||||||||||||||||||
| * | Commenced operations on November 30, 2015. |
| 1 | Annualized, based on the Fund’s most recent fiscal half-year expenses. |
| 2 | Operating expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184 days, then divided by 365. |
| 3 | Operating expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 31 days, then divided by 365. |
| matthewsasia.com | 800.789.ASIA | 89 |
Table of Contents
Disclosure of Fund Expenses (unaudited) (continued)
| INVESTOR CLASS | INSTITUTIONAL CLASS | |||||||||||||||||||||||||||||||||
| Beginning Value 7/1/15 |
Ending Value |
Expense Ratio1 |
Operating Expenses Paid During Period 7/1/15– 12/31/152 |
Beginning Value |
Ending Value |
Expense Ratio1 |
Operating Expenses Paid During Period 7/1/15– 12/31/152 |
|||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGIES | ||||||||||||||||||||||||||||||||||
| Matthews Asia Small Companies Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $854.70 | 1.48% | $6.92 | $1,000.00 | $855.90 | 1.26% | $5.89 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.74 | 1.48% | $7.53 | $1,000.00 | $1,018.85 | 1.26% | $6.41 | ||||||||||||||||||||||||||
| Matthews China Small Companies Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $893.20 | 1.50% | $7.16 | ||||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.64 | 1.50% | $7.63 | ||||||||||||||||||||||||||||||
| ASIA SPECIALTY STRATEGY | ||||||||||||||||||||||||||||||||||
| Matthews Asia Science and Technology Fund |
||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $960.80 | 1.22% | $6.03 | $1,000.00 | $961.50 | 0.99% | $4.89 | ||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.06 | 1.22% | $6.21 | $1,000.00 | $1,020.21 | 0.99% | $5.04 | ||||||||||||||||||||||||||
| 1 | Annualized, based on the Fund’s most recent fiscal half-year expenses. |
| 2 | Operating expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184 days, then divided by 365. |
| 90 | MATTHEWS ASIA FUNDS |
Table of Contents
(This Page Intentionally Left Blank)
| matthewsasia.com | 800.789.ASIA | 91 |
Table of Contents
Statements of Assets and Liabilities
|
Matthews Asia Income Fund |
Matthews Asian Income Fund |
Matthews Asia Dividend Fund1 |
Matthews China Dividend Fund |
|||||||||||||
| ASSETS: |
||||||||||||||||
| Investments at value (A) (Note 2-A and 7): |
||||||||||||||||
| Unaffiliated issuers |
$57,820,048 | $2,839,910,133 | $4,246,278,701 | $176,915,548 | ||||||||||||
| Affiliated issuers |
— | — | 460,348,854 | — | ||||||||||||
| Total investments |
57,820,048 | 2,839,910,133 | 4,706,627,555 | 176,915,548 | ||||||||||||
| Cash |
1,608,926 | 6,104,823 | 61,871,524 | 4,038,241 | ||||||||||||
| Segregated foreign currency at value (B) |
— | — | 71,382 | — | ||||||||||||
| Foreign currency at value (B) (Note 2-C) |
1,511,573 | 1,103,933 | 9,364,043 | — | ||||||||||||
| Dividends, interest and other receivable—Unaffiliated issuers |
1,051,189 | 10,932,068 | 13,083,878 | 111,818 | ||||||||||||
| Dividends receivable—Affiliated issuers |
— | — | — | — | ||||||||||||
| Receivable for securities sold |
— | 22,760,359 | 3,290,580 | 427,477 | ||||||||||||
| Receivable for capital shares sold |
63,041 | 9,309,902 | 23,075,250 | 650,585 | ||||||||||||
| Due from Advisor (Note 5) |
— | — | — | — | ||||||||||||
| Deferred offering costs (Note 2-E) |
— | — | — | — | ||||||||||||
| Unrealized appreciation on forward foreign currency exchange contracts |
334,847 | — | — | — | ||||||||||||
| Prepaid expenses and other assets |
20,755 | 146,552 | 35,329 | 42,055 | ||||||||||||
| TOTAL ASSETS |
62,410,379 | 2,890,267,770 | 4,817,419,541 | 182,185,724 | ||||||||||||
| LIABILITIES: |
||||||||||||||||
| Payable for securities purchased |
— | — | 38,788 | 444,749 | ||||||||||||
| Payable for capital shares redeemed |
171,980 | 18,060,703 | 9,226,361 | 640,940 | ||||||||||||
| Unrealized depreciation on forward foreign currency exchange contracts |
38,273 | — | — | — | ||||||||||||
| Deferred foreign capital gains tax liability (Note 2-G) |
965 | — | — | — | ||||||||||||
| Due to Advisor (Note 5) |
24,744 | 1,678,948 | 2,643,275 | 100,258 | ||||||||||||
| Administration and accounting fees payable |
843 | 41,960 | 63,859 | 2,380 | ||||||||||||
| Administration and shareholder servicing fees payable |
7,573 | 363,191 | 560,495 | 21,691 | ||||||||||||
| Custodian fees payable |
389 | 147,847 | 152,083 | — | ||||||||||||
| Intermediary service fees payable (Note 5) |
9,573 | 719,565 | 716,070 | 33,042 | ||||||||||||
| Professional fees payable |
20,555 | 42,915 | 54,074 | 18,730 | ||||||||||||
| Transfer agent fees payable |
385 | 11,003 | 72,177 | 1,626 | ||||||||||||
| Printing fees payable |
— | 147,269 | 158,649 | 2,317 | ||||||||||||
| Offering costs (Note 2-E) |
— | — | — | — | ||||||||||||
| Trustees fees payable |
— | — | — | — | ||||||||||||
| Accrued other expenses payable |
4,496 | — | 110,027 | — | ||||||||||||
| TOTAL LIABILITIES |
279,776 | 21,213,401 | 13,795,858 | 1,265,733 | ||||||||||||
| NET ASSETS |
$62,130,603 | $2,869,054,369 | $4,803,623,683 | $180,919,991 | ||||||||||||
| NET ASSETS: |
||||||||||||||||
| Investor Class |
$51,129,598 | $2,045,435,360 | $2,757,910,393 | $165,514,383 | ||||||||||||
| Institutional Class |
11,001,005 | 823,619,009 | 2,045,713,290 | 15,405,608 | ||||||||||||
| TOTAL |
$62,130,603 | $2,869,054,369 | $4,803,623,683 | $180,919,991 | ||||||||||||
| SHARES OUTSTANDING: |
||||||||||||||||
| (shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value) |
||||||||||||||||
| Investor Class |
5,131,212 | 127,568,587 | 179,605,293 | 12,005,469 | ||||||||||||
| Institutional Class |
1,104,785 | 51,418,285 | 133,264,411 | 1,117,428 | ||||||||||||
| TOTAL |
6,235,997 | 178,986,872 | 312,869,704 | 13,122,897 | ||||||||||||
| 1 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 92 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2015
| Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
Matthews Asia ESG Fund |
||||||||||||||
| $1,320,377 | $10,749,522 | $760,804,877 | $6,033,506,582 | $4,840,407 | ||||||||||||||
| — | — | — | 596,651,164 | — | ||||||||||||||
| 1,320,377 | 10,749,522 | 760,804,877 | 6,630,157,746 | 4,840,407 | ||||||||||||||
| 417,745 | 450,099 | 13,970,217 | 61,486,309 | 102,974 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 4,285 | 11,902 | 75,103 | 3,029,378 | 2 | ||||||||||||||
|
|
4,564 |
|
33,906 | 469,903 | 6,491,425 | 8,720 | ||||||||||||
| — | — | — | 753,846 | — | ||||||||||||||
| — | — | 4,797,671 | — | 6,448 | ||||||||||||||
| 11,950 | 50,529 | 1,452,334 | 13,105,785 | 5,418 | ||||||||||||||
| 40,508 | 10,178 | — | — | 71,990 | ||||||||||||||
| 87,206 | — | — | — | 26,229 | ||||||||||||||
|
|
— |
|
— | — | — | — | ||||||||||||
| — | 15,739 | 60,704 | 46,648 | — | ||||||||||||||
| 1,886,635 | 11,321,875 | 781,630,809 | 6,715,071,137 | 5,062,188 | ||||||||||||||
| 41,413 | — | — | — | 2 | ||||||||||||||
| — | 136,680 | 3,848,419 | 23,395,883 | 300 | ||||||||||||||
|
|
— |
|
— | — | — | — | ||||||||||||
|
|
— |
|
— | 141,754 | — | 9,835 | ||||||||||||
| — | — | 439,511 | 3,673,742 | — | ||||||||||||||
| 9 | 157 | 10,541 | 90,093 | 72 | ||||||||||||||
|
|
167 |
|
1,395 | 95,164 | 762,734 | 643 | ||||||||||||
| 2,727 | — | 38,390 | 463,699 | 4,730 | ||||||||||||||
| 198 | — | 149,364 | 957,249 | — | ||||||||||||||
| 12,729 | 8,558 | 26,941 | 70,838 | 12,723 | ||||||||||||||
| 41 | 219 | 3,691 | 71,738 | 42 | ||||||||||||||
| 499 | 18 | 13,177 | 124,862 | 10,417 | ||||||||||||||
| 95,134 | — | — | — | 78,686 | ||||||||||||||
| 20 | — | — | — | 555 | ||||||||||||||
| 1,103 | — | 8,094 | 44,945 | 9,832 | ||||||||||||||
| 154,040 | 147,027 | 4,775,046 | 29,655,783 | 127,837 | ||||||||||||||
| $1,732,595 | $11,174,848 | $776,855,763 | $6,685,415,354 | $4,934,351 | ||||||||||||||
| $1,589,491 | $5,474,349 | $526,969,427 | $2,720,868,577 | $3,247,953 | ||||||||||||||
| 143,104 | 5,700,499 | 249,886,336 | 3,964,546,777 | 1,686,398 | ||||||||||||||
| $1,732,595 | $11,174,848 | $776,855,763 | $6,685,415,354 | $4,934,351 | ||||||||||||||
| 161,338 | 629,805 | 24,981,689 | 115,582,909 | 351,982 | ||||||||||||||
| 14,560 | 655,863 | 11,767,259 | 168,553,810 | 183,975 | ||||||||||||||
| 175,898 | 1,285,668 | 36,748,948 | 284,136,719 | 535,957 | ||||||||||||||
| matthewsasia.com | 800.789.ASIA | 93 |
Table of Contents
Statements of Assets and Liabilities (continued)
|
Matthews Asia Income Fund |
Matthews Asian Income Fund |
Matthews Asia Dividend Fund1 |
Matthews China Dividend Fund |
|||||||||||||
| NET ASSET VALUE: |
||||||||||||||||
| Investor Class, offering price and redemption price |
$9.96 | $16.03 | $15.36 | $13.79 | ||||||||||||
| Institutional Class, offering price and redemption price |
$9.96 | $16.02 | $15.35 | $13.79 | ||||||||||||
| NET ASSETS CONSIST OF: |
||||||||||||||||
| Capital paid-in |
$67,075,877 | $2,622,477,980 | $4,348,200,631 | $175,660,361 | ||||||||||||
| Undistributed (distributions in excess of) net investment income (loss) |
(141,570 | ) | (9,981,676 | ) | (4,689,915 | ) | (367,605 | ) | ||||||||
| Undistributed/accumulated net realized gain (loss) on investments, financial futures contracts, and foreign currency related transactions |
(1,535,531 | ) | 40,251,822 | (40,485,123 | ) | 516,116 | ||||||||||
| Net unrealized appreciation (depreciation) on investments, financial futures contracts, foreign currency translations and deferred foreign capital gains taxes |
(3,268,173 | ) | 216,306,243 | 500,598,090 | 5,111,119 | |||||||||||
| NET ASSETS |
$62,130,603 | $2,869,054,369 | $4,803,623,683 | $180,919,991 | ||||||||||||
| (A) Investments at cost: |
||||||||||||||||
| Unaffiliated issuers |
$61,378,254 | $2,623,543,355 | $3,741,066,074 | $171,804,467 | ||||||||||||
| Affiliated issuers |
— | — | 464,705,388 | — | ||||||||||||
| Total investments at cost |
$61,378,254 | $2,623,543,355 | $4,205,771,462 | $171,804,467 | ||||||||||||
| (B) Foreign currency at cost |
$1,511,573 | $1,103,933 | $9,613,953 | $— | ||||||||||||
| 1 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 94 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2015
| Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
Matthews Asia ESG Fund |
||||||||||||||
| $9.85 | $8.69 | $21.09 | $23.54 | $9.23 | ||||||||||||||
| $9.83 | $8.69 | $21.24 | $23.52 | $9.17 | ||||||||||||||
| $1,741,569 | $13,265,385 | $661,074,198 | $5,255,153,512 | $5,088,649 | ||||||||||||||
| 7,772 |
|
80,691 |
|
278,925 | — | 26,705 | ||||||||||||
| |
— |
|
(709,662 | ) | (19,506,204 | ) | 13,364,607 | (52,070 | ) | |||||||||
|
|
(16,746 |
) |
(1,461,566 | ) | 135,008,844 | 1,416,897,235 | (128,933 | ) | ||||||||||
| $1,732,595 | $11,174,848 | $776,855,763 | $6,685,415,354 | $4,934,351 | ||||||||||||||
| $1,337,140 | $12,210,811 | $625,650,734 | $4,467,455,485 | $4,959,486 | ||||||||||||||
| — | — | — | 745,786,796 | — | ||||||||||||||
| $1,337,140 | $12,210,811 | $625,650,734 | $5,213,242,281 | $4,959,486 | ||||||||||||||
| $4,274 | $11,902 | $75,103 | $3,029,224 | $2 | ||||||||||||||
| matthewsasia.com | 800.789.ASIA | 95 |
Table of Contents
Statements of Assets and Liabilities (continued)
| Matthews Emerging Asia Fund |
Matthews China Fund1 |
Matthews India Fund |
||||||||||
| ASSETS: |
||||||||||||
| Investments at value (A) (Note 2-A and 7): |
||||||||||||
| Unaffiliated issuers |
$165,213,375 | $732,306,149 | $1,408,937,740 | |||||||||
| Affiliated issuers |
— | — | 98,231,975 | |||||||||
| Total investments |
165,213,375 | 732,306,149 | 1,507,169,715 | |||||||||
| Cash |
4,285,963 | — | — | |||||||||
| Segregated foreign currency at value (B) |
— | 72,494 | — | |||||||||
| Foreign currency at value (B) |
2,253,794 | 1,652,644 | 10,906,448 | |||||||||
| Dividends, interest and other receivable—Unaffiliated issuers |
181,630 | — | 372,989 | |||||||||
| Dividends receivable—Affiliated issuers |
— | — | — | |||||||||
| Receivable for securities sold |
— | 11,904,467 | 8,792,539 | |||||||||
| Receivable for capital shares sold |
379,326 | 514,290 | 3,036,003 | |||||||||
| Prepaid expenses and other assets |
13,480 | 39,727 | 46,111 | |||||||||
| TOTAL ASSETS |
172,327,568 | 746,489,771 | 1,530,323,805 | |||||||||
| LIABILITIES: |
||||||||||||
| Payable for securities purchased |
389,880 | 7,474,674 | — | |||||||||
| Payable for capital shares redeemed |
177,718 | 3,838,369 | 6,328,274 | |||||||||
| Cash overdraft |
— | 273,630 | 14,780,558 | |||||||||
| Deferred foreign capital gains tax liability (Note 2-G) |
1,660,502 | — | 1,942,487 | |||||||||
| Foreign capital gains tax payable (Note 2-G) |
72,437 | — | — | |||||||||
| Due to Advisor (Note 5) |
68,510 | 417,735 | 841,513 | |||||||||
| Administration and accounting fees payable |
2,174 | 10,275 | 20,054 | |||||||||
| Administration and shareholder servicing fees payable |
19,696 | 90,362 | 182,336 | |||||||||
| Intermediary service fees payable (Note 5) |
30,705 | 160,710 | 248,331 | |||||||||
| Professional fees payable |
8,651 | 24,787 | 30,216 | |||||||||
| Transfer agent fees payable |
763 | 12,555 | 12,653 | |||||||||
| Accrued other expenses payable |
28,037 | 143,591 | 110,389 | |||||||||
| TOTAL LIABILITIES |
2,459,073 | 12,446,688 | 24,496,811 | |||||||||
| NET ASSETS |
$169,868,495 | $734,043,083 | $1,505,826,994 | |||||||||
| NET ASSETS: |
||||||||||||
| Investor Class |
$114,590,180 | $709,766,606 | $1,151,948,121 | |||||||||
| Institutional Class |
55,278,315 | 24,276,477 | 353,878,873 | |||||||||
| TOTAL |
$169,868,495 | $734,043,083 | $1,505,826,994 | |||||||||
| SHARES OUTSTANDING: |
||||||||||||
| (shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value) |
||||||||||||
| Investor Class |
10,170,853 | 38,536,969 | 43,588,611 | |||||||||
| Institutional Class |
4,896,422 | 1,320,026 | 13,358,512 | |||||||||
| TOTAL |
15,067,275 | 39,856,995 | 56,947,123 | |||||||||
| 1 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 96 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2015
| Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
Matthews Asia Science and Technology Fund |
||||||||||||||
| $1,796,117,364 | $201,177,976 | $583,834,040 | $21,138,749 | $158,657,003 | ||||||||||||||
| 65,578,270 | — | 7,205,664 | — | — | ||||||||||||||
| 1,861,695,634 | 201,177,976 | 591,039,704 | 21,138,749 | 158,657,003 | ||||||||||||||
| 83,456,343 | 4,694,850 | 20,764,878 | 635,285 | 6,694,239 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 4 | — | 619,715 | 8,361 | 900,633 | ||||||||||||||
| 1,339,933 | 2,085,503 | 253,252 | — | 263,828 | ||||||||||||||
| 37,679 | — | — | — | — | ||||||||||||||
| 1,399,096 | — | 3,135,379 | — | — | ||||||||||||||
| 22,270,200 | 118,618 | 1,646,581 | 111,600 | 321,800 | ||||||||||||||
| 47,506 | 15,013 | 32,830 | 6,313 | 18,318 | ||||||||||||||
| 1,970,246,395 | 208,091,960 | 617,492,339 | 21,900,308 | 166,855,821 | ||||||||||||||
| 17,771,298 | — | 600,789 | 327,970 | — | ||||||||||||||
| 1,770,046 | 230,441 | 6,105,618 | — | 149,488 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| — | — | 56,811 | — | — | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 1,010,736 | 114,290 | 494,674 | 5,180 | 90,794 | ||||||||||||||
| 23,026 | 2,761 | 8,455 | 282 | 2,148 | ||||||||||||||
| 219,075 | 24,749 | 75,124 | 2,560 | 19,654 | ||||||||||||||
| 82,326 | 17,862 | 141,132 | — | 23,454 | ||||||||||||||
| 13,122 | 18,853 | 37,057 | 17,909 | 25,935 | ||||||||||||||
| 13,992 | 2,858 | 2,562 | 405 | 2,238 | ||||||||||||||
| 16,104 | 13,104 | 55,409 | — | 9,569 | ||||||||||||||
| 20,919,725 | 424,918 | 7,577,631 | 354,306 | 323,280 | ||||||||||||||
| $1,949,326,670 | $207,667,042 | $609,914,708 | $21,546,002 | $166,532,541 | ||||||||||||||
| $1,330,743,379 | $147,684,772 | $387,746,960 | $21,546,002 | $129,762,540 | ||||||||||||||
| 618,583,291 | 59,982,270 | 222,167,748 | — | 36,770,001 | ||||||||||||||
| $1,949,326,670 | $207,667,042 | $609,914,708 | $21,546,002 | $166,532,541 | ||||||||||||||
| 70,167,096 | 24,015,280 | 19,975,837 | 2,452,395 | 10,531,982 | ||||||||||||||
| 32,562,867 | 9,707,828 | 11,454,086 | — | 2,979,461 | ||||||||||||||
| 102,729,963 | 33,723,108 | 31,429,923 | 2,452,395 | 13,511,443 | ||||||||||||||
| matthewsasia.com | 800.789.ASIA | 97 |
Table of Contents
Statements of Assets and Liabilities (continued)
| Matthews Emerging Asia Fund |
Matthews China Fund1 |
Matthews India Fund |
||||||||||
| NET ASSET VALUE: |
||||||||||||
| Investor Class, offering price and redemption price |
$11.27 | $18.42 | $26.43 | |||||||||
| Institutional Class, offering price and redemption price |
$11.29 | $18.39 | $26.49 | |||||||||
| NET ASSETS CONSIST OF: |
||||||||||||
| Capital paid-in |
$166,108,210 | $644,211,368 | $1,254,222,667 | |||||||||
| Undistributed (distributions in excess of) net investment income (loss) |
276,735 | (32,868 | ) | (50,865 | ) | |||||||
| Undistributed/accumulated net realized gain (loss) on investments and foreign currency related transactions |
(1,095,848 | ) | 15,479,406 | 11,096,759 | ||||||||
| Net unrealized appreciation (depreciation) on investments, foreign currency translations and deferred foreign capital gains taxes |
4,579,398 | 74,385,177 | 240,558,433 | |||||||||
| NET ASSETS |
$169,868,495 | $734,043,083 | $1,505,826,994 | |||||||||
| (A) Investments at cost: |
||||||||||||
| Unaffiliated issuers |
$158,973,147 | $657,904,382 | $1,181,426,322 | |||||||||
| Affiliated issuers |
— | — | 83,125,117 | |||||||||
| Total investments at cost |
$158,973,147 | $657,904,382 | $1,264,551,439 | |||||||||
| (B) Foreign currency at cost |
$2,253,808 | $1,669,467 | $10,906,448 | |||||||||
| 1 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 98 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2015
| Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
Matthews Asia Science and Technology Fund |
||||||||||||||
| $18.97 | $6.15 | $19.41 | $8.79 | $12.32 | ||||||||||||||
| $19.00 | $6.18 | $19.40 | $— | $12.34 | ||||||||||||||
| $1,846,206,894 | $135,013,532 | $591,767,216 | $20,196,514 | $117,221,520 | ||||||||||||||
| 1,177,791 | (93,408 | ) | 1,244,170 | 1,346 | — | |||||||||||||
| (67,394,578 | ) | 6,305,654 | (13,195,238 | ) | 701,492 | 10,405,773 | ||||||||||||
| 169,336,563 | 66,441,264 | 30,098,560 | 646,650 | 38,905,248 | ||||||||||||||
| $1,949,326,670 | $207,667,042 | $609,914,708 | $21,546,002 | $166,532,541 | ||||||||||||||
| $1,622,203,732 | $134,731,859 | $546,539,760 | $20,492,099 | $119,744,721 | ||||||||||||||
| 70,157,293 | — | 14,325,613 | — | — | ||||||||||||||
| $1,692,361,025 | $134,731,859 | $560,865,373 | $20,492,099 | $119,744,721 | ||||||||||||||
| $4 | $— | $619,657 | $8,361 | $907,082 | ||||||||||||||
| matthewsasia.com | 800.789.ASIA | 99 |
Table of Contents
| Matthews Asia Strategic Income Fund |
Matthews Asian Income Fund |
Matthews Asia Dividend Fund1 |
Matthews China Dividend Fund |
|||||||||||||
| INVESTMENT INCOME: |
||||||||||||||||
| Dividends—Unaffiliated Issuers |
$54,553 | $128,462,695 | $144,206,511 | $5,903,655 | ||||||||||||
| Dividends—Affiliated Issuers (Note 7) |
— | — | 22,043,241 | — | ||||||||||||
| Interest |
3,871,629 | 4,802,504 | 1,114 | 57,688 | ||||||||||||
| Foreign withholding tax |
(85,447 | ) | (7,461,719 | ) | (12,948,537 | ) | (371,441 | ) | ||||||||
| TOTAL INVESTMENT INCOME |
3,840,735 | 125,803,480 | 153,302,329 | 5,589,902 | ||||||||||||
| EXPENSES: |
||||||||||||||||
| Investment advisory fees (Note 5) |
438,698 | 25,621,034 | 35,306,056 | 1,183,701 | ||||||||||||
| Administration and accounting fees (Note 5) |
5,399 | 308,810 | 506,832 | 14,287 | ||||||||||||
| Administration and shareholder servicing fees (Note 5) |
94,329 | 5,389,839 | 7,429,497 | 248,951 | ||||||||||||
| Accounting out-of-pocket fees |
34,791 | 46,081 | 54,353 | 34,070 | ||||||||||||
| Custodian fees |
25,422 | 1,170,751 | 1,457,267 | 112,502 | ||||||||||||
| Insurance fees |
19,391 | 19,391 | 25,925 | 722 | ||||||||||||
| Intermediary service fees (Note 5) |
125,127 | 6,884,522 | 6,800,053 | 350,742 | ||||||||||||
| Printing fees |
6,466 | 427,492 | 405,884 | 21,602 | ||||||||||||
| Professional fees |
47,692 | 105,255 | 213,542 | 44,905 | ||||||||||||
| Registration fees |
35,183 | 73,516 | 75,540 | 37,533 | ||||||||||||
| Transfer agent fees |
3,225 | 90,241 | 583,595 | 12,220 | ||||||||||||
| Trustees fees |
2,538 | 50,063 | 193,470 | 11,126 | ||||||||||||
| Offering costs (Note 2-E) |
— | — | 96,561 | — | ||||||||||||
| Other expenses |
4,828 | 103,522 | 116,236 | 17,455 | ||||||||||||
| TOTAL EXPENSES |
843,089 | 40,290,517 | 53,264,811 | 2,089,816 | ||||||||||||
| Advisory fees waived and expenses waived or reimbursed (Note 5) |
(113,621 | ) | (86,260 | ) | (244,805 | ) | — | |||||||||
| Administration fees waived (Note 5) |
— | (86,260 | ) | (244,805 | ) | — | ||||||||||
| NET EXPENSES |
729,468 | 40,117,997 | 52,775,201 | 2,089,816 | ||||||||||||
| NET INVESTMENT INCOME (LOSS) |
3,111,267 | 85,685,483 | 100,527,128 | 3,500,086 | ||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FINANCIAL FUTURES CONTRACTS, FOREIGN CURRENCY RELATED TRANSACTIONS AND DEFERRED CAPITAL GAINS TAXES: | ||||||||||||||||
| Net realized gain (loss) on investments—Unaffiliated Issuers |
226,884 | 161,549,914 | 256,519,653 | 10,318,680 | ||||||||||||
| Net realized gain (loss) on investments—Affiliated Issuers |
— | — | 3,642,992 | — | ||||||||||||
| Net realized gain (loss) on financial futures contracts |
(88,422 | ) | — | — | — | |||||||||||
| Net realized foreign capital gains tax |
— | — | (216,219 | ) | — | |||||||||||
| Net realized gain (loss) on foreign currency related transactions |
(1,438,110 | ) | (1,287,301 | ) | (1,974,507 | ) | (48,778 | ) | ||||||||
| Net change in unrealized appreciation/depreciation on investments |
(2,508,426 | ) | (408,123,551 | ) | (204,821,506 | ) | (6,469,661 | ) | ||||||||
| Net change in deferred foreign capital gains taxes on unrealized appreciation |
18,403 | — | 7,302,449 | — | ||||||||||||
| Net change in unrealized appreciation/depreciation on financial futures contracts |
(12,891 | ) | — | — | — | |||||||||||
| Net change in unrealized appreciation/depreciation on foreign currency related translations |
299,762 | (107,432 | ) | (327,104 | ) | 77 | ||||||||||
| Net realized and unrealized gain (loss) on investments, financial futures contracts, foreign currency related transactions and deferred capital gains taxes |
(3,502,800 | ) | (247,968,370 | ) | 60,125,758 | 3,800,318 | ||||||||||
| NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS |
($391,533 | ) | ($162,282,887 | ) | $160,652,886 | $7,300,404 | ||||||||||
| * | Matthews Asia Value Fund commenced operations on November 30, 2015. |
| ** | Matthews Asia ESG Fund commenced operations on April 30, 2015. |
| 1 | Consolidated Statements of Operations. See Note 2-C. |
See accompanying notes to financial statements.
