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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, 2016
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, 2016 | matthewsasia.com
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*The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016.
Cover photo: Conical Vietnamese hats, Hanoi, Vietnam
This report has been prepared for Matthews International Funds (d/b/a 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, 2016. 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, 2016)
| Investor Class | Average Annual Total Return† |
Inception |
2016 Annual Operating Expenses |
2016 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 STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Strategic Income Fund (MAINX) |
8.85% | 4.64% | n.a. | 4.45% | 11/30/11 | 1.33% | 1.15% | 1 | 1.28% | 1.12% | 1 | |||||||||||||||||||||||||
| Asia Credit Opportunities Fund (MCRDX) |
n.a. | n.a. | n.a. | 4.66% | 4/29/16 | 2.24% | 1.15% | 1 | 2.10% | 1.10% | 1 | |||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asian Growth and Income Fund (MACSX) |
1.34% | 5.05% | 4.75% | 9.04% | 9/12/94 | 1.09% | 1.09% | ‡2 | 1.09% | n.a. | ||||||||||||||||||||||||||
| Asia Dividend Fund (MAPIX) |
4.13% | 7.85% | 7.60% | 8.28% | 10/31/06 | 1.06% | 1.06% | ‡2 | 1.06% | 1.05% | 2 | |||||||||||||||||||||||||
| China Dividend Fund (MCDFX) |
5.70% | 11.11% | n.a. | 8.71% | 11/30/09 | 1.22% | n.a. | 1.19% | n.a. | |||||||||||||||||||||||||||
| ASIA VALUE STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Value Fund (MAVRX) |
7.43% | n.a. | n.a. | 5.50% | 11/30/15 | 11.48% | 1.50% | 3 | 36.42% | 1.50% | 3 | |||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Focus Fund (MAFSX) |
4.82% | n.a. | n.a. | -1.76% | 4/30/13 | 2.47% | 1.50% | 3 | 2.07% | 1.50% | 3 | |||||||||||||||||||||||||
| Asia Growth Fund (MPACX) |
0.92% | 7.49% | 4.89% | 8.25% | 10/31/03 | 1.14% | n.a. | 1.11% | n.a. | |||||||||||||||||||||||||||
| Pacific Tiger Fund (MAPTX) |
-0.16% | 6.67% | 6.57% | 8.11% | 9/12/94 | 1.09% | 1.08% | 2 | 1.09% | 1.07% | 2 | |||||||||||||||||||||||||
| Asia ESG Fund (MASGX) |
-1.40% | n.a. | n.a. | -5.24% | 4/30/15 | 3.54% | 1.48% | 3 | 9.09% | 1.44% | 3 | |||||||||||||||||||||||||
| Emerging Asia Fund (MEASX) |
19.25% | n.a. | n.a. | 8.64% | 4/30/13 | 1.77% | 1.47% | 3 | 1.75% | 1.50% | 3 | |||||||||||||||||||||||||
| Asia Innovators Fund (MATFX) |
-9.10% | 9.93% | 5.21% | 1.96% | 12/27/99 | 1.24% | n.a. | 1.18% | n.a. | |||||||||||||||||||||||||||
| China Fund (MCHFX) |
-5.18% | 2.11% | 4.90% | 8.55% | 2/19/98 | 1.18% | n.a. | 1.14% | n.a. | |||||||||||||||||||||||||||
| India Fund (MINDX) |
-1.23% | 15.09% | 7.57% | 10.99% | 10/31/05 | 1.12% | n.a. | 1.11% | n.a. | |||||||||||||||||||||||||||
| Japan Fund (MJFOX) |
0.40% | 11.40% | 2.88% | 5.56% | 12/31/98 | 0.98% | 0.98% | ‡2 | 0.99% | n.a. | ||||||||||||||||||||||||||
| Korea Fund (MAKOX) |
-6.32% | 7.90% | 4.34% | 5.69% | 1/3/95 | 1.15% | n.a. | 1.10% | n.a. | |||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGIES |
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| Asia Small Companies Fund (MSMLX) |
-1.44% | 5.72% | n.a. | 10.53% | 9/15/08 | 1.49% | 1.47% | 3 | 1.48% | 1.47% | 3 | |||||||||||||||||||||||||
| China Small Companies Fund (MCSMX) |
-2.35% | 6.95% | n.a. | -0.25% | 5/31/11 | 2.24% | 1.50% | 4 | 2.10% | 1.50% | 4 | |||||||||||||||||||||||||
| † | Annualized performance for periods of at least one year, otherwise cumulative. |
| * | These figures are from the fund’s prospectus dated as of April 29, 2016, and may differ from the actual expense ratios for fiscal year 2016, as shown in the financial highlights section of this report. |
| ‡ | Reimbursement was below 0.01%. |
| 1 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 0.90% first by waiving class specific expenses (i.e., 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 lesser of the (i) expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 | 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, 2018 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 | Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 1.25% first by waiving class specific expenses (i.e., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 | MATTHEWS ASIA FUNDS |
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Institutional Class Performance and Expenses (December 31, 2016)
| Institutional Class |
Average Annual Total Return† |
Inception |
2016 Annual Operating Expenses |
2016 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 STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Strategic Income Fund (MINCX) |
9.02% | 4.85% | n.a. | 4.66% | 11/30/11 | 1.12% | 0.90% | 1 | 1.09% | 0.90% | 1 | |||||||||||||||||||||||||
| Asia Credit Opportunities Fund (MICPX) |
n.a. | n.a. | n.a. | 4.82% | 4/29/16 | 1.99% | 0.90% | 1 | 1.94% | 0.90% | 1 | |||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES |
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| Asian Growth and Income Fund (MICSX) |
1.44% | 5.21% | n.a. | 2.75% | 10/29/10 | 0.94% | 0.94% | ‡3 | 0.92% | n.a. | ||||||||||||||||||||||||||
| Asia Dividend Fund (MIPIX) |
4.33% | 7.98% | n.a. | 5.12% | 10/29/10 | 0.94% | 0.93% | 3 | 0.93% | 0.92% | 3 | |||||||||||||||||||||||||
| China Dividend Fund (MICDX) |
5.90% | 11.31% | n.a. | 7.05% | 10/29/10 | 1.06% | n.a. | 1.00% | n.a. | |||||||||||||||||||||||||||
| ASIA VALUE STRATEGY |
||||||||||||||||||||||||||||||||||||
| Asia Value Fund (MAVAX) |
7.72% | n.a. | n.a. | 5.82% | 11/30/15 | 11.26% | 1.25% | 2 | 36.17% | 1.25% | 2 | |||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES |
||||||||||||||||||||||||||||||||||||
| Asia Focus Fund (MIFSX) |
5.05% | n.a. | n.a. | -1.53% | 4/30/13 | 2.29% | 1.25% | 2 | 1.91% | 1.25% | 2 | |||||||||||||||||||||||||
| Asia Growth Fund (MIAPX) |
1.06% | 7.70% | n.a. | 4.36% | 10/29/10 | 0.96% | n.a. | 0.91% | n.a. | |||||||||||||||||||||||||||
| Pacific Tiger Fund (MIPTX) |
0.03% | 6.86% | n.a. | 3.61% | 10/29/10 | 0.91% | 0.90% | 3 | 0.91% | 0.89% | 3 | |||||||||||||||||||||||||
| Asia ESG Fund (MISFX) |
-1.16% | n.a. | n.a. | -5.00% | 4/30/15 | 3.36% | 1.25% | 2 | 8.90% | 1.25% | 2 | |||||||||||||||||||||||||
| Emerging Asia Fund (MIASX) |
19.61% | n.a. | n.a. | 8.90% | 4/30/13 | 1.62% | 1.25% | 2 | 1.57% | 1.25% | 2 | |||||||||||||||||||||||||
| Asia Innovators Fund (MITEX) |
-8.92% | n.a. | n.a. | 7.51% | 4/30/13 | 1.01% | n.a. | 0.97% | n.a. | |||||||||||||||||||||||||||
| China Fund (MICFX) |
-5.06% | 2.27% | n.a. | -1.80% | 10/29/10 | 1.03% | n.a. | 0.99% | n.a. | |||||||||||||||||||||||||||
| India Fund (MIDNX) |
-1.00% | 15.30% | n.a. | 3.96% | 10/29/10 | 0.91% | n.a. | 0.90% | n.a. | |||||||||||||||||||||||||||
| Japan Fund (MIJFX) |
0.51% | 11.54% | n.a. | 9.71% | 10/29/10 | 0.88% | 0.88% | ‡3 | 0.87% | n.a. | ||||||||||||||||||||||||||
| Korea Fund (MIKOX) |
-6.31% | 7.97% | n.a. | 6.75% | 10/29/10 | 0.97% | n.a. | 0.93% | n.a. | |||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGY |
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| Asia Small Companies Fund (MISMX) |
-1.24% | n.a. | n.a. | 0.06% | 4/30/13 | 1.34% | 1.25% | 2 | 1.30% | 1.25% | 2 | |||||||||||||||||||||||||
| † | Annualized performance for periods of at least one year, otherwise cumulative. |
| * | These figures are from the fund’s prospectus dated as of April 29, 2016, and may differ from the actual expense ratios for fiscal year 2016, as shown in the financial highlights section of this report. |
| ‡ | Reimbursement was below 0.01%. |
| 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, 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 | 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, 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 | 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, 2018 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. |
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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| matthewsasia.com | 800.789.ASIA | 5 |
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Message to Shareholders from the Investment Advisor
Dear Valued Shareholders,
The last few days of 2016 have receded amidst continued pain for Asia’s markets. The year had begun with a rally in Asia’s equity and fixed income markets, but it ended in a slump. I wish performance had been better, but the sectors that rallied—materials, energy and other cyclicals—did so less due to fundamental reasons than due to expectations of inflationary conditions rising once again. Sectors with more robust secular growth profiles, such as health care, have recently suffered. This environment has been a difficult one for investors, including our team at Matthews Asia, which is focused on making long-term strategic decisions to buy secular growth at reasonable prices. But it is also an environment of which we have warned investors, one that I believe is transient, and so we intend to stick to our investment philosophy and our commitment to long-term growth, not short-term trading. But sentiment is against us right now.
Indeed, as markets have marched on since the victory of Donald Trump, each footstep seems to bring new confidence into the U.S. market, just as it sends tremors through Asia. Expectations of higher inflation, easier regulations, and an America-first trade policy are being priced in as being a boon to the U.S. and a burden to Asia. But have the markets been marching blindly? Is the focus too much on NOW and too little on the far future? Has the market been relying too much on conventional wisdom, what it feels is true, rather than spending the time to think through the issues in a cooler, more logical fashion? If it has done so, it would not be surprising—given the shock and emotional reaction by many over Trump’s surprise win. And yes, I do believe that the market has gotten some things wrong.
First, the markets may be overestimating the inflationary stimulus from President Trump’s economic policy. Tax cuts will raise the budget deficit, yes. But that will be offset by a faster pace of interest rate hikes by the Federal Reserve. Tax cuts that save money for the wealthiest and broaden the tax base at the bottom are more likely to be saved than spent. That is not stimulative. Plus, many on the new administration’s economics team are advocates of hard money and tighter control over, even auditing, the Fed. This is not an environment in which it will be comfortable for the Fed’s doves (those happy to see higher inflation) to operate.
Second, the markets may be overestimating the effects of looser regulation. Yes, there are costs associated with it, but it is not as if profits are at a low level. Indeed, they are close to peak levels of GDP. Where is the evidence that regulation has imposed high costs? The effect of tax cuts in the corporate tax rate are real—but for how long are they likely to persist? Perhaps the market is overestimating the boost to valuations from these potential events.
And the effect of trade tariffs? They are likely to impose costs—a one-off jump in import costs, on the U.S. consumer and businessman alike. The reaction in the markets has been stark—as if the U.S. was isolated to this effect and Asia is incredibly exposed. This is the old canard about Asia being an export-led economy. It is not. Asia grows because it saves, it invests and it reforms. The excess that it produces beyond its immediate needs, it exports. But that is not vital to its citizens’ standard of living. Indeed, Asia would simply consume even more of what it produces (and it already consumes the vast majority) if tariffs became punitive. The short-term impact is likely to make the U.S. dollar stronger—but less trade means less cross-border investment and that could weaken the dollar further down the line.
Would supply chains be affected? Shortened? Probably, but again, don’t take too much of a U.S.-centric view of the world. China and other large Asian manufacturers are building out their supply chains in more developing parts of Asia only in part to satisfy Western demand. The long-term goal is still to produce for their own citizens. China will keep investing in the rest of Asia. Yes, some businesses will suffer, but others will benefit. Our portfolios largely consist of those companies focused on the domestic consumer and the domestic business in Asia, where we believe long-term trends are overwhelmingly positive.
Simultaneously, markets are, I believe, mispricing Asia’s long-term prospects. The better performance we saw in the early part of 2016 was, I believe, partly a recognition that Europe had its own problems, but also that in Asia, equity valuations were reasonable and real interest rates were actually very high in global terms (hence the rally in bonds)—and that despite several years of poor earnings results, Asia’s economic growth would sooner or later translate into profit growth. That confidence has gone for now. But the fundamentals remain in place and even as valuations in the U.S. become increasingly stretched as markets price in an idealistic interpretation of the next administration’s policies, valuations in Asia are getting cheaper for long-term secular growth businesses.
Indeed, as I meet clients these days, I am often asked: “Where is the good news?” As I talk about the likely issues to come—trade issues, more worries about China’s currency, a strong dollar, and all the other issues that the markets are focused on, it’s a fair question. The answer is twofold. First, we believe Asia appears well set to weather the storm! This may seem mealy-mouthed, but it’s important to recognize the current issues and also to see that high savings, high current accounts, low inflation, and low budget deficits give Asia a lot of policy room to maneuver—room that Latin America, for example, largely does not have. Second, Asia’s economies are still growing faster than the West and that should ultimately mean stronger profits. This is no small advantage. It may seem like a thin thread to hang your hopes on, but it only appears thin because it is not tangible—corporate profits are not growing quickly NOW.
Still, Asia right now has much going for it—economic growth, stable politics, strong fiscal and monetary positions, and reasonable valuations. The only things it lacks are momentum in corporate profits and the change in sentiment which that would bring. As I look into 2017, I do not know if this is the year when profits will turn (though margins are close to 15-year lows). But with dividend yields in the market near 3%, I know we will be paid to be patient. And now in Asia, more than ever, there would appear to be prospective returns to patience. That patience may be tried at times by “junk rallies” and sensationalist headlines, but we will continue to look beyond the headlines and help you see the opportunities in the region. And we intend to keep investing in the companies that are set to grow sustainably for the long term, not try to time rallies in those companies enjoying their last days in the sun. When the market is thinking “now, now, NOW”... we are trying to be patient, patient, patient.
Robert Horrocks, PhD
Chief Investment Officer
Matthews International Capital Management, LLC
| 6 | MATTHEWS ASIA FUNDS |
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| * | The Index performance reflects the returns of the discontinued predecessor HSBC Asian Local Bond Index up to December 31, 2012 and the returns of the successor Markit iBoxx Asian Local Bond Index thereafter. |
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 7 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MAINX) | -1.72% | 8.85% | 3.53% | 4.64% | 4.45% | 11/30/11 | ||||||||||||||||||
| Institutional Class (MINCX) | -1.75% | 9.02% | 3.73% | 4.85% | 4.66% | 11/30/11 | ||||||||||||||||||
| Markit iBoxx Asian Local Bond Index5 | -7.36% | 1.73% | 1.05% | 0.99% | 1.13% | |||||||||||||||||||
| Lipper Emerging Markets Hard Currency Debt Funds Category Average6 | -2.65% | 10.82% | 2.71% | 3.96% | 4.07% | |||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||||||||||||
| Investor (MAINX) | $ | 0.06 | $ | 0.11 | $ | 0.11 | $ | 0.13 | $ | 0.41 | $ | 0.00 | $ | 0.10 | $ | 0.08 | $ | 0.11 | $ | 0.29 | ||||||||||||||||||||||||
| Inst’l (MINCX) | $ | 0.06 | $ | 0.12 | $ | 0.12 | $ | 0.13 | $ | 0.43 | $ | 0.01 | $ | 0.10 | $ | 0.09 | $ | 0.11 | $ | 0.31 | ||||||||||||||||||||||||
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: 4.92% (4.44% excluding waivers) Inst’l Class: 5.16% (4.59% excluding waivers)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/16, 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: 6.94% 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, Markit iBoxx and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 94 for index definitions. The Index performance reflects the returns of the discontinued predecessor HSBC Asian Local Bond Index up to December 31, 2012 and the returns of the successor Markit iBoxx Asian Local Bond Index thereafter. |
| 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 HOLDINGS | ||||||||
| Sector | Currency | % of Net Assets | ||||||
| Malaysia Government Investment Issue, 3.508%, 05/15/2018 | Foreign Government Bonds | Malaysian Ringgit | 5.6% | |||||
| Sprint Communications, Inc., 6.000%, 11/15/2022 | Telecommunication Services | U.S. Dollar | 5.5% | |||||
| Standard Chartered PLC, 6.500%, 12/29/2049 | Financials | U.S. Dollar | 4.9% | |||||
| Indonesia Treasury Bond, 8.375%, 03/15/2034 | Foreign Government Bonds | Indonesian Rupiah | 4.6% | |||||
| Ctrip.com International, Ltd., Cnv., 1.000%, 07/01/2020 | Consumer Discretionary | U.S. Dollar | 4.5% | |||||
| Indonesia Treasury Bond, 8.375%, 03/15/2024 | Foreign Government Bonds | Indonesian Rupiah | 4.5% | |||||
| Debt and Asset Trading Corp., 1.000%, 10/10/2025 | Financials | U.S. Dollar | 4.2% | |||||
| Indonesia Treasury Bond, 7.875%, 04/15/2019 | Foreign Government Bonds | Indonesian Rupiah | 4.1% | |||||
| Delta Investment Horizon International, Ltd., Cnv., 3.000%, 05/26/2020 | Telecommunication Services | U.S. Dollar | 4.1% | |||||
| DFCC Bank PLC, 9.625%, 10/31/2018 | Financials | U.S. Dollar | 4.0% | |||||
| % OF ASSETS IN TOP TEN | 46.0% | |||||||
| 8 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 9 |
Table of Contents
Matthews Asia Strategic Income Fund
December 31, 2016
Schedule of Investmentsa
NON-CONVERTIBLE CORPORATE BONDS: 51.7%
| 10 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Strategic Income Fund
December 31, 2016
Schedule of Investmentsa (continued)
CONVERTIBLE CORPORATE BONDS: 9.4%
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
| Currency Purchased |
Currency Sold | Counterparty | Settlement Date |
Unrealized Appreciation |
||||||||||
| Short |
USD 3,000,000 |
CNY 21,213,000 | JPMorgan Chase & Co. | 03/22/17 | $15,746 | |||||||||
| USD 8,600,000 |
KRW 10,181,540,000 | JPMorgan Chase & Co. | 02/28/17 | 166,791 | ||||||||||
|
|
|
|||||||||||||
| $182,537 | ||||||||||||||
|
|
|
|||||||||||||
OTC CREDIT DEFAULT SWAPS - BUY PROTECTION*
| Issuer | Pay Fixed Rate |
Counterparty | Expiration Date |
Notional Amount (000) |
Value | Premiums Received |
Unrealized Depreciation |
|||||||||||||||
| Republic of Korea |
1.00% | Bank of America, N.A. | 12/20/2021 | USD 8,000 | ($216,678 | ) | ($185,771 | ) | ($30,907 | ) | ||||||||||||
|
|
|
|||||||||||||||||||||
| * | Swap is not centrally cleared. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 11 |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 | Not annualized. The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 12 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||
| Actual Return, Not Annualized |
||||||||||||
| 3 Months | Since Inception |
Inception Date |
||||||||||
| Investor Class (MCRDX) | -0.90% | 4.66% | 4/29/2016 | |||||||||
| Institutional Class (MICPX) | -0.86% | 4.82% | 4/29/2016 | |||||||||
| J.P. Morgan Asia Credit Index5 | -3.01% | 1.40% | ||||||||||
| Lipper Alternative Credit Focus Funds Cateory Average6 | 0.59% | 3.53% | ||||||||||
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 | ||||||||||||||||||||
| 2016 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | ||||||||||||||||
| Investor (MCRDX) | n.a. | $ | 0.06 | $ | 0.10 | $ | 0.16 | $ | 0.32 | |||||||||||
| Inst’l (MICPX) | n.a. | $ | 0.06 | $ | 0.11 | $ | 0.16 | $ | 0.33 | |||||||||||
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: 4.53% (1.51% excluding waivers) Institutional Class: 4.81% (1.84% excluding waivers)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/16, 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: 6.10%
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 J.P. Morgan and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 94 for index definition. |
| 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 HOLDINGS | ||||||||
| Sector | Currency | % of Net Assets | ||||||
| Sprint Communications, Inc., 6.000%, 11/15/2022 | Telecommunication Services | U.S. Dollar | 5.2% | |||||
| ICTSI Treasury BV, 5.875%, 09/17/2025 | Industrials | U.S. Dollar | 5.2% | |||||
| Delta Investment Horizon International, Ltd., Cnv., 3.000%, 05/26/2020 | Telecommunication Services | U.S. Dollar | 5.1% | |||||
| KWG Property Holding, Ltd., 8.975%, 01/14/2019 | Real Estate | U.S. Dollar | 5.1% | |||||
| HSBC Holdings PLC, 6.375%, 12/29/2049 | Financials | U.S. Dollar | 4.9% | |||||
| Listrindo Capital BV, 4.950%, 09/14/2026 | Utilities | U.S. Dollar | 4.8% | |||||
| DFCC Bank PLC, 9.625%, 10/31/2018 | Financials | U.S. Dollar | 4.5% | |||||
| Standard Chartered PLC, 6.500%, 12/29/2049 | Financials | U.S. Dollar | 4.5% | |||||
| Harvest Operations Corp., 6.875%, 10/01/2017 | Energy | U.S. Dollar | 4.3% | |||||
| Debt and Asset Trading Corp., 1.000%, 10/10/2025 | Financials | U.S. Dollar | 4.1% | |||||
| % OF ASSETS IN TOP TEN | 47.7% | |||||||
| matthewsasia.com | 800.789.ASIA | 13 |
Table of Contents
| 14 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Credit Opportunities Fund
December 31, 2016
Schedule of Investmentsa
| NON-CONVERTIBLE CORPORATE BONDS: 69.1% | CONVERTIBLE CORPORATE BONDS: 12.1% |
| matthewsasia.com | 800.789.ASIA | 15 |
Table of Contents
Matthews Asia Credit Opportunities Fund
December 31, 2016
Schedule of Investmentsa (continued)
OTC CREDIT DEFAULT SWAPS - BUY PROTECTION*
| Issuer | Pay Fixed Rate |
Counterparty | Expiration Date |
Notional Amount (000) |
Value | Premiums Received |
Unrealized Depreciation |
|||||||||||||||
| Republic of Korea |
1.00% | Bank of America, N.A. | 12/20/2021 | USD 2,000 | ($54,170 | ) | ($46,443 | ) | ($7,727 | ) | ||||||||||||
|
|
|
|||||||||||||||||||||
| * | Swap is not centrally cleared. |
See accompanying notes to financial statements.
| 16 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 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, 2018 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 | Reimbursement was below 0.01% |
| 4 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 17 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MACSX) | -8.30% | 1.34% | -1.30% | 5.05% | 4.75% | 9.04% | 9/12/94 | |||||||||||||||||||||
| Institutional Class (MICSX) | -8.24% | 1.44% | -1.15% | 5.21% | n.a. | 2.75% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia ex Japan Index5 | -6.25% | 5.76% | 0.42% | 5.13% | 3.99% | 3.60% | 6 | |||||||||||||||||||||
| Lipper Pacific Region Funds Category Average7 | -5.11% | 4.28% | 0.73% | 6.28% | 2.87% | 3.64% | 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. 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 | ||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||
| June | December | Total | June | December | Total | |||||||||||||||||||||||
| Investor (MACSX) | $ | 0.15 | $ | 0.33 | $ | 0.48 | $ | 0.21 | $ | 0.21 | $ | 0.42 | ||||||||||||||||
| Inst’l (MICSX) | $ | 0.16 | $ | 0.34 | $ | 0.50 | $ | 0.23 | $ | 0.22 | $ | 0.45 | ||||||||||||||||
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: 1.45% (Investor Class) 1.59% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/16, 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: 3.43%
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 12/31/16 divided by the current price of each equity as of 12/31/16. 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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 5 | 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 94 for index definition. |
| 6 | Calculated from 8/31/94. |
| 7 | 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 HOLDINGS8 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| AIA Group, Ltd. | Financials | China/Hong Kong | 3.2% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. | Information Technology | Taiwan | 3.1% | |||||
| CapitaLand, Ltd., Cnv., 1.950%, 10/17/2023 | Real Estate | Singapore | 2.6% | |||||
| Samsung Electronics Co., Ltd. | Information Technology | South Korea | 2.6% | |||||
| Singapore Telecommunications, Ltd. | Telecommunication Services | Singapore | 2.4% | |||||
| Shine Power International, Ltd., Cnv., 0.000%, 07/28/2019 | Industrials | China/Hong Kong | 2.3% | |||||
| Ascendas REIT | Real Estate | Singapore | 2.2% | |||||
| Guangdong Investment, Ltd. | Utilities | China/Hong Kong | 2.1% | |||||
| United Overseas Bank, Ltd. | Financials | Singapore | 2.1% | |||||
| China Mobile, Ltd. | Telecommunication Services | China/Hong Kong | 2.1% | |||||
| % OF ASSETS IN TOP TEN | 24.7% | |||||||
| 8 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 18 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 19 |
Table of Contents
Matthews Asian Growth and Income Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 84.1%
| 20 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asian Growth and Income Fund
December 31, 2016
Schedule of Investmentsa (continued)
| CONVERTIBLE CORPORATE BONDS: 11.1% | PREFERRED EQUITIES: 3.5% |
| matthewsasia.com | 800.789.ASIA | 21 |
Table of Contents
| * | Reimbursement was below 0.01% |
| 1 | Actual 2016 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, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 22 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MAPIX) | -7.29% | 4.13% | 2.54% | 7.85% | 7.60% | 8.28% | 10/31/06 | |||||||||||||||||||||
| Institutional Class (MIPIX) | -7.21% | 4.33% | 2.67% | 7.98% | |
n.a. |
|
5.12% | 10/29/10 | |||||||||||||||||||
| MSCI AC Asia Pacific Index4 | -2.98% | 5.21% | 1.23% | 6.38% | |
2.29% |
|
2.88% | 5 | |||||||||||||||||||
| Lipper Pacific Region Funds Category Average6 | -5.11% | 4.28% | 0.73% | 6.28% | |
2.87% |
|
3.57% | 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. 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 | ||||||||||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||||||||||||
| Investor (MAPIX) | $ | 0.01 | $ | 0.19 | $ | 0.06 | $ | 0.04 | $ | 0.29 | $ | 0.02 | $ | 0.18 | $ | 0.03 | $ | 0.04 | $ | 0.27 | ||||||||||||||||||||||||
| Inst’l (MIPIX) | $ | 0.02 | $ | 0.19 | $ | 0.07 | $ | 0.05 | $ | 0.32 | $ | 0.02 | $ | 0.19 | $ | 0.04 | $ | 0.04 | $ | 0.29 | ||||||||||||||||||||||||
Totals may differ by $0.01 due to rounding and a return of capital. For distribution history please visit matthewsasia.com.
| 30-DAY YIELD: 1.56% (Investor Class) 1.67% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/16, 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: 3.03%
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 12/31/16 divided by the current price of each equity as of 12/31/16. 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 94 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 HOLDINGS7 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Minth Group, Ltd. | Consumer Discretionary | China/Hong Kong | 3.8% | |||||
| Shenzhou International Group Holdings, Ltd. | Consumer Discretionary | China/Hong Kong | 3.6% | |||||
| ITOCHU Corp. | Industrials | Japan | 3.4% | |||||
| HSBC Holdings PLC | Financials | China/Hong Kong | 3.2% | |||||
| Mitsubishi UFJ Financial Group, Inc. | Financials | Japan | 3.2% | |||||
| Sumitomo Mitsui Financial Group, Inc. | Financials | Japan | 3.2% | |||||
| LG Chem, Ltd., Pfd. | Materials | South Korea | 2.9% | |||||
| United Overseas Bank, Ltd. | Financials | Singapore | 2.6% | |||||
| Sands China, Ltd. | Consumer Discretionary | China/Hong Kong | 2.5% | |||||
| Samsung Electronics Co., Ltd., Pfd. | Information Technology | South Korea | 2.3% | |||||
| % OF ASSETS IN TOP TEN | 30.7% | |||||||
| 7 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 23 |
Table of Contents
| 24 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Dividend Fund
December 31, 2016
Consolidated Schedule of Investmentsa
COMMON EQUITIES: 92.5%
| matthewsasia.com | 800.789.ASIA | 25 |
Table of Contents
Matthews Asia Dividend Fund
December 31, 2016
Consolidated Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 5.2%
| 26 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 27 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Year | 5 Year | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MCDFX) | -4.51% | 5.70% | 5.34% | 11.11% | 8.71% | 11/30/09 | ||||||||||||||||||
| Institutional Class (MICDX) | -4.44% | 5.90% | 5.51% | 11.31% | 7.05% | 10/29/10 | ||||||||||||||||||
| MSCI China Index3 | -7.07% | 1.11% | 0.37% | 5.29% | 1.54% | 4 | ||||||||||||||||||
| Lipper China Region Funds Category Average5 | -7.21% | -2.33% | -0.67% | 5.36% | 2.38% | 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 | ||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||
| June | December | Total | June | December | Total | |||||||||||||||||||||||
| Investor (MCDFX) | $ | 0.21 | $ | 0.07 | $ | 0.28 | $ | 0.27 | $ | 0.01 | $ | 0.28 | ||||||||||||||||
| Inst’l (MICDX) | $ | 0.22 | $ | 0.08 | $ | 0.30 | $ | 0.28 | $ | 0.03 | $ | 0.30 | ||||||||||||||||
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: 1.11% (Investor Class) 1.26% (Institutional Class)
The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/16, 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: 3.68%
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 12/31/16 divided by the current price of each equity as of 12/31/16. 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 94 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 HOLDINGS6 | ||||||||
| Sector | % of Net Assets | |||||||
| Tencent Holdings, Ltd. | Information Technology | 5.1% | ||||||
| HSBC Holdings PLC | Financials | 4.0% | ||||||
| PICC Property & Casualty Co., Ltd. | Financials | 3.2% | ||||||
| HKBN, Ltd. | Telecommunication Services | 3.2% | ||||||
| China Construction Bank Corp. | Financials | 3.2% | ||||||
| China Mobile, Ltd. | Telecommunication Services | 3.0% | ||||||
| SITC International Holdings Co., Ltd. | Industrials | 2.7% | ||||||
| Red Star Macalline Group Corp., Ltd. | Real Estate | 2.6% | ||||||
| Guangdong Provincial Expressway Development Co., Ltd. | Industrials | 2.6% | ||||||
| Guangshen Railway Co., Ltd. | Industrials | 2.6% | ||||||
| % OF ASSETS IN TOP TEN | 32.2% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 28 | MATTHEWS ASIA FUNDS |
Table of Contents
| matthewsasia.com | 800.789.ASIA | 29 |
Table of Contents
Matthews China Dividend Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 95.9%
| 30 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Dividend Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| matthewsasia.com | 800.789.ASIA | 31 |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 32 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||
|
|
|
Average Annual Total Returns |
||||||||||||||
| 3 Months | 1 Year | Since Inception |
Inception Date |
|||||||||||||
| Investor Class (MAVRX) | -2.20% | 7.43% | 5.50% | 11/30/15 | ||||||||||||
| Institutional Class (MAVAX) | -2.04% | 7.72% | 5.82% | 11/30/15 | ||||||||||||
| MSCI AC Asia ex Japan Index4 | -6.25% | 5.76% | 4.89% | |||||||||||||
| Lipper Pacific Region Funds Category Average5 | -5.11% | 4.28% | 4.44% | |||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Samsung Electronics Co., Ltd., Pfd. | Information Technology | South Korea | 5.3% | |||||
| Shandong Weigao Group Medical Polymer Co., Ltd. | Health Care | China/Hong Kong | 4.6% | |||||
| YAMADA Consulting Group Co., Ltd. | Industrials | Japan | 3.5% | |||||
| CK Hutchison Holdings, Ltd. | Industrials | China/Hong Kong | 3.1% | |||||
| Kweichow Moutai Co., Ltd. | Consumer Staples | China/Hong Kong | 3.0% | |||||
| DGB Financial Group, Inc. | Financials | South Korea | 3.0% | |||||
| Hyundai Greenfood Co., Ltd. | Consumer Staples | South Korea | 3.0% | |||||
| Samsung SDI Co., Ltd., Pfd. | Information Technology | South Korea | 2.9% | |||||
| Shinyoung Securities Co., Ltd. | Financials | South Korea | 2.8% | |||||
| Kwangju Bank | Financials | South Korea | 2.7% | |||||
| % OF ASSETS IN TOP TEN | 33.9% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 33 |
Table of Contents
| 34 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Value Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 73.4%
| matthewsasia.com | 800.789.ASIA | 35 |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 36 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|||||||||||||||||
| 3 Months | 1 Year | 3 Years | Since Inception |
Inception Date |
||||||||||||||||
| Investor Class (MAFSX) | -8.55% | 4.82% | -1.28% | -1.76% | 4/30/13 | |||||||||||||||
| Institutional Class (MIFSX) | -8.53% | 5.05% | -1.04% | -1.53% | 4/30/13 | |||||||||||||||
| MSCI AC Asia ex Japan Index4 | -6.25% | 5.76% | 0.42% | 0.88% | ||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 | -7.69% | 2.75% | -0.27% | -0.09% | ||||||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| AIA Group, Ltd. | Financials | China/Hong Kong | 5.3% | |||||
| Tencent Holdings, Ltd. | Information Technology | China/Hong Kong | 4.3% | |||||
| Singapore Telecommunications, Ltd. | Telecommunication Services | Singapore | 3.8% | |||||
| Samsung Electronics Co., Ltd. | Information Technology | South Korea | 3.7% | |||||
| Techtronic Industries Co., Ltd. | Consumer Discretionary | China/Hong Kong | 3.5% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. | Information Technology | Taiwan | 3.5% | |||||
| CK Hutchison Holdings, Ltd. | Industrials | China/Hong Kong | 3.3% | |||||
| ResMed, Inc. | Health Care | United States | 3.3% | |||||
| PT Bank Rakyat Indonesia Persero | Financials | Indonesia | 3.3% | |||||
| Tata Motors, Ltd. | Consumer Discretionary | India | 3.2% | |||||
| % OF ASSETS IN TOP TEN | 37.2% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 37 |
Table of Contents
| 38 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Focus Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 96.7%
| matthewsasia.com | 800.789.ASIA | 39 |
Table of Contents
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 40 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MPACX) | -8.66% | 0.92% | 0.78% | 7.49% | 4.89% | 8.25% | 10/31/03 | |||||||||||||||||||||
| Institutional Class (MIAPX) | -8.62% | 1.06% | 0.97% | 7.70% | n.a. | 4.36% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia Pacific Index3 | -2.98% | 5.21% | 1.23% | 6.38% | 2.29% | 6.35% | 4 | |||||||||||||||||||||
| Lipper Pacific Region Funds Category Average5 | -5.11% | 4.28% | 0.73% | 6.28% | 2.87% | 6.60% | 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 94 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Shenzhou International Group Holdings, Ltd. | Consumer Discretionary | China/Hong Kong | 4.5% | |||||
| PT Astra International | Consumer Discretionary | Indonesia | 4.3% | |||||
| ORIX Corp. | Financials | Japan | 4.2% | |||||
| PT Bank Rakyat Indonesia Persero | Financials | Indonesia | 4.1% | |||||
| Sysmex Corp. | Health Care | Japan | 4.0% | |||||
| M3, Inc. | Health Care | Japan | 3.6% | |||||
| Emami, Ltd. | Consumer Staples | India | 3.5% | |||||
| Baidu, Inc. | Information Technology | China/Hong Kong | 3.3% | |||||
| HDFC Bank, Ltd. | Financials | India | 3.2% | |||||
| Start Today Co., Ltd. | Consumer Discretionary | Japan | 2.8% | |||||
| % OF ASSETS IN TOP TEN | 37.5% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 41 |
Table of Contents
| 42 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Growth Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 98.4%
| matthewsasia.com | 800.789.ASIA | 43 |
Table of Contents
| 1 | Actual 2016 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, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 44 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MAPTX) | -9.50% | -0.16% | 3.27% | 6.67% | 6.57% | 8.11% | 9/12/94 | |||||||||||||||||||||
| Institutional Class (MIPTX) | -9.48% | 0.03% | 3.47% | 6.86% | n.a. | 3.61% | 10/29/10 | |||||||||||||||||||||
| MSCI AC Asia ex Japan Index4 | -6.25% | 5.76% | 0.42% | 5.13% | 3.99% | 3.60% | 5 | |||||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average6 | -7.69% | 2.75% | -0.27% | 4.84% | 3.94% | 4.45% | 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. 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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS7 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Central Pattana Public Co., Ltd. | Real Estate | Thailand | 3.1% | |||||
| Tata Power Co., Ltd. | Utilities | India | 2.9% | |||||
| DKSH Holding, Ltd. | Industrials | Switzerland | 2.8% | |||||
| Baidu, Inc. | Information Technology | China/Hong Kong | 2.8% | |||||
| Kotak Mahindra Bank, Ltd. | Financials | India | 2.7% | |||||
| Vietnam Dairy Products JSC | Consumer Staples | Vietnam | 2.6% | |||||
| Dongbu Insurance Co., Ltd. | Financials | South Korea | 2.5% | |||||
| Naver Corp. | Information Technology | South Korea | 2.4% | |||||
| Delta Electronics, Inc. | Information Technology | Taiwan | 2.3% | |||||
| President Chain Store Corp. | Consumer Staples | Taiwan | 2.3% | |||||
| % OF ASSETS IN TOP TEN | 26.4% | |||||||
| 7 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 45 |
Table of Contents
| 46 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Pacific Tiger Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 98.4%
| matthewsasia.com | 800.789.ASIA | 47 |
Table of Contents
Matthews Pacific Tiger Fund
December 31, 2016
Schedule of Investmentsa (continued)
WARRANTS: 0.1%
| 48 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 49 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||
| 3 Months | 1 Year | Since Inception |
Inception Date |
|||||||||||||
| Investor Class (MASGX) | -4.81% | -1.40% | -5.24% | 4/30/15 | ||||||||||||
| Institutional Class (MISFX) | -4.69% | -1.16% | -5.00% | 4/30/15 | ||||||||||||
| MSCI AC Asia ex Japan Index4 | -6.25% | 5.76% | -8.86% | |||||||||||||
| Lipper Pacific Funds Category Average5 | -5.11% | 4.28% | -5.11% | |||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Total Access Communication Public Co., Ltd. NVDR | Telecommunication Services | Thailand | 3.4% | |||||
| Lupin, Ltd. | Health Care | India | 3.3% | |||||
| MTR Corp., Ltd. | Industrials | China/Hong Kong | 2.9% | |||||
| PT Bank Rakyat Indonesia Persero | Financials | Indonesia | 2.8% | |||||