| 100 | MATTHEWS ASIA FUNDS |
Table of Contents
Year Ended December 31, 2015
| Matthews Asia Value Fund* |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
Matthews Asia ESG Fund** |
||||||||||||||
| $5,785 | $382,131 | $16,027,429 | $205,047,908 | $50,346 | ||||||||||||||
| — | — | — | 16,268,632 | — | ||||||||||||||
| — | 5 | 89 | 160 | — | ||||||||||||||
| (880 | ) | (13,719 | ) | (1,445,364 | ) | (12,503,194 | ) | (7,045 | ) | |||||||||
| 4,905 | 368,417 | 14,582,154 | 208,813,506 | 43,301 | ||||||||||||||
| 771 | 95,048 | 5,989,698 | 54,519,201 | 15,886 | ||||||||||||||
| 9 | 1,146 | 72,251 | 657,337 | 192 | ||||||||||||||
| |
167 |
|
19,988 | 1,260,375 | 11,459,861 | 3,397 | ||||||||||||
| 201 | 25,500 | 43,424 | 57,369 | 24,418 | ||||||||||||||
| 2,727 | 21,248 | 386,187 | 3,163,638 | 45,376 | ||||||||||||||
| — | 19,391 | 4,347 | 41,746 | — | ||||||||||||||
| 266 | 23,862 | 1,376,500 | 9,006,250 | 2,940 | ||||||||||||||
| 500 | 2,221 | 68,303 | 344,136 | 10,828 | ||||||||||||||
| 29,326 | 42,957 | 69,621 | 222,833 | 53,961 | ||||||||||||||
| 1,048 | 27,895 | 62,652 | 72,523 | 4,180 | ||||||||||||||
| 40 | 1,795 | 30,118 | 454,792 | 257 | ||||||||||||||
| 20 | 1,048 | 33,463 | 343,024 | 599 | ||||||||||||||
| 7,928 | — | — | — | 52,457 | ||||||||||||||
| 20 | 3,362 | 20,761 | 177,322 | 2,459 | ||||||||||||||
| 43,023 | 285,461 | 9,417,700 | 80,520,032 | 216,950 | ||||||||||||||
| |
(41,279 |
) |
(87,252 | ) | |
— |
|
(857,693 | ) | (183,985 | ) | |||||||
| — | — | — | (857,693 | ) | — | |||||||||||||
| 1,744 | 198,209 | 9,417,700 | 78,804,646 | 32,965 | ||||||||||||||
| 3,161 | 170,208 | 5,164,454 | 130,008,860 | 10,336 | ||||||||||||||
| |
— |
|
(609,861 | ) | 13,899,209 | 685,636,391 | (52,070 | ) | ||||||||||
| |
— |
|
— | — | (19,396,677 | ) | — | |||||||||||
| — | — | — | — | — | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| (988 | ) | (1,014 | ) | (5,751 | ) | (763,754 | ) | |
1,317 |
| ||||||||
|
|
(16,763 |
) |
(1,483,528 | ) | (31,519,028 | ) | (1,050,830,850 | ) | (119,079 | ) | ||||||||
| |
— |
|
982 | 120,781 | 5,827,625 | (9,835 | ) | |||||||||||
| |
— |
|
— | — | — | — | ||||||||||||
| |
17 |
|
(133 | ) | 3,699 | (47,224 | ) | (19 | ) | |||||||||
| (17,734 | ) | (2,093,554 | ) | (17,501,090 | ) | (379,574,489 | ) | (179,686 | ) | |||||||||
|
|
($14,573 |
) |
($1,923,346 | ) | ($12,336,636 | ) | ($249,565,629 | ) | ($169,350 | ) | ||||||||
| matthewsasia.com | 800.789.ASIA | 101 |
Table of Contents
Statements of Operations (continued)
| Matthews Emerging Asia Fund |
Matthews China Fund1 |
Matthews India Fund |
||||||||||
| INVESTMENT INCOME: |
||||||||||||
| Dividends—Unaffiliated Issuers |
$3,365,820 | $19,903,318 | $11,718,335 | |||||||||
| Dividends—Affiliated Issuers (Note 7) |
— | — | 2,578,272 | |||||||||
| Interest |
— | 15 | 13,816 | |||||||||
| Foreign withholding tax |
(297,602 | ) | (839,714 | ) | — | |||||||
| TOTAL INVESTMENT INCOME |
3,068,218 | 19,063,619 | 14,310,423 | |||||||||
| EXPENSES: |
||||||||||||
| Investment advisory fees (Note 5) |
1,661,519 | 6,216,536 | 10,143,432 | |||||||||
| Administration and accounting fees (Note 5) |
13,297 | 151,438 | 122,373 | |||||||||
| Administration and shareholder servicing fees (Note 5) |
232,258 | 1,306,491 | 2,137,111 | |||||||||
| Accounting out-of-pocket fees |
49,003 | 37,930 | 38,505 | |||||||||
| Custodian fees |
396,277 | 331,247 | 772,169 | |||||||||
| Intermediary service fees (Note 5) |
314,340 | 1,916,570 | 2,785,784 | |||||||||
| Printing fees |
22,413 | 172,392 | 135,425 | |||||||||
| Professional fees |
47,780 | 130,093 | 68,903 | |||||||||
| Registration fees |
42,816 | 39,856 | 78,724 | |||||||||
| Transfer agent fees |
6,281 | 118,552 | 100,498 | |||||||||
| Trustees fees |
4,739 | 40,385 | 54,654 | |||||||||
| Offering costs (Note 2-E) |
— | 96,561 | — | |||||||||
| Other expenses |
26,073 | 35,353 | 43,501 | |||||||||
| TOTAL EXPENSES |
2,816,796 | 10,593,404 | 16,481,079 | |||||||||
| Advisory fees waived and expenses waived or reimbursed (Note 5) |
(452,048 | ) | — | — | ||||||||
| NET EXPENSES |
2,364,748 | 10,593,404 | 16,481,079 | |||||||||
| NET INVESTMENT INCOME (LOSS) |
703,470 | 8,470,215 | (2,170,656 | ) | ||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS AND DEFERRED CAPITAL GAINS TAXES: | ||||||||||||
| Net realized gain (loss) on investments—Unaffiliated Issuers |
(883,817 | ) | 131,493,138 | 24,512,494 | ||||||||
| Net realized gain (loss) on investments—Affiliated Issuers |
— | — | 251,540 | |||||||||
| Net realized foreign capital gains tax |
(124,875 | ) | — | — | ||||||||
| Net realized gain (loss) on foreign currency related transactions |
(82,987 | ) | (273,081 | ) | (917,224 | ) | ||||||
| Net change in unrealized appreciation/depreciation on investments |
(4,198,765 | ) | (106,942,414 | ) | (62,169,687 | ) | ||||||
| Net change in deferred foreign capital gains taxes on unrealized appreciation |
(730,548 | ) | 4,990 | 6,684,572 | ||||||||
| Net change in unrealized appreciation/depreciation on foreign currency related translations |
951 | 11,673 | (13,669 | ) | ||||||||
| Net realized and unrealized gain (loss) on investments, foreign currency related transactions and deferred capital gains taxes |
(6,020,041 | ) | 24,294,306 | (31,651,974 | ) | |||||||
| NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS |
($5,316,571 | ) | $32,764,521 | ($33,822,630 | ) | |||||||
| 1 | Consolidated Statements of Operations. See Note 2-C. |
See accompanying notes to financial statements.
| 102 | MATTHEWS ASIA FUNDS |
Table of Contents
Year Ended December 31, 2015
| Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
Matthews Asia Science and Technology Fund |
||||||||||||||
| $14,613,800 | $3,085,707 | $12,405,821 | $529,669 | $1,664,237 | ||||||||||||||
| 882,727 | — | 368,679 | — | — | ||||||||||||||
| — | — | 84 | — | 12 | ||||||||||||||
| (1,547,684 | ) | (509,194 | ) | (1,137,342 | ) | (15,720 | ) | (175,988 | ) | |||||||||
| 13,948,843 | 2,576,513 | 11,637,242 | 513,949 | 1,488,261 | ||||||||||||||
| 7,785,999 | 1,359,009 | 7,188,942 | 223,822 | 1,174,937 | ||||||||||||||
| 94,121 | 16,399 | 57,520 | 1,791 | 14,165 | ||||||||||||||
| 1,647,371 | 286,380 | 1,003,109 | 31,234 | 247,195 | ||||||||||||||
| 49,637 | 37,526 | 47,901 | 42,579 | 32,089 | ||||||||||||||
| 189,668 | 72,195 | 419,003 | 38,680 | 106,712 | ||||||||||||||
| 1,054,987 | 244,868 | 1,270,374 | 58,767 | 273,619 | ||||||||||||||
| 78,766 | 16,540 | 53,346 | 3,258 | 21,020 | ||||||||||||||
| 58,211 | 42,776 | 79,328 | 42,596 | 56,910 | ||||||||||||||
| 63,843 | 34,125 | 52,700 | 18,298 | 31,812 | ||||||||||||||
| 115,354 | 23,567 | 20,831 | 3,281 | 17,952 | ||||||||||||||
| 30,834 | 7,913 | 42,292 | 1,724 | 8,337 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 31,745 | 12,186 | 22,712 | 3,003 | 10,136 | ||||||||||||||
| 11,200,536 | 2,153,484 | 10,258,058 | 469,033 | 1,994,884 | ||||||||||||||
| — | — | (113,037 | ) | (133,327 | ) | — | ||||||||||||
| 11,200,536 | 2,153,484 | 10,145,021 | 335,706 | 1,994,884 | ||||||||||||||
| 2,748,307 | 423,029 | 1,492,221 | 178,243 | (506,623 | ) | |||||||||||||
| 24,814,680 | 13,748,671 | (7,719,282 | ) | 3,457,528 | 27,270,960 | |||||||||||||
| 142,916 | — | (32,275 | ) | — | — | |||||||||||||
| — | — | — | — | — | ||||||||||||||
| (340,642 | ) | (99,064 | ) | (249,073 | ) | 863 | (112,049 | ) | ||||||||||
| 124,627,217 | 10,801,565 | (74,035,599 | ) | (3,135,949 | ) | (18,069,368 | ) | |||||||||||
| — | — | 378,114 | — | — | ||||||||||||||
| 1,512 | (46,204 | ) | (1,417 | ) | (826 | ) | (8,955 | ) | ||||||||||
|
|
149,245,683 |
|
24,404,968 | (81,659,532 | ) | 321,616 | 9,080,588 | |||||||||||
| $151,993,990 | $24,827,997 | ($80,167,311 | ) | $499,859 | $8,573,965 | |||||||||||||
| matthewsasia.com | 800.789.ASIA | 103 |
Table of Contents
Statements of Changes in Net Assets
| MATTHEWS ASIA STRATEGIC INCOME FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$3,111,267 | $2,549,890 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(1,299,648 | ) | (1,349,144 | ) | ||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(2,208,664 | ) | (188,122 | ) | ||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
18,403 | (15,022 | ) | |||||
| Net change in unrealized appreciation/depreciation on financial futures contracts |
(12,891 | ) | (52,031 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(391,533 | ) | 945,571 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(1,574,263 | ) | (1,819,452 | ) | ||||
| Institutional Class |
(350,781 | ) | (294,936 | ) | ||||
| Net decrease in net assets resulting from distributions |
(1,925,044 | ) | (2,114,388 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(1,988,782 | ) | 21,884,520 | |||||
| REDEMPTION FEES |
1,288 | 6,087 | ||||||
| Total increase (decrease) in net assets |
(4,304,071 | ) | 20,721,790 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
66,434,674 | 45,712,884 | ||||||
| End of year (including undistributed/distributions in excess of net investment income of ($141,570) and ($241,167), respectively) |
$62,130,603 | $66,434,674 | ||||||
| MATTHEWS ASIAN GROWTH AND INCOME FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$85,685,483 | $92,607,652 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
160,262,613 | 117,898,875 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(408,230,983 | ) | (247,572,282 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(162,282,887 | ) | (37,065,755 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(60,473,615 | ) | (58,176,498 | ) | ||||
| Institutional Class |
(25,646,657 | ) | (24,675,840 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(99,500,383 | ) | (73,703,258 | ) | ||||
| Institutional Class |
(38,663,330 | ) | (28,748,112 | ) | ||||
| Net decrease in net assets resulting from distributions |
(224,283,985 | ) | (185,303,708 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(979,815,420 | ) | 58,477,140 | |||||
| REDEMPTION FEES |
181,880 | 343,294 | ||||||
| Total increase (decrease) in net assets |
(1,366,200,412 | ) | (163,549,029 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
4,235,254,781 | 4,398,803,810 | ||||||
| End of year (including distributions in excess of net investment income of ($9,981,676) and ($13,412,958), respectively) |
$2,869,054,369 | $4,235,254,781 | ||||||
See accompanying notes to financial statements.
| 104 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS ASIA DIVIDEND FUND | Year
Ended December 31, 20151 |
Year
Ended December 31, 2014 1 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$100,527,128 | $103,460,502 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
257,971,919 | 116,243,335 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(205,148,610 | ) | (236,016,208 | ) | ||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
7,302,449 | (5,021,270 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
160,652,886 | (21,333,641 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(50,178,458 | ) | (47,911,397 | ) | ||||
| Institutional Class |
(42,940,313 | ) | (32,066,176 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(40,978,371 | ) | — | |||||
| Institutional Class |
(30,690,700 | ) | — | |||||
| Return of Capital: |
||||||||
| Investor Class |
— | (13,172,130 | ) | |||||
| Institutional Class |
— | (8,815,853 | ) | |||||
| Net decrease in net assets resulting from distributions |
(164,787,842 | ) | (101,965,556 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(217,935,493 | ) | (645,503,365 | ) | ||||
| REDEMPTION FEES |
95,389 | 497,372 | ||||||
| Total increase (decrease) in net assets |
(221,975,060 | ) | (768,305,190 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
5,025,598,743 | 5,793,903,933 | ||||||
| End of year (including distributions in excess of net investment income of ($4,689,915) and ($55,629,552), respectively) |
$4,803,623,683 | $5,025,598,743 | ||||||
| 1 Consolidated Statements of Changes in Net Assets. See Note 2-C. |
||||||||
| MATTHEWS CHINA DIVIDEND FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$3,500,086 | $2,671,693 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
10,269,902 | 2,594,721 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(6,469,584 | ) | (5,177,012 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
7,300,404 | 89,402 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(3,549,297 | ) | (2,935,482 | ) | ||||
| Institutional Class |
(479,873 | ) | (817,023 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(7,116,965 | ) | (1,191,973 | ) | ||||
| Institutional Class |
(673,526 | ) | (314,911 | ) | ||||
| Net decrease in net assets resulting from distributions |
(11,819,661 | ) | (5,259,389 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
37,808,908 | 1,987,255 | ||||||
| REDEMPTION FEES |
13,497 | 45,150 | ||||||
| Total increase (decrease) in net assets |
33,303,148 | (3,137,582 | ) | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
147,616,843 | 150,754,425 | ||||||
| End of year (including distributions in excess of net investment income of ($367,605) and ($1,285,165), respectively) |
$180,919,991 | $147,616,843 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 105 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS ASIA VALUE FUND | Period Ended December 31, 20151 |
|||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$3,161 | |||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(988 | ) | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(16,746 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations |
(14,573 | ) | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(1,748 | ) | ||||||
| Institutional Class |
(581 | ) | ||||||
| Net decrease in net assets resulting from distributions |
(2,329 | ) | ||||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
1,749,497 | |||||||
| Total increase (decrease) in net assets |
1,732,595 | |||||||
| NET ASSETS: |
||||||||
| Beginning of period |
— | |||||||
| End of period (including undistributed net investment income of $7,772) |
$1,732,595 | |||||||
| 1 Matthews Asia Value commenced operations on November 30, 2015. |
||||||||
| MATTHEWS ASIA FOCUS FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$170,208 | $93,078 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(610,875 | ) | 90,648 | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(1,483,661 | ) | 65,598 | |||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
982 | 8,519 | ||||||
| Net increase (decrease) in net assets resulting from operations |
(1,923,346 | ) | 257,843 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(43,929 | ) | (55,443 | ) | ||||
| Institutional Class |
(68,121 | ) | (57,082 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(30,710 | ) | — | |||||
| Institutional Class |
(30,458 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(173,218 | ) | (112,525 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(1,717,388 | ) | 6,463,284 | |||||
| REDEMPTION FEES |
1,869 | 2,548 | ||||||
| Total increase (decrease) in net assets |
(3,812,083 | ) | 6,611,150 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
14,986,931 | 8,375,781 | ||||||
| End of year (including undistributed net investment income of $80,691 and $1,023, respectively) |
$11,174,848 | $14,986,931 | ||||||
See accompanying notes to financial statements.
| 106 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS ASIA GROWTH FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$5,164,454 | $4,953,601 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
13,893,458 | 15,349,737 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(31,515,329 | ) | (9,391,211 | ) | ||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
120,781 | (262,534 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
(12,336,636 | ) | 10,649,593 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
— | (10,002,000 | ) | |||||
| Institutional Class |
— | (5,438,617 | ) | |||||
| Net decrease in net assets resulting from distributions |
— | (15,440,617 | ) | |||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(60,027,645 | ) | 67,553,705 | |||||
| REDEMPTION FEES |
36,064 | 162,173 | ||||||
| Total increase (decrease) in net assets |
(72,328,217 | ) | 62,924,854 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
849,183,980 | 786,259,126 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of $278,925 and ($11,816,062), respectively) |
$776,855,763 | $849,183,980 | ||||||
| MATTHEWS PACIFIC TIGER FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$130,008,860 | $47,931,459 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
665,475,960 | 301,174,040 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(1,050,878,074 | ) | 479,195,485 | |||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
5,827,625 | (4,638,516 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
(249,565,629 | ) | 823,662,468 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(44,786,496 | ) | (14,427,716 | ) | ||||
| Institutional Class |
(72,239,388 | ) | (32,970,946 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(237,860,447 | ) | (134,989,408 | ) | ||||
| Institutional Class |
(343,244,442 | ) | (226,070,336 | ) | ||||
| Net decrease in net assets resulting from distributions |
(698,130,773 | ) | (408,458,406 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(463,729,788 | ) | 48,148,464 | |||||
| REDEMPTION FEES |
121,959 | 220,012 | ||||||
| Total increase (decrease) in net assets |
(1,411,304,231 | ) | 463,572,538 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
8,096,719,585 | 7,633,147,047 | ||||||
| End of year (including undistributed net investment income of $0 and $12,414, respectively) |
$6,685,415,354 | $8,096,719,585 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 107 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS ASIA ESG FUND | Period Ended December 31, 20151 |
|||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$10,336 | |||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(50,753 | ) | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(119,098 | ) | ||||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
(9,835 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations |
(169,350 | ) | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(16,506 | ) | ||||||
| Institutional Class |
(20,899 | ) | ||||||
| Net decrease in net assets resulting from distributions |
(37,405 | ) | ||||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
5,141,106 | |||||||
| Total increase (decrease) in net assets |
4,934,351 | |||||||
| NET ASSETS: |
||||||||
| Beginning of period |
— | |||||||
| End of period (including undistributed net investment income of $26,705) |
$4,934,351 | |||||||
| 1 Matthews Asia ESG Fund commenced operations on April 30, 2015. |
||||||||
| MATTHEWS EMERGING ASIA FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$703,470 | $282,110 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(1,091,679 | ) | 520,478 | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(4,197,814 | ) | 9,875,738 | |||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
(730,548 | ) | (757,162 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(5,316,571 | ) | 9,921,164 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(35,327 | ) | (518,224 | ) | ||||
| Institutional Class |
(46,163 | ) | (105,103 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(300,074 | ) | — | |||||
| Institutional Class |
(132,999 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(514,563 | ) | (623,327 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
43,937,018 | 82,361,403 | ||||||
| REDEMPTION FEES |
49,908 | 14,452 | ||||||
| Total increase (decrease) in net assets |
38,155,792 | 91,673,692 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
131,712,703 | 40,039,011 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of $276,735 and ($349,313), respectively) |
$169,868,495 | $131,712,703 | ||||||
See accompanying notes to financial statements.
| 108 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS CHINA FUND | Year Ended December 31, 20151 |
Year Ended December 31, 20141 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$8,470,215 | $12,670,620 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
131,220,057 | 19,391,086 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(106,930,741 | ) | (96,779,181 | ) | ||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
4,990 | (4,990 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
32,764,521 | (64,722,465 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(7,271,979 | ) | (11,939,433 | ) | ||||
| Institutional Class |
(292,369 | ) | (897,946 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(112,695,199 | ) | (4,591,640 | ) | ||||
| Institutional Class |
(3,998,950 | ) | (303,495 | ) | ||||
| Net decrease in net assets resulting from distributions |
(124,258,497 | ) | (17,732,514 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(174,745,783 | ) | (321,454,659 | ) | ||||
| REDEMPTION FEES |
64,297 | 141,324 | ||||||
| Total increase (decrease) in net assets |
(266,175,462 | ) | (403,768,314 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
1,000,218,545 | 1,403,986,859 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($32,868) and $73,913, respectively) |
$734,043,083 | $1,000,218,545 | ||||||
| 1 Consolidated Statements of Changes in Net Assets. See Note 2-C. |
||||||||
| MATTHEWS INDIA FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
($2,170,656 | ) | $2,121,302 | |||||
| Net realized gain (loss) on investments and foreign currency related transactions |
23,846,810 | 6,119,604 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(62,183,356 | ) | 298,047,926 | |||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
6,684,572 | (8,627,059 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
(33,822,630 | ) | 297,661,773 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(1,210,919 | ) | (1,672,358 | ) | ||||
| Institutional Class |
(713,191 | ) | (176,254 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(10,496,814 | ) | (5,267,446 | ) | ||||
| Institutional Class |
(3,018,487 | ) | (320,352 | ) | ||||
| Net decrease in net assets resulting from distributions |
(15,439,411 | ) | (7,436,410 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
469,778,771 | 362,428,175 | ||||||
| REDEMPTION FEES |
1,141,560 | 420,708 | ||||||
| Total increase (decrease) in net assets |
421,658,290 | 653,074,246 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
1,084,168,704 | 431,094,458 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($50,865) and $1,797,278, respectively) |
$1,505,826,994 | $1,084,168,704 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 109 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS JAPAN FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$2,748,307 | $1,903,581 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
24,616,954 | 13,363,795 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
124,628,729 | (29,305,954 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
151,993,990 | (14,038,578 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
— | (2,432,405 | ) | |||||
| Institutional Class |
— | (893,149 | ) | |||||
| Net decrease in net assets resulting from distributions |
— | (3,325,554 | ) | |||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
1,174,685,964 | 267,055,762 | ||||||
| REDEMPTION FEES |
42,911 | 221,547 | ||||||
| Total increase (decrease) in net assets |
1,326,722,865 | 249,913,177 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
622,603,805 | 372,690,628 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of $1,177,791 and ($3,723,660), respectively) |
$1,949,326,670 | $622,603,805 | ||||||
| MATTHEWS KOREA FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$423,029 | $550,797 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
13,649,607 | 5,707,881 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
10,755,361 | (9,305,293 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
24,827,997 | (3,046,615 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(299,912 | ) | — | |||||
| Institutional Class |
(230,197 | ) | — | |||||
| Realized gains on investments: |
||||||||
| Investor Class |
(7,587,708 | ) | (5,528,243 | ) | ||||
| Institutional Class |
(3,214,060 | ) | (4,268,341 | ) | ||||
| Net decrease in net assets resulting from distributions |
(11,331,877 | ) | (9,796,584 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(25,043,885 | ) | 80,886,069 | |||||
| REDEMPTION FEES |
10,431 | 48,449 | ||||||
| Total increase (decrease) in net assets |
(11,537,334 | ) | 68,091,319 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
219,204,376 | 151,113,057 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($93,408) and $342,932, respectively) |
$207,667,042 | $219,204,376 | ||||||
See accompanying notes to financial statements.
| 110 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS ASIA SMALL COMPANIES FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$1,492,221 | $2,628,989 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(8,000,630 | ) | 2,692,424 | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(74,037,016 | ) | 48,527,175 | |||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
378,114 | 458,859 | ||||||
| Net increase (decrease) in net assets resulting from operations |
(80,167,311 | ) | 54,307,447 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(527,668 | ) | (2,240,054 | ) | ||||
| Institutional Class |
(972,889 | ) | (425,758 | ) | ||||
| Net decrease in net assets resulting from distributions |
(1,500,557 | ) | (2,665,812 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
15,106,280 | 172,402,487 | ||||||
| REDEMPTION FEES |
226,015 | 85,734 | ||||||
| Total increase (decrease) in net assets |
(66,335,573 | ) | 224,129,856 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
676,250,281 | 452,120,425 | ||||||
| End of year (including undistributed net investment income of $1,244,170 and $1,500,466, respectively) |
$609,914,708 | $676,250,281 | ||||||
| MATTHEWS CHINA SMALL COMPANIES FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$178,243 | $32,748 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
3,458,391 | 725,842 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(3,136,775 | ) | (1,527,785 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
499,859 | (769,195 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(146,067 | ) | (50,571 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(1,644,128 | ) | — | |||||
| Return of Capital: |
||||||||
| Investor Class |
— | (828,820 | ) | |||||
| Net decrease in net assets resulting from distributions |
(1,790,195 | ) | (879,391 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
743,769 | (2,960,536 | ) | |||||
| REDEMPTION FEES |
24,657 | 2,817 | ||||||
| Total increase (decrease) in net assets |
(521,910 | ) | (4,606,305 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
22,067,912 | 26,674,217 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of $1,346 and ($38,540), respectively) |
$21,546,002 | $22,067,912 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 111 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS ASIA SCIENCE AND TECHNOLOGY FUND | Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
($506,623 | ) | $87,025 | |||||
| Net realized gain (loss) on investments and foreign currency related transactions |
27,158,911 | 15,185,277 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(18,078,323 | ) | (362,764 | ) | ||||
| Net change on deferred foreign capital gains taxes on unrealized appreciation |
— | 201,559 | ||||||
| Net increase (decrease) in net assets resulting from operations |
8,573,965 | 15,111,097 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
— | (545,161 | ) | |||||
| Institutional Class |
— | (384,106 | ) | |||||
| Realized gains on investments: |
||||||||
| Investor Class |
(17,188,079 | ) | (769,763 | ) | ||||
| Institutional Class |
(4,989,441 | ) | (372,799 | ) | ||||
| Net decrease in net assets resulting from distributions |
(22,177,520 | ) | (2,071,829 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(6,569,665 | ) | 12,612,113 | |||||
| REDEMPTION FEES |
5,577 | 61,504 | ||||||
| Total increase (decrease) in net assets |
(20,167,643 | ) | 25,712,885 | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
186,700,184 | 160,987,299 | ||||||
| End of year (including distributions in excess of net investment income of $0 and ($787), respectively) |
$166,532,541 | $186,700,184 | ||||||
See accompanying notes to financial statements.
| 112 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Strategic Income Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 |
Period Ended Dec. 31, 20111 |
||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
| Net Asset Value, beginning of period |
$10.31 | $10.42 | $10.84 | $9.93 | $10.00 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.47 | 0.46 | 0.40 | 0.37 | 0.02 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, financial futures contracts and foreign currency |
(0.53 | ) | (0.19 | ) | (0.48 | ) | 0.95 | (0.07 | ) | |||||||||||
| Total from investment operations |
(0.06 | ) | 0.27 | (0.08 | ) | 1.32 | (0.05 | ) | ||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.29 | ) | (0.38 | ) | (0.35 | ) | (0.42 | ) | (0.02 | ) | ||||||||||
| Net realized gains on investments |
— | — | (0.01 | ) | — | — | ||||||||||||||
| Total distributions |
(0.29 | ) | (0.38 | ) | (0.36 | ) | (0.42 | ) | (0.02 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 3 | — | 3 | 0.02 | 0.01 | — | |||||||||||||
| Net Asset Value, end of period |
$9.96 | $10.31 | $10.42 | $10.84 | $9.93 | |||||||||||||||
| TOTAL RETURN |
(0.58% | ) | 2.54% | (0.50% | ) | 13.62% | (0.52% | )4 | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of period (in 000’s) |
$51,130 | $58,594 | $38,051 | $29,479 | $7,746 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.28% | 1.27% | 1.28% | 1.85% | 3.20% | 5 | ||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.12% | 1.13% | 1.20% | 1.17% | 1.00% | 5 | ||||||||||||||
| Ratio of net investment income (loss) to average net assets |
4.57% | 4.36% | 3.75% | 3.58% | 2.06% | 5 | ||||||||||||||
| Portfolio turnover6 |
50.09% | 34.28% | 48.71% | 18.45% | 3.66% | 4 | ||||||||||||||
|
|
Year Ended Dec. 31 | Period Ended Dec. 31, 20111 |
||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
| Net Asset Value, beginning of period |
$10.30 | $10.42 | $10.83 | $9.93 | $10.00 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.49 | 0.48 | 0.42 | 0.39 | 0.02 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, financial futures contracts, and foreign currency |
(0.52 | ) | (0.20 | ) | (0.46 | ) | 0.94 | (0.07 | ) | |||||||||||
| Total from investment operations |
(0.03 | ) | 0.28 | (0.04 | ) | 1.33 | (0.05 | ) | ||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.31 | ) | (0.40 | ) | (0.38 | ) | (0.44 | ) | (0.02 | ) | ||||||||||
| Net realized gains on investments |
— | — | (0.01 | ) | — | — | ||||||||||||||
| Total distributions |
(0.31 | ) | (0.40 | ) | (0.39 | ) | (0.44 | ) | (0.02 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 3 | — | 3 | 0.02 | 0.01 | — | |||||||||||||
| Net Asset Value, end of period |
$9.96 | $10.30 | $10.42 | $10.83 | $9.93 | |||||||||||||||
| TOTAL RETURN |
(0.27% | ) | 2.64% | (0.20% | ) | 13.74% | (0.52% | )4 | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of period (in 000’s) |
$11,001 | $7,840 | $7,662 | $6,205 | $5,266 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.09% | 1.07% | 1.09% | 1.70% | 3.20% | 5 | ||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.90% | 0.93% | 1.00% | 1.00% | 1.00% | 5 | ||||||||||||||
| Ratio of net investment income (loss) to average net assets |
4.81% | 4.55% | 3.99% | 3.70% | 1.96% | 5 | ||||||||||||||
| Portfolio turnover6 |
50.09% | 34.28% | 48.71% | 18.45% | 3.66% | 4 | ||||||||||||||
| 1 | Commencement of operations on November 30, 2011. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | Not annualized. |
| 5 | Annualized. |
| 6 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 113 |
Table of Contents
Financial Highlights (continued)
Matthews Asian Growth and Income Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$18.01 | $18.91 | $18.61 | $15.07 | $18.04 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.39 | 0.39 | 0.41 | 0.43 | 0.47 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(1.19 | ) | (0.50 | ) | 0.47 | 3.58 | (2.36 | ) | ||||||||||||
| Total from investment operations |
(0.80 | ) | (0.11 | ) | 0.88 | 4.01 | (1.89 | ) | ||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.42 | ) | (0.35 | ) | (0.46 | ) | (0.47 | ) | (0.47 | ) | ||||||||||
| Net realized gains on investments |
(0.76 | ) | (0.44 | ) | (0.12 | ) | — | (0.61 | ) | |||||||||||
| Total distributions |
(1.18 | ) | (0.79 | ) | (0.58 | ) | (0.47 | ) | (1.08 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$16.03 | $18.01 | $18.91 | $18.61 | $15.07 | |||||||||||||||
| TOTAL RETURN |
(4.50% | ) | (0.65% | ) | 4.83% | 26.90% | (10.62% | ) | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,045,435 | $3,052,565 | $3,278,586 | $3,214,984 | $2,340,606 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.09% | 1.08% | 1.08% | 1.11% | 1.12% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.09% | 1.08% | 1.08% | 1.11% | 1.12% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
2.17% | 2.03% | 2.14% | 2.52% | 2.71% | |||||||||||||||
| Portfolio turnover3 |
16.48% | 16.79% | 15.27% | 17.43% | 16.54% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$18.00 | $18.90 | $18.60 | $15.06 | $18.04 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.42 | 0.42 | 0.44 | 0.45 | 0.52 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(1.19 | ) | (0.50 | ) | 0.48 | 3.58 | (2.39 | ) | ||||||||||||
| Total from investment operations |
(0.77 | ) | (0.08 | ) | 0.92 | 4.03 | (1.87 | ) | ||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.45 | ) | (0.38 | ) | (0.50 | ) | (0.49 | ) | (0.50 | ) | ||||||||||
| Net realized gains on investments |
(0.76 | ) | (0.44 | ) | (0.12 | ) | — | (0.61 | ) | |||||||||||
| Total distributions |
(1.21 | ) | (0.82 | ) | (0.62 | ) | (0.49 | ) | (1.11 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$16.02 | $18.00 | $18.90 | $18.60 | $15.06 | |||||||||||||||
| TOTAL RETURN |
(4.33% | ) | (0.48% | ) | 5.04% | 27.09% | (10.54% | ) | ||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$823,619 | $1,182,690 | $1,120,218 | $856,876 | $531,493 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.92% | 0.92% | 0.93% | 0.97% | 0.99% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
0.92% | 0.92% | 0.93% | 0.97% | 0.99% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
2.34% | 2.19% | 2.30% | 2.69% | 3.05% | |||||||||||||||
| Portfolio turnover3 |
16.48% | 16.79% | 15.27% | 17.43% | 16.54% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 114 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Dividend Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 20151 | 20141 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$15.26 | $15.60 | $14.58 | $12.48 | $14.33 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.29 | 0.30 | 0.32 | 0.36 | 0.36 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
0.31 | (0.34 | ) | 1.30 | 2.30 | (1.78 | ) | |||||||||||||
| Total from investment operations |
0.60 | (0.04 | ) | 1.62 | 2.66 | (1.42 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.27 | ) | (0.23 | ) | (0.60 | ) | (0.56 | ) | (0.37 | ) | ||||||||||
| Return of capital |
— | (0.07 | ) | — | — | — | ||||||||||||||
| Net realized gains on investments |
(0.23 | ) | — | — | — | (0.06 | ) | |||||||||||||
| Total distributions |
(0.50 | ) | (0.30 | ) | (0.60 | ) | (0.56 | ) | (0.43 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$15.36 | $15.26 | $15.60 | $14.58 | $12.48 | |||||||||||||||
| TOTAL RETURN |
3.86% | (0.32% | ) | 11.27% | 21.63% | (10.02% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,757,910 | $2,918,228 | $3,669,690 | $2,780,043 | $1,930,363 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.06% | 1.06% | 1.06% | 1.09% | 1.10% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.05% | 1.05% | 1.06% | 1.09% | 1.10% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.82% | 1.89% | 2.04% | 2.65% | 2.61% | |||||||||||||||
| Portfolio turnover4 |
35.98% | 20.06% | 14.06% | 9.17% | 16.48% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 20151 | 20141 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$15.26 | $15.59 | $14.57 | $12.48 | $14.33 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.32 | 0.32 | 0.34 | 0.37 | 0.41 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
0.29 | (0.33 | ) | 1.30 | 2.29 | (1.82 | ) | |||||||||||||
| Total from investment operations |
0.61 | (0.01 | ) | 1.64 | 2.66 | (1.41 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.29 | ) | (0.25 | ) | (0.62 | ) | (0.57 | ) | (0.38 | ) | ||||||||||
| Return of capital |
— | (0.07 | ) | — | — | — | ||||||||||||||
| Net realized gains on investments |
(0.23 | ) | — | — | — | (0.06 | ) | |||||||||||||
| Total distributions |
(0.52 | ) | (0.32 | ) | (0.62 | ) | (0.57 | ) | (0.44 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$15.35 | $15.26 | $15.59 | $14.57 | $12.48 | |||||||||||||||
| TOTAL RETURN |
3.93% | (0.18% | ) | 11.43% | 21.70% | (9.93% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,045,713 | $2,107,371 | $2,124,214 | $922,561 | $344,502 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.93% | 0.93% | 0.93% | 0.97% | 1.00% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.92% | 0.93% | 0.93% | 0.97% | 1.00% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.98% | 2.02% | 2.17% | 2.72% | 3.03% | |||||||||||||||
| Portfolio turnover4 |
35.98% | 20.06% | 14.06% | 9.17% | 16.48% | |||||||||||||||
| 1 | Consolidated Financial Highlights. See Note 2-C. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 115 |
Table of Contents
Financial Highlights (continued)
Matthews China Dividend Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$13.37 | $13.74 | $12.35 | $10.06 | $12.17 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.29 | 0.25 | 0.25 | 0.25 | 0.29 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
1.01 | (0.12 | ) | 1.35 | 2.49 | (2.04 | ) | |||||||||||||
| Total from investment operations |
1.30 | 0.13 | 1.60 | 2.74 | (1.75 | ) | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.28 | ) | (0.36 | ) | (0.23 | ) | (0.46 | ) | (0.35 | ) | ||||||||||
| Net realized gains on investments |
(0.60 | ) | (0.14 | ) | — | — | (0.02 | ) | ||||||||||||
| Total distributions |
(0.88 | ) | (0.50 | ) | (0.23 | ) | (0.46 | ) | (0.37 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | 0.02 | 0.01 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$13.79 | $13.37 | $13.74 | $12.35 | $10.06 | |||||||||||||||
| TOTAL RETURN |
9.54% | 0.93% | 13.35% | 27.81% | (14.44% | ) | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$165,514 | $116,954 | $125,965 | $59,535 | $26,467 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.19% | 1.19% | 1.24% | 1.47% | 1.52% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.19% | 1.19% | 1.34% | 1.50% | 1.50% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.97% | 1.88% | 1.94% | 2.24% | 2.47% | |||||||||||||||
| Portfolio turnover3 |
79.91% | 25.43% | 20.52% | 21.40% | 22.31% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$13.37 | $13.74 | $12.34 | $10.06 | $12.17 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.28 | 0.28 | 0.33 | 0.22 | 0.30 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
1.04 | (0.13 | ) | 1.32 | 2.53 | (2.01 | ) | |||||||||||||
| Total from investment operations |
1.32 | 0.15 | 1.65 | 2.75 | (1.71 | ) | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.30 | ) | (0.38 | ) | (0.26 | ) | (0.48 | ) | (0.38 | ) | ||||||||||
| Net realized gains on investments |
(0.60 | ) | (0.14 | ) | — | — | (0.02 | ) | ||||||||||||
| Total distributions |
(0.90 | ) | (0.52 | ) | (0.26 | ) | (0.48 | ) | (0.40 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | 0.01 | 0.01 | — | 2 | ||||||||||||
| Net Asset Value, end of year |
$13.79 | $13.37 | $13.74 | $12.34 | $10.06 | |||||||||||||||
| TOTAL RETURN |
9.71% | 1.11% | 13.72% | 27.90% | (14.22% | ) | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$15,406 | $30,662 | $24,790 | $201 | $12 | |||||||||||||||
| Ratio of expenses to average net assets |
1.00% | 1.01% | 1.08% | 1.29% | 1.31% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.89% | 2.06% | 2.54% | 1.87% | 2.61% | |||||||||||||||
| Portfolio turnover3 |
79.91% | 25.43% | 20.52% | 21.40% | 22.31% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 116 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Value Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS | Period Ended Dec. 31, 20151 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.02 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.16 | ) | ||
| Total from investment operations |
(0.14 | ) | ||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.01 | ) | ||
| Total distributions |
(0.01 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
$9.85 | |||
| TOTAL RETURN |
(1.35% | )3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$1,589 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
36.42% | 4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 4 | ||
| Ratio of net investment income (loss) to average net assets |
2.70% | 4 | ||
| Portfolio turnover5 |
10.80% | 3 | ||
| INSTITUTIONAL CLASS | Period Ended Dec. 31, 20151 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.02 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.15 | ) | ||
| Total from investment operations |
(0.13 | ) | ||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.04 | ) | ||
| Total distributions |
(0.04 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
$9.83 | |||
| TOTAL RETURN |
(1.30% | )3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$143 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
36.17% | 4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 4 | ||
| Ratio of net investment income (loss) to average net assets |
2.41% | 4 | ||
| Portfolio turnover5 |
10.80% | 3 | ||
| 1 | Commenced operations on November 30, 2015. |
| 2 | Calculated using the average daily shares method. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 117 |
Table of Contents
Financial Highlights (continued)
Matthews Asia Focus Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| Year Ended Dec. 31 |
Period Ended Dec. 31, 20131 |
|||||||||||
| INVESTOR CLASS | 2015 | 2014 | ||||||||||
| Net Asset Value, beginning of period |
$10.01 | $9.66 | $10.00 | |||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||
| Net investment income (loss)2 |
0.11 | 0.09 | 0.04 | |||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(1.31 | ) | 0.33 | (0.30 | ) | |||||||
| Total from investment operations |
(1.20 | ) | 0.42 | (0.26 | ) | |||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||
| Net investment income |
(0.07 | ) | (0.07 | ) | (0.08 | ) | ||||||
| Net realized gains on investments |
(0.05 | ) | — | — | ||||||||
| Total distributions |
(0.12 | ) | (0.07 | ) | (0.08 | ) | ||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | |||||||||
| Net Asset Value, end of period |
$8.69 | $10.01 | $9.66 | |||||||||
| TOTAL RETURN |
(12.07% | ) | 4.38% | (2.63% | )4 | |||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||
| Net assets, end of period (in 000’s) |
$5,474 | $7,839 | $6,258 | |||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
2.07% | 2.16% | 3.50% | 5 | ||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 1.57% | 1.71% | 5 | ||||||||
| Ratio of net investment income (loss) to average net assets |
1.08% | 0.87% | 0.64% | 5 | ||||||||
| Portfolio turnover6 |
23.60% | 24.12% | 16.23% | 4 | ||||||||
| Year Ended Dec. 31 |
Period Ended Dec. 31, 20131 |
|||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | ||||||||||
| Net Asset Value, beginning of period |
$10.04 | $9.66 | $10.00 | |||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||
| Net investment income (loss)2 |
0.13 | 0.10 | 0.05 | |||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(1.33 | ) | 0.36 | (0.30 | ) | |||||||
| Total from investment operations |
(1.20 | ) | 0.46 | (0.25 | ) | |||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||
| Net investment income |
(0.10 | ) | (0.08 | ) | (0.09 | ) | ||||||
| Net realized gains on investments |
(0.05 | ) | — | — | ||||||||
| Total distributions |
(0.15 | ) | (0.08 | ) | (0.09 | ) | ||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | |||||||||
| Net Asset Value, end of period |
$8.69 | $10.04 | $9.66 | |||||||||
| TOTAL RETURN |
(11.96% | ) | 4.77% | (2.48% | )4 | |||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||
| Net assets, end of period (in 000’s) |
$5,700 | $7,148 | $2,118 | |||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.91% | 1.94% | 3.32% | 5 | ||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 1.31% | 1.50% | 5 | ||||||||
| Ratio of net investment income (loss) to average net assets |
1.30% | 0.96% | 0.79% | 5 | ||||||||
| Portfolio turnover6 |
23.60% | 24.12% | 16.23% | 4 | ||||||||
| 1 | Commenced operations on April 30, 2013. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | Not annualized. |
| 5 | Annualized. |
| 6 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 118 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Growth Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$21.10 | $21.17 | $18.02 | $15.34 | $17.97 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.11 | 0.12 | 0.11 | 0.15 | 0.11 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation |
(0.12 | ) | 0.19 | 3.37 | 2.53 | (2.41 | ) | |||||||||||||
| Total from investment operations |
(0.01 | ) | 0.31 | 3.48 | 2.68 | (2.30 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.38 | ) | (0.33 | ) | — | (0.35 | ) | ||||||||||||
| Total distributions |
— | (0.38 | ) | (0.33 | ) | — | (0.35 | ) | ||||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | — | 2 | — | 2 | 0.02 | |||||||||||
| Net Asset Value, end of year |
$21.09 | $21.10 | $21.17 | $18.02 | $15.34 | |||||||||||||||
| TOTAL RETURN |
(0.05% | ) | 1.49% | 19.35% | 17.47% | (12.70% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$526,969 | $561,922 | $558,407 | $276,884 | $259,166 | |||||||||||||||
| Ratio of expenses to average net assets |
1.11% | 1.11% | 1.12% | 1.16% | 1.19% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.49% | 0.55% | 0.55% | 0.92% | 0.63% | |||||||||||||||
| Portfolio turnover3 |
29.51% | 22.24% | 10.77% | 44.76% | 28.06% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$21.19 | $21.26 | $18.08 | $15.37 | $17.98 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.16 | 0.16 | 0.15 | 0.17 | 0.14 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation |
(0.11 | ) | 0.19 | 3.39 | 2.54 | (2.42 | ) | |||||||||||||
| Total from investment operations |
0.05 | 0.35 | 3.54 | 2.71 | (2.28 | ) | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.42 | ) | (0.36 | ) | — | (0.35 | ) | ||||||||||||
| Total distributions |
— | (0.42 | ) | (0.36 | ) | — | (0.35 | ) | ||||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | — | 2 | — | 2 | 0.02 | |||||||||||
| Net Asset Value, end of year |
$21.24 | $21.19 | $21.26 | $18.08 | $15.37 | |||||||||||||||
| TOTAL RETURN |
0.24% | 1.63% | 19.63% | 17.63% | (12.58% | ) | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$249,886 | $287,262 | $227,852 | $147,142 | $84,302 | |||||||||||||||
| Ratio of expenses to average net assets |
0.91% | 0.91% | 0.93% | 0.98% | 1.03% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.72% | 0.74% | 0.73% | 1.02% | 0.84% | |||||||||||||||
| Portfolio turnover3 |
29.51% | 22.24% | 10.77% | 44.76% | 28.06% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 119 |
Table of Contents
Financial Highlights (continued)
Matthews Pacific Tiger Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$26.57 | $24.99 | $24.42 | $20.33 | $23.44 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.42 | 0.14 | 0.17 | 0.18 | 0.10 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.82 | ) | 2.80 | 0.72 | 4.09 | (2.78 | ) | |||||||||||||
| Total from investment operations |
(0.40 | ) | 2.94 | 0.89 | 4.27 | (2.68 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.42 | ) | (0.13 | ) | (0.16 | ) | (0.16 | ) | (0.11 | ) | ||||||||||
| Net realized gains on investments |
(2.21 | ) | (1.23 | ) | (0.16 | ) | (0.02 | ) | (0.33 | ) | ||||||||||
| Total distributions |
(2.63 | ) | (1.36 | ) | (0.32 | ) | (0.18 | ) | (0.44 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | — | 2 | — | 2 | 0.01 | |||||||||||
| Net Asset Value, end of year |
$23.54 | $26.57 | $24.99 | $24.42 | $20.33 | |||||||||||||||
| TOTAL RETURN |
(1.30% | ) | 11.79% | 3.63% | 21.00% | (11.41% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,720,869 | $3,047,077 | $2,954,108 | $2,994,026 | $2,780,640 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.09% | 1.09% | 1.09% | 1.11% | 1.11% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.07% | 1.08% | 1.09% | 1.11% | 1.11% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.53% | 0.52% | 0.67% | 0.82% | 0.44% | |||||||||||||||
| Portfolio turnover 3 |
12.56% | 11.38% | 7.73% | 6.53% | 10.51% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$26.56 | $24.97 | $24.41 | $20.32 | $23.44 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.44 | 0.18 | 0.21 | 0.21 | 0.23 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.80 | ) | 2.82 | 0.71 | 4.10 | (2.87 | ) | |||||||||||||
| Total from investment operations |
(0.36 | ) | 3.00 | 0.92 | 4.31 | (2.64 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.47 | ) | (0.18 | ) | (0.20 | ) | (0.20 | ) | (0.15 | ) | ||||||||||
| Net realized gains on investments |
(2.21 | ) | (1.23 | ) | (0.16 | ) | (0.02 | ) | (0.33 | ) | ||||||||||
| Total distributions |
(2.68 | ) | (1.41 | ) | (0.36 | ) | (0.22 | ) | (0.48 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$23.52 | $26.56 | $24.97 | $24.41 | $20.32 | |||||||||||||||
| TOTAL RETURN |
(1.15% | ) | 12.03% | 3.78% | 21.24% | (11.28% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$3,964,547 | $5,049,643 | $4,679,039 | $3,770,568 | $2,029,091 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.91% | 0.92% | 0.92% | 0.95% | 0.95% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
0.89% | 0.91% | 0.92% | 0.95% | 0.95% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.61% | 0.68% | 0.83% | 0.95% | 1.03% | |||||||||||||||
| Portfolio turnover3 |
12.56% | 11.38% | 7.73% | 6.53% | 10.51% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 120 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia ESG Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS | Period Ended Dec. 31, 20151 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.02 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.75 | ) | ||
| Total from investment operations |
(0.73 | ) | ||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.04 | ) | ||
| Total distributions |
(0.04 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
$9.23 | |||
| TOTAL RETURN |
(7.30% | )3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$3,248 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
9.09% | 4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.44% | 4 | ||
| Ratio of net investment income (loss) to average net assets |
0.25% | 4 | ||
| Portfolio turnover5 |
21.72% | 3 | ||
| INSTITUTIONAL CLASS | Period Ended Dec. 31, 20151 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.05 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.77 | ) | ||
| Total from investment operations |
(0.72 | ) | ||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.11 | ) | ||
| Total distributions |
(0.11 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
$9.17 | |||
| TOTAL RETURN |
(7.14% | )3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$1,686 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
8.90% | 4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 4 | ||
| Ratio of net investment income (loss) to average net assets |
0.75% | 4 | ||
| Portfolio turnover5 |
21.72% | 3 | ||
| 1 | Commenced operations on April 30, 2015. |
| 2 | Calculated using the average daily shares method. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 121 |
Table of Contents
Financial Highlights (continued)
Matthews Emerging Asia Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| Year Ended Dec. 31 | Period Ended Dec. 31, 20131 |
|||||||||||
| INVESTOR CLASS | 2015 | 2014 | ||||||||||
| Net Asset Value, beginning of period |
$11.60 | $9.93 | $10.00 | |||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||
| Net investment income (loss)2 |
0.04 | 0.04 | (0.01 | ) | ||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.34 | ) | 1.69 | (0.05 | ) | |||||||
| Total from investment operations |
(0.30 | ) | 1.73 | (0.06 | ) | |||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||
| Net investment income |
— | 3 | (0.06 | ) | — | 3 | ||||||
| Return of capital |
— | — | (0.01 | ) | ||||||||
| Net realized gains on investments |
(0.03 | ) | — | — | ||||||||
| Total distributions |
(0.03 | ) | (0.06 | ) | (0.01 | ) | ||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | |||||||||
| Net Asset Value, end of period |
$11.27 | $11.60 | $9.93 | |||||||||
| TOTAL RETURN |
(2.56% | ) | 17.39% | (0.61% | )4 | |||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||
| Net assets, end of period (in 000’s) |
$114,590 | $110,363 | $38,022 | |||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.75% | 1.78% | 2.39% | 5 | ||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 1.58% | 1.98% | 5 | ||||||||
| Ratio of net investment income (loss) to average net assets |
0.33% | 0.34% | (0.08% | )5 | ||||||||
| Portfolio turnover6 |
12.14% | 8.21% | 1.66% | 4 | ||||||||
| Year Ended Dec. 31 | Period Ended Dec. 31, 20131 |
|||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | ||||||||||
| Net Asset Value, beginning of period |
$11.60 | $9.92 | $10.00 | |||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||
| Net investment income (loss)2 |