| JD.com, Inc. | Consumer Discretionary | China/Hong Kong | 2.8% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. | Information Technology | Taiwan | 2.6% | |||||
| CSPC Pharmaceutical Group, Ltd. | Health Care | China/Hong Kong | 2.5% | |||||
| Inner Mongolia Yili Industrial Group Co., Ltd. | Consumer Staples | China/Hong Kong | 2.5% | |||||
| Ipca Laboratories, Ltd. | Health Care | India | 2.2% | |||||
| KT Skylife Co., Ltd. | Consumer Discretionary | South Korea | 2.2% | |||||
| % OF ASSETS IN TOP TEN | 27.2% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 50 | MATTHEWS ASIA FUNDS |
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Table of Contents
Matthews Asia ESG Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 95.8%
| 52 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia ESG Fund
December 31, 2016
Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 2.0%
| matthewsasia.com | 800.789.ASIA | 53 |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 54 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||
| 3 Months | 1 Year | 3 Years | Since Inception |
Inception Date |
||||||||||||||||
| Investor Class (MEASX) | -0.89% | 19.25% | 10.90% | 8.64% | 4/30/13 | |||||||||||||||
| Institutional Class (MIASX) | -0.78% | 19.61% | 11.20% | 8.90% | 4/30/13 | |||||||||||||||
| MSCI Emerging Markets Asia Index4 | -5.99% | 6.53% | 0.51% | 0.99% | ||||||||||||||||
| Lipper Emerging Markets Funds Category Average5 | -4.94% | 8.77% | -3.32% | -3.00% | ||||||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| The Searle Company, Ltd. | Health Care | Pakistan | 2.9% | |||||
| PT Bank Mandiri Persero | Financials | Indonesia | 2.8% | |||||
| Vinh Hoan Corp. | Consumer Staples | Vietnam | 2.7% | |||||
| PC Jeweller, Ltd. | Consumer Discretionary | India | 2.7% | |||||
| Shenzhou International Group Holdings, Ltd. | Consumer Discretionary | China/Hong Kong | 2.6% | |||||
| BRAC Bank, Ltd. | Financials | Bangladesh | 2.6% | |||||
| Square Pharmaceuticals, Ltd. | Health Care | Bangladesh | 2.6% | |||||
| PT Gudang Garam | Consumer Staples | Indonesia | 2.6% | |||||
| K-Electric, Ltd. | Utilities | Pakistan | 2.5% | |||||
| British American Tobacco Bangladesh Co., Ltd. | Consumer Staples | Bangladesh | 2.4% | |||||
| % OF ASSETS IN TOP TEN | 26.4% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 55 |
Table of Contents
| 56 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Emerging Asia Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 96.2%
| matthewsasia.com | 800.789.ASIA | 57 |
Table of Contents
Matthews Emerging Asia Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| 58 | MATTHEWS ASIA FUNDS |
Table of Contents
| ‡ | Effective on April 29, 2016, the Matthews Asia Innovators Fund changed its primary benchmark to the MSCI AC Asia Ex Japan Index and its secondary index became the MSCI AC Asia Index. |
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| matthewsasia.com | 800.789.ASIA | 59 |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MATFX) | -10.26% | -9.10% | 1.23% | 9.93% | 5.21% | 1.96% | 12/27/99 | |||||||||||||||||||||
| Institutional Class (MITEX) | -10.30% | -8.92% | 1.44% | n.a. | n.a. | 7.51% | 4/30/13 | |||||||||||||||||||||
| MSCI AC Asia ex Japan Index3 | -6.25% | 5.76% | 0.42% | 5.13% | 3.99% | 5.30% | 4 | |||||||||||||||||||||
| MSCI AC Asia Index3 | -3.47% | 4.27% | 1.57% | 6.68% | 1.97% | 1.90% | 4 | |||||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 | -7.69% | 2.75% | -0.27% | 4.84% | 3.94% | 5.79% | 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 94 for index definition. Effective on April 29, 2016, the Matthews Asia Innovators Fund changed its primary benchmark to the MSCI AC Asia ex Japan Index and its secondary index became the MSCI AC Asia Index. |
| 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 HOLDINGS6 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Tencent Holdings, Ltd. | Information Technology | China/Hong Kong | 4.4% | |||||
| Taiwan Semiconductor Manufacturing Co., Ltd. | Information Technology | Taiwan | 3.9% | |||||
| PT Bank Mandiri Persero | Financials | Indonesia | 3.4% | |||||
| Baidu, Inc. | Information Technology | China/Hong Kong | 3.3% | |||||
| Samsung Electronics Co., Ltd. | Information Technology | South Korea | 3.0% | |||||
| Hugel, Inc. | Health Care | South Korea | 3.0% | |||||
| NetEase, Inc. | Information Technology | China/Hong Kong | 2.9% | |||||
| Samsung Electronics Co., Ltd., Pfd. | Information Technology | South Korea | 2.9% | |||||
| Info Edge India, Ltd. | Information Technology | India | 2.7% | |||||
| LG Household & Health Care, Ltd., Pfd. | Consumer Staples | South Korea | 2.7% | |||||
| % OF ASSETS IN TOP TEN | 32.2% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 60 | MATTHEWS ASIA FUNDS |
Table of Contents
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Table of Contents
Matthews Asia Innovators Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 93.8%
| 62 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Innovators Fund
December 31, 2016
Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 5.6%
| matthewsasia.com | 800.789.ASIA | 63 |
Table of Contents
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 64 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MCHFX) | -6.14% | -5.18% | -2.45% | 2.11% | 4.90% | 8.55% | 2/19/98 | |||||||||||||||||||||
| Institutional Class (MICFX) | -6.13% | -5.06% | -2.32% | 2.27% | n.a. | -1.80% | 10/29/10 | |||||||||||||||||||||
| MSCI China Index3 | -7.07% | 1.11% | 0.37% | 5.29% | 3.96% | 3.15% | 4 | |||||||||||||||||||||
| Lipper China Region Funds Category Average5 | -7.21% | -2.33% | -0.67% | 5.36% | 3.46% | 6.34% | 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 94 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 HOLDINGS6 | ||||||||
| Sector | % of Net Assets | |||||||
| Tencent Holdings, Ltd. | Information Technology | 11.5% | ||||||
| China Life Insurance Co., Ltd. | Financials | 7.2% | ||||||
| China Construction Bank Corp. | Financials | 5.3% | ||||||
| Alibaba Group Holding, Ltd. | Information Technology | 4.9% | ||||||
| Ping An Insurance Group Co. of China, Ltd. | Financials | 4.9% | ||||||
| China Merchants Bank Co., Ltd. | Financials | 4.8% | ||||||
| Chongqing Rural Commercial Bank Co., Ltd. | Financials | 3.6% | ||||||
| CITIC Securities Co., Ltd. | Financials | 3.5% | ||||||
| Industrial & Commercial Bank of China, Ltd. | Financials | 3.2% | ||||||
| NetEase, Inc. | Information Technology | 3.1% | ||||||
| % OF ASSETS IN TOP TEN | 52.0% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 65 |
Table of Contents
| 66 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Fund
December 31, 2016
Consolidated Schedule of Investmentsa
COMMON EQUITIES: 100.4%
| matthewsasia.com | 800.789.ASIA | 67 |
Table of Contents
Matthews China Fund
December 31, 2016
Consolidated Schedule of Investmentsa (continued)
| 68 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
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Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MINDX) | -7.10% | -1.23% | 17.72% | 15.09% | 7.57% | 10.99% | 10/31/05 | |||||||||||||||||||||
| Institutional Class (MIDNX) | -7.04% | -1.00% | 17.93% | 15.30% | n.a. | 3.96% | 10/29/10 | |||||||||||||||||||||
| S&P Bombay Stock Exchange 100 Index3 | -7.12% | 2.32% | 7.96% | 8.97% | 4.45% | 9.25% | 4 | |||||||||||||||||||||
| Lipper India Region Funds Category Average5 | -9.29% | 0.41% | 11.10% | 10.24% | 2.82% | 7.56% | 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 S&P BSE 100 Index and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 94 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 HOLDINGS6 | ||||||
| Sector | % of Net Assets | |||||
| Taro Pharmaceutical Industries, Ltd. | Health Care | 5.3% | ||||
| Cognizant Technology Solutions Corp. | Information Technology | 5.1% | ||||
| IndusInd Bank, Ltd. | Financials | 5.0% | ||||
| ITC, Ltd. | Consumer Staples | 4.7% | ||||
| Kotak Mahindra Bank, Ltd. | Financials | 4.7% | ||||
| AIA Engineering, Ltd. | Industrials | 4.3% | ||||
| HDFC Bank, Ltd. | Financials | 4.2% | ||||
| Ajanta Pharma, Ltd. | Health Care | 3.8% | ||||
| eClerx Services, Ltd. | Information Technology | 3.7% | ||||
| Housing Development Finance Corp., Ltd. | Financials | 3.6% | ||||
| % OF ASSETS IN TOP TEN | 44.4% | |||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 70 | MATTHEWS ASIA FUNDS |
Table of Contents
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Table of Contents
Matthews India Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 97.6%
| 72 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews India Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| matthewsasia.com | 800.789.ASIA | 73 |
Table of Contents
| 1 | Actual 2016 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 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 | Reimbursement was below 0.01% |
| 4 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 74 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MJFOX) | -8.65% | 0.40% | 5.72% | 11.40% | 2.88% | 5.56% | 12/31/98 | |||||||||||||||||||||
| Institutional Class (MIJFX) | -8.62% | 0.51% | 5.84% | 11.54% | n.a. | 9.71% | 10/29/10 | |||||||||||||||||||||
| MSCI Japan Index5 | -0.14% | 2.73% | 2.82% | 8.45% | 0.73% | 2.92% | 6 | |||||||||||||||||||||
| Lipper Japanese Funds Category Average7 | 0.42% | 2.43% | 4.62% | 9.57% | 1.96% | 4.04% | 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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 5 | It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 94 for index definitions. |
| 6 | Calculated from 12/31/98. |
| 7 | 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 HOLDINGS8 | ||||||||
| Sector | % of Net Assets | |||||||
| Mitsubishi UFJ Financial Group, Inc. | Financials | 3.9% | ||||||
| Tokio Marine Holdings, Inc. | Financials | 2.7% | ||||||
| Toyota Motor Corp. | Consumer Discretionary | 2.6% | ||||||
| Sumitomo Mitsui Financial Group, Inc. | Financials | 2.6% | ||||||
| Suzuki Motor Corp. | Consumer Discretionary | 2.6% | ||||||
| Murata Manufacturing Co., Ltd. | Information Technology | 2.5% | ||||||
| Mitsui & Co., Ltd. | Industrials | 2.4% | ||||||
| Nitori Holdings Co., Ltd. | Consumer Discretionary | 2.4% | ||||||
| Kao Corp. | Consumer Staples | 2.3% | ||||||
| Hoya Corp. | Health Care | 2.3% | ||||||
| % OF ASSETS IN TOP TEN | 26.3% | |||||||
| 8 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| matthewsasia.com | 800.789.ASIA | 75 |
Table of Contents
| 76 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Japan Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 98.8%
| matthewsasia.com | 800.789.ASIA | 77 |
Table of Contents
Matthews Japan Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| 78 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 expense ratios. |
| 2 | The lesser of fiscal year 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
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Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
Inception Date |
||||||||||||||||||||||
| Investor Class (MAKOX) | -9.27% | -6.32% | 2.31% | 7.90% | 4.34% | 5.69% | 1/3/95 | |||||||||||||||||||||
| Institutional Class (MIKOX) | -9.39% | -6.31% | 2.47% | 7.97% | n.a. | 6.75% | 10/29/10 | |||||||||||||||||||||
| Korea Composite Stock Price Index3 | -9.64% | 0.98% | -3.12% | 2.38% | 2.21% | 2.64% | 4 | |||||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average5 | -7.69% | 2.75% | -0.27% | 4.84% | 3.94% | 5.80% | 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 Korea Composite Stock Price Index and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 94 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 HOLDINGS6 | ||||||||
| Sector | % of Net Assets | |||||||
| Samsung Electronics Co., Ltd. | Information Technology | 7.4% | ||||||
| Samsung Electronics Co., Ltd., Pfd. | Information Technology | 7.3% | ||||||
| Shinhan Financial Group Co., Ltd. | Financials | 4.6% | ||||||
| SK Hynix, Inc. | Information Technology | 3.8% | ||||||
| Naver Corp. | Information Technology | 3.6% | ||||||
| KB Financial Group, Inc. | Financials | 3.6% | ||||||
| LG Household & Health Care, Ltd., Pfd. | Consumer Staples | 3.5% | ||||||
| Hyundai Mobis Co., Ltd. | Consumer Discretionary | 3.2% | ||||||
| Hana Financial Group, Inc. | Financials | 3.0% | ||||||
| Hankook Tire Co., Ltd. | Consumer Discretionary | 2.6% | ||||||
| % OF ASSETS IN TOP TEN | 42.6% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
| 80 | MATTHEWS ASIA FUNDS |
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Table of Contents
Matthews Korea Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 75.4%
| 82 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Korea Fund
December 31, 2016
Schedule of Investmentsa (continued)
PREFERRED EQUITIES: 22.8%
| matthewsasia.com | 800.789.ASIA | 83 |
Table of Contents
| 1 | Actual 2016 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, 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., 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
| 84 | MATTHEWS ASIA FUNDS |
Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | Since Inception |
Inception Date |
|||||||||||||||||||
| Investor Class (MSMLX) | -8.38% | -1.44% | -0.19% | 5.72% | 10.53% | 9/15/2008 | ||||||||||||||||||
| Institutional Class (MISMX) | -8.33% | -1.24% | 0.03% | n.a. | 0.06% | 4/30/2013 | ||||||||||||||||||
| MSCI AC Asia ex Japan Small Cap Index4 | -7.09% | -2.05% | -0.96% | 5.03% | 6.69% | 5 | ||||||||||||||||||
| Lipper Pacific ex Japan Funds Category Average6 | -7.69% | 2.75% | -0.27% | 4.84% | 7.21% | 7 | ||||||||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 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 94 for index definition. |
| 5 | Calculated from 9/15/08. |
| 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. |
| 7 | Calculated from 9/30/08. |
| TOP TEN HOLDINGS8 | ||||||||
| Sector | Country | % of Net Assets | ||||||
| Vitasoy International Holdings, Ltd. | Consumer Staples | China/Hong Kong | 2.9% | |||||
| Value Partners Group, Ltd. | Financials | China/Hong Kong | 2.3% | |||||
| SITC International Holdings Co., Ltd. | Industrials | China/Hong Kong | 2.0% | |||||
| Tongda Group Holdings, Ltd. | Information Technology | China/Hong Kong | 1.9% | |||||
| PChome Online, Inc. | Information Technology | Taiwan | 1.9% | |||||
| Clear Media, Ltd. | Consumer Discretionary | China/Hong Kong | 1.9% | |||||
| Lifetech Scientific Corp. | Health Care | China/Hong Kong | 1.8% | |||||
| Macauto Industrial Co., Ltd. | Consumer Discretionary | Taiwan | 1.8% | |||||
| Qingdao Port International Co., Ltd. | Industrials | China/Hong Kong | 1.8% | |||||
| PT Bank Tabungan Pensiunan Nasional | Financials | Indonesia | 1.7% | |||||
| % OF ASSETS IN TOP TEN | 20.0% | |||||||
| 8 | Holdings may combine more than one security from same issuer and related depositary receipts. |
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| 86 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews Asia Small Companies Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 96.4%
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Table of Contents
Matthews Asia Small Companies Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
| 88 | MATTHEWS ASIA FUNDS |
Table of Contents
| 1 | Actual 2016 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, 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 lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2018 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 2016 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities. |
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Table of Contents
| PERFORMANCE AS OF DECEMBER 31, 2016 | ||||||||||||||||||||||||
|
|
|
|
Average Annual Total Returns |
|
||||||||||||||||||||
| 3 Months | 1 Year | 3 Years | 5 Years | Since Inception |
Inception date |
|||||||||||||||||||
| Investor Class (MCSMX) | -8.39% | -2.35% | -0.59% | 6.95% | -0.25% | 5/31/2011 | ||||||||||||||||||
| MSCI China Small Cap Index4 | -4.67% | -5.95% | -1.01% | 7.20% | -1.48% | |||||||||||||||||||
| Lipper China Region Funds Category Average5 | -7.21% | -2.33% | -0.67% | 5.36% | -0.22% | |||||||||||||||||||
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 $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS
Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gains distributions or redemption of Fund shares. Values are in US$.