0.07 | 0.06 | 0.01 | |||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(0.34 | ) | 1.69 | (0.07 | ) | |||||||
| Total from investment operations |
(0.27 | ) | 1.75 | (0.06 | ) | |||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||
| Net investment income |
(0.01 | ) | (0.07 | ) | — | 3 | ||||||
| Return of capital |
— | — | (0.02 | ) | ||||||||
| Net realized gains on investments |
(0.03 | ) | — | — | ||||||||
| Total distributions |
(0.04 | ) | (0.07 | ) | (0.02 | ) | ||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | |||||||||
| Net Asset Value, end of period |
$11.29 | $11.60 | $9.92 | |||||||||
| TOTAL RETURN |
(2.33% | ) | 17.68% | (0.55% | )4 | |||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||
| Net assets, end of period (in 000’s) |
$55,278 | $21,350 | $2,017 | |||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.57% | 1.59% | 2.21% | 5 | ||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 1.33% | 1.75% | 5 | ||||||||
| Ratio of net investment income (loss) to average net assets |
0.65% | 0.55% | 0.19% | 5 | ||||||||
| Portfolio turnover6 |
12.14% | 8.21% | 1.66% | 4 | ||||||||
| 1 | Commenced operations on April 30, 2013. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | Not annualized. |
| 5 | Annualized. |
| 6 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 122 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 20151 | 20141 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$21.46 | $22.84 | $23.47 | $21.51 | $29.36 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.20 | 0.24 | 0.25 | 0.30 | 0.26 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
0.30 | (1.25 | ) | 1.33 | 2.26 | (5.78 | ) | |||||||||||||
| Total from investment operations |
0.50 | (1.01 | ) | 1.58 | 2.56 | (5.52 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.21 | ) | (0.27 | ) | (0.26 | ) | (0.35 | ) | (0.28 | ) | ||||||||||
| Net realized gains on investments |
(3.33 | ) | (0.10 | ) | (1.95 | ) | (0.25 | ) | (2.06 | ) | ||||||||||
| Total distributions |
(3.54 | ) | (0.37 | ) | (2.21 | ) | (0.60 | ) | (2.34 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 3 | — | 3 | — | 3 | — | 3 | 0.01 | |||||||||||
| Net Asset Value, end of year |
$18.42 | $21.46 | $22.84 | $23.47 | $21.51 | |||||||||||||||
| TOTAL RETURN |
2.41% | (4.42% | ) | 6.84% | 11.96% | (18.93% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$709,767 | $947,740 | $1,286,309 | $1,642,090 | $1,836,333 | |||||||||||||||
| Ratio of expenses to average net assets |
1.14% | 1.11% | 1.08% | 1.12% | 1.13% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.89% | 1.09% | 1.06% | 1.33% | 0.93% | |||||||||||||||
| Portfolio turnover4 |
66.22% | 10.23% | 6.29% | 9.61% | 8.43% | |||||||||||||||
| INSTITUTIONAL CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 20151 | 20141 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$21.44 | $22.81 | $23.45 | $21.49 | $29.36 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.25 | 0.28 | 0.26 | 0.36 | 0.26 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
0.27 | (1.25 | ) | 1.36 | 2.25 | (5.73 | ) | |||||||||||||
| Total from investment operations |
0.52 | (0.97 | ) | 1.62 | 2.61 | (5.47 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.24 | ) | (0.30 | ) | (0.31 | ) | (0.40 | ) | (0.34 | ) | ||||||||||
| Net realized gains on investments |
(3.33 | ) | (0.10 | ) | (1.95 | ) | (0.25 | ) | (2.06 | ) | ||||||||||
| Total distributions |
(3.57 | ) | (0.40 | ) | (2.26 | ) | (0.65 | ) | (2.40 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$18.39 | $21.44 | $22.81 | $23.45 | $21.49 | |||||||||||||||
| TOTAL RETURN |
2.50% | (4.22% | ) | 6.97% | 12.22% | (18.80% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$24,276 | $52,478 | $117,678 | $390,744 | $288,277 | |||||||||||||||
| Ratio of expenses to average net assets |
0.99% | 0.95% | 0.91% | 0.91% | 0.96% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.09% | 1.27% | 1.13% | 1.58% | 0.99% | |||||||||||||||
| Portfolio turnover4 |
66.22% | 10.23% | 6.29% | 9.61% | 8.43% | |||||||||||||||
| 1 | Consolidated Financial Highlights. See Note 2-C. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of share issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 123 |
Table of Contents
Financial Highlights (continued)
Matthews India Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$26.46 | $16.28 | $17.51 | $13.59 | $21.49 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
(0.05 | ) | 0.07 | 0.08 | 0.11 | 0.11 | ||||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.26 | 10.29 | (1.13 | ) | 4.17 | (7.96 | ) | |||||||||||||
| Total from investment operations |
0.21 | 10.36 | (1.05 | ) | 4.28 | (7.85 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.03 | ) | (0.05 | ) | (0.18 | ) | (0.09 | ) | (0.07 | ) | ||||||||||
| Net realized gains on investments |
(0.23 | ) | (0.14 | ) | (0.01 | ) | (0.27 | ) | — | |||||||||||
| Total distributions |
(0.26 | ) | (0.19 | ) | (0.19 | ) | (0.36 | ) | (0.07 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
0.02 | 0.01 | 0.01 | — | 2 | 0.02 | ||||||||||||||
| Net Asset Value, end of year |
$26.43 | $26.46 | $16.28 | $17.51 | $13.59 | |||||||||||||||
| TOTAL RETURN |
0.90% | 63.71% | (5.90% | ) | 31.54% | (36.48% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$1,151,948 | $974,838 | $427,861 | $607,800 | $559,337 | |||||||||||||||
| Ratio of expenses to average net assets |
1.11% | 1.12% | 1.13% | 1.18% | 1.18% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
(0.17% | ) | 0.32% | 0.48% | 0.65% | 0.58% | ||||||||||||||
| Portfolio turnover3 |
9.51% | 14.86% | 8.70% | 7.03% | 3.51% | |||||||||||||||
| INSTITUTIONAL CLASS |
Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$26.49 | $16.31 | $17.53 | $13.61 | $21.48 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.01 | 0.09 | 0.10 | 0.14 | 0.16 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.26 | 10.29 | (1.11 | ) | 4.17 | (7.96 | ) | |||||||||||||
| Total from investment operations |
0.27 | 10.38 | (1.01 | ) | 4.31 | (7.80 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.06 | ) | (0.08 | ) | (0.21 | ) | (0.12 | ) | (0.07 | ) | ||||||||||
| Net realized gains on investments |
(0.23 | ) | (0.14 | ) | (0.01 | ) | (0.27 | ) | — | |||||||||||
| Total distributions |
(0.29 | ) | (0.22 | ) | (0.22 | ) | (0.39 | ) | (0.07 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
0.02 | 0.02 | 0.01 | — | 2 | — | 2 | |||||||||||||
| Net Asset Value, end of year |
$26.49 | $26.49 | $16.31 | $17.53 | $13.61 | |||||||||||||||
| TOTAL RETURN |
1.12% | 63.80% | (5.67% | ) | 31.74% | (36.35% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$353,879 | $109,331 | $3,234 | $36,166 | $26,920 | |||||||||||||||
| Ratio of expenses to average net assets |
0.90% | 0.94% | 0.95% | 0.98% | 0.99% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.02% | 0.38% | 0.61% | 0.87% | 0.86% | |||||||||||||||
| Portfolio turnover3 |
9.51% | 14.86% | 8.70% | 7.03% | 3.51% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| 124 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Japan Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$15.70 | $16.20 | $12.27 | $11.34 | $12.53 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.04 | 0.05 | 0.03 | 0.10 | 0.07 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
3.23 | (0.48 | ) | 4.12 | 0.84 | (1.06 | ) | |||||||||||||
| Total from investment operations |
3.27 | (0.43 | ) | 4.15 | 0.94 | (0.99 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.08 | ) | (0.24 | ) | (0.01 | ) | (0.22 | ) | |||||||||||
| Total distributions |
— | (0.08 | ) | (0.24 | ) | (0.01 | ) | (0.22 | ) | |||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | 0.01 | 0.02 | — | 2 | 0.02 | |||||||||||||
| Net Asset Value, end of year |
$18.97 | $15.70 | $16.20 | $12.27 | $11.34 | |||||||||||||||
| TOTAL RETURN |
20.83% | (2.60% | ) | 34.03% | 8.32% | (7.72% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$1,330,743 | $467,854 | $312,988 | $82,463 | $101,369 | |||||||||||||||
| Ratio of expenses to average net assets |
0.99% | 1.03% | 1.10% | 1.20% | 1.22% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.22% | 0.32% | 0.19% | 0.81% | 0.54% | |||||||||||||||
| Portfolio turnover3 |
24.19% | 42.52% | 22.72% | 48.58% | 34.94% | |||||||||||||||
| INSTITUTIONAL CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$15.71 | $16.20 | $12.26 | $11.34 | $12.53 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.05 | 0.09 | 0.06 | 0.12 | 0.06 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
3.24 | (0.50 | ) | 4.12 | 0.84 | (1.04 | ) | |||||||||||||
| Total from investment operations |
3.29 | (0.41 | ) | 4.18 | 0.96 | (0.98 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.09 | ) | (0.26 | ) | (0.04 | ) | (0.22 | ) | |||||||||||
| Total distributions |
— | (0.09 | ) | (0.26 | ) | (0.04 | ) | (0.22 | ) | |||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | 0.01 | 0.02 | — | 2 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$19.00 | $15.71 | $16.20 | $12.26 | $11.34 | |||||||||||||||
| TOTAL RETURN |
20.94% | (2.47% | ) | 34.27% | 8.47% | (7.72% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$618,583 | $154,750 | $59,702 | $22,233 | $30,302 | |||||||||||||||
| Ratio of expenses to average net assets |
0.87% | 0.90% | 0.96% | 1.04% | 1.07% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.28% | 0.58% | 0.41% | 0.99% | 0.46% | |||||||||||||||
| Portfolio turnover3 |
24.19% | 42.52% | 22.72% | 48.58% | 34.94% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 125 |
Table of Contents
Financial Highlights (continued)
Matthews Korea Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS |
Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$5.65 | $5.95 | $5.64 | $4.59 | $5.14 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.01 | — | 2 | — | 2 | — | 2 | (0.01 | ) | |||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.83 | (0.05 | ) | 0.57 | 1.10 | (0.31 | ) | |||||||||||||
| Total from investment operations |
0.84 | (0.05 | ) | 0.57 | 1.10 | (0.32 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.01 | ) | — | (0.02 | ) | — | (0.01 | ) | ||||||||||||
| Net realized gains on investments |
(0.33 | ) | (0.25 | ) | (0.24 | ) | (0.05 | ) | (0.22 | ) | ||||||||||
| Total distributions |
(0.34 | ) | (0.25 | ) | (0.26 | ) | (0.05 | ) | (0.23 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$6.15 | $5.65 | $5.95 | $5.64 | $4.59 | |||||||||||||||
| TOTAL RETURN |
15.16% | (0.73% | ) | 10.11% | 24.05% | (6.45% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$147,685 | $127,774 | $138,830 | $141,247 | $141,590 | |||||||||||||||
| Ratio of expenses to average net assets |
1.10% | 1.11% | 1.13% | 1.16% | 1.18% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.18% | 0.04% | 0.02% | 0.01% | (0.18% | ) | ||||||||||||||
| Portfolio turnover3 |
20.36% | 17.37% | 46.20% | 34.84% | 30.13% | |||||||||||||||
| INSTITUTIONAL CLASS | Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$5.68 | $5.96 | $5.67 | $4.61 | $5.14 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.02 | 0.05 | — | 2 | — | 2 | 0.17 | |||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.83 | (0.08 | ) | 0.56 | 1.11 | (0.47 | ) | |||||||||||||
| Total from investment operations |
0.85 | (0.03 | ) | 0.56 | 1.11 | (0.30 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.02 | ) | — | (0.03 | ) | — | (0.01 | ) | ||||||||||||
| Net realized gains on investments |
(0.33 | ) | (0.25 | ) | (0.24 | ) | (0.05 | ) | (0.22 | ) | ||||||||||
| Total distributions |
(0.35 | ) | (0.25 | ) | (0.27 | ) | (0.05 | ) | (0.23 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$6.18 | $5.68 | $5.96 | $5.67 | $4.61 | |||||||||||||||
| TOTAL RETURN |
15.27% | (0.39% | ) | 9.87% | 24.16% | (6.05% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$59,982 | $91,431 | $12,283 | $8,597 | $15,109 | |||||||||||||||
| Ratio of expenses to average net assets |
0.93% | 0.93% | 0.97% | 1.00% | 1.07% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.28% | 0.87% | (0.03% | ) | (0.07% | ) | 3.37% | |||||||||||||
| Portfolio turnover3 |
20.36% | 17.37% | 46.20% | 34.84% | 30.13% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of share issued. |
See accompanying notes to financial statements.
| 126 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Small Companies Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
| INVESTOR CLASS |
Year Ended Dec. 31 | |||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Net Asset Value, beginning of year |
$21.46 | $19.34 | $18.13 | $14.77 | $21.16 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.02 | 0.09 | 0.11 | 0.17 | 0.15 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(2.05 | ) | 2.11 | 1.19 | 3.36 | (4.35 | ) | |||||||||||||
| Total from investment operations |
(2.03 | ) | 2.20 | 1.30 | 3.53 | (4.20 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.03 | ) | (0.08 | ) | (0.09 | ) | (0.09 | ) | (0.17 | ) | ||||||||||
| Net realized gains on investments |
— | — | — | (0.08 | ) | (2.04 | ) | |||||||||||||
| Total distributions |
(0.03 | ) | (0.08 | ) | (0.09 | ) | (0.17 | ) | (2.21 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
0.01 | — | 2 | — | 2 | — | 2 | 0.02 | ||||||||||||
| Net Asset Value, end of year |
$19.41 | $21.46 | $19.34 | $18.13 | $14.77 | |||||||||||||||
| TOTAL RETURN |
(9.43% | ) | 11.39% | 7.19% | 23.92% | (20.03% | ) | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$387,747 | $599,082 | $407,352 | $366,753 | $258,944 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.48% | 1.47% | 1.47% | 1.50% | 1.52% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.47% | 1.47% | 1.47% | 1.50% | 1.52% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.08% | 0.44% | 0.58% | 1.06% | 0.76% | |||||||||||||||
| Portfolio turnover |
48.29% | 3 | 21.70% | 3 | 37.01% | 3 | 27.95% | 19.97% | ||||||||||||
|
|
Year Ended Dec. 31 |
Period Ended Dec. 31, 20134 |
||||||||||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | ||||||||||||||||||
| Net Asset Value, beginning of period |
$21.46 | $19.33 | $19.44 | |||||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.11 | 0.15 | 0.18 | |||||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency |
(2.10 | ) | 2.10 | (0.16 | ) | |||||||||||||||
| Total from investment operations |
(1.99 | ) | 2.25 | 0.02 | ||||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.12 | ) | (0.13 | ) | ||||||||||||||
| Net realized gains on investments |
— | — | — | |||||||||||||||||
| Total distributions |
(0.08 | ) | (0.12 | ) | (0.13 | ) | ||||||||||||||
| Paid-in capital from redemption fees (Note 4) |
0.01 | — | 2 | — | 2 | |||||||||||||||
| Net Asset Value, end of period |
$19.40 | $21.46 | $19.33 | |||||||||||||||||
| TOTAL RETURN |
(9.23% | ) | 11.65% | 0.13% | 5 | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of period (in 000’s) |
$222,168 | $77,168 | $44,769 | |||||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.30% | 1.27% | 1.25% | 6 | ||||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 1.26% | 1.25% | 6 | ||||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.53% | 0.70% | 1.39% | 6 | ||||||||||||||||
| Portfolio turnover3 |
48.29% | 21.70% | 37.01% | 5 | ||||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
| 4 | Institutional Class commenced operations on April 30, 2013. |
| 5 | Not annualized. |
| 6 | Annualized. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 127 |
Table of Contents
Financial Highlights (continued)
Matthews China Small Companies Fund
The table below sets forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 |
Period Ended Dec. 31, 20111 |
||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
| Net Asset Value, beginning of period |
$9.21 | $9.89 | $7.76 | $7.04 | $10.00 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.08 | 0.01 | 0.02 | 0.03 | (0.02 | ) | ||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments |
0.27 | (0.33 | ) | 2.22 | 0.68 | (2.96 | ) | |||||||||||||
| Total from investment operations |
0.35 | (0.32 | ) | 2.24 | 0.71 | (2.98 | ) | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.06 | ) | (0.02 | ) | (0.11 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
| Return of capital |
— | (0.34 | ) | — | — | — | ||||||||||||||
| Net realized gains on investments |
(0.72 | ) | — | — | — | — | ||||||||||||||
| Total distributions |
(0.78 | ) | (0.36 | ) | (0.11 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
0.01 | — | 3 | — | 3 | 0.03 | 0.03 | |||||||||||||
| Net Asset Value, end of period |
$8.79 | $9.21 | $9.89 | $7.76 | $7.04 | |||||||||||||||
| TOTAL RETURN |
4.07% | (3.33% | ) | 28.85% | 10.53% | (29.51% | )4 | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of period (in 000’s) |
$21,546 | $22,068 | $26,674 | $10,266 | $4,493 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
2.10% | 1.90% | 2.04% | 3.26% | 5.32% | 5 | ||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 1.67% | 2.00% | 2.00% | 2.00% | 5 | ||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.80% | 0.14% | 0.17% | 0.40% | (0.53% | )5 | ||||||||||||||
| Portfolio turnover |
72.49% | 32.42% | 10.28% | 34.01% | 6.08% | 4 | ||||||||||||||
| 1 | Investor Class commenced operations on May 31, 2011. |
| 2 | Calculated using the average daily shares method. |
| 3 | Less than $0.01 per share. |
| 4 | Not annualized. |
| 5 | Annualized. |
See accompanying notes to financial statements.
| 128 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Science and Technology Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| Net Asset Value, beginning of year |
$13.61 | $12.59 | $9.29 | $8.16 | $9.89 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
(0.05 | ) | — | 2 | 0.01 | 0.03 | 0.02 | |||||||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.64 | 1.16 | 3.30 | 1.12 | (1.74 | ) | ||||||||||||||
| Total from investment operations |
0.59 | 1.16 | 3.31 | 1.15 | (1.72 | ) | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.06 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | |||||||||||
| Net realized gains on investments |
(1.88 | ) | (0.08 | ) | — | — | — | |||||||||||||
| Total distributions |
(1.88 | ) | (0.14 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | — | 2 | — | 2 | — | 2 | 0.01 | |||||||||||
| Net Asset Value, end of year |
$12.32 | $13.61 | $12.59 | $9.29 | $8.16 | |||||||||||||||
| TOTAL RETURN |
4.48% | 9.24% | 35.61% | 14.11% | (17.26% | ) | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$129,763 | $125,612 | $111,751 | $131,629 | $153,349 | |||||||||||||||
| Ratio of expenses to average net assets |
1.18% | 1.16% | 1.18% | 1.18% | 1.21% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
(0.33% | ) | (0.02% | ) | 0.07% | 0.30% | 0.23% | |||||||||||||
| Portfolio turnover |
72.85% | 3 | 62.99% | 3 | 62.04% | 3 | 45.76% | 65.47% | ||||||||||||
|
|
Year Ended Dec. 31 |
Period Ended Dec. 31, 20134 |
||||||||||
| INSTITUTIONAL CLASS | 2015 | 2014 | ||||||||||
| Net Asset Value, beginning of period |
$13.61 | $12.58 | $10.09 | |||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||
| Net investment income (loss)1 |
(0.02 | ) | 0.03 | 0.04 | ||||||||
| Net realized gain (loss) and unrealized appreciation/ |
0.63 | 1.17 | 2.48 | |||||||||
| Total from investment operations |
0.61 | 1.20 | 2.52 | |||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||
| Net investment income |
— | (0.09 | ) | (0.03 | ) | |||||||
| Net realized gains on investments |
(1.88 | ) | (0.08 | ) | — | |||||||
| Total distributions |
(1.88 | ) | (0.17 | ) | (0.03 | ) | ||||||
| Paid-in capital from redemption fees (Note 4)2 |
— | — | — | |||||||||
| Net Asset Value, end of period |
$12.34 | $13.61 | $12.58 | |||||||||
| TOTAL RETURN |
4.63% | 9.54% | 24.99% | 5 | ||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||
| Net assets, end of period (in 000’s) |
$36,770 | $61,088 | $49,236 | |||||||||
| Ratio of expenses to average net assets |
0.97% | 0.95% | 1.00% | 6 | ||||||||
| Ratio of net investment income (loss) to average net assets |
(0.16% | ) | 0.21% | 0.56% | 6 | |||||||
| Portfolio turnover3 |
72.85% | 62.99% | 62.04% | 5 | ||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
| 3 | The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued. |
| 4 | Institutional Class commenced operations on April 30, 2013. |
| 5 | Not annualized. |
| 6 | Annualized. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 129 |
Table of Contents
| 1. | ORGANIZATION |
Matthews Asia Funds (the “Trust”) is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust currently issues seventeen separate series of shares (each a “Fund” and collectively, the “Funds”): Matthews Asia Strategic Income Fund, Matthews Asian Growth and Income Fund, Matthews Asia Dividend Fund, Matthews China Dividend Fund, Matthews Asia Value Fund, Matthews Asia Focus Fund, Matthews Asia Growth Fund, Matthews Pacific Tiger Fund, Matthews Asia ESG Fund, Matthews Emerging Asia Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, Matthews China Small Companies Fund and Matthews Asia Science and Technology Fund. Each Fund except for Matthews China Small Companies Fund currently offers two classes of shares: Investor Class and Institutional Class. Matthews China Small Companies Fund currently offers only Investor Class shares. Each class of shares has identical voting, dividend, liquidation and other rights and the same terms and conditions, except each class may be subject to different class expenses as outlined in the relevant prospectus and each class has exclusive voting rights with respect to matters solely affecting such class.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies consistently followed by the Funds in preparation of their financial statements.
| A. | SECURITY VALUATION: The value of the Funds’ securities is based on market quotations for those securities, or on their fair value determined by the valuation policies approved by the Funds’ Board of Trustees (the “Board”). Market quotations and valuation information are provided by commercial pricing services or securities dealers that are independent of the Funds and Matthews International Capital Management, LLC (“Matthews”), in accordance with procedures established by the Funds’ Board. Foreign exchange-traded securities are valued as of the close of trading on the primary exchange on which they trade. Securities that trade in over-the-counter markets, including most debt securities (bonds), may be valued by other third-party vendors or by using indicative bid quotations from dealers or market makers, or other available market information. Market values for securities are determined based on quotations, market data or other information from the principal (or most advantageous) market on which the security is traded. Market quotations for equity securities used by the Funds include last reported sale prices, or, if such prices are not reported or available, bid and ask prices. Financial futures contracts traded on exchanges are valued at their settlement price. Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined at the close of business on the New York Stock Exchange (“NYSE”). Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. The Funds may also utilize independent pricing services to assist them in determining a current market value for each security based on sources believed to be reliable. |
The Board has delegated the responsibility of making fair value determinations to the Funds’ Valuation Committee (the “Valuation Committee”) subject to the Funds’ pricing policies. When fair value pricing is employed, the prices of securities used by a Fund to calculate its Net Asset Value (“NAV”) may differ from any quoted or published prices for the same securities for that day. All fair value determinations are made subject to the Board’s oversight. Events affecting the value of foreign investments may occur between the time at which they are determined and when the Funds calculate their NAV, which is normally the close of trading on the NYSE. If such events render market quotations unreliable, and the impact of such events can be reasonably determined, the investments will be valued at their fair value in accordance with pricing policies. The fair value of a security held by the Funds may be determined using the services of third-party pricing services to assist in this process.
The books and records of the Funds are maintained in U.S. dollars. Transactions, portfolio securities, and assets and liabilities denominated in a foreign currency are translated and recorded in U.S. dollars at the prevailing exchange rate as of the close of trading on the NYSE. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Funds do not isolate that portion of gains and losses on investments in equity securities that is due to changes in foreign exchange rate from that which is due to changes in market prices of securities.
Foreign securities held by the Funds may be traded on days and at times when the NYSE is closed. Accordingly, the NAV of the Funds may be significantly affected on days when shareholders have no access to the Funds.
| B. | FAIR VALUE MEASUREMENTS: In accordance with the guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States (“U.S. GAAP”), the Funds disclose the fair value of their investments and derivative financial instruments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). Various inputs are used in determining the fair value of investments and derivative financial instruments, which are as follows: |
Level 1: Quoted prices in active markets for identical securities.
Level 2: Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3: Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments and derivative financial instruments).
Level 3 securities consisted of equities that, as of December 31, 2015, were suspended from trading. As described in Note 2-A, these securities are valued based on their fair value as determined under the direction of the Board. The significant unobservable inputs, the methodology used for valuing such securities, and the characterization of such securities as Level 3 securities are not necessarily an indication of liquidity, or the risk associated with investing in these securities. A significant change in the unobservable inputs could result in a significantly lower or higher value in such Level 3 securities and could impact overall Fund performance. Level 2 equity securities consist primarily of securities that have been fair valued by third-party pricing services (see Note 2-A).
| 130 | MATTHEWS ASIA FUNDS |
Table of Contents
The summary of inputs used to determine the fair valuation of the Fund’s investments as of December 31, 2015 is as follows:
| Matthews Asia |
Matthews Asian Growth and Income Fund |
Matthews Asia Dividend Fund |
Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
|||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Level 1: Quoted Prices |
||||||||||||||||||||||||
| China/Hong Kong |
$— | $197,867,028 | $167,142,547 | $62,871 | $784,479 | $48,475,813 | ||||||||||||||||||
| Indonesia |
— | 51,939,120 | 48,424,150 | — | — | — | ||||||||||||||||||
| Israel |
— | — | — | 30,910 | — | — | ||||||||||||||||||
| Malaysia |
— | — | — | — | — | 7,605,523 | ||||||||||||||||||
| Pakistan |
— | — | — | — | — | 7,644,819 | ||||||||||||||||||
| Philippines |
— | — | — | — | — | 7,216,775 | ||||||||||||||||||
| Singapore |
500,994 | — | 32,808,738 | 39,265 | — | — | ||||||||||||||||||
| Sri Lanka |
— | — | — | — | — | 21,476,137 | ||||||||||||||||||
| Taiwan |
— | 94,900,283 | 168,714,394 | — | — | — | ||||||||||||||||||
| United States |
— | — | — | 85,354 | 711,838 | — | ||||||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||||||
| Foreign Government Obligationsa |
5,667,592 | — | — | — | — | — | ||||||||||||||||||
| Non-Convertible Corporate Bondsa |
42,654,102 | — | — | — | — | — | ||||||||||||||||||
| Convertible Corporate Bondsa |
8,731,499 | 256,088,500 | — | — | — | — | ||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Australia |
— | 105,059,030 | 95,770,290 | — | 631,448 | 28,298,302 | ||||||||||||||||||
| Bangladesh |
— | — | — | — | — | 3,879,776 | ||||||||||||||||||
| China/Hong Kong |
— | 651,015,825 | 1,452,078,652 | 391,821 | 3,464,844 | 40,116,290 | ||||||||||||||||||
| India |
— | — | 125,320,782 | — | 363,328 | 86,678,527 | ||||||||||||||||||
| Indonesia |
— | 27,468,842 | 159,538,645 | — | 561,135 | 74,932,731 | ||||||||||||||||||
| Japan |
— | 182,545,266 | 1,471,753,968 | 88,315 | 348,781 | 355,621,506 | ||||||||||||||||||
| Luxembourg |
— | — | 71,353,674 | — | — | — | ||||||||||||||||||
| Malaysia |
— | 197,847,166 | — | 69,540 | 944,423 | — | ||||||||||||||||||
| New Zealand |
— | 57,859,979 | 50,879,701 | — | — | — | ||||||||||||||||||
| Norway |
— | 44,496,720 | — | — | — | — | ||||||||||||||||||
| Philippines |
265,861 | 34,106,645 | 56,871,121 | — | — | 33,530,546 | ||||||||||||||||||
| Singapore |
— | 396,495,736 | 160,118,287 | 36,282 | 1,087,483 | — | ||||||||||||||||||
| South Korea |
— | 216,664,405 | 212,909,163 | 235,716 | 638,482 | 9,286,943 | ||||||||||||||||||
| Switzerland |
— | — | — | — | 343,049 | — | ||||||||||||||||||
| Taiwan |
— | 48,674,077 | 86,978,334 | 70,347 | 405,539 | 12,096,125 | ||||||||||||||||||
| Thailand |
— | 95,361,378 | 103,919,551 | 15,956 | 464,693 | 11,641,461 | ||||||||||||||||||
| United Kingdom |
— | — | — | 33,523 | — | — | ||||||||||||||||||
| Vietnam |
— | 71,610,012 | 77,772,211 | — | — | 12,303,603 | ||||||||||||||||||
| Preferred Equities: |
||||||||||||||||||||||||
| South Korea |
— | 109,847,906 | 164,273,347 | 160,477 | — | — | ||||||||||||||||||
| Rights: |
||||||||||||||||||||||||
| Singapore |
— | 62,215 | — | — | — | — | ||||||||||||||||||
| Total Market Value of Investments |
$57,820,048 | $2,839,910,133 | $4,706,627,555 | $1,320,377 | $10,749,522 | $760,804,877 | ||||||||||||||||||
| a | Industry, countries, or security types are disclosed on the Schedule of Investments. |
| Matthews Asia Strategic Income Fund |
||||
| Derivative Financial Instruments1 | ||||
| Assets: | ||||
| Level 2: Other Significant Observable Inputs |
||||
| Foreign Currency Exchange Contracts |
$334,847 | |||
| Liabilities: | ||||
| Level 2: Other Significant Observable Inputs |
||||
| Foreign Currency Exchange Contracts |
(38,273 | ) | ||
| Total Market Value of Derivative Financial Instruments |
$296,574 | |||
| 1 | Derivative financial instruments are foreign currency exchange contracts. Foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument. |
| matthewsasia.com | 800.789.ASIA | 131 |
Table of Contents
Notes to Financial Statements (continued)
| Matthews China Dividend Fund |
Matthews China Fund |
Matthews India Fund |
Matthews Japan Fund |
Matthews Korea Fund |
Matthews China Small Companies Fund |
|||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Level 1: Quoted Prices |
||||||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Consumer Discretionary |
$9,483,287 | $45,047,122 | $12,656,909 | $— | $— | $1,611,171 | ||||||||||||||||||
| Consumer Staples |
— | — | 21,813,810 | — | — | — | ||||||||||||||||||
| Financials |
3,017,053 | — | 25,956,908 | — | — | — | ||||||||||||||||||
| Health Care |
— | — | 77,501,570 | — | — | 1,390,551 | ||||||||||||||||||
| Industrials |
529,008 | — | — | — | — | 1,135,079 | ||||||||||||||||||
| Information Technology |
4,473,658 | 34,388,784 | 64,983,654 | — | — | 237,188 | ||||||||||||||||||
| Telecommunication Services |
5,279,811 | — | — | — | 7,438,682 | — | ||||||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Consumer Discretionary |
30,063,702 | 84,752,204 | 110,512,390 | 321,696,813 | 39,622,709 | 2,128,243 | ||||||||||||||||||
| Consumer Staples |
13,104,130 | 19,586,079 | 253,205,307 | 291,195,265 | 39,289,156 | 1,097,450 | ||||||||||||||||||
| Energy |
2,554,135 | 7,638,084 | — | — | 4,166,180 | — | ||||||||||||||||||
| Financials |
34,904,479 | 261,723,617 | 378,574,522 | 204,240,854 | 26,524,365 | 2,348,094 | ||||||||||||||||||
| Health Care |
8,449,199 | 39,182,541 | 146,401,826 | 258,666,298 | 7,195,786 | 2,085,572 | ||||||||||||||||||
| Industrials |
32,299,023 | 112,835,631 | 145,560,032 | 491,303,686 | 9,707,182 | 6,128,006 | ||||||||||||||||||
| Information Technology |
9,919,715 | 89,166,519 | 188,492,523 | 248,737,716 | 17,434,332 | 2,519,150 | ||||||||||||||||||
| Materials |
3,928,017 | — | 81,510,264 | 45,855,002 | 4,535,861 | — | ||||||||||||||||||
| Telecommunication Services |
10,313,942 | — | — | — | — | — | ||||||||||||||||||
| Utilities |
8,596,389 | 17,474,787 | — | — | — | 446,090 | ||||||||||||||||||
| Rights: |
||||||||||||||||||||||||
| Information Technology |
— | — | — | — | — | 4,607 | ||||||||||||||||||
| Preferred Equities: |
||||||||||||||||||||||||
| Consumer Discretionary |
— | — | — | — | 5,541,022 | — | ||||||||||||||||||
| Consumer Staples |
— | — | — | — | 16,528,385 | — | ||||||||||||||||||
| Energy |
— | — | — | — | 2,030,053 | — | ||||||||||||||||||
| Financials |
— | — | — | — | 6,346,051 | — | ||||||||||||||||||
| Information Technology |
— | — | — | — | 8,987,211 | — | ||||||||||||||||||
| Materials |
— | — | — | — | 5,831,001 | — | ||||||||||||||||||
| Level 3: Significant Unobservable Inputs |
||||||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Financials |
— | 20,510,781 | — | — | — | — | ||||||||||||||||||
| Information Technology |
— | — | — | — | — | 7,548 | ||||||||||||||||||
| Total Market Value of Investments |
$176,915,548 | $732,306,149 | $1,507,169,715 | $1,861,695,634 | $201,177,976 | $21,138,749 | ||||||||||||||||||
| 132 | MATTHEWS ASIA FUNDS |
Table of Contents
| Matthews Pacific Tiger Fund |
Matthews Asia ESG Fund |
Matthews Emerging Asia Fund |
Matthews Asia Small Companies Fund |
Matthews Asia Science and Technology Fund |
||||||||||||||||
| Assets: | ||||||||||||||||||||
| Investments: | ||||||||||||||||||||
| Level 1: Quoted Prices |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| Bangladesh |
$— | $— | $12,386,912 | $— | $— | |||||||||||||||
| China/Hong Kong |
520,042,996 | 154,872 | 837,081 | 68,191,580 | 51,249,404 | |||||||||||||||
| Indonesia |
16,164,708 | — | 1,781,085 | 14,349,431 | 2,446,440 | |||||||||||||||
| Malaysia |
73,066,276 | — | — | 9,066,793 | — | |||||||||||||||
| Pakistan |
— | 125,338 | 8,018,012 | — | — | |||||||||||||||
| Philippines |
— | 135,688 | 4,871,455 | 14,581,606 | — | |||||||||||||||
| Singapore |
— | 54,345 | — | — | — | |||||||||||||||
| Sri Lanka |
— | — | 10,461,138 | — | — | |||||||||||||||
| United States |
82,983,652 | — | — | — | 3,199,066 | |||||||||||||||
| Vietnam |
— | — | 13,989,738 | 2,945,401 | — | |||||||||||||||
| Warrants: |
||||||||||||||||||||
| Malaysia |
2,425,945 | — | — | — | — | |||||||||||||||
| Thailand |
— | — | 17,485 | — | — | |||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| Australia |
— | 87,734 | 1,699,778 | — | — | |||||||||||||||
| Bangladesh |
— | 61,559 | 11,290,607 | — | — | |||||||||||||||
| Cambodia |
— | — | 1,781,353 | — | — | |||||||||||||||
| China/Hong Kong |
1,550,646,005 | 1,216,148 | 15,388,996 | 125,057,410 | 21,495,143 | |||||||||||||||
| India |
1,323,980,756 | 887,030 | 18,972,248 | 92,403,428 | 15,940,400 | |||||||||||||||
| Indonesia |
410,521,599 | 118,407 | 14,876,231 | 16,168,591 | — | |||||||||||||||
| Japan |
— | 303,449 | — | — | 18,321,161 | |||||||||||||||
| Luxembourg |
— | 86,354 | — | — | — | |||||||||||||||
| Malaysia |
164,879,101 | — | — | 15,774,729 | — | |||||||||||||||
| Pakistan |
— | — | 25,838,998 | — | — | |||||||||||||||
| Philippines |
190,435,871 | 113,525 | 5,120,399 | 10,155,255 | — | |||||||||||||||
| Singapore |
17,101,875 | 110,956 | 1,787,119 | 39,616,214 | 3,913,880 | |||||||||||||||
| South Korea |
1,136,733,504 | 417,893 | — | 47,786,510 | 13,938,234 | |||||||||||||||
| Sri Lanka |
— | 87,968 | 4,007,376 | — | — | |||||||||||||||
| Switzerland |
172,209,114 | — | — | — | — | |||||||||||||||
| Taiwan |
384,788,402 | 669,460 | — | 100,552,432 | 11,873,828 | |||||||||||||||
| Thailand |
340,109,464 | 209,681 | 4,762,212 | 34,312,819 | 3,185,411 | |||||||||||||||
| Vietnam |
161,219,878 | — | 7,301,102 | — | 1,307,308 | |||||||||||||||
| Rights: |
||||||||||||||||||||
| Pakistan |
— | — | 24,050 | — | — | |||||||||||||||
| Taiwan |
— | — | — | 77,505 | — | |||||||||||||||
| Preferred Equities: |
||||||||||||||||||||
| South Korea |
— | — | — | — | 11,786,728 | |||||||||||||||
| Level 3: Significant Unobservable Inputs |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| China/Hong Kong |
82,848,600 | — | — | — | — | |||||||||||||||
| Total Market Value of Investments |
$6,630,157,746 | $4,840,407 | $165,213,375 | $591,039,704 | $158,657,003 | |||||||||||||||
| matthewsasia.com | 800.789.ASIA | 133 |
Table of Contents
Notes to Financial Statements (continued)
Foreign securities that are valued based on market quotations are categorized as Level 1 in the fair value hierarchy (see Note 2-B). Certain foreign securities may be fair valued by external pricing services when the Funds determine that events affecting the value of foreign securities which occur between the time at which they are determined and the close of trading on the NYSE render market quotations unreliable. Such fair valuations are typically categorized as Level 2 in the fair value hierarchy. The Funds’ policy is to recognize transfers in and transfers out as of the beginning of the reporting period. At December 31, 2015, the Funds utilized third party pricing services to fair value certain securities, some of which were different than the securities which had been valued by third party pricing services at December 31, 2014. As a result, certain securities held by the Funds were transferred from Level 2 into Level 1 and certain securities held by the Funds were transferred from Level 1 to Level 2 with beginning of period values as follows:
| Transfer to Level 1 from Level 2 |
Transfer to Level 2 from Level 1 |
|||||||
| Matthews Asia Dividend Fund | $34,007,402 | $105,927,798 | ||||||
| Matthews China Dividend Fund | — | 8,897,745 | ||||||
| Matthews Asia Growth Fund | 18,212,806 | — | ||||||
| Matthews Pacific Tiger Fund | 61,210,015 | 152,036,514 | ||||||
| Matthews Emerging Asia Fund | 18,094,819 | 26,857,057 | ||||||
| Matthews India Fund | 37,924,647 | 166,384,965 | ||||||
| Matthews Japan Fund | — | 7,076,440 | ||||||
| Matthews Korea Fund | — | 12,249,730 | ||||||
| Matthews Asia Small Companies Fund | 22,542,435 | 42,161,044 | ||||||
| Matthews Asia Science and Technology Fund | — | 1,997,151 | ||||||
A reconciliation of Level 3 investments for which significant unobservable inputs were used to determine value are as follows:
| Matthews Pacific Tiger Fund |
Matthews Fund |
Matthews China Small Companies Fund |
Matthews China Small Companies Fund |
Matthews China Dividend Fund |
Matthews China Dividend Fund |
Matthews China Dividend Fund |
||||||||||||||||||||||
| Common Equities — China/ Hong Kong |
Common Equities — Financials |
Common Equities — Industrials |
Common Technology |
Common Equities — Consumer Discretionary |
Common Equities — Industrials |
Common Technology |
||||||||||||||||||||||
| Balance as of 12/31/14 (market value) | $— | $— | $898,951 | $7,544 | $5,999,103 | $4,694,035 | $3,526,660 | |||||||||||||||||||||
| Accrued discounts/premiums | — | — | — | — | — | — | — | |||||||||||||||||||||
| Realized gain/(loss) | 12,131,727 | 13,393,369 | 145,383 | — | 3,311,999 | 2,037,781 | 3,827,643 | |||||||||||||||||||||
| Change in unrealized (depreciation) | 8,596,172 | (8,110,968 | ) | (172,985 | ) | 4 | (1,556,432 | ) | (2,011,672 | ) | (727,248 | ) | ||||||||||||||||
| Purchases | — | 7,545,097 | 71,642 | — | — | 1,302,855 | — | |||||||||||||||||||||
| Sales | (24,708,275 | ) | (22,502,575 | ) | (942,991 | ) | — | (7,754,670 | ) | (6,022,999 | ) | (6,627,055 | ) | |||||||||||||||
| Transfers in to Level 3* | 86,828,976 | 30,185,858 | — | — | — | — | — | |||||||||||||||||||||
| Transfers out of Level 3* | — | — | — | — | — | — | — | |||||||||||||||||||||
| Balance as of 12/31/15 (market value) | $82,848,600 | $20,510,781 | $— | $7,548 | $— | $— | $— | |||||||||||||||||||||
| Net change in unrealized appreciation/depreciation on Level 3 investments held as of 12/31/15** | $8,596,172 | ($8,110,968 | ) | $— | $4 | $— | $— | $— | ||||||||||||||||||||
| * | The Fund’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period. |
| ** | Included in the related amounts on the Statements of Operations. |
Certain foreign securities, for which market quotations are not readily available, may be fair valued and classified as either Level 2 or Level 3. When the underlying inputs include significant observable inputs obtained from sources independent of the Funds, the securities are classified as Level 2. These inputs include evaluated prices from the Funds’ pricing vendors, day-on-day price changes, primary and ancillary pricing sources, and other available independent market indicators of value. When the underlying inputs include significant unobservable inputs and reflect assumptions of market participants, the securities are classified as Level 3. As of December 31, 2015, the Funds that previously used quoted prices or observable inputs now also utilize significant unobservable inputs for certain securities that were suspended from trading. As a result, certain securities held by the Funds that were previously classified as Level 1 or Level 2 were transferred to Level 3. Certain securities held by the Funds that were suspended from trading and classified as Level 3 on December 31, 2014 subsequently resumed trading and were transferred from Level 3 to Level 1, Level 2 or were sold.
| 134 | MATTHEWS ASIA FUNDS |
Table of Contents
The following table summarizes the valuation techniques used and unobservable inputs developed by the Valuation Committee to determine the fair value of certain, material Level 3 investments:
| Value | Valuation Technique |
Unobservable Input1 |
Range of Unobservable Inputs |
|||||||||
| Matthews Pacific Tiger Fund Assets: | ||||||||||||
| Common Equity |
$82,848,600 | Last Price2 Multiplied by Proxy factor3 | Proxy factor3 | Less than 5% | ||||||||
| Matthews China Fund Assets: | ||||||||||||
| Common Equity |
$20,510,781 | Last Price2 Multiplied by Proxy factor3 | Proxy factor3 | Less than 5% | ||||||||
| 1 | Increase in unobservable input may result in a significant increase to value, while a decrease in unobservable input may result in a significant decrease to value. |
| 2 | Last Price could include closing price, last reported sales price, or last fair valued price as described in Note 2-A. |
| 3 | Proxy factor considers movement of the Hong Kong Hang Seng Index. |
| C. | BASIS OF CONSOLIDATION: The accompanying consolidated financial statements of Matthews China Fund and Matthews Asia Dividend Fund (the “Investing Funds”) includes the accounts of the Matthews CF-U Series and Matthews ADF-U Series (the “U Series Funds”), respectively. The U Series Funds are series of Matthews A Share Selections Fund, LLC, a Delaware limited liability company registered under the 1940 Act. All of the interests offered by U Series Funds are exclusively owned by the Investing Funds. The U Series Funds primarily invest in the stocks of Chinese companies listed on Mainland China Stock Exchanges, and traded and denominated in the currency of China, the Renminbi. To allow U Series Funds to invest in China A Shares Matthews has applied for and received a license from the China Securities Regulatory Commission as a Qualified Foreign Institutional Investor (“QFII”) and has been allocated by the State Administration of Foreign Exchange of China an initial quota of $100 million in June 2014, and an additional quota of $440 million in July 2015, representing the equivalent value in Renminbi of China A Shares that the Funds may purchase. Access to the quota will be subject to Matthews’ trade allocation procedures and access allocation procedures. The U Series Funds are subject to the same investment policies and restrictions that apply to Investing Funds. The net assets of Matthews CF-U Series and Matthews ADF-U Series at December 31, 2015, were $78,853,729 and $101,315,686 respectively. Intercompany accounts and transactions, if any, have been eliminated in the consolidation process. The U Series Funds are intended to be disregarded entities for the tax purposes. Therefore, no federal tax provision is required. Consolidated financial statements include expenses that are accrued for and paid by the Investing Funds. These include on-going operational costs as well as costs in connection with the launching of the U Series Funds (see offering cost, note E). |
As of April 2015, certain Funds began investing in China A Shares via the Shanghai-Hong Kong Stock Connect, a securities trading and clearing linked program developed by the Hong Kong Exchanges and Clearing Limited, Shanghai Stock Exchange and China Securities Depository and Clearing Corporation Limited, with an aim to achieve mutual stock market access between mainland China and Hong Kong.
| D. | RISKS ASSOCIATED WITH NON-U.S. COMPANIES: Investments by the Funds in the securities of non-U.S. companies may involve investment risks not typically associated with investments in U.S. issuers. These risks include possible political, economic, social and religious instability, inadequate investor protection; changes in laws or regulations of countries within the Asia Pacific region (including both in countries where you invest, as well as in the broader region); international relations with other nations; natural disasters; corruption; and military activity. Foreign securities may be subject to greater fluctuations in price than securities of domestic corporations or the U.S. government. Foreign investing may also include the risk of expropriation or confiscatory taxation, limitation on the removal of funds or other assets, currency crises and exchange controls, the imposition of foreign withholding tax on the interest income payable on such instruments, the possible seizure or nationalization of foreign deposits or assets, or the adoption of other foreign government restrictions that might adversely affect the foreign securities held by the Funds. Additionally, Asia Pacific countries may utilize formal or informal currency exchange controls or “capital controls” that may limit the ability to repatriate investments or income or adversely affect the value of portfolio investments. The economies of many Asia Pacific countries differ from the economies of more developed countries in many respects, such as their rate of growth, inflation, capital reinvestment, resource self-sufficiency and dependence on other economies, 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 economies of other countries. Non-U.S. companies are subject to different accounting, auditing, and financial reporting standards, practices, and requirements than U.S. companies. There is generally less government regulation of stock exchanges, brokers, and listed companies abroad than in the United States, which may result in less transparency with respect to a company’s operations, and make obtaining information about them more difficult (or such information may be unavailable). |
Foreign stock markets may not be as developed or efficient as those in the United States, and the absence of negotiated brokerage commissions in certain countries may result in higher brokerage fees. The time between the trade and settlement dates of securities transactions on foreign exchanges ranges from one day to four weeks or longer and may result in higher custody charges. Custodial arrangements may be less well developed than in the United States. Foreign securities are generally denominated and pay distributions in foreign currencies, exposing the Funds to changes in foreign currency exchange rates. Investing in any country in the Asia Pacific region will also entail risks specific and unique to that country, and these risks can be significant and change rapidly.
Changes in interest rates in each of the countries in which the Funds may invest, as well as interest rates in more-developed countries, may cause a decline in the market value of an investment. Generally, fixed income securities will decrease in value when interest rates rise and can be expected to rise in value when interest rates decline. As interest rates decline, debt issuers may repay or refinance their loans or obligations earlier than anticipated. The issuers of fixed income securities may, therefore, repay principal in advance. This would force the Funds to reinvest the proceeds from the principal prepayments at lower rates, which reduces the Funds’ income.
As of December 31, 2015, Chinese law permits a QFII, such as Matthews, to repatriate an Investment Quota (including the proceeds of the Investment Quota) once every seven days. Previously, repatriation by a QFII was limited to once every 30 days (and other types of QFIIs may operate under greater or different repatriation restrictions). As a result of this restriction, the Company sought and has been granted by the U.S. Securities and Exchange Commission an exemption (the “Exemptive Order”) from the provisions of Section 22(e) of the 1940 Act and Rule 22c-1 thereunder to the extent necessary to permit the Company to operate as an “extended payment fund.” As extended payment funds, the U Series Funds (see Note 2-C) will only redeem Interests on a periodic basis, which, pursuant to the Exemptive Order, shall be no less frequent than on one day each month.
| E. | OFFERING COSTS: Offering costs are amortized on a straight-line basis over one year from each Fund’s respective commencement of operations. In the event that any of the initial shares are redeemed during the period of amortization of the Fund’s offering costs, the redemption proceeds will be reduced by any such unamortized offering costs in the same proportion as the number of shares being redeemed bears to the number of those shares outstanding at the time of redemption. |
| matthewsasia.com | 800.789.ASIA | 135 |
Table of Contents
Notes to Financial Statements (continued)
| F. | DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of Matthews Asian Growth and Income Fund and Matthews China Dividend Fund to distribute net investment income on a semi-annual basis and capital gains, if any, annually. It is the policy of Matthews Asia Dividend Fund and Matthews Asia Strategic Income Fund to distribute net investment income on a quarterly basis and capital gains, if any, annually. Each of the other Funds distributes a net investment income and capital gains, if any, annually. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. |
The tax character of distributions paid for the fiscal year ended December 31, 2015 and December 31, 2014 were as follows:
| YEAR ENDED DECEMBER 31, 2015 | Ordinary Income |
Net Long-Term Capital Gains |
Total Taxable Distributions |
|||||||||
| Matthews Asia Strategic Income Fund | $1,925,044 | $— | $1,925,044 | |||||||||
| Matthews Asian Growth and Income Fund | 89,571,608 | 134,712,377 | 224,283,985 | |||||||||
| Matthews Asia Dividend Fund | 93,118,771 | 71,669,071 | 164,787,842 | |||||||||
| Matthews China Dividend Fund | 4,110,069 | 7,709,592 | 11,819,661 | |||||||||
| Matthews Asia Value Fund | 2,329 | — | 2,329 | |||||||||
| Matthews Asia Focus Fund | 112,053 | 61,165 | 173,218 | |||||||||
| Matthews Pacific Tiger Fund | 131,749,094 | 685,544,217 | 817,293,311 | |||||||||
| Matthews Asia ESG Fund | 37,405 | — | 37,405 | |||||||||
| Matthews Emerging Asia Fund | 81,591 | 432,972 | 514,563 | |||||||||
| Matthews China Fund | 10,545,675 | 127,726,027 | 138,271,702 | |||||||||
| Matthews India Fund | 1,967,432 | 13,471,979 | 15,439,411 | |||||||||
| Matthews Korea Fund | 956,216 | 12,118,013 | 13,074,229 | |||||||||
| Matthews Asia Small Companies Fund | 1,500,557 | — | 1,500,557 | |||||||||
| Matthews China Small Companies Fund | 162,446 | 1,862,709 | 2,025,155 | |||||||||
| Matthews Asia Science and Technology Fund | — | 25,836,171 | 25,836,171 | |||||||||
| YEAR ENDED DECEMBER 31, 2014 | Ordinary Income |
Net Long-Term Capital Gains |
Return of Capital |
Total Taxable Distributions |
||||||||||||
| Matthews Asia Strategic Income Fund | $2,114,388 | $— | $— | $2,114,388 | ||||||||||||
| Matthews Asian Growth and Income Fund | 82,852,338 | 102,451,370 | — | 185,303,708 | ||||||||||||
| Matthews Asia Dividend Fund | 79,977,573 | — | 21,987,983 | 101,965,556 | ||||||||||||
| Matthews China Dividend Fund | 4,550,194 | 709,195 | — | 5,259,389 | ||||||||||||
| Matthews Asia Focus Fund | 112,525 | — | — | 112,525 | ||||||||||||
| Matthews Asia Growth Fund | 15,440,617 | — | — | 15,440,617 | ||||||||||||
| Matthews Pacific Tiger Fund | 47,680,793 | 360,777,613 | — | 408,458,406 | ||||||||||||
| Matthews Emerging Asia Fund | 618,186 | 5,141 | — | 623,327 | ||||||||||||
| Matthews China Fund | 12,883,867 | 4,848,647 | — | 17,732,514 | ||||||||||||
| Matthews India Fund | 1,848,612 | 5,587,798 | — | 7,436,410 | ||||||||||||
| Matthews Japan Fund | 3,325,554 | — | — | 3,325,554 | ||||||||||||
| Matthews Korea Fund | — | 9,796,584 | — | 9,796,584 | ||||||||||||
| Matthews Asia Small Companies Fund | 2,665,812 | — | — | 2,665,812 | ||||||||||||
| Matthews China Small Companies Fund | 50,571 | — | 828,820 | 879,391 | ||||||||||||
| Matthews Asia Science and Technology Fund | 929,241 | 1,142,588 | — | 2,071,829 | ||||||||||||
| G. | INVESTMENT TRANSACTIONS AND INCOME: Securities transactions are accounted for on the date the securities are purchased or sold or on the following business day. Gains or losses on the sale of securities are determined on the identified cost basis. Interest income is recorded on the accrual basis. Dividend income is generally recorded on the ex-dividend date. Dividend income for certain issuers headquartered in countries which the Funds invest may not be recorded until approved by the shareholders (which may occur after the ex-dividend date) if, in the judgment of management, such dividends are not reasonably determined as of the ex-dividend date. Income and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis. For convertible securities, premiums attributable to the conversion feature are not amortized. |
The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which they invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, the Funds record an estimated deferred tax liability in an amount that may be payable if the securities were disposed of on the valuation date.
| H. | FUND EXPENSE ALLOCATIONS: The Funds account separately for the assets, liabilities and operations of each Fund. Direct expenses of each Fund or class are charged to that Fund or class while general expenses are allocated pro-rata among the Funds based on net assets or other appropriate methods. |
| I. | CASH, CASH OVERDRAFTS, AND FOREIGN CURRENCY: The U Series Funds are required by the local market to maintain a cash reserve. The cash reserve is based upon a fixed ratio of the QFII’s approved investment quota, which is defined as the amount remitted into its special renminbi (RMB) cash account. The fixed ratio is set at 0.08 percent for the Shanghai and 0.06 percent for the Shenzhen market. When any of the Funds’ cash balances are overdrawn, a Fund is charged an overdraft fee by the custodian of 1.00% above the 30-day LIBOR rate on outstanding balances. These amounts, if any, are included in “Other expenses” on the Statements of Operations. |
| 136 | MATTHEWS ASIA FUNDS |
Table of Contents
| J. | USE OF ESTIMATES: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. |
| 3. | DERIVATIVE FINANCIAL INSTRUMENTS |
Matthews Asia Strategic Income Fund engages in derivative transactions for a variety of purposes, including managing interest rate, currency and credit exposure. In particular, the Fund may seek to take on currency exposure by using derivatives such as currency forwards, and the Fund may also employ a currency overlay strategy in an effort to enhance returns and moderate volatility. Derivative financial instruments and transactions in which the Fund may engage include financial futures contracts and/or forward foreign currency exchange contracts. The currency overlay strategy involves long and short positions on one or more currencies. As a result, the Fund’s exposure to a currency could exceed the value of the Fund’s assets and the Fund could be exposed to currency risk whether or not it holds a bond or other instrument denominated in that currency. The gross notional value of derivative financial instruments and transactions could exceed the value of the Fund’s net assets, although the net market value of these instruments and transactions, on a marked-to-market basis, at most times, is expected to be substantially lower. The primary risks associated with the use of derivative financial instruments are: (i) Matthews may not correctly predict the direction of currency exchange rates, interest rates, security prices, or other economic factors; (ii) Matthews may not correctly predict changes in the value of derivative financial instruments and related underlying instruments or assets, which may result in disproportionately increased losses and/or reduced opportunities for gains; (iii) imperfect correlation between the change in market value of the securities held by the Fund and the price of financial futures contracts; (iv) the lack of, or a reduction in the liquidity of, any secondary market for the instrument, and the resulting inability to close the position (or exit the position) when desired; (v) losses, which are potentially unlimited, due to unanticipated market movements; (vi) the value of the instrument may change unfavorably due to movements in the value of the referenced foreign currencies; (vii) the Fund may suffer disproportionately heavy losses relative to the amount invested; (viii) changes in the value of the derivatives may not match or fully offset changes in the value of hedged or related portfolio securities, thereby failing to achieve the hedging or investment purpose for the derivative transaction; and (ix) the other party to the instrument may fail to fulfill its obligation.