| 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 94 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 HOLDINGS6 | ||||||||
| Sector | % of Net Assets | |||||||
| SITC International Holdings Co., Ltd. | Industrials | 4.0% | ||||||
| Silergy Corp. | Information Technology | 3.8% | ||||||
| TK Group Holdings, Ltd. | Industrials | 3.4% | ||||||
| Wuxi Little Swan Co., Ltd. | Consumer Discretionary | 3.3% | ||||||
| KWG Property Holding, Ltd. | Real Estate | 3.2% | ||||||
| Qingdao Port International Co., Ltd. | Industrials | 3.2% | ||||||
| Value Partners Group, Ltd. | Financials | 3.0% | ||||||
| Shanghai Haohai Biological Technology Co., Ltd. | Health Care | 3.0% | ||||||
| Genscript Biotech Corp. | Health Care | 3.0% | ||||||
| Yuexiu Transport Infrastructure, Ltd. | Industrials | 2.9% | ||||||
| % OF ASSETS IN TOP TEN | 32.8% | |||||||
| 6 | Holdings may combine more than one security from same issuer and related depositary receipts. |
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Table of Contents
Matthews China Small Companies Fund
December 31, 2016
Schedule of Investmentsa
COMMON EQUITIES: 100.0%
| 92 | MATTHEWS ASIA FUNDS |
Table of Contents
Matthews China Small Companies Fund
December 31, 2016
Schedule of Investmentsa (continued)
COMMON EQUITIES (continued)
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Table of Contents
| 94 | MATTHEWS ASIA FUNDS |
Table of Contents
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Table of Contents
Disclosure of Fund Expenses (unaudited)
| 96 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2016
Disclosure of Fund Expenses (unaudited) (continued)
Annualized, based on the Fund’s most recent fiscal half year expenses
| INVESTOR CLASS | INSTITUTIONAL CLASS | |||||||||||||||||||||||||||||||||||
| Beginning Account Value 7/1/16 |
Ending Account Value 12/31/16 |
Expense Ratio |
Operating Expenses Paid During Period 7/1/16– 12/31/161 |
Beginning Account Value 7/1/16 |
Ending Account Value 12/31/16 |
Expense Ratio |
Operating Expenses Paid During Period 7/1/16– 12/31/161 |
|||||||||||||||||||||||||||||
| ASIA FIXED INCOME STRATEGIES | ||||||||||||||||||||||||||||||||||||
| Matthews Asia Strategic Income Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,028.50 | 1.15% | $5.86 | $1,000.00 | $1,029.90 | 0.90% | $4.59 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.36 | 1.15% | $5.84 | $1,000.00 | $1,020.61 | 0.90% | $4.57 | ||||||||||||||||||||||||||||
| Matthews Asia Credit Opportunities Fund* |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,031.60 | 1.15% | $5.87 | $1,000.00 | $1,033.70 | 0.90% | $4.60 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.36 | 1.15% | $5.84 | $1,000.00 | $1,020.61 | 0.90% | $4.57 | ||||||||||||||||||||||||||||
| ASIA GROWTH AND INCOME STRATEGIES | ||||||||||||||||||||||||||||||||||||
| Matthews Asian Growth and Income Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $946.70 | 1.06% | $5.19 | $1,000.00 | $947.30 | 0.93% | $4.55 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.81 | 1.06% | $5.38 | $1,000.00 | $1,020.46 | 0.93% | $4.72 | ||||||||||||||||||||||||||||
| Matthews Asia Dividend Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $977.70 | 1.03% | $5.12 | $1,000.00 | $978.20 | 0.93% | $4.62 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.96 | 1.03% | $5.23 | $1,000.00 | $1,020.46 | 0.93% | $4.72 | ||||||||||||||||||||||||||||
| Matthews China Dividend Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,066.30 | 1.24% | $6.44 | $1,000.00 | $1,067.10 | 1.08% | $5.61 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,018.90 | 1.24% | $6.29 | $1,000.00 | $1,019.71 | 1.08% | $5.48 | ||||||||||||||||||||||||||||
| ASIA VALUE STRATEGY | ||||||||||||||||||||||||||||||||||||
| Matthews Asia Value Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,040.50 | 1.50% | $7.69 | $1,000.00 | $1,042.20 | 1.25% | $6.42 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.60 | 1.50% | $7.61 | $1,000.00 | $1,018.85 | 1.25% | $6.34 | ||||||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES | ||||||||||||||||||||||||||||||||||||
| Matthews Asia Focus Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $982.60 | 1.37% | $6.83 | $1,000.00 | $982.70 | 1.26% | $6.28 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,018.25 | 1.37% | $6.95 | $1,000.00 | $1,018.80 | 1.26% | $6.39 | ||||||||||||||||||||||||||||
| Matthews Asia Growth Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $973.60 | 1.13% | $5.61 | $1,000.00 | $974.40 | 0.98% | $4.86 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.46 | 1.13% | $5.74 | $1,000.00 | $1,020.21 | 0.98% | $4.98 | ||||||||||||||||||||||||||||
| Matthews Pacific Tiger Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $959.70 | 1.06% | $5.22 | $1,000.00 | $960.60 | 0.89% | $4.39 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.81 | 1.06% | $5.38 | $1,000.00 | $1,020.66 | 0.89% | $4.52 | ||||||||||||||||||||||||||||
| Matthews Asia ESG Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,000.10 | 1.50% | $7.54 | $1,000.00 | $1,001.50 | 1.25% | $6.29 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.60 | 1.50% | $7.61 | $1,000.00 | $1,018.85 | 1.25% | $6.34 | ||||||||||||||||||||||||||||
| Matthews Emerging Asia Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,077.80 | 1.45% | $7.57 | $1,000.00 | $1,079.50 | 1.25% | $6.53 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.85 | 1.45% | $7.35 | $1,000.00 | $1,018.85 | 1.25% | $6.34 | ||||||||||||||||||||||||||||
| Matthews Asia Innovators Fund** |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $954.70 | 1.27% | $6.24 | $1,000.00 | $955.70 | 1.06% | $5.21 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,018.75 | 1.27% | $6.44 | $1,000.00 | $1,019.81 | 1.06% | $5.38 | ||||||||||||||||||||||||||||
| Matthews China Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,078.90 | 1.15% | $6.01 | $1,000.00 | $1,079.80 | 0.98% | $5.12 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.36 | 1.15% | $5.84 | $1,000.00 | $1,020.21 | 0.98% | $4.98 | ||||||||||||||||||||||||||||
| Matthews India Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $970.50 | 1.11% | $5.50 | $1,000.00 | $971.70 | 0.92% | $4.56 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.56 | 1.11% | $5.63 | $1,000.00 | $1,020.51 | 0.92% | $4.67 | ||||||||||||||||||||||||||||
| * | Commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 1 | 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 366. |
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Table of Contents
Disclosure of Fund Expenses (unaudited) (continued)
| INVESTOR CLASS | INSTITUTIONAL CLASS | |||||||||||||||||||||||||||||||||||
| Beginning Account Value 7/1/16 |
Ending Account Value 12/31/16 |
Expense Ratio |
Operating Expenses Paid During Period 7/1/16– 12/31/161 |
Beginning Account Value 7/1/16 |
Ending Account Value 12/31/16 |
Expense Ratio |
Operating Expenses Paid During Period 7/1/16– 12/31/161 |
|||||||||||||||||||||||||||||
| ASIA GROWTH STRATEGIES (continued) | ||||||||||||||||||||||||||||||||||||
| Matthews Japan Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $944.70 | 1.03% | $5.03 | $1,000.00 | $945.40 | 0.90% | $4.40 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.96 | 1.03% | $5.23 | $1,000.00 | $1,020.61 | 0.90% | $4.57 | ||||||||||||||||||||||||||||
| Matthews Korea Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $939.90 | 1.16% | $5.66 | $1,000.00 | $938.40 | 1.14% | $5.55 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,019.30 | 1.16% | $5.89 | $1,000.00 | $1,019.41 | 1.14% | $5.79 | ||||||||||||||||||||||||||||
| ASIA SMALL COMPANY STRATEGIES | ||||||||||||||||||||||||||||||||||||
| Matthews Asia Small Companies Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $992.20 | 1.45% | $7.26 | $1,000.00 | $993.20 | 1.26% | $6.31 | ||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.85 | 1.45% | $7.35 | $1,000.00 | $1,018.80 | 1.26% | $6.39 | ||||||||||||||||||||||||||||
| Matthews China Small Companies Fund |
||||||||||||||||||||||||||||||||||||
| Actual Fund Return |
$1,000.00 | $1,037.90 | 1.50% | $7.68 | ||||||||||||||||||||||||||||||||
| Hypothetical 5% Return |
$1,000.00 | $1,017.60 | 1.50% | $7.61 | ||||||||||||||||||||||||||||||||
| 1 | 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 366. |
| 98 | MATTHEWS ASIA FUNDS |
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(This Page Intentionally Left Blank)
| matthewsasia.com | 800.789.ASIA | 99 |
Table of Contents
Statements of Assets and Liabilities
| Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund1 |
Matthews Asian Growth and Income Fund |
||||||||||
| ASSETS: |
||||||||||||
| Investments at value (A) (Note 2-A and 7): |
||||||||||||
| Unaffiliated issuers |
$63,525,371 | $14,957,196 | $2,460,814,795 | |||||||||
| Affiliated issuers |
— | — | — | |||||||||
| Total investments |
63,525,371 | 14,957,196 | 2,460,814,795 | |||||||||
| Cash |
4,246,578 | 1,115,219 | — | |||||||||
| Segregated foreign currency at value (B) |
— | — | — | |||||||||
| Foreign currency at value (B) |
— | — | 1,941,814 | |||||||||
| Dividends, interest and other receivable—Unaffiliated issuers |
1,169,022 | 255,560 | 10,096,850 | |||||||||
| Receivable for securities sold |
— | — | 48,898,924 | |||||||||
| Receivable for capital shares sold |
43,853 | 9,200 | 7,995,660 | |||||||||
| Due from Advisor (Note 5) |
— | 31,190 | — | |||||||||
| Unrealized appreciation on forward foreign currency exchange contracts |
182,537 | — | — | |||||||||
| Deferred offering costs (Note 2-E) |
— | 33,230 | — | |||||||||
| Prepaid expenses and other assets |
24,203 | 2,867 | 47,107 | |||||||||
| TOTAL ASSETS |
69,191,564 | 16,404,462 | 2,529,795,150 | |||||||||
| LIABILITIES: |
||||||||||||
| Payable for securities purchased |
— | — | 1,210,414 | |||||||||
| Payable for capital shares redeemed |
79,271 | 4,663 | 21,961,130 | |||||||||
| Swaps premium received |
185,771 | 46,443 | — | |||||||||
| Cash overdraft |
— | — | 9,513,820 | |||||||||
| Unrealized depreciation on credit default swaps |
30,907 | 7,727 | — | |||||||||
| Deferred foreign capital gains tax liability (Note 2-D) |
16,630 | — | — | |||||||||
| Due to Advisor (Note 5) |
7,582 | — | 1,498,489 | |||||||||
| Administration and accounting fees payable |
921 | 216 | 37,010 | |||||||||
| Administration and shareholder servicing fees payable |
8,348 | 1,910 | 323,316 | |||||||||
| Custodian fees payable |
9,905 | 812 | 232,698 | |||||||||
| Intermediary service fees payable |
15,324 | 3,003 | 529,621 | |||||||||
| Professional fees payable |
28,816 | 13,774 | 36,126 | |||||||||
| Transfer agent fees payable |
661 | 85 | 13,557 | |||||||||
| Offering costs (Note 2-E) |
— | 1,799 | — | |||||||||
| Trustees fees payable |
47 | 60 | 85 | |||||||||
| Accrued other expenses payable |
518 | — | 197,452 | |||||||||
| TOTAL LIABILITIES |
384,701 | 80,492 | 35,553,718 | |||||||||
| NET ASSETS |
$68,806,863 | $16,323,970 | $2,494,241,432 | |||||||||
| NET ASSETS: |
||||||||||||
| Investor Class |
$55,408,903 | $10,119,016 | $1,684,987,370 | |||||||||
| Institutional Class |
13,397,960 | 6,204,954 | 809,254,062 | |||||||||
| TOTAL |
$68,806,863 | $16,323,970 | $2,494,241,432 | |||||||||
| 1 | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| 2 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 100 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2016
|
Matthews Asia |
Matthews China Dividend Fund |
Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
|||||||||||||||||
| $4,230,835,855 | $180,444,931 | $2,252,541 | $9,770,756 | $605,750,684 | $5,949,704,492 | |||||||||||||||||
| 346,857,120 | — | — | — | — | 605,915,614 | |||||||||||||||||
| 4,577,692,975 | 180,444,931 | 2,252,541 | 9,770,756 | 605,750,684 | 6,555,620,106 | |||||||||||||||||
| 70,854,221 | 8,106,368 | 505,942 | 275,981 | 12,320,773 | 58,320,521 | |||||||||||||||||
| 60,010 | 10,543 | — | — | — | 86,996 | |||||||||||||||||
| 4,252,872 | 191,395 | 2,625 | — | 74,735 | 7,353,754 | |||||||||||||||||
| 12,391,487 | 142,536 | 10,397 | 36,306 | 398,312 | 9,212,495 | |||||||||||||||||
| 1,437,635 | 787,582 | — | 31,307 | — | 1,936,003 | |||||||||||||||||
| 37,400,316 | 1,177,869 | 500 | 100 | 867,425 | 52,247,362 | |||||||||||||||||
| — | — | 33,638 | 10,234 | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 53,984 | 27,192 | 16,035 | 19,164 | 39,827 | 60,945 | |||||||||||||||||
| 4,704,143,500 | 190,888,416 | 2,821,678 | 10,143,848 | 619,451,756 | 6,684,838,182 | |||||||||||||||||
| — | 2,117,398 | 21,873 | — | — | — | |||||||||||||||||
| 14,360,436 | 406,691 | 15,753 | 724 | 2,738,286 | 25,350,103 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | 533,265 | — | |||||||||||||||||
| 2,644,706 | 107,124 | — | — | 345,901 | 3,794,165 | |||||||||||||||||
| 63,625 | 2,564 | 33 | 144 | 8,385 | 92,610 | |||||||||||||||||
| 559,468 | 23,113 | 311 | 1,262 | 74,660 | 784,421 | |||||||||||||||||
| 445,766 | — | — | — | 96,651 | 1,005,301 | |||||||||||||||||
| 734,653 | 36,318 | 436 | — | 111,838 | 831,483 | |||||||||||||||||
| 41,558 | 21,926 | 29,007 | 30,886 | 33,287 | 53,012 | |||||||||||||||||
| 100,303 | 1,950 | 119 | 394 | 4,686 | 37,716 | |||||||||||||||||
| — | — | 50,251 | — | — | — | |||||||||||||||||
| — | — | — | 62 | 33 | — | |||||||||||||||||
| 306,026 | 14,173 | 335 | 1,275 | 39,679 | 198,500 | |||||||||||||||||
| 19,256,541 | 2,731,257 | 118,118 | 34,747 | 3,986,671 | 32,147,311 | |||||||||||||||||
| $4,684,886,959 | $188,157,159 | $2,703,560 | $10,109,101 | $615,465,085 | $6,652,690,871 | |||||||||||||||||
| $2,650,611,239 | $160,399,551 | $2,548,463 | $4,712,557 | $419,515,949 | $2,445,183,259 | |||||||||||||||||
| 2,034,275,720 | 27,757,608 | 155,097 | 5,396,544 | 195,949,136 | 4,207,507,612 | |||||||||||||||||
| $4,684,886,959 | $188,157,159 | $2,703,560 | $10,109,101 | $615,465,085 | $6,652,690,871 | |||||||||||||||||
| matthewsasia.com | 800.789.ASIA | 101 |
Table of Contents
Statements of Assets and Liabilities (continued)
| Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund1 |
Matthews Asian Growth and Income Fund |
||||||||||
| SHARES OUTSTANDING: |
||||||||||||
| (shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value) |
||||||||||||
| Investor Class |
5,312,025 | 998,955 | 112,817,059 | |||||||||
| Institutional Class |
1,285,307 | 612,542 | 54,250,039 | |||||||||
| TOTAL |
6,597,332 | 1,611,497 | 167,067,098 | |||||||||
| NET ASSET VALUE: |
||||||||||||
| Investor Class, offering price and redemption price |
$10.43 | $10.13 | $14.94 | |||||||||
| Institutional Class, offering price and redemption price |
$10.42 | $10.13 | $14.92 | |||||||||
| NET ASSETS CONSIST OF: |
||||||||||||
| Capital paid-in |
$70,985,287 | $16,152,864 | $2,433,335,896 | |||||||||
| Undistributed (distributions in excess of) net investment income (loss) |
(278,404 | ) | 6,393 | (35,270,959 | ) | |||||||
| Undistributed/accumulated net realized gain (loss) on investments, foreign currency related transactions, and swaps |
(2,203,538 | ) | 35,884 | 43,228,584 | ||||||||
| Net unrealized appreciation (depreciation) on investments, foreign currency translations, swaps and foreign capital gains taxes |
303,518 | 128,829 | 52,947,911 | |||||||||
| NET ASSETS |
$68,806,863 | $16,323,970 | $2,494,241,432 | |||||||||
| (A) Investments at cost: |
||||||||||||
| Unaffiliated issuers |
$63,348,993 | $14,820,641 | $2,407,876,010 | |||||||||
| Affiliated issuers |
— | — | — | |||||||||
| Total investments at cost |
$63,348,993 | $14,820,641 | $2,407,876,010 | |||||||||
| (B) Foreign currency at cost |
$— | $— | $1,941,084 | |||||||||
| 1 | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| 2 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
| 3 | Matthews Asia Value Fund Institutional Class net asset value is calculated using unrounded net assets of $155,097.27 divided by the unrounded shares outstanding of 15,753.708. |
See accompanying notes to financial statements.