Financial Futures Contracts: Financial futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on settlement date.
Pursuant to the contract, the Fund agrees to receive from or pay an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized appreciation or depreciation. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Forward Foreign Currency Exchange Contracts: A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The Matthews Asia Strategic Income Fund does not offset financial assets and financial liabilities on forward foreign currency contracts in the statement of assets and liabilities as they are not subject to netting arrangements.
Derivative Financial Instruments Categorized by Risk Exposure:
As of December 31, 2015, the fair values of derivative financial instruments were as follows:
| Statement of Assets and Liabilities Location | Matthews Asia Strategic Income Fund |
|||||
| Asset Derivatives |
||||||
| Forward foreign currency exchange contracts | Unrealized appreciation on forward foreign currency exchange contracts | $334,847 | ||||
| Liability Derivatives |
||||||
| Forward foreign currency exchange contracts | Unrealized depreciation on forward foreign currency exchange contracts | (38,273 | ) | |||
|
|
|
|||||
| Total |
$296,574 | |||||
|
|
|
|||||
For the fiscal year ended December 31, 2015, the effects of derivative financial instruments on the Statements of Operations were as follows:
| Derivative type | Statement of Operations Location | Matthews Asia Strategic Income Fund |
||||
| Net Realized Gain (Loss) |
||||||
| Interest rate contracts: | ||||||
| Financial futures contracts |
Net realized gain (loss) on financial futures contracts | ($88,422 | ) | |||
|
|
|
|||||
| Net Change in Unrealized Appreciation (Depreciation) |
||||||
| Interest rate contracts: | ||||||
| Financial futures contracts |
Net change in unrealized appreciation/depreciation on financial futures contracts | ($12,891 | ) | |||
|
|
|
|||||
| Foreign currency contracts: | ||||||
| Foreign currency exchange contracts |
Net change in unrealized appreciation/depreciation on foreign currency related translations | $296,574 | ||||
|
|
|
|||||
Notional amounts disclosed on the Matthews Asia Strategic Income Fund’s Schedule of Investments are indicative of the activity during the period which forward foreign currency contracts were held, October 6, 2015 - December 31, 2015.
| matthewsasia.com | 800.789.ASIA | 137 |
Table of Contents
Notes to Financial Statements (continued)
| 4. | CAPITAL SHARE TRANSACTIONS |
Each Fund is authorized to issue an unlimited number of shares of beneficial interest with a par value of $0.001 per share.
| Year Ended December 31, 2015 |
Year Ended December 31, 2014 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS ASIA STRATEGIC INCOME FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
1,323,678 | $13,608,885 | 2,868,763 | $30,387,264 | ||||||||||||
| Shares issued through reinvestment of distributions |
156,283 | 1,568,876 | 170,890 | 1,792,188 | ||||||||||||
| Shares redeemed |
(2,031,972 | ) | (20,725,933 | ) | (1,006,520 | ) | (10,564,074 | ) | ||||||||
| Net increase (decrease) |
(552,011 | ) | ($5,548,172 | ) | 2,033,133 | $21,615,378 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
514,725 | $5,309,238 | 8,500 | $90,318 | ||||||||||||
| Shares issued through reinvestment of distributions |
34,909 | 350,189 | 28,064 | 294,191 | ||||||||||||
| Shares redeemed |
(205,825 | ) | (2,100,037 | ) | (11,064 | ) | (115,367 | ) | ||||||||
| Net increase (decrease) |
343,809 | $3,559,390 | 25,500 | $269,142 | ||||||||||||
| MATTHEWS ASIAN GROWTH AND INCOME FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
25,916,582 | $466,448,198 | 42,335,422 | $806,641,528 | ||||||||||||
| Shares issued through reinvestment of distributions |
9,143,700 | 150,474,022 | 6,792,538 | 123,896,096 | ||||||||||||
| Shares redeemed |
(76,976,258 | ) | (1,349,111,339 | ) | (53,031,955 | ) | (997,653,204 | ) | ||||||||
| Net increase (decrease) |
(41,915,976 | ) | ($732,189,119 | ) | (3,903,995 | ) | ($67,115,580 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
11,883,290 | $212,136,578 | 17,734,558 | $339,731,302 | ||||||||||||
| Shares issued through reinvestment of distributions |
3,858,797 | 63,544,851 | 2,873,664 | 52,402,976 | ||||||||||||
| Shares redeemed |
(30,034,472 | ) | (523,307,730 | ) | (14,176,690 | ) | (266,541,558 | ) | ||||||||
| Net increase (decrease) |
(14,292,385 | ) | ($247,626,301 | ) | 6,431,532 | $125,592,720 | ||||||||||
| MATTHEWS ASIA DIVIDEND FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
35,125,000 | $570,435,753 | 27,074,172 | $421,810,410 | ||||||||||||
| Shares issued through reinvestment of distributions |
5,242,086 | 83,243,373 | 3,452,211 | 55,280,782 | ||||||||||||
| Shares redeemed |
(51,950,453 | ) | (827,708,599 | ) | (74,520,827 | ) | (1,151,165,817 | ) | ||||||||
| Net increase (decrease) |
(11,583,367 | ) | ($174,029,473 | ) | (43,994,444 | ) | ($674,074,625 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
52,931,529 | $860,637,014 | 47,197,289 | $735,042,714 | ||||||||||||
| Shares issued through reinvestment of distributions |
2,615,057 | 41,384,032 | 1,435,590 | 22,955,772 | ||||||||||||
| Shares redeemed |
(60,382,643 | ) | (945,927,066 | ) | (46,762,733 | ) | (729,427,226 | ) | ||||||||
| Net increase (decrease) |
(4,836,057 | ) | ($43,906,020 | ) | 1,870,146 | $28,571,260 | ||||||||||
| MATTHEWS CHINA DIVIDEND FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
9,804,629 | $151,536,779 | 3,469,549 | $46,973,569 | ||||||||||||
| Shares issued through reinvestment of distributions |
724,059 | 10,466,697 | 293,612 | 3,935,098 | ||||||||||||
| Shares redeemed |
(7,269,925 | ) | (106,195,533 | ) | (4,184,807 | ) | (55,511,036 | ) | ||||||||
| Net increase (decrease) |
3,258,763 | $55,807,943 | (421,646 | ) | ($4,602,369 | ) | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
1,122,001 | $16,210,502 | 1,028,815 | $13,795,976 | ||||||||||||
| Shares issued through reinvestment of distributions |
78,571 | 1,153,826 | 84,509 | 1,131,935 | ||||||||||||
| Shares redeemed |
(2,376,571 | ) | (35,363,363 | ) | (624,547 | ) | (8,338,287 | ) | ||||||||
| Net increase (decrease) |
(1,175,999 | ) | ($17,999,035 | ) | 488,777 | $6,589,624 | ||||||||||
| 138 | MATTHEWS ASIA FUNDS |
Table of Contents
| Year Ended December 31, 2015 |
Year Ended December 31, 2014 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS ASIA VALUE FUND* |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
161,193 | $1,602,501 | ||||||||||||||
| Shares issued through reinvestment of distributions |
179 | 1,748 | ||||||||||||||
| Shares redeemed |
(34 | ) | (333 | ) | ||||||||||||
| Net increase (decrease) |
161,338 | $1,603,916 | ||||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
14,500 | $145,000 | ||||||||||||||
| Shares issued through reinvestment of distributions |
60 | 581 | ||||||||||||||
| Shares redeemed |
— | — | ||||||||||||||
| Net increase (decrease) |
14,560 | $145,581 | ||||||||||||||
| MATTHEWS ASIA FOCUS FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
250,574 | $2,466,477 | 435,111 | $4,372,718 | ||||||||||||
| Shares issued through reinvestment of distributions |
8,502 | 74,221 | 5,515 | 55,145 | ||||||||||||
| Shares redeemed |
(411,977 | ) | (3,802,344 | ) | (305,685 | ) | (2,951,262 | ) | ||||||||
| Net increase (decrease) |
(152,901 | ) | ($1,261,646 | ) | 134,941 | $1,476,601 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
85,035 | $790,900 | 562,972 | $5,679,393 | ||||||||||||
| Shares issued through reinvestment of distributions |
11,279 | 98,578 | 5,697 | 57,082 | ||||||||||||
| Shares redeemed |
(152,717 | ) | (1,345,220 | ) | (75,633 | ) | (749,792 | ) | ||||||||
| Net increase (decrease) |
(56,403 | ) | ($455,742 | ) | 493,036 | $4,986,683 | ||||||||||
| MATTHEWS ASIA GROWTH FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
10,116,539 | $220,731,758 | 8,352,421 | $176,815,714 | ||||||||||||
| Shares issued through reinvestment of distributions |
— | — | 364,634 | 7,679,192 | ||||||||||||
| Shares redeemed |
(11,770,308 | ) | (246,526,119 | ) | (8,456,299 | ) | (177,869,893 | ) | ||||||||
| Net increase (decrease) |
(1,653,769 | ) | ($25,794,361 | ) | 260,756 | $6,625,013 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
5,203,260 | $112,251,892 | 3,166,264 | $68,111,071 | ||||||||||||
| Shares issued through reinvestment of distributions |
— | — | 233,352 | 4,937,721 | ||||||||||||
| Shares redeemed |
(6,990,514 | ) | (146,485,176 | ) | (564,454 | ) | (12,120,100 | ) | ||||||||
| Net increase (decrease) |
(1,787,254 | ) | ($34,233,284 | ) | 2,835,162 | $60,928,692 | ||||||||||
| MATTHEWS PACIFIC TIGER FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
18,629,799 | $505,974,505 | 13,461,553 | $362,907,557 | ||||||||||||
| Shares issued through reinvestment of distributions |
11,411,932 | 263,383,421 | 5,254,231 | 139,026,894 | ||||||||||||
| Shares redeemed |
(29,132,577 | ) | (758,670,355 | ) | (22,276,690 | ) | (585,489,213 | ) | ||||||||
| Net increase (decrease) |
909,154 | $10,687,571 | (3,560,906 | ) | ($83,554,762 | ) | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
66,516,041 | $1,778,275,629 | 41,237,653 | $1,119,555,511 | ||||||||||||
| Shares issued through reinvestment of distributions |
11,636,136 | 268,329,315 | 5,592,016 | 147,852,921 | ||||||||||||
| Shares redeemed |
(99,756,044 | ) | (2,521,022,303 | ) | (44,056,685 | ) | (1,135,705,206 | ) | ||||||||
| Net increase (decrease) |
(21,603,867 | ) | ($474,417,359 | ) | 2,772,984 | $131,703,226 | ||||||||||
| MATTHEWS ASIA ESG FUND** |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
482,804 | $4,562,170 | ||||||||||||||
| Shares issued through reinvestment of distributions |
1,806 | 16,466 | ||||||||||||||
| Shares redeemed |
(132,628 | ) | (1,222,043 | ) | ||||||||||||
| Net increase (decrease) |
351,982 | $3,356,593 | ||||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
186,254 | $1,805,130 | ||||||||||||||
| Shares issued through reinvestment of distributions |
2,307 | 20,899 | ||||||||||||||
| Shares redeemed |
(4,586 | ) | (41,516 | ) | ||||||||||||
| Net increase (decrease) |
183,975 | $1,784,513 | ||||||||||||||
| * | Investor Class and Institutional Class commencement of operations on November 30, 2015. |
| ** | Investor Class and Institutional Class commencement of operations on April 30, 2015. |
| matthewsasia.com | 800.789.ASIA | 139 |
Table of Contents
Notes to Financial Statements (continued)
| Year Ended December 31, 2015 |
Year Ended December 31, 2014 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS EMERGING ASIA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
3,222,545 | $37,424,394 | 6,358,977 | $71,447,277 | ||||||||||||
| Shares issued through reinvestment of distributions |
29,906 | 334,053 | 44,331 | 513,799 | ||||||||||||
| Shares redeemed |
(2,594,387 | ) | (29,676,907 | ) | (719,405 | ) | (7,920,065 | ) | ||||||||
| Net increase (decrease) |
658,064 | $8,081,540 | 5,683,903 | $64,041,011 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
4,382,373 | $50,726,364 | 1,672,829 | $18,713,467 | ||||||||||||
| Shares issued through reinvestment of distributions |
16,011 | 179,162 | 9,076 | 105,103 | ||||||||||||
| Shares redeemed |
(1,342,327 | ) | (15,050,048 | ) | (44,825 | ) | (498,178 | ) | ||||||||
| Net increase (decrease) |
3,056,057 | $35,855,478 | 1,637,080 | $18,320,392 | ||||||||||||
| MATTHEWS CHINA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
5,141,080 | $120,488,105 | 4,652,101 | $101,501,385 | ||||||||||||
| Shares issued through reinvestment of distributions |
6,355,104 | 116,616,158 | 752,109 | 16,034,960 | ||||||||||||
| Shares redeemed |
(17,118,626 | ) | (385,888,737 | ) | (17,574,642 | ) | (379,926,583 | ) | ||||||||
| Net increase (decrease) |
(5,622,442 | ) | ($148,784,474 | ) | (12,170,432 | ) | ($262,390,238 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
628,563 | $14,774,529 | 572,587 | $12,475,109 | ||||||||||||
| Shares issued through reinvestment of distributions |
234,182 | 4,290,241 | 55,031 | 1,172,155 | ||||||||||||
| Shares redeemed |
(1,990,574 | ) | (45,026,079 | ) | (3,338,212 | ) | (72,711,685 | ) | ||||||||
| Net increase (decrease) |
(1,127,829 | ) | ($25,961,309 | ) | (2,710,594 | ) | ($59,064,421 | ) | ||||||||
| MATTHEWS INDIA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
30,620,097 | $867,318,320 | 18,378,382 | $428,347,047 | ||||||||||||
| Shares issued through reinvestment of distributions |
408,995 | 10,507,217 | 251,419 | 6,614,834 | ||||||||||||
| Shares redeemed |
(24,282,755 | ) | (667,371,469 | ) | (8,069,436 | ) | (172,617,142 | ) | ||||||||
| Net increase (decrease) |
6,746,337 | $210,454,068 | 10,560,365 | $262,344,739 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
9,976,872 | $279,880,654 | 4,119,011 | $103,116,285 | ||||||||||||
| Shares issued through reinvestment of distributions |
23,353 | 601,584 | 4,649 | 122,448 | ||||||||||||
| Shares redeemed |
(768,413 | ) | (21,157,535 | ) | (195,207 | ) | (3,155,297 | ) | ||||||||
| Net increase (decrease) |
9,231,812 | $259,324,703 | 3,928,453 | $100,083,436 | ||||||||||||
| MATTHEWS JAPAN FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
53,437,657 | $989,896,404 | 14,683,754 | $236,544,033 | ||||||||||||
| Merger |
— | — | 9,304,606 | 143,006,665 | ||||||||||||
| Shares issued through reinvestment of distributions |
— | — | 136,979 | 2,162,925 | ||||||||||||
| Shares redeemed |
(13,073,985 | ) | (233,136,140 | ) | (13,641,932 | ) | (216,980,228 | ) | ||||||||
| Net increase (decrease) |
40,363,672 | $756,760,264 | 10,483,407 | $164,733,395 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
25,203,856 | $462,758,856 | 7,921,739 | $130,732,643 | ||||||||||||
| Merger |
— | — | 117,933 | 1,814,627 | ||||||||||||
| Shares issued through reinvestment of distributions |
— | — | 27,262 | 430,732 | ||||||||||||
| Shares redeemed |
(2,491,900 | ) | (44,833,156 | ) | (1,901,165 | ) | (30,655,635 | ) | ||||||||
| Net increase (decrease) |
22,711,956 | $417,925,700 | 6,165,769 | $102,322,367 | ||||||||||||
| MATTHEWS KOREA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
7,063,187 | $45,732,771 | 2,855,980 | $17,811,596 | ||||||||||||
| Shares issued through reinvestment of distributions |
1,247,048 | 7,432,409 | 958,127 | 5,298,441 | ||||||||||||
| Shares redeemed |
(6,893,554 | ) | (42,613,047 | ) | (4,561,112 | ) | (27,333,556 | ) | ||||||||
| Net increase (decrease) |
1,416,681 | $10,552,133 | (747,005 | ) | ($4,223,519 | ) | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
1,949,647 | $12,656,326 | 15,224,562 | $92,211,027 | ||||||||||||
| Shares issued through reinvestment of distributions |
33,764 | 202,244 | 294,354 | 1,633,663 | ||||||||||||
| Shares redeemed |
(8,378,869 | ) | (48,454,588 | ) | (1,475,555 | ) | (8,735,102 | ) | ||||||||
| Net increase (decrease) |
(6,395,458 | ) | ($35,596,018 | ) | 14,043,361 | $85,109,588 | ||||||||||
| 140 | MATTHEWS ASIA FUNDS |
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| Year Ended December 31, 2015 |
Year Ended December 31, 2014 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS ASIA SMALL COMPANIES FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
8,497,848 | $182,977,362 | 12,269,745 | $256,739,667 | ||||||||||||
| Shares issued through reinvestment of distributions |
23,288 | 441,546 | 91,722 | 1,980,278 | ||||||||||||
| Shares redeemed |
(16,455,313 | ) | (348,268,552 | ) | (5,510,122 | ) | (113,024,665 | ) | ||||||||
| Net increase (decrease) |
(7,934,177 | ) | ($164,849,644 | ) | 6,851,345 | $145,695,280 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
11,287,130 | $246,873,661 | 1,637,024 | $34,046,110 | ||||||||||||
| Shares issued through reinvestment of distributions |
47,417 | 898,076 | 11,551 | 249,394 | ||||||||||||
| Shares redeemed |
(3,476,347 | ) | (67,815,813 | ) | (368,351 | ) | (7,588,297 | ) | ||||||||
| Net increase (decrease) |
7,858,200 | $179,955,924 | 1,280,224 | $26,707,207 | ||||||||||||
| MATTHEWS CHINA SMALL COMPANIES FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
766,278 | $7,633,873 | 1,079,235 | $10,536,592 | ||||||||||||
| Shares issued through reinvestment of distributions |
202,804 | 1,752,230 | 91,585 | 856,321 | ||||||||||||
| Shares redeemed |
(911,884 | ) | (8,642,334 | ) | (1,472,901 | ) | (14,353,449 | ) | ||||||||
| Net increase (decrease) |
57,198 | $743,769 | (302,081 | ) | ($2,960,536 | ) | ||||||||||
| MATTHEWS ASIA SCIENCE AND TECHNOLOGY FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
2,583,487 | $36,194,231 | 2,001,250 | $26,712,471 | ||||||||||||
| Shares issued through reinvestment of distributions |
1,321,498 | 16,095,853 | 92,181 | 1,261,036 | ||||||||||||
| Shares redeemed |
(2,600,415 | ) | (35,098,196 | ) | (1,740,481 | ) | (22,680,601 | ) | ||||||||
| Net increase (decrease) |
1,304,570 | $17,191,888 | 352,950 | $5,292,906 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
248,176 | $3,444,526 | 533,868 | $6,731,909 | ||||||||||||
| Shares issued through reinvestment of distributions |
320,936 | 3,915,412 | 55,365 | 756,846 | ||||||||||||
| Shares redeemed |
(2,079,401 | ) | (31,121,491 | ) | (12,051 | ) | (169,548 | ) | ||||||||
| Net increase (decrease) |
(1,510,289 | ) | ($23,761,553 | ) | 577,182 | $7,319,207 | ||||||||||
Currently, a 2.00% redemption fee will be assessed on the sale or exchange of shares of the Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund and Matthews China Small Companies Fund (collectively, the “Covered Funds”) within 90 days after the date an investor purchases shares of the Covered Funds. The imposition of redemption fees pursuant to the Funds’ Short-Term Trading Redemption Fee Policy for the Covered Funds may assist the Covered Funds in discouraging market timing activity.
The redemption fee is imposed to discourage market timing and short-term buying and selling of shares of the Covered Funds, which can disrupt the management of the Covered Funds’ investment portfolios and may have detrimental effects on the Covered Funds and other shareholders, and to allocate the costs the Covered Funds incur as a result of short-term trading and market timing. This fee is payable directly to the Covered Funds.
To determine whether the redemption fee applies, the Covered Funds do not count the day that you purchased your shares, and first redeem the shares that you have held the longest.
The Covered Funds may grant an exemption from the redemption fee when the Covered Funds have previously received assurances that transactions do not involve a substantial risk of the type of harm that the policy is designed to avoid. The Covered Funds may also waive the imposition of redemption fees in certain circumstances. For more information on this policy, please see the Funds’ prospectuses. The redemption fees returned to the assets of the Funds are stated in the Statements of Changes in Net Assets.
| 5. | INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES |
Matthews, a registered investment advisor under the 1940 Act, provides the Funds with investment management services. Pursuant to an Investment Advisory Agreement dated August 13, 2004, as amended (the “Advisory Agreement”), the Funds pay Matthews (i) for management and advisory services; and (ii) for certain administrative services, an annual fee as a percentage of average daily net assets. Under the Advisory Agreement each of the Funds, other than Matthews Asia Strategic Income Fund, Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund, and Matthews China Small Companies Fund (the “Family-Priced Funds”), pays Matthews 0.75% of their aggregate average daily net assets up to $2 billion, 0.6834% of their aggregate average daily net assets over $2 billion up to $5 billion, 0.65% of their aggregate average daily net assets over $5 billion up to $25 billion, 0.64% of their aggregate average daily net assets over $25 billion up to $30 billion, 0.63% of their aggregate average daily net assets over $30 billion up to $35 billion, 0.62% of their aggregate average daily net assets over $35 billion up to $40 billion, 0.61% of their aggregate average daily net assets over $40 billion up to $45 billion, and 0.60% of their aggregate average daily net assets over $45 billion. Matthews Asia Strategic Income Fund pays Matthews an annual fee of 0.65% of its annual average daily net assets pursuant to the Advisory Agreement. Each of the Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund, and the Matthews China Small Companies Fund pays Matthews an annual fee of 1.00% of the average daily net assets of such Fund up to $1 billion and 0.95% of the average daily net assets of such Fund over $1 billion pursuant to the Advisory Agreement. Each Fund paid Matthews a monthly fee of one-twelfth (1/12) of the management fee of the Fund’s average daily net asset value.
Pursuant to a fee waiver letter agreement, effective as of September 1, 2014, between the Trust, on behalf of the Family-Priced Funds, and Matthews (as amended from time to time, the “Fee Waiver Agreement”), for each Family-Priced Fund, Matthews has agreed to waive a portion of the fee payable under the Advisory Agreement and a portion of the fee payable under the Administration and Shareholder Services Agreement, if any Family-Priced Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of a Family-Priced Fund that are
| matthewsasia.com | 800.789.ASIA | 141 |
Table of Contents
Notes to Financial Statements (continued)
over $3 billion, the fee rates that otherwise would be applied for calculating fees payable under the Advisory Agreement and the Administration and Shareholder Services Agreement for such Family-Priced Fund with respect to such excess average daily net assets will be each reduced by 0.01%, in each case without reducing such fee rate below 0.00%.
Under a written agreement between the Funds and Matthews (the “Operating Expenses Agreement”), Matthews agrees to waive fees and reimburse expenses to a Fund if its expense ratio exceeds a certain percentage level. Effective April 30, 2015 for all Funds, except Matthews Asia Strategic Income Fund and Matthews China Small Companies Fund, this level is 1.25% for the Institutional Class. Matthews agrees to reduce the expense ratio by waiving an equal amount of non-class specific expenses for the Investor Class. Because certain expenses of the Investor Class may be higher than Institutional Class and class specific expenses may be waived solely for the Institutional Class, total annual Fund expenses for the Investor Class may exceed 1.25%. For Matthews Asia Strategic Income Fund this level is 0.90% for Institutional Class. Matthews agrees to reduce the expense ratio by waiving an equal amount of non-class expenses for the Investor Class. Because certain expenses of the Investor Class may be higher that the Institutional Class and class specific expenses may be waived solely for the Institutional Class, total annual Fund expenses for the Investor Class may exceed 0.90%. For Matthews China Small Companies Fund this level is 1.50% for the Investor Class. Prior to May 1, 2014 for Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, Matthews China Small Companies Fund and Matthews Asia Science and Technology Fund, this level was 2.00%. For Matthews Asian Growth and Income Fund, Matthews Asia Growth Fund and Matthews Pacific Tiger Fund, this level was 1.90%. For Matthews Asia Dividend Fund and Matthews China Dividend Fund, this level was 1.50%. For Matthews Asia Strategic Income Fund, Matthews Asia Focus Fund and Matthews Emerging Asia Fund, Matthews agreed to waive fees and reimburse expenses to each Fund if its expense ratio exceeded 1.25%, 1.75%, and 2.00%, respectively, for the Institutional Class and agreed to reduce the expense ratio by an equal amount for the Investor Class. In turn, if a Fund’s expenses fall below the level noted within three years after Matthews has made such a reimbursement, the Fund may reimburse Matthews up to an amount of the recoupment available not to exceed its expense limitation. For each Fund other than the Matthews Asia Value Fund, this agreement will continue through at least April 30, 2017 and may be extended for additional periods not exceeding one year. This agreement will continue through April 30, 2018 for the Matthews Asia Value Fund, and may be extended for additional periods not exceeding one year.
On December 31, 2015, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:
| Expiring December 31, | ||||||||||||
| 2016 | 2017 | 2018 | ||||||||||
| Matthews Asia Strategic Income Fund | $41,268 | $79,504 | $113,621 | |||||||||
| Matthews Asia Value Fund | — | — | 41,279 | |||||||||
| Matthews Asia Focus Fund | 87,951 | 62,897 | 87,252 | |||||||||
| Matthews Asia ESG Fund | — | — | 183,985 | |||||||||
| Matthews Emerging Asia Fund | 76,881 | 152,283 | 452,048 | |||||||||
| Matthews Asia Small Companies Fund | — | 15,270 | 113,037 | |||||||||
| Matthews China Small Companies Fund | 7,801 | 63,212 | 133,327 | |||||||||
Matthews Asia Strategic Income Fund and Matthews China Small Companies Fund had $161,965 and $76,425, respectively, of recoupment that expired on December 31, 2015. Matthews Asian Growth and Income Fund, Matthews Pacific Tiger Fund, Matthews India Fund and Matthews Japan Fund had no amounts available for recoupment and no amounts recouped during the year ended December 31, 2015.
Investment advisory fees charged, waived fees and reimbursed additional expenses for the year ended December 31, 2015, were as follows:
| Gross Advisory Fees | Advisory Fees Waived and Reimbursed in Excess of the Expense Limitation |
Net Advisory Fee/ Reimbursement |
||||||||||
| Matthews Asia Strategic Income Fund | $438,698 | ($113,621 | ) | $325,077 | ||||||||
| Matthews Asian Growth and Income Fund | 25,621,034 | (86,260 | ) | 25,534,774 | ||||||||
| Matthews Asia Dividend Fund | 35,306,056 | (244,805 | ) | 35,061,251 | ||||||||
| Matthews China Dividend Fund | 1,183,701 | — | 1,183,701 | |||||||||
| Matthews Asia Value Fund | 771 | (41,279 | ) | (40,508 | ) | |||||||
| Matthews Asia Focus Fund | 95,048 | (87,252 | ) | 7,796 | ||||||||
| Matthews Asia Growth Fund | 5,989,698 | — | 5,989,698 | |||||||||
| Matthews Pacific Tiger Fund | 54,519,201 | (857,693 | ) | 53,661,508 | ||||||||
| Matthews Asia ESG Fund | 15,886 | (183,985 | ) | (168,099 | ) | |||||||
| Matthews Emerging Asia Fund | 1,661,519 | (452,048 | ) | 1,209,471 | ||||||||
| Matthews China Fund | 6,216,536 | — | 6,216,536 | |||||||||
| Matthews India Fund | 10,143,432 | — | 10,143,432 | |||||||||
| Matthews Japan Fund | 7,785,999 | — | 7,785,999 | |||||||||
| Matthews Korea Fund | 1,359,009 | — | 1,359,009 | |||||||||
| Matthews Asia Small Companies Fund | 7,188,942 | (113,037 | ) | 7,075,905 | ||||||||
| Matthews China Small Companies Fund | 223,822 | (133,327 | ) | 90,495 | ||||||||
| Matthews Asia Science and Technology Fund | 1,174,937 | — | 1,174,937 | |||||||||
Certain officers and Trustees of the Funds are also officers and directors of Matthews. All officers serve without compensation from the Funds. The Funds paid the Independent Trustees $967,000 in aggregate for regular compensation during the year ended December 31, 2015.
The Funds have an Administration and Shareholder Services Agreement dated August 13, 2004, as amended (the “Shareholder Services Agreement” or “Services Agreement”), in which the Funds pay an annual administration and shareholder servicing fee to Matthews, as a percentage of the average
| 142 | MATTHEWS ASIA FUNDS |
Table of Contents
daily net assets of each Fund in aggregate, computed and prorated on a daily basis. Under the Shareholder Services Agreement, the Funds in the aggregate pay Matthews 0.25% of their aggregate average daily net assets up to $2 billion, 0.1834% of their aggregate average daily net assets over $2 billion up to $5 billion, 0.15% of their aggregate average daily net assets over $5 billion up to $7.5 billion, 0.125% of their aggregate average daily net assets over $7.5 billion up to $15 billion, 0.11% of their aggregate average daily net assets over $15 billion up to $22.5 billion, 0.10% of their aggregate average daily net assets over $22.5 billion up to $25 billion, 0.09% of their aggregate average daily net assets over $25 billion up to $30 billion, 0.08% of their aggregate average daily net assets over $30 billion up to $35 billion, 0.07% of their aggregate average daily net assets over $35 billion up to $40 billion, 0.06% of their aggregate average daily net assets over $40 billion up to $45 billion, and 0.05% of their aggregate average daily net assets over $45 billion.
Administration and shareholder servicing fees charged, for the year ended December 31, 2015, were as follows:
| Gross Administration and Shareholder Servicing Fees |
Administration and Shareholder Servicing Fees Waived in Excess of Expense Limitation |
Net Administration and Shareholder Servicing Fees |
||||||||||
| Matthews Asia Strategic Income Fund | $94,329 | $— | $94,329 | |||||||||
| Matthews Asian Growth and Income Fund | 5,389,839 | (86,260 | ) | 5,303,579 | ||||||||
| Matthews Asia Dividend Fund | 7,429,497 | (244,805 | ) | 7,184,692 | ||||||||
| Matthews China Dividend Fund | 248,951 | — | 248,951 | |||||||||
| Matthews Asia Value Fund | 167 | — | 167 | |||||||||
| Matthews Asia Focus Fund | 19,988 | — | 19,988 | |||||||||
| Matthews Asia Growth Fund | 1,260,375 | — | 1,260,375 | |||||||||
| Matthews Pacific Tiger Fund | 11,459,861 | (857,693 | ) | 10,602,168 | ||||||||
| Matthews Asia ESG Fund | 3,397 | — | 3,397 | |||||||||
| Matthews Emerging Asia Fund | 232,258 | — | 232,258 | |||||||||
| Matthews China Fund | 1,306,491 | — | 1,306,491 | |||||||||
| Matthews India Fund | 2,137,111 | — | 2,137,111 | |||||||||
| Matthews Japan Fund | 1,647,370 | — | 1,647,370 | |||||||||
| Matthews Korea Fund | 286,380 | — | 286,380 | |||||||||
| Matthews Asia Small Companies Fund | 1,003,109 | — | 1,003,109 | |||||||||
| Matthews China Small Companies Fund | 31,234 | — | 31,234 | |||||||||
| Matthews Asia Science and Technology Fund | 247,195 | — | 247,195 | |||||||||
In addition to the fees paid to the Funds’ transfer agent, the Funds bear the cost of fees paid to certain service providers or intermediaries, including supermarkets, which provide transfer agency, record-keeping and shareholder servicing to certain shareholders. These fees are referred to as intermediary service fees on the statement of assets and liabilities as well as the statement of operations. Additional information concerning these services and fees is contained in the Funds’ prospectuses.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), an indirect wholly owned subsidiary of The Bank of New York Mellon Corporation, serves as the Funds’ administrator, and in that capacity, performs various administrative and accounting services for each Fund. BNY Mellon also serves as the Funds’ transfer agent, dividend disbursing agent and registrar. An officer of BNY Mellon serves as Assistant Treasurer to the Funds. Total fees accrued by the Funds for administration and accounting services for the year ended December 31, 2015 were as follows:
| Administration and Accounting Fees |
||||
| Matthews Asia Strategic Income Fund | $5,399 | |||
| Matthews Asian Growth and Income Fund | 308,810 | |||
| Matthews Asia Dividend Fund | 506,832 | |||
| Matthews China Dividend Fund | 14,287 | |||
| Matthews Asia Value Fund | 9 | |||
| Matthews Asia Focus Fund | 1,146 | |||
| Matthews Asia Growth Fund | 72,251 | |||
| Matthews Pacific Tiger Fund | 657,337 | |||
| Matthews Asia ESG Fund | 192 | |||
| Matthews Emerging Asia Fund | 13,297 | |||
| Matthews China Fund | 151,438 | |||
| Matthews India Fund | 122,373 | |||
| Matthews Japan Fund | 94,121 | |||
| Matthews Korea Fund | 16,399 | |||
| Matthews Asia Small Companies Fund | 57,520 | |||
| Matthews China Small Companies Fund | 1,791 | |||
| Matthews Asia Science and Technology Fund | 14,165 | |||
Brown Brothers Harriman & Co. serves as the Funds’ custodian. Foreside Funds Distributors LLC, serves as the Funds’ distributor in the United States pursuant to an Underwriting Agreement. Matthews Asia Funds are distributed in Latin America by HMC Partners.
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Table of Contents
Notes to Financial Statements (continued)
Cross trades for the year ended December 31, 2015, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which Matthews International Capital Management, LLC serves as investment advisor. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.
As of December 31, 2015, Matthews and its affiliates held 370,411 shares of the Matthews China Small Companies Fund, representing approximately 15% of that Fund’s outstanding shares.
As of December 31, 2015, Matthews and its affiliates held 1,383,209 shares of the Matthews Asia Strategic Income Fund, representing approximately 22% of that Fund’s outstanding shares.
As of December 31, 2015, Matthews and its affiliates held 168,743 shares of the Matthews Asia Focus Fund, representing approximately 13% of that Fund’s outstanding shares.
As of December 31, 2015, Matthews and its affiliates held 190,905 shares of the Matthews Asia ESG Fund, representing approximately 36% of that Fund’s outstanding shares.
As of December 31, 2015, Matthews and its affiliates held 94,249 shares of the Matthews Asia Value Fund, representing approximately 54% of that Fund’s outstanding shares.
| 6. | INVESTMENTS |
The value of investment transactions made for affiliated and unaffiliated holdings for the year ended December 31, 2015 were as follows:
| Affiliated Purchases | Proceeds from Affiliated Sales |
Unaffiliated Purchases | Proceeds from Unaffiliated Sales |
|||||||||||||
| Matthews Asia Strategic Income Fund | $— | $— | $32,426,493 | $35,548,979 | ||||||||||||
| Matthews Asian Growth and Income Fund | — | — | 618,817,959 | 1,769,760,356 | ||||||||||||
| Matthews Asia Dividend Fund | 54,833,390 | 20,899,575 | 1,801,464,058 | 2,116,590,663 | ||||||||||||
| Matthews China Dividend Fund | — | — | 165,523,862 | 135,565,439 | ||||||||||||
| Matthews Asia Value Fund | — | — | 1,483,256 | 142,595 | ||||||||||||
| Matthews Asia Focus Fund | — | — | 3,130,891 | 4,301,722 | ||||||||||||
| Matthews Asia Growth Fund | — | — | 254,991,531 | 289,389,778 | ||||||||||||
| Matthews Pacific Tiger Fund | 93,097,520 | 53,825,246 | 900,070,011 | 1,954,956,485 | ||||||||||||
| Matthews Asia ESG Fund | — | — | 5,763,880 | 752,324 | ||||||||||||
| Matthews Emerging Asia Fund | — | — | 64,115,814 | 19,237,728 | ||||||||||||
| Matthews China Fund | — | — | 603,874,891 | 883,485,745 | ||||||||||||
| Matthews India Fund | 35,942,361 | 1,405,655 | 581,072,943 | 140,772,015 | ||||||||||||
| Matthews Japan Fund | 40,967,075 | 483,811 | 1,332,314,980 | 275,182,437 | ||||||||||||
| Matthews Korea Fund | — | — | 40,847,176 | 79,089,909 | ||||||||||||
| Matthews Asia Small Companies Fund | 14,394,911 | — | 344,866,333 | 329,445,055 | ||||||||||||
| Matthews China Small Companies Fund | — | — | 15,706,729 | 16,488,564 | ||||||||||||
| Matthews Asia Science and Technology Fund | — | — | 125,297,215 | 158,100,070 | ||||||||||||
| 7. | HOLDINGS OF 5% VOTING SHARES OF PORTFOLIO COMPANIES |
The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting shares. During the year ended December 31, 2015, the Funds below held 5% or more of the outstanding voting shares of the noted portfolio companies. During this period, other Funds in the Trust may also have held voting shares of the issuers at levels below 5%.
Investments in affiliates:
A summary of transactions in securities of issuers affiliated with a Fund for the year ended December 31, 2015 is as follows:
| Shares Held at Dec. 31, 2014 |
Shares Purchased |
Shares Sold |
Shares Held at Dec. 31, 2015 |
Value at Dec. 31, 2015 |
Dividend Income Jan. 1, 2015– Dec. 31, 2015 |
Net Realized Gain (Loss) Jan. 1, 2015– Dec. 31, 2015 |
||||||||||||||||||||||
| MATTHEWS ASIAN GROWTH AND INCOME FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| CITIC Telecom International Holdings, Ltd.† |
188,818,250 | — | 188,818,250 | — | $— | $— | $— | |||||||||||||||||||||
| Total Affiliates |
$— | $— | $— | |||||||||||||||||||||||||
| MATTHEWS ASIA DIVIDEND FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| Anritsu Corp. |
6,853,300 | 1,204,800 | 493,600 | 7,564,500 | $49,563,094 | $1,492,743 | ($2,212,956) | |||||||||||||||||||||
| Ascendas India Trust |
55,065,000 | — | 1,594,300 | 53,470,700 | 32,808,738 | 2,052,190 | (272,425 | ) | ||||||||||||||||||||
| Breville Group, Ltd. |
10,847,453 | — | 203,434 | 10,644,019 | 57,515,357 | 2,157,910 | (499,012 | ) | ||||||||||||||||||||
| CapitaLand Retail China Trust, REIT |
52,179,400 | — | 8,947,000 | 43,232,400 | 45,342,034 | 3,589,911 | 4,816,676 | |||||||||||||||||||||
| China Machinery Engineering Corp. H Shares |
— | 55,225,000 | 1,414,000 | 53,811,000 | 39,262,849 | 1,787,189 | (206,234 | ) | ||||||||||||||||||||
| Greatview Aseptic Packaging Co., Ltd. |
110,945,000 | — | 1,915,000 | 109,030,000 | 49,294,621 | 2,861,572 | (305,699 | ) | ||||||||||||||||||||
| Minth Group, Ltd. |
61,267,000 | — | 1,732,000 | 59,535,000 | 118,275,877 | 4,009,279 | 2,322,239 | |||||||||||||||||||||
| Pigeon Corp.† |
2,377,800 | 4,755,600 | †† | 3,327,300 | 3,806,100 | — | — | — | ||||||||||||||||||||
| Springland International Holdings, Ltd.† |
138,171,000 | — | 138,171,000 | — | — | — | — | |||||||||||||||||||||
| St. Shine Optical Co., Ltd. † |
2,674,000 | 1,057,000 | 1,348,000 | 2,383,000 | — | — | — | |||||||||||||||||||||
| Xingda International Holdings, Ltd. H Shares† |
87,141,000 | — | 87,141,000 | — | — | — | — | |||||||||||||||||||||
| Yuexiu Transport Infrastructure, Ltd. |
109,490,000 | — | 168,000 | 109,322,000 | 68,286,284 | 4,092,447 | 403 | |||||||||||||||||||||
| Total Affiliates |
$460,348,854 | $22,043,241 | $3,642,992 | |||||||||||||||||||||||||
| 144 | MATTHEWS ASIA FUNDS |
Table of Contents
| Shares Held at Dec. 31, 2014 |
Shares Purchased |
Shares Sold |
Shares Held at Dec. 31, 2015 |
Value at Dec. 31, 2015 |
Dividend Income Jan. 1, 2015– Dec. 31, 2015 |
Net Realized Gain (Loss) Jan. 1, 2015– Dec. 31, 2015 |
||||||||||||||||||||||
| MATTHEWS PACIFIC TIGER FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| Cheil Worldwide, Inc. |
6,420,440 | — | 266,143 | 6,154,297 | $107,636,527 | $— | $2,266,723 | |||||||||||||||||||||
| Dongbu Insurance Co., Ltd.† |
4,020,500 | — | 771,381 | 3,249,119 | — | — | — | |||||||||||||||||||||
| Fuyao Glass Industry Group Co., Ltd. H Shares |
— | 31,836,000 | — | 31,836,000 | 76,461,314 | — | — | |||||||||||||||||||||
| Green Cross Corp. |
1,008,655 | — | 161,783 | 846,872 | 131,010,777 | 905,087 | 6,200,002 | |||||||||||||||||||||
| Hyflux, Ltd. |
65,284,280 | — | 22,199,750 | 43,084,530 | 17,101,875 | 1,108,752 | (14,588,250 | ) | ||||||||||||||||||||
| Synnex Technology International Corp. |
102,065,354 | — | 3,874,000 | 98,191,354 | 95,267,555 | 10,701,054 | (876,059 | ) | ||||||||||||||||||||
| Tata Power Co., Ltd. |
162,545,436 | 13,000,000 | 9,925,000 | 165,620,436 | 169,173,116 | 3,553,739 | (12,399,093 | ) | ||||||||||||||||||||
| Total Affiliates |
$596,651,164 | $16,268,632 | ($19,396,677) | |||||||||||||||||||||||||
| MATTHEWS INDIA FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| eClerx Services, Ltd. |
1,189,293 | 2,005,664 | ††† | 59,376 | 3,135,581 | $67,149,179 | $1,268,206 | $251,540 | ||||||||||||||||||||
| VST Industries, Ltd. |
855,933 | 359,771 | — | 1,215,704 | 31,082,796 | 1,310,066 | — | |||||||||||||||||||||
| Total Affiliates |
$98,231,975 | $2,578,272 | $251,540 | |||||||||||||||||||||||||
| MATTHEWS JAPAN FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| AIT Corp. |
678,700 | 499,000 | 47,400 | 1,130,300 | $10,956,219 | $352,952 | $142,916 | |||||||||||||||||||||
| Daiken Medical Co., Ltd. |
711,600 | 1,043,600 | — | 1,755,200 | 14,950,699 | 179,257 | — | |||||||||||||||||||||
| eGuarantee, Inc. |
401,000 | 440,800 | — | 841,800 | 18,101,879 | 104,565 | — | |||||||||||||||||||||
| MORESCO Corp. |
400,300 | 374,200 | — | 774,500 | 10,886,881 | 204,126 | — | |||||||||||||||||||||
| N Field Co., Ltd. |
276,800 | 729,600 | — | 1,006,400 | 10,682,592 | 41,827 | — | |||||||||||||||||||||
| Total Affiliates |
$65,578,270 | $882,727 | $142,916 | |||||||||||||||||||||||||
| MATTHEWS ASIA SMALL COMPANIES FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| Ezwelfare Co., Ltd.† |
742,858 | 131,365 | 874,223 | — | $— | $— | $— | |||||||||||||||||||||
| FineTek Co., Ltd. |
— | 3,208,920 | ††† | 16,000 | 3,192,920 | 7,205,664 | 368,679 | (32,275 | ) | |||||||||||||||||||
| SaraminHR Co., Ltd.† |
682,434 | — | 682,434 | — | — | — | — | |||||||||||||||||||||
| PT Wismilak Inti Makmur† |
107,640,100 | 6,710,500 | 25,088,700 | 89,261,900 | — | — | — | |||||||||||||||||||||
| Total Affiliates |
$7,205,664 | $368,679 | ($32,275) | |||||||||||||||||||||||||
| † | Issuer was not an affiliated company as of December 31, 2015. |
| †† | Includes stock split during the period. |
| ††† | Includes stock dividend during the period. |
| 8. | INCOME TAX INFORMATION INCOME AND WITHHOLDING TAXES |
It is the policy of the Funds to comply with all requirements of the Internal Revenue Code of 1986, as amended (“the Code”), applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. The Funds have met the requirements of the Code applicable to regulated investment companies for the year ended December 31, 2015. Therefore, no federal income tax provision is required.
Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (current and prior three tax years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
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Notes to Financial Statements (continued)
As of December 31, 2015, the components of accumulated earnings/deficit on tax basis were as follows:
| Undistributed Ordinary Income |
Undistributed Long-Term Capital Gains |
Capital Loss Carryforwards |
||||||||||
| Matthews Asia Strategic Income Fund | $— | $— | ($1,535,532 | ) | ||||||||
| Matthews Asian Growth and Income Fund | — | 40,554,606 | — | |||||||||
| Matthews Asia Dividend Fund | — | — | — | |||||||||
| Matthews China Dividend Fund | — | 645,489 | — | |||||||||
| Matthews Asia Value Fund | 16,386 | — | — | |||||||||
| Matthews Asia Focus Fund | 80,691 | — | (637,245 | ) | ||||||||
| Matthews Asia Growth Fund | 6,045,112 | — | (19,506,205 | ) | ||||||||
| Matthews Pacific Tiger Fund | 15,495,421 | — | — | |||||||||
| Matthews Asia ESG Fund | 27,652 | — | (29,988 | ) | ||||||||
| Matthews Emerging Asia Fund | 276,735 | — | (883,817 | ) | ||||||||
| Matthews China Fund | — | 19,701,557 | — | |||||||||
| Matthews India Fund | 112,375 | 11,087,490 | — | |||||||||
| Matthews Japan Fund | 2,671,495 | — | (64,759,904 | ) | ||||||||
| Matthews Korea Fund | 2,182,168 | 7,169,413 | — | |||||||||
| Matthews Asia Small Companies Fund | 1,244,171 | — | (12,769,786 | ) | ||||||||
| Matthews China Small Companies Fund | 1,346 | 747,896 | — | |||||||||
| Matthews Asia Science and Technology Fund | — | 10,439,580 | — | |||||||||
| Late Year Losses* |
Other Temporary Differences |
Unrealized Appreciation (Depreciation)** |
Total Accumulated Earnings/Deficit |
|||||||||||||
| Matthews Asia Strategic Income Fund | ($179,842 | ) | $— | ($3,229,900 | ) | ($4,945,274 | ) | |||||||||
| Matthews Asian Growth and Income Fund | (366,546 | ) | — | 206,388,329 | 246,576,389 | |||||||||||
| Matthews Asia Dividend Fund | (32,923,665 | ) | (27,008 | ) | 488,373,725 | 455,423,052 | ||||||||||
| Matthews China Dividend Fund | (87,749 | ) | — | 4,701,890 | 5,259,630 | |||||||||||
| Matthews Asia Value Fund | — | — | (25,360 | ) | (8,974 | ) | ||||||||||
| Matthews Asia Focus Fund | — | — | (1,533,983 | ) | (2,090,537 | ) | ||||||||||
| Matthews Asia Growth Fund | — | — | 129,242,658 | 115,781,565 | ||||||||||||
| Matthews Pacific Tiger Fund | — | — | 1,414,766,421 | 1,430,261,842 | ||||||||||||
| Matthews Asia ESG Fund | — | — | (151,962 | ) | (154,298 | ) | ||||||||||
| Matthews Emerging Asia Fund | — | (212,031 | ) | 4,579,398 | 3,760,285 | |||||||||||
| Matthews China Fund | (2,902,517 | ) | — | 73,032,675 | 89,831,715 | |||||||||||
| Matthews India Fund | — | (11,653 | ) | 240,416,115 | 251,604,327 | |||||||||||
| Matthews Japan Fund | — | — | 165,208,185 | 103,119,776 | ||||||||||||
| Matthews Korea Fund | — | — | 63,301,929 | 72,653,510 | ||||||||||||
| Matthews Asia Small Companies Fund | — | — | 29,673,107 | 18,147,492 | ||||||||||||
| Matthews China Small Companies Fund | — | — | 600,246 | 1,349,488 | ||||||||||||
| Matthews Asia Science and Technology Fund | — | — | 38,871,441 | 49,311,021 | ||||||||||||
| * | The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next fiscal year. |
| ** | The differences between book-basis and tax-basis unrealized appreciation/depreciation is attributable primarily to the tax deferral of losses on wash sales and passive foreign investment company (PFIC) mark to market adjustments. |
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As of December 31, 2015, the Funds have capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| Amount With No Expiration* | ||||||||||||||||||||
| LOSSES DEFERRED EXPIRING IN: | 2016 | 2017 |
Short-term Losses |
Long-term Losses |
Total | |||||||||||||||
| Matthews Asia Strategic Income Fund | $— | $— | $1,535,532 | $— | $1,535,532 | |||||||||||||||
| Matthews Asia Focus Fund | — | — | 128,568 | 508,677 | 637,245 | |||||||||||||||
| Matthews Asia Growth Fund | — | 19,506,205 | — | — | 19,506,205 | |||||||||||||||
| Matthews Asia ESG Fund | — | — | 29,988 | — | 29,988 | |||||||||||||||
| Matthews Emerging Asia Fund | — | — | — | 883,817 | 883,817 | |||||||||||||||
| Matthews Japan Fund | 20,727,478 | 44,032,426 | — | — | 64,759,904 | |||||||||||||||
| Matthews Asia Small Companies Fund | — | — | 12,769,786 | — | 12,769,786 | |||||||||||||||
| * | Post-Enactment Losses: Must be utilized prior to losses subject to expiration. |
The following Funds utilized capital loss carryforwards in the current year:
| Utilized Capital Loss Carryforwards |
||||
| Matthews Asia Strategic Income Fund | $131,018 | |||
| Matthews Asia Dividend Fund | 182,779,099 | |||
| Matthews Asia Growth Fund | 6,923,705 | |||
| Matthews Japan Fund | 23,506,272 | |||
| Matthews China Small Companies Fund | 734,068 | |||
Under the Regulated Investment Company Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
U.S. GAAP requires that certain components of net assets be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or NAV. The permanent differences are primarily attributable to investments in PFICs, non-deductible expenses, foreign currency reclassification, capital gains tax, re-characterization of distributions, adjustments on distributions related to taxable spinoffs and the utilization of accumulated earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction for income tax purposes. For the year ended December 31, 2015, permanent differences in book and tax accounting have been reclassified to paid-in capital, undistributed net investment income (loss) and accumulated realized gain (loss) as follows:
| Increase/ (Decrease) Paid-in-Capital |
Increase/(Decrease) Undistributed Net Investment Income/(Loss) |
Increase/(Decrease) Accumulated Realized |
||||||||||
| Matthews Asia Strategic Income Fund | $— | ($1,086,626 | ) | $1,086,626 | ||||||||
| Matthews Asian Growth and Income Fund | — | 3,866,071 | (3,866,071 | ) | ||||||||
| Matthews Asia Dividend Fund | (96,561 | ) | 43,531,280 | (43,434,719 | ) | |||||||
| Matthews China Dividend Fund | — | 1,446,644 | (1,446,644 | ) | ||||||||
| Matthews Asia Value Fund | (7,928 | ) | 6,940 | 988 | ||||||||
| Matthews Asia Focus Fund | — | 21,510 | (21,510 | ) | ||||||||
| Matthews Asia Growth Fund | — | 6,930,533 | (6,930,533 | ) | ||||||||
| Matthews Pacific Tiger Fund | 119,162,538 | (12,995,390 | ) | (106,167,148 | ) | |||||||
| Matthews Asia ESG Fund | (52,457 | ) | 53,774 | (1,317 | ) | |||||||
| Matthews Emerging Asia Fund | — | 4,068 | (4,068 | ) | ||||||||
| Matthews China Fund | 13,916,644 | (1,012,648 | ) | (12,903,996 | ) | |||||||
| Matthews India Fund | — | 2,246,623 | (2,246,623 | ) | ||||||||
| Matthews Japan Fund | — | 2,153,144 | (2,153,144 | ) | ||||||||
| Matthews Korea Fund | 1,742,351 | (329,260 | ) | (1,413,091 | ) | |||||||
| Matthews Asia Small Companies Fund | (1,113 | ) | (247,960 | ) | 249,073 | |||||||
| Matthews China Small Companies Fund | 234,960 | 7,710 | (242,670 | ) | ||||||||
| Matthews Asia Science and Technology Fund | 3,039,193 | 507,410 | (3,546,603 | ) | ||||||||
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Notes to Financial Statements (continued)
| 9. | SUBSEQUENT EVENTS |
Effective February 1, 2016, Mizuho Bank, Ltd. (“Mizuho”), acquired an ownership interest in Matthews equal to approximately 16% of the outstanding units of Matthews previously held by a broad group of existing equity holders. Along with that transaction, Matthews adopted a new governance structure, through eliminating the managing member roles and expanding and providing additional authority to its Board of Directors. The governance changes constituted a change of control of Matthews and, therefore, technically resulted in an “assignment” of the Investment Advisory Agreement then in effect for each Fund, and its automatic termination as required by its terms and the Investment Company Act of 1940. The shareholders of each Fund approved a new Investment Advisory Agreement with Matthews, which became effective on February 1, 2016 upon the closing of those transactions and the automatic termination of the prior Investment Advisory Agreement. The new Investment Advisory Agreement has substantively the same terms as the prior Investment Advisory Agreement, including the same fee rates, except for the commencement and renewal dates.