| 102 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2016
|
Matthews Asia |
Matthews China Dividend Fund |
Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
|||||||||||||||||
| 170,768,090 | 11,384,130 | 255,867 | 524,970 | 19,931,108 | 106,679,423 | |||||||||||||||||
| 131,088,202 | 1,969,936 | 15,754 | 600,366 | 9,248,621 | 183,731,217 | |||||||||||||||||
| 301,856,292 | 13,354,066 | 271,621 | 1,125,336 | 29,179,729 | 290,410,640 | |||||||||||||||||
| $15.52 | $14.09 | $9.96 | $8.98 | $21.05 | $22.92 | |||||||||||||||||
| $15.52 | $14.09 | $9.85 | 3 | $8.99 | $21.19 | $22.90 | ||||||||||||||||
| $4,169,376,824 | $182,667,048 | $2,623,296 | $11,849,861 | $503,128,944 | $5,428,861,031 | |||||||||||||||||
| (8,048,067 | ) | (21,078 | ) | (5,575 | ) | 61,966 | (4,567,404 | ) | 220,925 | |||||||||||||
|
|
(13,514,381 |
) |
2,081,995 | (4,123 | ) | (938,483 | ) | 3,690,163 | 2,522,057 | |||||||||||||
| |
537,072,583 |
|
3,429,194 | 89,962 | (864,243 | ) | 113,213,382 | 1,221,086,858 | ||||||||||||||
| $4,684,886,959 | $188,157,159 | $2,703,560 | $10,109,101 | $615,465,085 | $6,652,690,871 | |||||||||||||||||
| $3,808,415,269 | $177,016,605 | $2,162,637 | $10,634,740 | $492,001,061 | $4,590,570,694 | |||||||||||||||||
| 232,134,445 | — | — | — | — | 743,759,489 | |||||||||||||||||
| $4,040,549,714 | $177,016,605 | $2,162,637 | $10,634,740 | $492,001,061 | $5,334,330,183 | |||||||||||||||||
| $4,424,802 | $202,036 | $2,624 | $— | $74,735 | $7,621,928 | |||||||||||||||||
| matthewsasia.com | 800.789.ASIA | 103 |
Table of Contents
Statements of Assets and Liabilities (continued)
| Matthews Asia |
Matthews Emerging Asia Fund |
Matthews Asia Innovators Fund1 |
||||||||||
| ASSETS: |
||||||||||||
| Investments at value (A) (Note 2-A and 7): |
||||||||||||
| Unaffiliated issuers |
$8,563,505 | $227,781,741 | $99,840,073 | |||||||||
| Affiliated issuers |
— | 3,985,771 | — | |||||||||
| Total investments |
8,563,505 | 231,767,512 | 99,840,073 | |||||||||
| Cash |
244,646 | 10,697,824 | — | |||||||||
| Segregated foreign currency at value (B) |
29 | — | — | |||||||||
| Foreign currency at value (B) |
87,071 | 616,583 | 887,097 | |||||||||
| Dividends, interest and other receivable—Unaffiliated issuers |
20,839 | 95,921 | 166,355 | |||||||||
| Receivable for securities sold |
52,361 | — | 121,005 | |||||||||
| Receivable for capital shares sold |
— | 3,061,301 | 52,163 | |||||||||
| Due from Advisor (Note 5) |
26,274 | — | — | |||||||||
| Prepaid expenses and other assets |
12,933 | 24,532 | 19,498 | |||||||||
| TOTAL ASSETS |
9,007,658 | 246,263,673 | 101,086,191 | |||||||||
| LIABILITIES: |
||||||||||||
| Foreign currency at value (B) |
— | — | — | |||||||||
| Payable for securities purchased |
83,616 | 1,793,088 | — | |||||||||
| Payable for capital shares redeemed |
24,106 | 275,632 | 300,296 | |||||||||
| Cash overdraft |
— | — | 137,179 | |||||||||
| Deferred foreign capital gains tax liability (Note 2-D) |
20,114 | 2,943,361 | 17,802 | |||||||||
| Foreign capital gains tax payable (Note 2-D) |
2,043 | — | — | |||||||||
| Due to Advisor (Note 5) |
— | 125,063 | 60,210 | |||||||||
| Administration and accounting fees payable |
19 | 3,009 | 1,597 | |||||||||
| Administration and shareholder servicing fees payable |
1,105 | 27,970 | 12,879 | |||||||||
| Custodian fees payable |
— | 136,140 | 25,727 | |||||||||
| Intermediary service fees payable |
— | 29,988 | 25,650 | |||||||||
| Professional fees payable |
30,756 | 32,859 | 25,936 | |||||||||
| Transfer agent fees payable |
121 | 1,528 | 2,763 | |||||||||
| Offering costs (Note 2-E) |
78,686 | — | — | |||||||||
| Trustees fees payable |
507 | — | — | |||||||||
| Accrued other expenses payable |
9,158 | 7,052 | 5,198 | |||||||||
| TOTAL LIABILITIES |
250,231 | 5,375,690 | 615,237 | |||||||||
| NET ASSETS |
$8,757,427 | $240,887,983 | $100,470,954 | |||||||||
| NET ASSETS: |
||||||||||||
| Investor Class |
$5,375,638 | $145,163,904 | $83,926,436 | |||||||||
| Institutional Class |
3,381,789 | 95,724,079 | 16,544,518 | |||||||||
| TOTAL |
$8,757,427 | $240,887,983 | $100,470,954 | |||||||||
| 1 | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 2 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 104 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2016
| Matthews China Fund2 |
Matthews India Fund |
Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
|||||||||||||||||
| $513,861,218 | $1,382,701,762 | $2,743,614,578 | $147,481,144 | $413,901,607 | $16,104,297 | |||||||||||||||||
| — | 98,785,305 | 210,054,085 | — | — | — | |||||||||||||||||
| 513,861,218 | 1,481,487,067 | 2,953,668,663 | 147,481,144 | 413,901,607 | 16,104,297 | |||||||||||||||||
| — | 24,503,884 | 15,700,639 | — | 12,265,682 | — | |||||||||||||||||
| 35,713 | — | — | — | — | — | |||||||||||||||||
| 5,464,075 | 4,907 | — | 779,353 | 467,157 | 70,918 | |||||||||||||||||
| — | 377,429 | 2,617,121 | 1,825,454 | 388,098 | — | |||||||||||||||||
| 3,408,522 | 1,744,368 | 22,060,927 | 2,000,097 | 4,666,106 | 351,735 | |||||||||||||||||
| 571,289 | 16,373,152 | 18,724,987 | 102,256 | 583,248 | 2,838 | |||||||||||||||||
| — | — | — | — | — | 3,725 | |||||||||||||||||
| 37,039 | 47,325 | 33,967 | 19,916 | 40,323 | 7,170 | |||||||||||||||||
| 523,377,856 | 1,524,538,132 | 3,012,806,304 | 152,208,220 | 432,312,221 | 16,540,683 | |||||||||||||||||
| — | — | 702 | — | — | — | |||||||||||||||||
| — | — | 8,108,376 | 779,353 | 727,527 | 3,377 | |||||||||||||||||
| 2,294,082 | 4,646,755 | 13,754,654 | 656,191 | 1,734,278 | 178,914 | |||||||||||||||||
| 8,452,576 | — | — | 404,768 | — | 218,047 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 306,176 | 856,910 | 1,703,063 | 86,847 | 357,662 | — | |||||||||||||||||
| 7,625 | 21,083 | 41,311 | 2,048 | 6,201 | 239 | |||||||||||||||||
| 65,980 | 185,151 | 367,940 | 18,583 | 54,331 | 2,111 | |||||||||||||||||
| 27,211 | 245,504 | 96,314 | 6,285 | 83,758 | 1,250 | |||||||||||||||||
| 124,143 | 241,113 | 347,768 | 22,250 | 89,469 | 482 | |||||||||||||||||
| 29,799 | 24,932 | 30,729 | 27,395 | 33,846 | 29,709 | |||||||||||||||||
| 13,794 | 14,530 | 22,778 | 4,037 | 3,189 | 636 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 133 | — | — | — | 50 | — | |||||||||||||||||
| 282,232 | 91,527 | 144,048 | 12,672 | 34,600 | 4,695 | |||||||||||||||||
| 11,603,751 | 6,327,505 | 24,617,683 | 2,020,429 | 3,124,911 | 439,460 | |||||||||||||||||
| $511,774,105 | $1,518,210,627 | $2,988,188,621 | $150,187,791 | $429,187,310 | $16,101,223 | |||||||||||||||||
| $495,899,809 | $967,009,038 | $1,685,871,986 | $142,726,212 | $254,225,770 | $16,101,223 | |||||||||||||||||
| 15,874,296 | 551,201,589 | 1,302,316,635 | 7,461,579 | 174,961,540 | — | |||||||||||||||||
| $511,774,105 | $1,518,210,627 | $2,988,188,621 | $150,187,791 | $429,187,310 | $16,101,223 | |||||||||||||||||
| matthewsasia.com | 800.789.ASIA | 105 |
Table of Contents
Statements of Assets and Liabilities (continued)
| Matthews Asia |
Matthews Emerging Asia Fund |
Matthews Asia Innovators Fund1 |
||||||||||
| SHARES OUTSTANDING: |
||||||||||||
| (shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value) |
||||||||||||
| Investor Class |
599,025 | 11,010,172 | 8,308,925 | |||||||||
| Institutional Class |
378,976 | 7,241,195 | 1,631,066 | |||||||||
| TOTAL |
978,001 | 18,251,367 | 9,939,991 | |||||||||
| NET ASSET VALUE: |
||||||||||||
| Investor Class, offering price and redemption price |
$8.97 | $13.18 | $10.10 | |||||||||
| Institutional Class, offering price and redemption price |
$8.92 | $13.22 | $10.14 | |||||||||
| NET ASSETS CONSIST OF: |
||||||||||||
| Capital paid-in |
$8,922,835 | $216,618,199 | $76,617,837 | |||||||||
| Undistributed (distributions in excess of) net investment income (loss) |
(20,477 | ) | (151,736 | ) | (122,197 | ) | ||||||
| Undistributed/accumulated net realized gain (loss) on investments, and foreign currency related transactions |
(59,373 | ) | (65,362 | ) | 8,934,225 | |||||||
| Net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains taxes |
(85,558 | ) | 24,486,882 | 15,041,089 | ||||||||
| NET ASSETS |
$8,757,427 | $240,887,983 | $100,470,954 | |||||||||
| (A) Investments at cost: |
||||||||||||
| Unaffiliated issuers |
$8,627,213 | $200,404,951 | $84,780,289 | |||||||||
| Affiliated issuers |
— | 3,933,041 | — | |||||||||
| Total investments at cost |
$8,627,213 | $204,337,992 | $84,780,289 | |||||||||
| (B) Foreign currency at cost |
$88,908 | $616,583 | $888,096 | |||||||||
| 1 | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 2 | Consolidated Statements of Assets and Liabilities. See Note 2-C. |
See accompanying notes to financial statements.
| 106 | MATTHEWS ASIA FUNDS |
Table of Contents
December 31, 2016
| Matthews China Fund2 |
Matthews India Fund |
Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
|||||||||||||||||
| 32,058,172 | 37,693,507 | 89,524,404 | 27,202,628 | 13,344,356 | 1,960,401 | |||||||||||||||||
| 1,027,928 | 21,389,411 | 69,049,854 | 1,414,761 | 9,193,535 | — | |||||||||||||||||
| 33,086,100 | 59,082,918 | 158,574,258 | 28,617,389 | 22,537,891 | 1,960,401 | |||||||||||||||||
| $15.47 | $25.65 | $18.83 | $5.25 | $19.05 | $8.21 | |||||||||||||||||
| $15.44 | $25.77 | $18.86 | $5.27 | $19.03 | — | |||||||||||||||||
| $510,563,305 | $1,312,159,261 | $2,849,610,183 | $104,453,075 | $418,884,756 | $16,046,797 | |||||||||||||||||
| (16,878 | ) | 615,562 | (8,574,832 | ) | (1,721,768 | ) | 1,443,823 | 168,416 | ||||||||||||||
|
|
(11,697,933 |
) |
13,346,160 | 61,216,547 | 8,921,684 | (2,023,697 | ) | 122,337 | ||||||||||||||
| |
12,925,611 |
|
192,089,644 | 85,936,723 | 38,534,800 | 10,882,428 | (236,327 | ) | ||||||||||||||
| $511,774,105 | $1,518,210,627 | $2,988,188,621 | $150,187,791 | $429,187,310 | $16,101,223 | |||||||||||||||||
| $500,901,412 | $1,212,714,717 | $2,647,865,478 | $108,949,884 | $403,004,551 | $16,340,651 | |||||||||||||||||
| — | 76,555,739 | 219,881,493 | — | — | — | |||||||||||||||||
| $500,901,412 | $1,289,270,456 | $2,867,746,971 | $108,949,884 | $403,004,551 | $16,340,651 | |||||||||||||||||
| $5,533,481 | $4,907 | $(703 | ) | $778,586 | $467,157 | $70,930 | ||||||||||||||||
| matthewsasia.com | 800.789.ASIA | 107 |
Table of Contents
| Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund1 |
Matthews Asian Growth and Income Fund |
||||||||||
| INVESTMENT INCOME: |
||||||||||||
| Dividends—Unaffiliated Issuers |
$5,278 | $2,085 | $88,620,814 | |||||||||
| Dividends—Affiliated Issuers (Note 7) |
— | — | 87,853 | |||||||||
| Interest |
4,018,444 | 530,698 | 4,537,273 | |||||||||
| Foreign withholding tax |
(83,575 | ) | — | (5,732,674 | ) | |||||||
| TOTAL INVESTMENT INCOME |
3,940,147 | 532,783 | 87,513,266 | |||||||||
| EXPENSES: |
||||||||||||
| Investment advisory fees (Note 5) |
426,049 | 66,127 | 19,401,795 | |||||||||
| Administration and accounting fees (Note 5) |
5,250 | 814 | 233,912 | |||||||||
| Administration and shareholder servicing fees (Note 5) |
93,640 | 14,418 | 4,171,933 | |||||||||
| Accounting out-of-pocket fees |
15,021 | 3,671 | 28,172 | |||||||||
| Custodian fees |
27,692 | 3,680 | 791,744 | |||||||||
| Printing fees |
26,396 | 3,745 | 253,138 | |||||||||
| Intermediary service fees |
137,280 | 16,663 | 4,892,400 | |||||||||
| Professional fees |
59,585 | 28,050 | 91,206 | |||||||||
| Registration fees |
35,483 | 2,195 | 76,387 | |||||||||
| Transfer agent fees |
3,201 | 263 | 67,295 | |||||||||
| Trustees fees |
4,530 | 437 | 301,620 | |||||||||
| Offering costs (Note 2-E) |
— | 67,525 | — | |||||||||
| Other expenses |
13,363 | 11,086 | 66,816 | |||||||||
| TOTAL EXPENSES |
847,490 | 218,674 | 30,376,418 | |||||||||
| Advisory fees waived and expenses waived or reimbursed (Note 5) |
(123,474 | ) | (110,447 | ) | (2,182 | ) | ||||||
| Administration fees waived (Note 5) |
— | — | (2,182 | ) | ||||||||
| NET EXPENSES |
724,016 | 108,227 | 30,372,054 | |||||||||
| NET INVESTMENT INCOME (LOSS) |
3,216,131 | 424,556 | 57,141,212 | |||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, SWAPS AND FOREIGN CAPITAL GAINS TAXES: | ||||||||||||
| Net realized gain (loss) on investments—Unaffiliated Issuers |
(459,895 | ) | 67,553 | 149,487,415 | ||||||||
| Net realized gain (loss) on investments—Affiliated Issuers |
— | — | — | |||||||||
| Net realized gain (loss) on swaps |
(2,845 | ) | (711 | ) | — | |||||||
| Net realized gain (loss) on foreign currency related transactions |
(954,923 | ) | 645 | (1,222,176 | ) | |||||||
| Net change in unrealized appreciation/depreciation on investments |
3,734,584 | 136,556 | (163,427,993 | ) | ||||||||
| Net change in deferred foreign capital gains taxes on unrealized appreciation |
(15,665 | ) | — | — | ||||||||
| Net change in unrealized appreciation/depreciation on swaps |
(30,907 | ) | (7,727 | ) | — | |||||||
| Net change in unrealized appreciation/depreciation on foreign currency related translations |
(116,321 | ) | — | 69,661 | ||||||||
| Net realized and unrealized gain (loss) on investments, foreign currency related transactions, swaps and foreign capital gains taxes |
2,154,028 | 196,316 | (15,093,093 | ) | ||||||||
| NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS |
$5,370,159 | $620,872 | $42,048,119 | |||||||||
| 1 | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| 2 | Consolidated Statements of Operations. See Note 2-C. |
See accompanying notes to financial statements.
| 108 | MATTHEWS ASIA FUNDS |
Table of Contents
Year Ended December 31, 2016
| Matthews Asia Dividend Fund2 |
Matthews China Dividend Fund |
Matthews Asia Value Fund |
Matthews Asia Focus Fund |
Matthews Asia Growth Fund |
Matthews Pacific Tiger Fund |
|||||||||||||||||
| $134,954,825 | $6,243,624 | $54,157 | $305,237 | $10,789,270 | $100,284,623 | |||||||||||||||||
| 12,517,056 | — | — | — | — | 16,199,902 | |||||||||||||||||
| 4,553 | — | 6 | — | — | 9,376 | |||||||||||||||||
| (12,884,045 | ) | (371,614 | ) | (4,724 | ) | (13,065 | ) | (1,047,731 | ) | (10,191,607 | ) | |||||||||||
| 134,592,389 | 5,872,010 | 49,439 | 292,172 | 9,741,539 | 106,302,294 | |||||||||||||||||
| 31,417,886 | 1,123,179 | 14,034 | 73,684 | 4,484,357 | 45,566,740 | |||||||||||||||||
| 378,790 | 13,542 | 169 | 888 | 54,070 | 549,368 | |||||||||||||||||
| 6,755,698 | 241,428 | 3,015 | 15,846 | 964,821 | 9,794,580 | |||||||||||||||||
| 29,589 | 26,846 | 31,324 | 22,704 | 28,213 | 26,477 | |||||||||||||||||
| 1,468,064 | 109,405 | 21,164 | 22,630 | 407,998 | 2,923,876 | |||||||||||||||||
| 309,460 | 34,805 | 2,692 | 4,497 | 76,152 | 287,157 | |||||||||||||||||
| 6,161,999 | 357,109 | 4,953 | 17,150 | 1,084,555 | 7,368,778 | |||||||||||||||||
| 125,105 | 44,683 | 50,440 | 60,689 | 59,170 | 162,433 | |||||||||||||||||
| 89,855 | 57,741 | 13,053 | 26,912 | 70,501 | 109,671 | |||||||||||||||||
| 509,008 | 9,567 | 454 | 1,880 | 23,410 | 154,746 | |||||||||||||||||
| 282,613 | 11,006 | 80 | 1,353 | 43,163 | 361,930 | |||||||||||||||||
| — | — | 87,206 | — | — | — | |||||||||||||||||
| 293,860 | 15,123 | 13,803 | 15,479 | 44,963 | 131,486 | |||||||||||||||||
| 47,821,927 | 2,044,434 | 242,387 | 263,712 | 7,341,373 | 67,437,242 | |||||||||||||||||
| (173,279 | ) | — | (211,035 | ) | (111,801 | ) | — | (522,856 | ) | |||||||||||||
| (173,279 | ) | — | — | — | — | (522,856 | ) | |||||||||||||||
| 47,475,369 | 2,044,434 | 31,352 | 151,911 | 7,341,373 | 66,391,530 | |||||||||||||||||
| 87,117,020 | 3,827,576 | 18,087 | 140,261 | 2,400,166 | 39,910,764 | |||||||||||||||||
| 51,625,633 | 4,195,822 | 25,029 | (228,821 | ) | 23,196,367 | 127,921,962 | ||||||||||||||||
| 5,930,414 | — | — | — | — | 3,794,822 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (2,152,860 | ) | (9,798 | ) | 450 | (1,592 | ) | (35,774 | ) | 139,693 | |||||||||||||
| 36,287,168 | (1,682,755 | ) | 106,667 | 597,305 | (21,404,520 | ) | (195,625,542 | ) | ||||||||||||||
| — | — | — | — | (391,511 | ) | — | ||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 187,325 | 830 | 41 | 18 | 569 | (184,835 | ) | ||||||||||||||||
| 91,877,680 | 2,504,099 | 132,187 | 366,910 | 1,365,131 | (63,953,900 | ) | ||||||||||||||||
| $178,994,700 | $6,331,675 | $150,274 | $507,171 | $3,765,297 | ($24,043,136 | ) | ||||||||||||||||
| matthewsasia.com | 800.789.ASIA | 109 |
Table of Contents
Statements of Operations (continued)
| Matthews Asia ESG Fund |
Matthews Emerging Asia Fund |
Matthews Asia Innovators Fund1 |
||||||||||
| INVESTMENT INCOME: |
||||||||||||
| Dividends—Unaffiliated Issuers |
$198,786 | $5,291,339 | $1,703,466 | |||||||||
| Dividends—Affiliated Issuers (Note 7) |
— | 87,853 | — | |||||||||
| Interest |
31 | — | — | |||||||||
| Foreign withholding tax |
(22,004 | ) | (553,019 | ) | (170,679 | ) | ||||||
| TOTAL INVESTMENT INCOME |
176,813 | 4,826,173 | 1,532,787 | |||||||||
| EXPENSES: |
||||||||||||
| Investment advisory fees (Note 5) |
52,381 | 1,695,506 | 964,368 | |||||||||
| Administration and accounting fees (Note 5) |
631 | 13,582 | 11,628 | |||||||||
| Administration and shareholder servicing fees (Note 5) |
11,244 | 242,127 | 207,389 | |||||||||
| Accounting out-of-pocket fees |
32,762 | 31,821 | 29,667 | |||||||||
| Custodian fees |
43,013 | 476,874 | 113,278 | |||||||||
| Printing fees |
— | 14,308 | 21,412 | |||||||||
| Intermediary service fees |
13,172 | 258,973 | 248,364 | |||||||||
| Professional fees |
57,032 | 72,109 | 47,120 | |||||||||
| Registration fees |
23,339 | 43,223 | 35,256 | |||||||||
| Transfer agent fees |
595 | 7,071 | 13,844 | |||||||||
| Trustees fees |
327 | 10,114 | 9,693 | |||||||||
| Offering costs (Note 2-E) |
26,229 | — | — | |||||||||
| Other expenses |
13,542 | 22,664 | 21,353 | |||||||||
| TOTAL EXPENSES |
274,267 | 2,888,372 | 1,723,372 | |||||||||
| Advisory fees waived and expenses waived or reimbursed (Note 5) |
(163,853 | ) | (553,167 | ) | — | |||||||
| Administration fees waived (Note 5) |
— | — | — | |||||||||
| NET EXPENSES |
110,414 | 2,335,205 | 1,723,372 | |||||||||
| NET INVESTMENT INCOME (LOSS) |
66,399 | 2,490,968 | (190,585 | ) | ||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS AND FOREIGN CAPITAL GAINS TAXES: | ||||||||||||
| Net realized gain (loss) on investments—Unaffiliated Issuers |
(7,225 | ) | 3,244,048 | 8,968,121 | ||||||||
| Net realized gain (loss) on investments—Affiliated Issuers |
— | — | — | |||||||||
| Payment by affiliate |
— | — | — | |||||||||
| Net realized foreign capital gains tax |
(2,043 | ) | (448,789 | ) | — | |||||||
| Net realized gain (loss) on foreign currency related transactions |
(1,291 | ) | (100,198 | ) | (84,683 | ) | ||||||
| Net change in unrealized appreciation/depreciation on investments |
55,371 | 21,189,292 | (23,852,498 | ) | ||||||||
| Net change in foreign capital gains taxes on unrealized appreciation |
(10,279 | ) | (1,282,859 | ) | (17,802 | ) | ||||||
| Net change in unrealized appreciation/depreciation on foreign currency related translations |
(1,717 | ) | 1,051 | 6,141 | ||||||||
| Net realized and unrealized gain (loss) on investments, foreign currency related transactions and foreign capital gains taxes |
32,816 | 22,602,545 | (14,980,721 | ) | ||||||||
| NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS |
$99,215 | $25,093,513 | ($15,171,306 | ) | ||||||||
| 1 | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 2 | Consolidated Statements of Operations. See Note 2-C. |
See accompanying notes to financial statements.