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Report of Independent Registered
Public Accounting Firm
To the Board of Trustees and Shareholders of
Matthews Asia Funds:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Matthews Asia Strategic Income Fund, Matthews Asian Growth and Income Fund, Matthews Asia Dividend Fund, Matthews China Dividend Fund, Matthews Asia Value Fund, Matthews Asia Focus Fund, Matthews Asia Growth Fund, Matthews Pacific Tiger Fund, Matthews Asia ESG Fund, Matthews Emerging Asia Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, Matthews China Small Companies Fund and Matthews Asia Science and Technology Fund (hereinafter referred as the “Funds”) at December 31, 2015, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (consolidated financial statements and consolidated financial highlights for Matthews China Fund and Matthews Asia Dividend Fund) (hereinafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers, LLP
San Francisco, California
February 26, 2016
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For shareholders who do not have a December 31, 2015 tax year-end, this notice is for informational purposes. For the period January 1, 2015 to December 31, 2015, the Funds report the following items with regard to distributions paid during the period. All reportings are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of each Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
1. Qualified Dividend Income
The Funds report a portion of the ordinary income distributed during the year ended December 31, 2015 as Qualified Dividend Income (“QDI”) as defined in the Internal Revenue code as follows:
| QDI Portion | ||||
| Matthews Asia Strategic Income Fund | 1.94% | |||
| Matthews Asian Growth and Income Fund | 64.31% | |||
| Matthews Asia Dividend Fund | 100.00% | |||
| Matthews China Dividend Fund | 63.25% | |||
| Matthews Asia Value Fund | 0.00% | |||
| Matthews Asia Focus Fund | 80.43% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 44.66% | |||
| Matthews Asia ESG Fund | 56.53% | |||
| Matthews Emerging Asia Fund | 100.00% | |||
| Matthews China Fund | 81.42% | |||
| Matthews India Fund | 100.00% | |||
| Matthews Japan Fund | 0.00% | |||
| Matthews Korea Fund | 94.96% | |||
| Matthews Asia Small Companies Fund | 100.00% | |||
| Matthews China Small Companies Fund | 29.76% | |||
| Matthews Asia Science and Technology Fund | 0.00% | |||
2. Dividends Received Deduction
The Funds report a Dividend Received Deduction pursuant to Section 854 of the Internal Revenue Code for the year ended December 31, 2015 as follows:
| Matthews Asia Strategic Income Fund | 0.00% | |||
| Matthews Asian Growth and Income Fund | 2.31% | |||
| Matthews Asia Dividend Fund | 3.45% | |||
| Matthews China Dividend Fund | 4.04% | |||
| Matthews Asia Value Fund | 0.00% | |||
| Matthews Asia Focus Fund | 12.50% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 1.27% | |||
| Matthews Asia ESG Fund | 0.00% | |||
| Matthews Emerging Asia Fund | 0.00% | |||
| Matthews China Fund | 0.00% | |||
| Matthews India Fund | 0.00% | |||
| Matthews Japan Fund | 0.00% | |||
| Matthews Korea Fund | 0.00% | |||
| Matthews Asia Small Companies Fund | 0.00% | |||
| Matthews China Small Companies Fund | 0.00% | |||
| Matthews Asia Science and Technology Fund | 0.00% |
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3. Long-Term Capital Gain Distributions
The Funds report Long-Term Capital Gain distributions pursuant to Section 852(b)(3) of the Internal Revenue Code for the year ended December 31, 2015 as follows:
| Long-Term Capital Gains | ||||
| Matthews Asian Growth and Income Fund | $134,712,377 | |||
| Matthews Asia Dividend Fund | 71,669,071 | |||
| Matthews China Dividend Fund | 7,709,592 | |||
| Matthews Asia Focus Fund | 61,165 | |||
| Matthews Pacific Tiger Fund | 685,544,217 | |||
| Matthews Emerging Asia Fund | 432,972 | |||
| Matthews China Fund | 127,726,027 | |||
| Matthews India Fund | 13,471,979 | |||
| Matthews Korea Fund | 12,118,013 | |||
| Matthews China Small Companies Fund | 1,862,709 | |||
| Matthews Asia Science and Technology Fund | 25,836,171 | |||
4. Foreign Taxes Paid
The Funds have elected to pass through to their shareholders the foreign taxes paid for year ended December 31, 2015 as follows:
| Foreign Source Income | Foreign Taxes Paid | |||||||
| Matthews Asia Strategic Income Fund | $3,829,016 | $84,023 | ||||||
| Matthews Asian Growth and Income Fund | 136,221,960 | 5,652,434 | ||||||
| Matthews Asia Dividend Fund | 162,653,864 | 10,381,648 | ||||||
| Matthews China Dividend Fund | 5,790,247 | 210,539 | ||||||
| Matthews Asia Value Fund | 5,764 | 812 | ||||||
| Matthews Asia Focus Fund | 387,991 | 13,720 | ||||||
| Matthews Pacific Tiger Fund | 219,250,295 | 10,976,450 | ||||||
| Matthews Asia ESG Fund | 50,415 | 6,267 | ||||||
| Matthews Emerging Asia Fund | 3,364,160 | 286,590 | ||||||
| Matthews China Fund | 19,900,425 | 103,503 | ||||||
| Matthews Korea Fund | 3,088,190 | 509,194 | ||||||
| Matthews Asia Small Companies Fund | 12,765,019 | 1,056,228 | ||||||
| Matthews China Small Companies Fund | 529,412 | 11,589 | ||||||
5. Qualified Interest Income
The Funds report a portion of the net income dividends distributed during the year ended December 31, 2015, as Qualified Interest Income (QII), as defined in the Internal Revenue Code as follows:
| QII Portion | ||||
| Matthews Asia Strategic Income Fund | 3.46% | |||
| Matthews Asian Growth and Income Fund | 0.02% | |||
| Matthews Asia Dividend Fund | 0.02% | |||
| Matthews China Dividend Fund | 0.16% | |||
| Matthews Asia Value Fund | 0.17% | |||
| Matthews Asia Focus Fund | 0.07% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 0.03% | |||
| Matthews Asia ESG Fund | 0.00% | |||
| Matthews Emerging Asia Fund | 0.05% | |||
| Matthews China Fund | 0.02% | |||
| Matthews India Fund | 0.03% | |||
| Matthews Japan Fund | 0.00% | |||
| Matthews Korea Fund | 0.07% | |||
| Matthews Asia Small Companies Fund | 0.05% | |||
| Matthews China Small Companies Fund | 0.05% | |||
| Matthews Asia Science and Technology Fund | 0.00% | |||
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Tax Information (unaudited) (continued)
6. Qualified Short Term Capital Gain Dividends
The Funds report a portion of the short term capital gain dividends distributed during the year ended December 31, 2015, as Qualified Short-Term Gain, as defined in the Internal Revenue Code as follows:
| Short-Term Gains | ||||
| Matthews Asia Strategic Income Fund | 0.00% | |||
| Matthews Asian Growth and Income Fund | 100.00% | |||
| Matthews Asia Dividend Fund | 0.00% | |||
| Matthews China Dividend Fund | 100.00% | |||
| Matthews Asia Value Fund | 0.00% | |||
| Matthews Asia Focus Fund | 0.00% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 0.00% | |||
| Matthews Asia ESG Fund | 0.00% | |||
| Matthews Emerging Asia Fund | 0.00% | |||
| Matthews China Fund | 100.00% | |||
| Matthews India Fund | 100.00% | |||
| Matthews Japan Fund | 0.00% | |||
| Matthews Korea Fund | 100.00% | |||
| Matthews Asia Small Companies Fund | 0.00% | |||
| Matthews China Small Companies Fund | 0.00% | |||
| Matthews Asia Science and Technology Fund | 0.00% | |||
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Approval of Investment Advisory Agreements (unaudited)
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Approval of Investment Advisory Agreements (unaudited) (continued)
| 154 | MATTHEWS ASIA FUNDS |
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Approval of Investment Advisory Agreements (unaudited) (continued)
| 156 | MATTHEWS ASIA FUNDS |
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Approval of Investment Advisory Agreements (unaudited) (continued)
| derived by Matthews from its relationship with the Fund are limited solely to research benefits received in exchange for “soft dollars.” |
No single factor was determinative of the Board’s decision to approve the Advisory Agreements, but rather the Trustees based their determination on the total mix of information available to them. After considering the factors described above, the Board concluded that the terms of the advisory arrangements would be fair and reasonable to the Fund in light of the services that Matthews is expected to provide, and that the Fund’s shareholders are expected to receive reasonable value in return for the advisory fees paid. For these reasons, the approval of the Advisory Agreements with respect to the Fund would be in the best interests of the Fund and its shareholders.
Each Advisory Agreement may be terminated by the Trustees on behalf of the Fund or by Matthews upon 60 days’ prior written notice without penalty. Each Advisory Agreement will also terminate automatically in the event of its assignment, as defined in the 1940 Act.
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Trustees and Officers of the Funds (unaudited)
The operations of each Fund are under the direction of the Board of Trustees. The Board of Trustees establishes each Fund’s policies and oversees and reviews the management of each Fund. The Board meets regularly to review the activities of the officers, who are responsible for the day-to-day operations of the Funds. The Statement of Additional Information, which includes additional information about Fund Trustees, is available without charge by calling 800.789.2742 or by visiting the Funds’ website, matthewsasia.com. The Trustees and executive officers of the Funds, their year of birth, business address and principal occupations during the past five years are set forth below:
| Name, Year of Birth, Address and Position(s) Held with Trust |
Term of Office and Length of Time Served1 |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in |
Other Trusteeships/Directorships (number of portfolios) Held by Trustee | ||||
| INDEPENDENT TRUSTEES | ||||||||
| JONATHAN F. ZESCHIN Born 1953 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Chairman of the Board of Trustees and Trustee |
Trustee since 2007 and Chairman of the Board since 2014 |
Partner (since 2009), Essential Investment Partners, LLC (investment advisory and wealth management); President (since 2000), Essential Advisers Inc. (financial holding company); Managing Partner (since 1998), JZ Partners LLC (consulting). | 19 | Director (since 2013), Matthews A Share Selections Fund, LLC (2 Portfolios); Trustee and Chairman of the Board, DCA Total Return Fund (2005–2011) (1 Portfolio) and DCW Total Return Fund (2007–2010) (1 Portfolio); Trustee (2002–2007), ICON Funds (17 Portfolios); Director (2002-2004), Wasatch Funds (10 portfolios) | ||||
| TOSHI SHIBANO Born 1950 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2003 | Faculty (since 2000), General Electric’s John F. Welch Leadership Center; President (since 1995), Strategic Value Creation, Inc. (executive development programs); Faculty Director and Executive Education Lecturer (since 1995), Center for Executive Education, Haas School of Business, UC Berkeley; Adjunct Professor (2000–2011), Columbia Graduate School of Business; Associate Professor (2001–2005), Thunderbird School of Global Management; Visiting Assistant Professor (2000), Stanford Graduate School of Business; Assistant Professor (1995–2000), University of Chicago Graduate School of Business; Assistant Professor (1988–1995), Haas School of Business, UC Berkeley. |
19 | Director (since 2013), Matthews A Share Selections Fund, LLC (2 Portfolios) | ||||
| RHODA ROSSMAN Born 1958 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2006 | Vice President, Corporate Investment Officer (2007–2010); Senior Vice President and Treasurer (2003–2007), The PMI Group, Inc. (mortgage insurer). | 19 | Director (since 2013), Matthews A Share Selections Fund, LLC (2 Portfolios) | ||||
| RICHARD K. LYONS Born 1961 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2010 | Dean (since 2008), Haas School of Business, UC Berkeley; Chief Learning Officer (2006–2008), Goldman Sachs (investment banking and investment management); 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. |
19 | Director (since 2013), Matthews A Share Selections Fund, LLC (2 Portfolios); Trustee (2001–2006), Barclays Global Investor Funds and Master Investment Portfolios (15 Portfolios); Director (2000–2006), iShares, Inc. (24 Portfolios) and iShares Trust (over 70 Portfolios); Trustee (1994–2006) and Chairman of the Board (2000–2006), Matthews International Funds (9 Portfolios) | ||||
| 1 | Each Trustee serves for an indefinite term, until retirement age or until his/her successor is elected. Officers serve at the pleasure of the Board of Trustees. |
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| Name, Year of Birth, Address and Position(s) Held with 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 | ||||||||
| CHRISTOPHER LEE Born 1967 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2015 | Lecturer (part-time) (since 2013), The Chinese University of Hong Kong; Private Investor and Partner (since 2012), FAA Investments (financial holding company); Managing Director, Asia Region, and Head of Global Markets Investment Products & db-X (2010–2012), Deutsche Bank AG (financial services); Managing Director, Equity Risk Management Products, and Head of Intermediary Business (2002–2010), UBS AG (financial services); Vice President, Global Markets & Investment Bank (2000–2002), Vice President, International Private Clients Group (1997–2000), Associate, Debt and Equity Markets Group (1995–1997), Merrill Lynch & Co., Inc. (brokerage and investment management). |
19 | Director (since 2015), Matthews A Share Selections Fund, LLC (2 Portfolios); Director (since 2013), Asian Masters Fund (Australia) (1 Portfolio); Trustee (since 2013), African Wildlife Foundation; Trustee (since 2010), Oakland Museum of California | ||||
| GALE K. CARUSO Born 1957 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2015 | Formerly President and Chief Executive Officer (1999–2003), Zurich Kemper Life (life insurance and annuities); Chairman, President and Chief Executive Officer (1994–1999), Scudder Canada Investor Services, Ltd. (investment management); Managing Director (1986–1999), Scudder Kemper Investments, Inc. (investment management). | 19 | Director (since 2015), Matthews A Share Selections Fund, LLC (2 portfolios); Trustee (since 2006), Pacific Select Fund (58 Portfolios) and Pacific Life Funds (33 Portfolios); Director (2005–2012), Make-A-Wish Foundation of Maine; Director (2005–2009), LandAmerica Financial Group, Inc.; Director (2001–2003),Make- A-Wish of Northern Illinois; former member of the Board of Directors, Illinois Life Insurance Council. | ||||
| Name, Year of Birth, Address and Position(s) Held with 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 | ||||
| INTERESTED TRUSTEES2 | ||||||||
| G. PAUL MATTHEWS Born 1956 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee |
Since 2007 | Director (since 1996), Chairman (1996–2009), Managing Member (1996–2016), Portfolio Manager (1996–2012), Chief Investment Officer (1991–2007), Matthews (investment management); President (1994–2007), Matthews International Funds (registered investment company). | 19 | Director (since 2013), Matthews A Share Selections Fund, LLC (2 Portfolios); Director (since 2004), Matthews Asian Selections Funds PLC (Ireland) (1 Portfolio); Trustee (2001–2004) and Trustee and Chairman of Board (1994–1998), Matthews International Funds (7 Portfolios). | ||||
| WILLIAM J. HACKETT Born 1967 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Trustee and President |
President since 2008 and Trustee since 2015 | Chief Executive Officer (since 2009), President and Secretary (since 2007), Matthews (investment management); President (since 2013), Matthews A Share Selections Fund, LLC (registered investment company); Director (since 2010), Matthews Global Investors S.à r.l. (Luxembourg) (investment management); Director (since 2010), Matthews Global Investors (Hong Kong) Limited (investment management); Partner (2002–2007), Deloitte & Touche, LLP (accounting). | 19 | Chairman (since 2010), Matthews Asia Funds SICAV (Luxembourg) (13 Portfolios); Director (since 2009), Matthews Asian Selections Funds, PLC (Ireland) (1 Portfolio). | ||||
| 1 | Each trustee serves for an indefinite term, until retirement age or until his/her successor is elected. Officers serve at the pleasure of the Board of Trustees. |
| 2 | A trustee is considered an “interested person” of the Trust as defined under the 1940 Act because of an ownership interest in the Advisor or an office held with the Trust or the Advisor. |
| 160 | MATTHEWS ASIA FUNDS |
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| Name, Year of Birth, Address and Position(s) Held with Trust |
Term of Office and Length of Time Served1 |
Principal Occupation(s) During Past 5 Years | Other Trusteeships/ Directorships (number of portfolios) Held by Officer | |||
| OFFICERS WHO ARE NOT TRUSTEES | ||||||
| ROBERT J. HORROCKS, PHD Born 1968 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Vice President |
Since 2009 | Chief Investment Officer (since 2009), Director of Research (2008–2009), Matthews (investment management); Head of Research (2006–2008), Mirae Asset Management (investment management); Chief Investment Officer (2003–2006), Everbright Pramerica (investment management). | None | |||
| JOHN P. McGOWAN Born 1964 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Vice President and Secretary |
Since 2005 | Senior Vice President of Business Administration (since 2009), Chief Administrative Officer (2007–2008), Chief Operating Officer (2004–2007), Matthews (investment management); Vice President and Secretary (since 2013), Matthews A Share Selections Fund, LLC (registered investment company); Director (since 2010), Matthews Asia Funds SICAV (Luxembourg) (investments); Director (since 2010), Matthews Global Investors S.à r.l. (Luxembourg) (investment management); Director (since 2004), Matthews Asian Selections Funds, PLC (Ireland) (investments). | Director, Matthews Asian Selections Funds Plc (1 Portfolio); Director, Matthews Asia Funds SICAV (Luxembourg) (13 Portfolios). | |||
| SHAI A. MALKA Born 1973 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Treasurer |
Since 2005 | Vice President of Fund Accounting and Operations (since 2010), Senior Manager of Fund Accounting and Operations (2004–2009), Matthews (investment management); Treasurer (since 2013), Matthews A Share Selections Fund, LLC (registered investment company). | None | |||
| DAVID MONROE Born 1963 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Vice President |
Since 2014 | General Counsel (since 2015), Deputy General Counsel (2014), Matthews (investment management); Chief Legal Officer (2006–2013), Nikko Asset Management Co., Ltd. (investment management). | None | |||
| MANOJ K. POMBRA Born 1964 Four Embarcadero Center Suite 550 San Francisco, CA 94111 Chief Compliance Officer and Anti-Money Laundering Officer |
Since 2005 | Chief Compliance Officer and Anti-Money Laundering Officer (since 2005), Matthews (investment management); Senior Manager, Mutual Fund Compliance/Manager Portfolio Compliance (2001–2005), Franklin Templeton Investments (investment management). | None | |||
| 1 | Each trustee serves for an indefinite term, until retirement age or until his/her successor is elected. Officers serve at the pleasure of the Board of Trustees. |
| matthewsasia.com | 800.789.ASIA | 161 |
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| Matthews Asia Funds | ||
| INVESTMENT ADVISOR Matthews International Capital Management, LLC Four Embarcadero Center, Suite 550 San Francisco, CA 94111 800.789.ASIA
CUSTODIAN Brown Brothers Harriman & Co. 50 Milk Street Boston, MA 02109 |
ACCOUNT SERVICES Matthews Asia Funds P.O. Box 9791 Providence, RI 02940 800.789.ASIA
LEGAL COUNSEL Paul Hastings LLP 55 Second Street, 24th Floor San Francisco, CA 94105 | |
P.O. Box 9791 | Providence, RI 02940 | matthewsasia.com | 800.789.ASIA (2742)
Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC, Berwyn, Pennsylvania
Matthews Asia Funds are distributed in Latin America by HMC Partners
AR-1215-192M
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Item 2. Code of Ethics.
| (a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
| (c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
| (d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
| (a) | As of the end of the period covered by the report, the registrant’s board of directors has determined that the registrant has two audit committee financial experts serving on its audit committee, Toshi Shibano and Jonathan F. Zeschin, and that both are “independent.” |
| (b) | Prof. Shibano is a member of the Faculty of the General Electric Corporate Leadership Development Center and also serves as Executive Education Lecturer at the Haas School of Business at the University of California, Berkeley. He was an Adjunct Professor at the Columbia Graduate School of Business and has served on the faculties of Thunderbird American Graduate School of International Management, Stanford Graduate School of Business, the University of Chicago School of Business and the Australian Graduate School of Management at the University of New South Wales. He regularly reviews current research in accounting both for use in instruction of courses and for internal faculty evaluation. He has experience analyzing and evaluating financial statements at the appropriate level of complexity through his professional activities on the educational faculties referenced above. |
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| Prof. Shibano also has extensive experience in executive education worldwide (Hong Kong, Taiwan, Singapore, Finland, Italy, Mexico, India) and has developed innovative new programs in financial analysis, management control systems and strategy implementation. Prof. Shibano has published in the Journal of Accounting Research, the Journal of Accounting and Economics, the Rand Journal of Economics, and the Journal of Applied Corporate Finance, on the topics of strategic audit risk, accounting standard setting, international accounting standards, tax minimization, foreign currency risk management, and organizational structure. Prof. Shibano received his MBA from the Haas School at UC Berkeley and earned his PhD at the Stanford Graduate School of Business, earning the highest academic honors in both programs. Prof. Shibano has gained additional accounting expertise as the Audit Committee Chair of Matthews International Funds. |
| Mr. Zeschin is Partner of Essential Investment Partners, LLC, a wealth management and investment advisory firm. He is also the portfolio manager for that firm’s Essential Growth Portfolio. Essential Investment Partners, LLC succeeded to the business of Essential Advisers, Inc. He is Managing Partner of JZ Partners, LLC, a business consulting firm for investment managers. Prior to forming Essential Advisers, Inc., Mr. Zeschin held senior executive positions with Founders Asset Management, Inc., Invesco Fund Group, and Stein Roe & Farnham, Inc. Mr. Zeschin holds a Masters of Management from the Kellogg School at Northwestern University, with majors in Finance and Marketing, and a Bachelor in Business Administration in Accounting with distinction from the University of Michigan. He holds a Certified Public Accountant certificate from the state of Illinois and is a Certified Financial Planner certificant. Mr. Zeschin is a former chair of the ICI’s Accounting Treasurer’s Committee and a former member of the AICPA Investment Companies committee. Mr. Zeschin is currently the chairman of the Board of Trustees to two NYSE listed closed-end funds. He has served on the audit committees of mutual fund boards since 2002. He has experience analyzing and evaluating financial statements at the appropriate level of complexity through his professional activities on the educational faculties referenced above. Mr. Zeschin has gained additional expertise as a member of the Audit Committee of Matthews International Funds. |
Item 4. Principal Accountant Fees and Services.
Audit Fees
| (a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $446,520 in 2014 and $525,698 in 2015. |
Audit-Related Fees
| (b) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 in 2014 and $0 in 2015. |
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Tax Fees
| (c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $114,858 in 2014 and $124,963 in 2015. Tax fees include services provided by the principal accountant for tax return preparations. |
All Other Fees
| (d) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 in 2014 and $0 in 2015. |
| (e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
Pre-Approval of Auditor Services.
Pre-Approval Requirements. Before the Auditor is engaged by the Trust to render audit related or permissible non-audit services, either:
| (i) | The Audit Committee shall pre-approve all audit related services and permissible non-audit services (e.g., tax services) to be provided to the Trust; or |
| (ii) | The Audit Committee shall establish policies and procedures governing the Auditor’s engagement. Any such policies and procedures must (1) be detailed as to the particular service and (2) not involve any delegation of the Audit Committee’s responsibilities to the Adviser. The Audit Committee may delegate to one or more of its members the authority to grant pre-approvals. The pre-approval policies and procedures shall include the requirement that the decisions of any member to whom authority is delegated under this Section 4(e) shall be presented to the full Audit Committee at its next scheduled meeting. |
De Minimis Exceptions to Pre-Approval Requirements. Pre-approval for a service provided to the Trust other than audit, review or attest services is not required if: (1) the aggregate amount of all such non-audit services provided to the Trust constitutes not more than 5 percent of the total amount of revenues paid by the Trust to the Auditor during the fiscal year in which the non-audit services are provided; (2) such services were not recognized by the Trust at the time of the engagement to be non-audit services; and (3) such services are promptly brought to the attention of the Audit Committee and are approved by the Audit Committee or by one or more members of the Audit Committee to whom authority to grant such approvals has been delegated by the Audit Committee.
Pre-Approval of Non-Audit Services Provided to the Adviser and Certain Control Persons. With respect to services that have a direct impact on the operations or financial reporting of the Trust, the Audit Committee shall pre-approve all such non-audit services proposed to be provided by the Auditor to (i) the Adviser and (ii) any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the Trust.
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Application of De Minimis Exception: The de minimis exceptions set forth above under Section 4(e)(ii) apply to pre-approvals under this Section 4(e)(iii) as well, except that the “total amount of revenues” calculation for Section 4(e)(iii) services is based on the total amount of revenues paid to the Auditor by the Trust and any other entity that has its services approved under this Section (i.e., the Adviser or any control person).
| (e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: |
(b) Not applicable.
(c) 100%.
(d) Not applicable.
| (f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0% |
| (g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $466,862 in 2014 and $353,683 in 2015. |
| (h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
| (a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
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(b) Not applicable.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
| Item 8. Portfolio | Managers of Closed-End Management Investment Companies. |
Not applicable.
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
| (a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
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Item 12. Exhibits.
| (a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. | |||
| (a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |||
| (a)(3) | Not applicable. | |||
| (b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |||
| (12.other) Not applicable. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) Matthews International Funds | ||||
| By (Signature and Title)* /s/ William J. Hackett | ||||
| William J. Hackett, President | ||||
| (principal executive officer) | ||||
| Date 3/8/2016 | ||||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* /s/ William J. Hackett | ||||
| William J. Hackett, President | ||||
| (principal executive officer) | ||||
| Date 3/8/2016 | ||||
| By (Signature and Title)* /s/ Shai Malka |
||||
| Shai Malka, Treasurer | ||||
| (principal financial officer) | ||||
| Date 3/8/2016 | ||||
| * | Print the name and title of each signing officer under his or her signature. |