| 110 | MATTHEWS ASIA FUNDS |
Table of Contents
Year Ended December 31, 2016
| Matthews China Fund2 |
Matthews India Fund |
Matthews Japan Fund |
Matthews Korea Fund |
Matthews Asia Small Companies Fund |
Matthews China Small Companies Fund |
|||||||||||||||||
| $15,746,734 | $16,074,707 | $42,537,554 | $2,904,136 | $10,986,706 | $534,511 | |||||||||||||||||
| — | 1,321,126 | 4,055,881 | — | — | — | |||||||||||||||||
| 1,053 | 14,182 | — | — | 4,891 | — | |||||||||||||||||
| (1,249,522 | ) | — | (4,618,299 | ) | (478,708 | ) | (822,492 | ) | (22,831 | ) | ||||||||||||
| 14,498,265 | 17,410,015 | 41,975,136 | 2,425,428 | 10,169,105 | 511,680 | |||||||||||||||||
| 3,980,422 | 10,314,168 | 19,807,446 | 1,194,852 | 5,325,434 | 191,203 | |||||||||||||||||
| 47,996 | 124,351 | 238,741 | 14,406 | 42,666 | 1,532 | |||||||||||||||||
| 856,119 | 2,216,690 | 4,254,896 | 257,280 | 761,317 | 27,330 | |||||||||||||||||
| 21,647 | 28,193 | 33,241 | 30,470 | 32,906 | 27,948 | |||||||||||||||||
| 220,321 | 735,800 | 383,194 | 77,699 | 382,676 | 44,886 | |||||||||||||||||
| 142,049 | 189,164 | 453,677 | 18,152 | 54,091 | 7,055 | |||||||||||||||||
| 1,264,556 | 2,413,501 | 2,368,521 | 262,391 | 853,763 | 47,868 | |||||||||||||||||
| 56,718 | 88,938 | 106,884 | 46,427 | 59,375 | 48,812 | |||||||||||||||||
| 41,653 | 74,394 | 86,461 | 32,591 | 56,691 | 16,284 | |||||||||||||||||
| 68,914 | 71,653 | 116,746 | 20,359 | 16,332 | 3,165 | |||||||||||||||||
| 47,784 | 105,621 | 153,145 | 11,683 | 34,029 | 1,330 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 291,550 | 40,462 | 66,273 | 24,648 | 26,233 | 12,130 | |||||||||||||||||
| 7,039,729 | 16,402,935 | 28,069,225 | 1,990,958 | 7,645,513 | 429,543 | |||||||||||||||||
| — | — | (14,338 | ) | — | (252,008 | ) | (142,295 | ) | ||||||||||||||
| — | — | (14,338 | ) | — | — | — | ||||||||||||||||
| 7,039,729 | 16,402,935 | 28,040,549 | 1,990,958 | 7,393,505 | 287,248 | |||||||||||||||||
| 7,458,536 | 1,007,080 | 13,934,587 | 434,470 | 2,775,600 | 224,432 | |||||||||||||||||
| 13,630,478 | 25,676,282 | 138,078,929 | 16,363,577 | 11,171,541 | 168,752 | |||||||||||||||||
| — | 3,589,788 | 3,691,632 | — | — | — | |||||||||||||||||
| 58,405 | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (233,980 | ) | (447,085 | ) | (1,077,732 | ) | 114,933 | (123,559 | ) | (9 | ) | ||||||||||||
| (61,441,961 | ) | (50,401,665 | ) | (83,412,917 | ) | (27,914,857 | ) | (19,277,275 | ) | (883,004 | ) | |||||||||||
| — | 1,942,487 | — | — | 56,811 | — | |||||||||||||||||
| (17,605 | ) | (9,611 | ) | 13,077 | 8,393 | 4,332 | 27 | |||||||||||||||
|
|
(48,004,663 |
) |
(19,649,804 | ) | 57,292,989 | (11,427,954 | ) | (8,168,150 | ) | (714,234 | ) | |||||||||||
| ($40,546,127 | ) | ($18,642,724 | ) | $71,227,576 | ($10,993,484 | ) | ($5,392,550 | ) | ($489,802 | ) | ||||||||||||
| matthewsasia.com | 800.789.ASIA | 111 |
Table of Contents
Statements of Changes in Net Assets
| MATTHEWS ASIA STRATEGIC INCOME FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$3,216,131 | $3,111,267 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(1,417,663 | ) | (1,299,648 | ) | ||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
3,618,263 | (2,208,664 | ) | |||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(15,665 | ) | 18,403 | |||||
| Net change in unrealized appreciation/depreciation on financial future contracts |
— | (12,891 | ) | |||||
| Net change in unrealized appreciation/depreciation on swaps |
(30,907 | ) | — | |||||
| Net increase (decrease) in net assets resulting from operations |
5,370,159 | (391,533 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(2,093,040 | ) | (1,574,263 | ) | ||||
| Institutional Class |
(510,269 | ) | (350,781 | ) | ||||
| Net decrease in net assets resulting from distributions |
(2,603,309 | ) | (1,925,044 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
3,909,410 | (1,988,782 | ) | |||||
| REDEMPTION FEES |
— | 1,288 | ||||||
| Total increase (decrease) in net assets |
6,676,260 | (4,304,071 | ) | |||||
| NET ASSETS: |
||||||||
| Beginning of year |
62,130,603 | 66,434,674 | ||||||
| End of year (including distributions in excess of net investment income of ($278,404) and ($141,570), respectively) |
$68,806,863 | $62,130,603 | ||||||
| MATTHEWS ASIA CREDIT OPPORTUNITIES FUND | Period Ended December 31, 20161 |
|||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$424,556 | |||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
67,487 | |||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
136,556 | |||||||
| Net change in unrealized appreciation/depreciation on swaps |
(7,727 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations |
620,872 | |||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(323,728 | ) | ||||||
| Institutional Class |
(168,476 | ) | ||||||
| Realized gains on investments: |
||||||||
| Investor Class |
(16,637 | ) | ||||||
| Institutional Class |
(8,450 | ) | ||||||
| Net decrease in net assets resulting from distributions |
(517,291 | ) | ||||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
16,220,389 | |||||||
| Total increase (decrease) in net assets |
16,323,970 | |||||||
| NET ASSETS: |
||||||||
| Beginning of period |
— | |||||||
| End of year (including undistributed net investment income of $6,393) |
$16,323,970 | |||||||
| 1 | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
See accompanying notes to financial statements.
| 112 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS ASIAN GROWTH AND INCOME FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$57,141,212 | $85,685,483 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
148,265,239 | 160,262,613 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(163,358,332 | ) | (408,230,983 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
42,048,119 | (162,282,887 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(54,001,197 | ) | (60,473,615 | ) | ||||
| Institutional Class |
(28,340,600 | ) | (25,646,657 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(96,373,726 | ) | (99,500,383 | ) | ||||
| Institutional Class |
(49,003,449 | ) | (38,663,330 | ) | ||||
| Net decrease in net assets resulting from distributions |
(227,718,972 | ) | (224,283,985 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(189,142,084 | ) | (979,815,420 | ) | ||||
| REDEMPTION FEES |
— | 181,880 | ||||||
| Total increase (decrease) in net assets |
(374,812,937 | ) | (1,366,200,412 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
2,869,054,369 | 4,235,254,781 | ||||||
| End of year (including distributions in excess of net investment income of ($35,270,959) and ($9,981,676), respectively) |
$2,494,241,432 | $2,869,054,369 | ||||||
| MATTHEWS ASIA DIVIDEND FUND | Year
Ended December 31, 20161 |
Year
Ended December 31, 20151 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$87,117,020 | $100,527,128 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
55,403,187 | 257,971,919 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
36,474,493 | (205,148,610 | ) | |||||
| Net change on foreign capital gains taxes on unrealized appreciation |
— | 7,302,449 | ||||||
| Net increase (decrease) in net assets resulting from operations |
178,994,700 | 160,652,886 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(49,010,082 | ) | (50,178,458 | ) | ||||
| Institutional Class |
(39,312,230 | ) | (42,940,313 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(17,325,153 | ) | (40,978,371 | ) | ||||
| Institutional Class |
(13,260,152 | ) | (30,690,700 | ) | ||||
| Return of Capital: |
||||||||
| Investor Class |
(15,297,114 | ) | — | |||||
| Institutional Class |
(11,747,472 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(145,952,203 | ) | (164,787,842 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(151,779,230 | ) | (217,935,493 | ) | ||||
| REDEMPTION FEES |
9 | 95,389 | ||||||
| Total increase (decrease) in net assets |
(118,736,724 | ) | (221,975,060 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
4,803,623,683 | 5,025,598,743 | ||||||
| End of year (including distributions in excess of net investment income of ($8,048,067) and ($4,689,915), respectively) |
$4,684,886,959 | $4,803,623,683 | ||||||
| 1 | Consolidated Statements of Changes in Net Assets. See Note 2-C. |
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 113 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS CHINA DIVIDEND FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$3,827,576 | $3,500,086 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
4,186,024 | 10,269,902 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(1,681,925 | ) | (6,469,584 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
6,331,675 | 7,300,404 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(3,001,665 | ) | (3,549,297 | ) | ||||
| Institutional Class |
(469,585 | ) | (479,873 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(2,247,824 | ) | (7,116,965 | ) | ||||
| Institutional Class |
(382,120 | ) | (673,526 | ) | ||||
| Net decrease in net assets resulting from distributions |
(6,101,194 | ) | (11,819,661 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
7,006,687 | 37,808,908 | ||||||
| REDEMPTION FEES |
— | 13,497 | ||||||
| Total increase (decrease) in net assets |
7,237,168 | 33,303,148 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
180,919,991 | 147,616,843 | ||||||
| End of year (including distributions in excess of net investment income of ($21,078) and ($367,605), respectively) |
$188,157,159 | $180,919,991 | ||||||
| MATTHEWS ASIA VALUE FUND | Year Ended December 31, 2016 |
Period
Ended December 31, 20151 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$18,087 | $3,161 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
25,479 | (988 | ) | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
106,708 | (16,746 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
150,274 | (14,573 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(129,547 | ) | (1,748 | ) | ||||
| Institutional Class |
(10,399 | ) | (581 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(8,096 | ) | — | |||||
| Institutional Class |
(542 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(148,584 | ) | (2,329 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
969,275 | 1,749,497 | ||||||
| Total increase (decrease) in net assets |
970,965 | 1,732,595 | ||||||
| NET ASSETS: |
||||||||
| Beginning of period |
1,732,595 | — | ||||||
| End of period (including undistributed/(distributions in excess of) net investment income of ($5,575) and $7,772, respectively) |
$2,703,560 | $1,732,595 | ||||||
| 1 | Matthews Asia Value Commenced operations on November 30, 2015. |
See accompanying notes to financial statements.
| 114 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS ASIA FOCUS FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$140,261 | $170,208 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(230,413 | ) | (610,875 | ) | ||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
597,323 | (1,483,661 | ) | |||||
| Net change on foreign capital gains taxes on unrealized appreciation |
— | 982 | ||||||
| Net increase (decrease) in net assets resulting from operations |
507,171 | (1,923,346 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(70,761 | ) | (43,929 | ) | ||||
| Institutional Class |
(87,218 | ) | (68,121 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
— | (30,710 | ) | |||||
| Institutional Class |
— | (30,458 | ) | |||||
| Net decrease in net assets resulting from distributions |
(157,979 | ) | (173,218 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(1,414,939 | ) | (1,717,388 | ) | ||||
| REDEMPTION FEES |
— | 1,869 | ||||||
| Total increase (decrease) in net assets |
(1,065,747 | ) | (3,812,083 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
11,174,848 | 14,986,931 | ||||||
| End of year (including undistributed net investment income of $61,966 and $80,691, respectively) |
$10,109,101 | $11,174,848 | ||||||
| MATTHEWS ASIA GROWTH FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$2,400,166 | $5,164,454 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
23,160,593 | 13,893,458 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(21,403,951 | ) | (31,515,329 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(391,511 | ) | 120,781 | |||||
| Net increase (decrease) in net assets resulting from operations |
3,765,297 | (12,336,636 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(4,658,025 | ) | — | |||||
| Institutional Class |
(2,552,696 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(7,210,721 | ) | — | |||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(157,945,254 | ) | (60,027,645 | ) | ||||
| REDEMPTION FEES |
— | 36,064 | ||||||
| Total increase (decrease) in net assets |
(161,390,678 | ) | (72,328,217 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
776,855,763 | 849,183,980 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($4,567,404) and $278,925, respectively) |
$615,465,085 | $776,855,763 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 115 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS PACIFIC TIGER FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$39,910,764 | $130,008,860 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
131,856,477 | 665,475,960 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(195,810,377 | ) | (1,050,878,074 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
— | 5,827,625 | ||||||
| Net increase (decrease) in net assets resulting from operations |
(24,043,136 | ) | (249,565,629 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(13,577,737 | ) | (44,786,496 | ) | ||||
| Institutional Class |
(31,600,912 | ) | (72,239,388 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(50,432,820 | ) | (237,860,447 | ) | ||||
| Institutional Class |
(86,777,397 | ) | (343,244,442 | ) | ||||
| Net decrease in net assets resulting from distributions |
(182,388,866 | ) | (698,130,773 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
173,707,489 | (463,729,788 | ) | |||||
| REDEMPTION FEES |
30 | 121,959 | ||||||
| Total increase (decrease) in net assets |
(32,724,483 | ) | (1,411,304,231 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
6,685,415,354 | 8,096,719,585 | ||||||
| End of year (including undistributed net investment income of $220,925 and $0, respectively) |
$6,652,690,871 | $6,685,415,354 | ||||||
| MATTHEWS ASIA ESG FUND | Year Ended December 31, 2016 |
Period Ended December 31, 20151 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$66,399 | $10,336 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
(10,559 | ) | (50,753 | ) | ||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
53,654 | (119,098 | ) | |||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(10,279 | ) | (9,835 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
99,215 | (169,350 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(85,420 | ) | (16,506 | ) | ||||
| Institutional Class |
(54,320 | ) | (20,899 | ) | ||||
| Net decrease in net assets resulting from distributions |
(139,740 | ) | (37,405 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
3,863,601 | 5,141,106 | ||||||
| Total increase (decrease) in net assets |
3,823,076 | 4,934,351 | ||||||
| NET ASSETS: |
||||||||
| Beginning of period |
4,934,351 | — | ||||||
| End of period (including undistributed/(distributions in excess of) net investment income of ($20,477) and $26,705, respectively) |
$8,757,427 | $4,934,351 | ||||||
| 1 | Matthews Asia ESG Fund commenced operations on April 30, 2015. |
See accompanying notes to financial statements.
| 116 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS EMERGING ASIA FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$2,490,968 | $703,470 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
2,695,061 | (1,091,679 | ) | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
21,190,343 | (4,197,814 | ) | |||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(1,282,859 | ) | (730,548 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
25,093,513 | (5,316,571 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(1,321,879 | ) | (35,327 | ) | ||||
| Institutional Class |
(1,048,573 | ) | (46,163 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(1,325,678 | ) | (300,074 | ) | ||||
| Institutional Class |
(887,884 | ) | (132,999 | ) | ||||
| Net decrease in net assets resulting from distributions |
(4,584,014 | ) | (514,563 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
50,373,123 | 43,937,018 | ||||||
| REDEMPTION FEES |
136,866 | 49,908 | ||||||
| Total increase (decrease) in net assets |
71,019,488 | 38,155,792 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
169,868,495 | 131,712,703 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($151,736) and $276,735, respectively) |
$240,887,983 | $169,868,495 | ||||||
| MATTHEWS ASIA INNOVATORS FUND | Year Ended December 31, 20161 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
($190,585 | ) | ($506,623 | ) | ||||
| Net realized gain (loss) on investments and foreign currency related transactions |
8,883,438 | 27,158,911 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(23,846,357 | ) | (18,078,323 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(17,802 | ) | — | |||||
| Net increase (decrease) in net assets resulting from operations |
(15,171,306 | ) | 8,573,965 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Realized gains on investments: |
||||||||
| Investor Class |
(8,895,423 | ) | (17,188,079 | ) | ||||
| Institutional Class |
(1,728,457 | ) | (4,989,441 | ) | ||||
| Net decrease in net assets resulting from distributions |
(10,623,880 | ) | (22,177,520 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(40,266,401 | ) | (6,569,665 | ) | ||||
| REDEMPTION FEES |
— | 5,577 | ||||||
| Total increase (decrease) in net assets |
(66,061,587 | ) | (20,167,643 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
166,532,541 | 186,700,184 | ||||||
| End of year (including distributions in excess of net investment income (loss) of ($122,197) and $0, respectively) |
$100,470,954 | $166,532,541 | ||||||
| 1 The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| |||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 117 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS CHINA FUND | Year Ended December 31, 20161 |
Year Ended December 31, 20151 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$7,458,536 | $8,470,215 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
13,454,903 | 131,220,057 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(61,441,961 | ) | (106,930,741 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
(17,605 | ) | 4,990 | |||||
| Net increase (decrease) in net assets resulting from operations |
(40,546,127 | ) | 32,764,521 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(7,918,085 | ) | (7,271,979 | ) | ||||
| Institutional Class |
(287,088 | ) | (292,369 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(38,601,123 | ) | (112,695,199 | ) | ||||
| Institutional Class |
(1,268,492 | ) | (3,998,950 | ) | ||||
| Return of Capital: |
||||||||
| Investor Class |
(17,371,599 | ) | — | |||||
| Institutional Class |
(571,054 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(66,017,441 | ) | (124,258,497 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(115,705,461 | ) | (174,745,783 | ) | ||||
| REDEMPTION FEES |
51 | 64,297 | ||||||
| Total increase (decrease) in net assets |
(222,268,978 | ) | (266,175,462 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
734,043,083 | 1,000,218,545 | ||||||
| End of year (including distributions in excess of net investment
income of ($16,878) and |
$511,774,105 | $734,043,083 | ||||||
| 1 Consolidated Statements of Changes in Net Assets. See Note 2-C. |
||||||||
| MATTHEWS INDIA FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$1,007,080 | $(2,170,656 | ) | |||||
| Net realized gain (loss) on investments and foreign currency related transactions |
28,818,985 | 23,846,810 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(50,411,276 | ) | (62,183,356 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
1,942,487 | 6,684,572 | ||||||
| Net increase (decrease) in net assets resulting from operations |
(18,642,724 | ) | (33,822,630 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
— | (1,210,919 | ) | |||||
| Institutional Class |
— | (713,191 | ) | |||||
| Realized gains on investments: |
||||||||
| Investor Class |
(17,649,381 | ) | (10,496,814 | ) | ||||
| Institutional Class |
(9,260,856 | ) | (3,018,487 | ) | ||||
| Net decrease in net assets resulting from distributions |
(26,910,237 | ) | (15,439,411 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
57,936,594 | 469,778,771 | ||||||
| REDEMPTION FEES |
— | 1,141,560 | ||||||
| Total increase (decrease) in net assets |
12,383,633 | 421,658,290 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
1,505,826,994 | 1,084,168,704 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of $615,562 and ($50,865), respectively) |
$1,518,210,627 | $1,505,826,994 | ||||||
See accompanying notes to financial statements.
| 118 | MATTHEWS ASIA FUNDS |
Table of Contents
| MATTHEWS JAPAN FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$13,934,587 | $2,748,307 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
140,692,829 | 24,616,954 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(83,399,840 | ) | 124,628,729 | |||||
| Net increase (decrease) in net assets resulting from operations |
71,227,576 | 151,993,990 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(14,892,806 | ) | — | |||||
| Institutional Class |
(12,780,128 | ) | — | |||||
| Realized gains on investments: |
||||||||
| Investor Class |
(4,615,399 | ) | — | |||||
| Institutional Class |
(3,490,954 | ) | — | |||||
| Net decrease in net assets resulting from distributions |
(35,779,287 | ) | — | |||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
1,003,413,662 | 1,174,685,964 | ||||||
| REDEMPTION FEES |
— | 42,911 | ||||||
| Total increase (decrease) in net assets |
1,038,861,951 | 1,326,722,865 | ||||||
| NET ASSETS: |
||||||||
| Beginning of year |
1,949,326,670 | 622,603,805 | ||||||
| End of year (including undistributed/(distributions in excess of) net investment income of ($8,574,832) and $1,177,791, respectively) |
$2,988,188,621 | $1,949,326,670 | ||||||
| MATTHEWS KOREA FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$434,470 | $423,029 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
16,478,510 | 13,649,607 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(27,906,464 | ) | 10,755,361 | |||||
| Net increase (decrease) in net assets resulting from operations |
(10,993,484 | ) | 24,827,997 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(2,065,275 | ) | (299,912 | ) | ||||
| Institutional Class |
(116,928 | ) | (230,197 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(10,912,600 | ) | (7,587,708 | ) | ||||
| Institutional Class |
(554,186 | ) | (3,214,060 | ) | ||||
| Net decrease in net assets resulting from distributions |
(13,648,989 | ) | (11,331,877 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(32,836,778 | ) | (25,043,885 | ) | ||||
| REDEMPTION FEES |
— | 10,431 | ||||||
| Total increase (decrease) in net assets |
(57,479,251 | ) | (11,537,334 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
207,667,042 | 219,204,376 | ||||||
| End of year (including distributions in excess of net investment
income of ($1,721,768) and |
$150,187,791 | $207,667,042 | ||||||
See accompanying notes to financial statements.
| matthewsasia.com | 800.789.ASIA | 119 |
Table of Contents
Statements of Changes in Net Assets (continued)
| MATTHEWS ASIA SMALL COMPANIES FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$2,775,600 | $1,492,221 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
11,047,982 | (8,000,630 | ) | |||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(19,272,943 | ) | (74,037,016 | ) | ||||
| Net change on foreign capital gains taxes on unrealized appreciation |
56,811 | 378,114 | ||||||
| Net increase (decrease) in net assets resulting from operations |
(5,392,550 | ) | (80,167,311 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(1,145,221 | ) | (527,668 | ) | ||||
| Institutional Class |
(1,307,167 | ) | (972,889 | ) | ||||
| Net decrease in net assets resulting from distributions |
(2,452,388 | ) | (1,500,557 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(173,006,090 | ) | 15,106,280 | |||||
| REDEMPTION FEES |
123,630 | 226,015 | ||||||
| Total increase (decrease) in net assets |
(180,727,398 | ) | (66,335,573 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
609,914,708 | 676,250,281 | ||||||
| End of year (including undistributed net investment income of $1,443,823 and $1,244,170, respectively) |
$429,187,310 | $609,914,708 | ||||||
| MATTHEWS CHINA SMALL COMPANIES FUND | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$224,432 | $178,243 | ||||||
| Net realized gain (loss) on investments and foreign currency related transactions |
168,743 | 3,458,391 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency related translations |
(882,977 | ) | (3,136,775 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(489,802 | ) | 499,859 | |||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM: |
||||||||
| Net investment income: |
||||||||
| Investor Class |
(57,353 | ) | (146,067 | ) | ||||
| Realized gains on investments: |
||||||||
| Investor Class |
(747,907 | ) | (1,644,128 | ) | ||||
| Net decrease in net assets resulting from distributions |
(805,260 | ) | (1,790,195 | ) | ||||
| CAPITAL SHARE TRANSACTIONS (net) (Note 4) |
(4,154,641 | ) | 743,769 | |||||
| REDEMPTION FEES |
4,924 | 24,657 | ||||||
| Total increase (decrease) in net assets |
(5,444,779 | ) | (521,910 | ) | ||||
| NET ASSETS: |
||||||||
| Beginning of year |
21,546,002 | 22,067,912 | ||||||
| End of year (including undistributed net investment income of $168,416 and $1,346, respectively) |
$16,101,223 | $21,546,002 | ||||||
See accompanying notes to financial statements.
| 120 | 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 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$9.96 | $10.31 | $10.42 | $10.84 | $9.93 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.50 | 0.47 | 0.46 | 0.40 | 0.37 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, financial futures contracts, foreign currency related transactions, swaps and foreign capital gains taxes |
0.38 | (0.53 | ) | (0.19 | ) | (0.48 | ) | 0.95 | ||||||||||||
| Total from investment operations |
0.88 | (0.06 | ) | 0.27 | (0.08 | ) | 1.32 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.41 | ) | (0.29 | ) | (0.38 | ) | (0.35 | ) | (0.42 | ) | ||||||||||
| Net realized gains on investments |
— | — | — | (0.01 | ) | — | ||||||||||||||
| Total distributions |
(0.41 | ) | (0.29 | ) | (0.38 | ) | (0.36 | ) | (0.42 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | 0.02 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$10.43 | $9.96 | $10.31 | $10.42 | $10.84 | |||||||||||||||
| TOTAL RETURN |
8.85% | (0.58% | ) | 2.54% | (0.50% | ) | 13.62% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$55,409 | $51,130 | $58,594 | $38,051 | $29,479 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.33% | 1.28% | 1.27% | 1.28% | 1.85% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.15% | 1.12% | 1.13% | 1.20% | 1.17% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
4.85% | 4.57% | 4.36% | 3.75% | 3.58% | |||||||||||||||
| Portfolio turnover3 |
71.50% | 50.09% | 34.28% | 48.71% | 18.45% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$9.96 | $10.30 | $10.42 | $10.83 | $9.93 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.53 | 0.49 | 0.48 | 0.42 | 0.39 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, financial futures contracts, foreign currency related transactions, swaps and foreign capital gains taxes |
0.36 | (0.52 | ) | (0.20 | ) | (0.46 | ) | 0.94 | ||||||||||||
| Total from investment operations |
0.89 | (0.03 | ) | 0.28 | (0.04 | ) | 1.33 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.43 | ) | (0.31 | ) | (0.40 | ) | (0.38 | ) | (0.44 | ) | ||||||||||
| Net realized gains on investments |
— | — | — | (0.01 | ) | — | ||||||||||||||
| Total distributions |
(0.43 | ) | (0.31 | ) | (0.40 | ) | (0.39 | ) | (0.44 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | 0.02 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$10.42 | $9.96 | $10.30 | $10.42 | $10.83 | |||||||||||||||
| TOTAL RETURN |
9.02% | (0.27% | ) | 2.64% | (0.20% | ) | 13.74% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$13,398 | $11,001 | $7,840 | $7,662 | $6,205 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.12% | 1.09% | 1.07% | 1.09% | 1.70% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.90% | 0.90% | 0.93% | 1.00% | 1.00% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
5.13% | 4.81% | 4.55% | 3.99% | 3.70% | |||||||||||||||
| Portfolio turnover3 |
71.50% | 50.09% | 34.28% | 48.71% | 18.45% | |||||||||||||||
| 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 | 121 |
Table of Contents
Financial Highlights (continued)
Matthews Asia Credit Opportunities Fund
The tables below set forth financial data for a share of beneficial interest outstanding throughout the period presented.
| INVESTOR CLASS | Period Ended December 31, 20161 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.29 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, swaps, and foreign currency related transactions |
0.18 | |||
| Total from investment operations |
0.47 | |||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.32 | ) | ||
| Net realized gains on investments |
(0.02 | ) | ||
| Total distributions |
(0.34 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
$10.13 | |||
| TOTAL RETURN |
4.66 | %3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$10,119 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
2.24 | %4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.15 | %4 | ||
| Ratio of net investment income (loss) to average net assets |
4.12 | %4 | ||
| Portfolio turnover5 |
18.80 | %3 | ||
| INSTITUTIONAL CLASS | Period Ended December 31, 20161 |
|||
| Net Asset Value, beginning of period |
$10.00 | |||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||
| Net investment income (loss)2 |
0.30 | |||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, swaps, and foreign currency related transactions |
0.18 | |||
| Total from investment operations |
0.48 | |||
| LESS DISTRIBUTIONS FROM: |
||||
| Net investment income |
(0.33 | ) | ||
| Net realized gains on investments |
(0.02 | ) | ||
| Total distributions |
(0.35 | ) | ||
| Paid-in capital from redemption fees (Note 4) |
— | |||
| Net Asset Value, end of period |
10.13 | |||
| TOTAL RETURN |
4.82 | %3 | ||
| RATIOS/SUPPLEMENTAL DATA |
||||
| Net assets, end of period (in 000’s) |
$6,205 | |||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.99 | %4 | ||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.90 | %4 | ||
| Ratio of net investment income (loss) to average net assets |
4.28 | %4 | ||
| Portfolio turnover5 |
18.80 | %3 | ||
| 1 | Commenced operations on April 29, 2016. |
| 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.
| 122 | MATTHEWS ASIA FUNDS |
Table of Contents
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 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$16.03 | $18.01 | $18.91 | $18.61 | $15.07 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.32 | 0.39 | 0.39 | 0.41 | 0.43 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.06 | ) | (1.19 | ) | (0.50 | ) | 0.47 | 3.58 | ||||||||||||
| Total from investment operations |
0.26 | (0.80 | ) | (0.11 | ) | 0.88 | 4.01 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.48 | ) | (0.42 | ) | (0.35 | ) | (0.46 | ) | (0.47 | ) | ||||||||||
| Net realized gains on investments |
(0.87 | ) | (0.76 | ) | (0.44 | ) | (0.12 | ) | — | |||||||||||
| Total distributions |
(1.35 | ) | (1.18 | ) | (0.79 | ) | (0.58 | ) | (0.47 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$14.94 | $16.03 | $18.01 | $18.91 | $18.61 | |||||||||||||||
| TOTAL RETURN |
1.34% | (4.50% | ) | (0.65% | ) | 4.83% | 26.90% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$1,684,987 | $2,045,435 | $3,052,565 | $3,278,586 | $3,214,984 | |||||||||||||||
| 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% | 1.08% | 1.08% | 1.11% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.09% | 1.09% | 1.08% | 1.08% | 1.11% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.90% | 2.17% | 2.03% | 2.14% | 2.52% | |||||||||||||||
| Portfolio turnover3 |
15.64% | 16.48% | 16.79% | 15.27% | 17.43% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$16.02 | $18.00 | $18.90 | $18.60 | $15.06 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.34 | 0.42 | 0.42 | 0.44 | 0.45 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.07 | ) | (1.19 | ) | (0.50 | ) | 0.48 | 3.58 | ||||||||||||
| Total from investment operations |
0.27 | (0.77 | ) | (0.08 | ) | 0.92 | 4.03 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.50 | ) | (0.45 | ) | (0.38 | ) | (0.50 | ) | (0.49 | ) | ||||||||||
| Net realized gains on investments |
(0.87 | ) | (0.76 | ) | (0.44 | ) | (0.12 | ) | — | |||||||||||
| Total distributions |
(1.37 | ) | (1.21 | ) | (0.82 | ) | (0.62 | ) | (0.49 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$14.92 | $16.02 | $18.00 | $18.90 | $18.60 | |||||||||||||||
| TOTAL RETURN |
1.44% | (4.33% | ) | (0.48% | ) | 5.04% | 27.09% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$809,254 | $823,619 | $1,182,690 | $1,120,218 | $856,876 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.94% | 0.92% | 0.92% | 0.93% | 0.97% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
0.94% | 0.92% | 0.92% | 0.93% | 0.97% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
2.06% | 2.34% | 2.19% | 2.30% | 2.69% | |||||||||||||||
| Portfolio turnover3 |
15.64% | 16.48% | 16.79% | 15.27% | 17.43% | |||||||||||||||
| 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 | 123 |
Table of Contents
Financial Highlights (continued)
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 | 20161 | 20151 | 20141 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$15.36 | $15.26 | $15.60 | $14.58 | $12.48 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.28 | 0.29 | 0.30 | 0.32 | 0.36 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.37 | 0.31 | (0.34 | ) | 1.30 | 2.30 | ||||||||||||||
| Total from investment operations |
0.65 | 0.60 | (0.04 | ) | 1.62 | 2.66 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.29 | ) | (0.27 | ) | (0.23 | ) | (0.60 | ) | (0.56 | ) | ||||||||||
| Net realized gains on investments |
(0.11 | ) | (0.23 | ) | — | — | — | |||||||||||||
| Return of capital |
(0.09 | ) | — | (0.07 | ) | — | — | |||||||||||||
| Total distributions |
(0.49 | ) | (0.50 | ) | (0.30 | ) | (0.60 | ) | (0.56 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 3 | — | 3 | — | 3 | — | 3 | |||||||||||
| Net Asset Value, end of year |
$15.52 | $15.36 | $15.26 | $15.60 | $14.58 | |||||||||||||||
| TOTAL RETURN |
4.13% | 3.86% | (0.32% | ) | 11.27% | 21.63% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,650,611 | $2,757,910 | $2,918,228 | $3,669,690 | $2,780,043 | |||||||||||||||
| 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% | 1.06% | 1.09% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.06% | 1.05% | 1.05% | 1.06% | 1.09% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.79% | 1.82% | 1.89% | 2.04% | 2.65% | |||||||||||||||
| Portfolio turnover4 |
39.76% | 35.98% | 20.06% | 14.06% | 9.17% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 20161 | 20151 | 20141 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$15.35 | $15.26 | $15.59 | $14.57 | $12.48 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.30 | 0.32 | 0.32 | 0.34 | 0.37 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.38 | 0.29 | (0.33 | ) | 1.30 | 2.29 | ||||||||||||||
| Total from investment operations |
0.68 | 0.61 | (0.01 | ) | 1.64 | 2.66 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.31 | ) | (0.29 | ) | (0.25 | ) | (0.62 | ) | (0.57 | ) | ||||||||||
| Net realized gains on investments |
(0.11 | ) | (0.23 | ) | — | — | — | |||||||||||||
| Return of capital |
(0.09 | ) | — | (0.07 | ) | — | — | |||||||||||||
| Total distributions |
(0.51 | ) | (0.52 | ) | (0.32 | ) | (0.62 | ) | (0.57 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 3 | — | 3 | — | 3 | — | 3 | |||||||||||
| Net Asset Value, end of year |
$15.52 | $15.35 | $15.26 | $15.59 | $14.57 | |||||||||||||||
| TOTAL RETURN |
4.33% | 3.93% | (0.18% | ) | 11.43% | 21.70% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,034,276 | $2,045,713 | $2,107,371 | $2,124,214 | $922,561 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.94% | 0.93% | 0.93% | 0.93% | 0.97% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.93% | 0.92% | 0.93% | 0.93% | 0.97% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.91% | 1.98% | 2.02% | 2.17% | 2.72% | |||||||||||||||
| Portfolio turnover4 |
39.76% | 35.98% | 20.06% | 14.06% | 9.17% | |||||||||||||||
| 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.
| 124 | MATTHEWS ASIA FUNDS |
Table of Contents
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 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$13.79 | $13.37 | $13.74 | $12.35 | $10.06 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.31 | 0.29 | 0.25 | 0.25 | 0.25 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.47 | 1.01 | (0.12 | ) | 1.35 | 2.49 | ||||||||||||||
| Total from investment operations |
0.78 | 1.30 | 0.13 | 1.60 | 2.74 | |||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.28 | ) | (0.28 | ) | (0.36 | ) | (0.23 | ) | (0.46 | ) | ||||||||||
| Net realized gains on investments |
(0.20 | ) | (0.60 | ) | (0.14 | ) | — | — | ||||||||||||
| Total distributions |
(0.48 | ) | (0.88 | ) | (0.50 | ) | (0.23 | ) | (0.46 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | 0.02 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$14.09 | $13.79 | $13.37 | $13.74 | $12.35 | |||||||||||||||
| TOTAL RETURN |
5.70% | 9.54% | 0.93% | 13.35% | 27.81% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$160,400 | $165,514 | $116,954 | $125,965 | $59,535 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.22% | 1.19% | 1.19% | 1.24% | 1.47% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.22% | 1.19% | 1.19% | 1.34% | 1.50% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
2.28% | 1.97% | 1.88% | 1.94% | 2.24% | |||||||||||||||
| Portfolio turnover3 |
72.96% | 79.91% | 25.43% | 20.52% | 21.40% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$13.79 | $13.37 | $13.74 | $12.34 | $10.06 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.29 | 0.28 | 0.28 | 0.33 | 0.22 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.51 | 1.04 | (0.13 | ) | 1.32 | 2.53 | ||||||||||||||
| Total from investment operations |
0.80 | 1.32 | 0.15 | 1.65 | 2.75 | |||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.30 | ) | (0.30 | ) | (0.38 | ) | (0.26 | ) | (0.48 | ) | ||||||||||
| Net realized gains on investments |
(0.20 | ) | (0.60 | ) | (0.14 | ) | — | — | ||||||||||||
| Total distributions |
(0.50 | ) | (0.90 | ) | (0.52 | ) | (0.26 | ) | (0.48 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | 0.01 | 0.01 | |||||||||||||
| Net Asset Value, end of year |
$14.09 | $13.79 | $13.37 | $13.74 | $12.34 | |||||||||||||||
| TOTAL RETURN |
5.90% | 9.71% | 1.11% | 13.72% | 27.90% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$27,758 | $15,406 | $30,662 | $24,790 | $201 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.06% | 1.00% | 1.01% | 1.08% | 1.29% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.06% | 1.00% | 1.01% | 1.08% | 1.29% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
2.09% | 1.89% | 2.06% | 2.54% | 1.87% | |||||||||||||||
| Portfolio turnover3 |
72.96% | 79.91% | 25.43% | 20.52% | 21.40% | |||||||||||||||
| 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 Asia Value 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, 2016 |
Period Ended Dec. 31, 20151 |
||||||
| Net Asset Value, beginning of period |
$9.85 | $10.00 | ||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||
| Net investment income (loss)2 |
$0.09 | 0.02 | ||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
$0.65 | (0.16 | ) | |||||
| Total from investment operations |
0.74 | (0.14 | ) | |||||
| LESS DISTRIBUTIONS FROM: |
||||||||
| Net investment income |
($0.59 | ) | (0.01 | ) | ||||
| Net realized gains on investments |
($0.04 | ) | — | |||||
| Total distributions |
($0.63 | ) | (0.01 | ) | ||||
| Net Asset Value, end of period |
$9.96 | $9.85 | ||||||
| TOTAL RETURN |
7.43% | (1.35% | )3 | |||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||
| Net assets, end of period (in 000’s) |
$2,548 | $1,589 | ||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
11.48% | 36.42% | 4 | |||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 1.50% | 4 | |||||
| Ratio of net investment income (loss) to average net assets |
0.84% | 2.70% | 4 | |||||
| Portfolio turnover5 |
19.60% | 10.80% | 3 | |||||
| INSTITUTIONAL CLASS | Year Ended Dec. 31, 2016 |
Period Ended Dec. 31, 20151 |
||||||
| Net Asset Value, beginning of period |
$9.83 | $10.00 | ||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||
| Net investment income (loss)2 |
0.10 | 0.02 | ||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.67 | (0.15 | ) | |||||
| Total from investment operations |
0.77 | (0.13 | ) | |||||
| LESS DISTRIBUTIONS FROM: |
||||||||
| Net investment income |
(0.71 | ) | (0.04 | ) | ||||
| Net realized gains on investments |
(0.04 | ) | — | |||||
| Total distributions |
(0.75 | ) | (0.04 | ) | ||||
| Net Asset Value, end of period |
$9.85 | $9.83 | ||||||
| TOTAL RETURN |
7.72% | (1.30% | )3 | |||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||
| Net assets, end of period (in 000’s) |
$155 | $143 | ||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
11.26% | 36.17% | 4 | |||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 1.25% | 4 | |||||
| Ratio of net investment income (loss) to average net assets |
1.01% | 2.41% | 4 | |||||
| Portfolio turnover5 |
19.60% | 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 share issues. |
See accompanying notes to financial statements.
| 126 | MATTHEWS ASIA FUNDS |
Table of Contents
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 | 2016 | 2015 | 2014 | |||||||||||||
| Net Asset Value, beginning of period |
$8.69 | $10.01 | $9.66 | $10.00 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)2 |
0.10 | 0.11 | 0.09 | 0.04 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.32 | (1.31 | ) | 0.33 | (0.30 | ) | ||||||||||
| Total from investment operations |
0.42 | (1.20 | ) | 0.42 | (0.26 | ) | ||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
(0.13 | ) | (0.07 | ) | (0.07 | ) | (0.08 | ) | ||||||||
| Net realized gains on investments |
— | (0.05 | ) | — | — | |||||||||||
| Total distributions |
(0.13 | ) | (0.12 | ) | (0.07 | ) | (0.08 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 3 | — | 3 | — | 3 | |||||||||
| Net Asset Value, end of period |
$8.98 | $8.69 | $10.01 | $9.66 | ||||||||||||
| TOTAL RETURN |
4.82% | (12.07% | ) | 4.38% | (2.63% | )4 | ||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$4,713 | $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) |
2.47% | 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% | 1.50% | 1.57% | 1.71% | 5 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
1.14% | 1.08% | 0.87% | 0.64% | 5 | |||||||||||
| Portfolio turnover6 |
21.10% | 23.60% | 24.12% | 16.23% | 4 | |||||||||||
| Year Ended Dec. 31 | Period Ended Dec. 31, 20131 |
|||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | |||||||||||||
| Net Asset Value, beginning of period |
$8.69 | $10.04 | $9.66 | $10.00 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)2 |
0.13 | 0.13 | 0.10 | 0.05 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
0.31 | (1.33 | ) | 0.36 | (0.30 | ) | ||||||||||
| Total from investment operations |
0.44 | (1.20 | ) | 0.46 | (0.25 | ) | ||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
(0.14 | ) | (0.10 | ) | (0.08 | ) | (0.09 | ) | ||||||||
| Net realized gains on investments |
— | (0.05 | ) | — | — | |||||||||||
| Total distributions |
(0.14 | ) | (0.15 | ) | (0.08 | ) | (0.09 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 3 | — | 3 | — | 3 | |||||||||
| Net Asset Value, end of period |
$8.99 | $8.69 | $10.04 | $9.66 | ||||||||||||
| TOTAL RETURN |
5.05% | (11.96% | ) | 4.77% | (2.48% | )4 | ||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$5,397 | $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) |
2.29% | 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% | 1.25% | 1.31% | 1.50% | 5 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
1.37% | 1.30% | 0.96% | 0.79% | 5 | |||||||||||
| Portfolio turnover6 |
21.10% | 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.
| matthewsasia.com | 800.789.ASIA | 127 |
Table of Contents
Financial Highlights (continued)
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 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$21.09 | $21.10 | $21.17 | $18.02 | $15.34 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.06 | 0.11 | 0.12 | 0.11 | 0.15 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
0.13 | (0.12 | ) | 0.19 | 3.37 | 2.53 | ||||||||||||||
| Total from investment operations |
0.19 | (0.01 | ) | 0.31 | 3.48 | 2.68 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.23 | ) | — | (0.38 | ) | (0.33 | ) | — | ||||||||||||
| Total distributions |
(0.23 | ) | — | (0.38 | ) | (0.33 | ) | — | ||||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$21.05 | $21.09 | $21.10 | $21.17 | $18.02 | |||||||||||||||
| TOTAL RETURN |
0.92% | (0.05% | ) | 1.49% | 19.35% | 17.47% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$419,516 | $526,969 | $561,922 | $558,407 | $276,884 | |||||||||||||||
| Ratio of expenses to average net assets |
1.14% | 1.11% | 1.11% | 1.12% | 1.16% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.30% | 0.49% | 0.55% | 0.55% | 0.92% | |||||||||||||||
| Portfolio turnover3 |
13.61% | 29.51% | 22.24% | 10.77% | 44.76% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$21.24 | $21.19 | $21.26 | $18.08 | $15.37 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.10 | 0.16 | 0.16 | 0.15 | 0.17 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
0.13 | (0.11 | ) | 0.19 | 3.39 | 2.54 | ||||||||||||||
| Total from investment operations |
0.23 | 0.05 | 0.35 | 3.54 | 2.71 | |||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.28 | ) | — | (0.42 | ) | (0.36 | ) | — | ||||||||||||
| Total distributions |
(0.28 | ) | — | (0.42 | ) | (0.36 | ) | — | ||||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$21.19 | $21.24 | $21.19 | $21.26 | $18.08 | |||||||||||||||
| TOTAL RETURN |
1.06% | 0.24% | 1.63% | 19.63% | 17.63% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$195,949 | $249,886 | $287,262 | $227,852 | $147,142 | |||||||||||||||
| Ratio of expenses to average net assets |
0.96% | 0.91% | 0.91% | 0.93% | 0.98% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.47% | 0.72% | 0.74% | 0.73% | 1.02% | |||||||||||||||
| Portfolio turnover3 |
13.61% | 29.51% | 22.24% | 10.77% | 44.76% | |||||||||||||||
| 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.
| 128 | MATTHEWS ASIA FUNDS |
Table of Contents
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 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$23.54 | $26.57 | $24.99 | $24.42 | $20.33 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.11 | 0.42 | 0.14 | 0.17 | 0.18 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.13 | ) | (0.82 | ) | 2.80 | 0.72 | 4.09 | |||||||||||||
| Total from investment operations |
(0.02 | ) | (0.40 | ) | 2.94 | 0.89 | 4.27 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.42 | ) | (0.13 | ) | (0.16 | ) | (0.16 | ) | ||||||||||
| Net realized gains on investments |
(0.47 | ) | (2.21 | ) | (1.23 | ) | (0.16 | ) | (0.02 | ) | ||||||||||
| Total distributions |
(0.60 | ) | (2.63 | ) | (1.36 | ) | (0.32 | ) | (0.18 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$22.92 | $23.54 | $26.57 | $24.99 | $24.42 | |||||||||||||||
| TOTAL RETURN |
(0.16% | ) | (1.30% | ) | 11.79% | 3.63% | 21.00% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$2,445,183 | $2,720,869 | $3,047,077 | $2,954,108 | $2,994,026 | |||||||||||||||
| 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% | 1.09% | 1.11% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
1.08% | 1.07% | 1.08% | 1.09% | 1.11% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.47% | 1.53% | 0.52% | 0.67% | 0.82% | |||||||||||||||
| Portfolio turnover3 |
5.73% | 12.56% | 11.38% | 7.73% | 6.53% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$23.52 | $26.56 | $24.97 | $24.41 | $20.32 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.16 | 0.44 | 0.18 | 0.21 | 0.21 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.14 | ) | (0.80 | ) | 2.82 | 0.71 | 4.10 | |||||||||||||
| Total from investment operations |
0.02 | (0.36 | ) | 3.00 | 0.92 | 4.31 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.17 | ) | (0.47 | ) | (0.18 | ) | (0.20 | ) | (0.20 | ) | ||||||||||
| Net realized gains on investments |
(0.47 | ) | (2.21 | ) | (1.23 | ) | (0.16 | ) | (0.02 | ) | ||||||||||
| Total distributions |
(0.64 | ) | (2.68 | ) | (1.41 | ) | (0.36 | ) | (0.22 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$22.90 | $23.52 | $26.56 | $24.97 | $24.41 | |||||||||||||||
| TOTAL RETURN |
0.03% | (1.15% | ) | 12.03% | 3.78% | 21.24% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$4,207,508 | $3,964,547 | $5,049,643 | $4,679,039 | $3,770,568 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement or waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.91% | 0.91% | 0.92% | 0.92% | 0.95% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement or waiver or recapture of expenses by Advisor and Administrator |
0.90% | 0.89% | 0.91% | 0.92% | 0.95% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.65% | 1.61% | 0.68% | 0.83% | 0.95% | |||||||||||||||
| Portfolio turnover 3 |
5.73% | 12.56% | 11.38% | 7.73% | 6.53% | |||||||||||||||
| 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 | 129 |
Table of Contents
Financial Highlights (continued)
Matthews Asia ESG 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, 2016 |
Period Ended Dec. 31, 20151 |
||||||
| Net Asset Value, beginning of period |
$9.23 | $10.00 | ||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||
| Net investment income (loss)2 |
0.07 | 0.02 | ||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.20 | ) | (0.75 | ) | ||||
| Total from investment operations |
(0.13 | ) | (0.73 | ) | ||||
| LESS DISTRIBUTIONS FROM: |
||||||||
| Net investment income |
(0.13 | ) | (0.04 | ) | ||||
| Total distributions |
(0.13 | ) | (0.04 | ) | ||||
| Net Asset Value, end of period |
$8.97 | $9.23 | ||||||
| TOTAL RETURN |
(1.40% | ) | (7.30% | )3 | ||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||
| Net assets, end of period (in 000’s) |
$5,376 | $3,248 | ||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
3.54% | 9.09% | 4 | |||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.48% | 1.44% | 4 | |||||
| Ratio of net investment income (loss) to average net assets |
0.77% | 0.25% | 4 | |||||
| Portfolio turnover5 |
16.10% | 21.72% | 3 | |||||
| INSTITUTIONAL CLASS | Year Ended Dec. 31, 2016 |
Period Ended Dec. 31, 20151 |
||||||
| Net Asset Value, beginning of period |
$9.17 | $10.00 | ||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||
| Net investment income (loss)2 |
0.09 | 0.05 | ||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.19 | ) | (0.77 | ) | ||||
| Total from investment operations |
(0.10 | ) | (0.72 | ) | ||||
| LESS DISTRIBUTIONS FROM: |
||||||||
| Net investment income |
(0.15 | ) | (0.11 | ) | ||||
| Total distributions |
(0.15 | ) | (0.11 | ) | ||||
| Net Asset Value, end of period |
$8.92 | $9.17 | ||||||
| TOTAL RETURN |
(1.16% | ) | (7.14% | )3 | ||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||
| Net assets, end of period (in 000’s) |
$3,382 | $1,686 | ||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
3.36% | 8.90% | 4 | |||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.25% | 1.25% | 4 | |||||
| Ratio of net investment income (loss) to average net assets |
0.97% | 0.75% | 4 | |||||
| Portfolio turnover5 |
16.10% | 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.
| 130 | MATTHEWS ASIA FUNDS |
Table of Contents
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 | 2016 | 2015 | 2014 | |||||||||||||
| Net Asset Value, beginning of period |
$11.27 | $11.60 | $9.93 | $10.00 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)2 |
0.15 | 0.04 | 0.04 | (0.01 | ) | |||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
2.01 | (0.34 | ) | 1.69 | (0.05 | ) | ||||||||||
| Total from investment operations |
2.16 | (0.30 | ) | 1.73 | (0.06 | ) | ||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
(0.13 | ) | — | 3 | (0.06 | ) | — | 3 | ||||||||
| Net realized gains on investments |
(0.13 | ) | (0.03 | ) | — | — | ||||||||||
| Return of capital |
— | — | — | (0.01 | ) | |||||||||||
| Total distributions |
(0.26 | ) | (0.03 | ) | (0.06 | ) | (0.01 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
0.01 | — | 3 | — | 3 | — | 3 | |||||||||
| Net Asset Value, end of period |
$13.18 | $11.27 | $11.60 | $9.93 | ||||||||||||
| TOTAL RETURN |
19.25% | (2.56% | ) | 17.39% | (0.61% | )4 | ||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$145,164 | $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) |
1.77% | 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 |
1.47% | 1.50% | 1.58% | 1.98% | 5 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
1.26% | 0.33% | 0.34% | (0.08% | )5 | |||||||||||
| Portfolio turnover6 |
34.90% | 12.14% | 8.21% | 1.66% | 4 | |||||||||||
| Year Ended Dec. 31 | Period Ended Dec. 31, 20131 |
|||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | |||||||||||||
| Net Asset Value, beginning of period |
$11.29 | $11.60 | $9.92 | $10.00 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)2 |
0.21 | 0.07 | 0.06 | 0.01 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
1.99 | (0.34 | ) | 1.69 | (0.07 | ) | ||||||||||
| Total from investment operations |
2.20 | (0.27 | ) | 1.75 | (0.06 | ) | ||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
(0.15 | ) | (0.01 | ) | (0.07 | ) | — | 3 | ||||||||
| Net realized gains on investments |
(0.13 | ) | (0.03 | ) | — | — | ||||||||||
| Return of capital |
— | — | — | (0.02 | ) | |||||||||||
| Total distributions |
(0.28 | ) | (0.04 | ) | (0.07 | ) | (0.02 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
0.01 | — | 3 | — | 3 | — | 3 | |||||||||
| Net Asset Value, end of period |
$13.22 | $11.29 | $11.60 | $9.92 | ||||||||||||
| TOTAL RETURN |
19.61% | (2.33% | ) | 17.68% | (0.55% | )4 | ||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$95,724 | $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) |
1.62% | 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% | 1.25% | 1.33% | 1.75% | 5 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
1.72% | 0.65% | 0.55% | 0.19% | 5 | |||||||||||
| Portfolio turnover6 |
34.90% | 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.
| matthewsasia.com | 800.789.ASIA | 131 |
Table of Contents
Financial Highlights (continued)
Matthews Asia Innovators 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 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$12.32 | $13.61 | $12.59 | $9.29 | $8.16 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
(0.02 | ) | (0.05 | ) | — | 2 | 0.01 | 0.03 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(1.07 | ) | 0.64 | 1.16 | 3.30 | 1.12 | ||||||||||||||
| Total from investment operations |
(1.09 | ) | 0.59 | 1.16 | 3.31 | 1.15 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | — | (0.06 | ) | (0.01 | ) | (0.02 | ) | ||||||||||||
| Net realized gains on investments |
(1.13 | ) | (1.88 | ) | (0.08 | ) | — | — | ||||||||||||
| Total distributions |
(1.13 | ) | (1.88 | ) | (0.14 | ) | (0.01 | ) | (0.02 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$10.10 | $12.32 | $13.61 | $12.59 | $9.29 | |||||||||||||||
| TOTAL RETURN |
(9.10% | ) | 4.48% | 9.24% | 35.61% | 14.11% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$83,926 | $129,763 | $125,612 | $111,751 | $131,629 | |||||||||||||||
| Ratio of expenses to average net assets |
1.24% | 1.18% | 1.16% | 1.18% | 1.18% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
(0.19% | ) | (0.33% | ) | (0.02% | ) | 0.07% | 0.30% | ||||||||||||
| Portfolio turnover |
92.25% | 3 | 72.85% | 3 | 62.99% | 3 | 62.04% | 3 | 45.76% | |||||||||||
| INSTITUTIONAL CLASS |
Year Ended Dec. 31 | |
Period Ended Dec. 31, 20134 |
| ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||
| Net Asset Value, beginning of period |
$12.34 | $13.61 | $12.58 | $10.09 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)1 |
0.01 | (0.02 | ) | 0.03 | 0.04 | |||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(1.08 | ) | 0.63 | 1.17 | 2.48 | |||||||||||
| Total from investment operations |
(1.07 | ) | 0.61 | 1.20 | 2.52 | |||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
— | — | (0.09 | ) | (0.03 | ) | ||||||||||
| Net realized gains on investments |
(1.13 | ) | (1.88 | ) | (0.08 | ) | — | |||||||||
| Total distributions |
(1.13 | ) | (1.88 | ) | (0.17 | ) | (0.03 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | |||||||||
| Net Asset Value, end of period |
$10.14 | $12.34 | $13.61 | $12.58 | ||||||||||||
| TOTAL RETURN |
(8.92% | ) | 4.63% | 9.54% | 24.99% | 5 | ||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$16,545 | $36,770 | $61,088 | $49,236 | ||||||||||||
| Ratio of expenses to average net assets |
1.01% | 0.97% | 0.95% | 1.00% | 6 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
0.06% | (0.16% | ) | 0.21% | 0.56% | 6 | ||||||||||
| Portfolio turnover3 |
92.25% | 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.
| 132 | 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.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 20161 | 20151 | 20141 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$18.42 | $21.46 | $22.84 | $23.47 | $21.51 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.21 | 0.20 | 0.24 | 0.25 | 0.30 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(1.04 | ) | 0.30 | (1.25 | ) | 1.33 | 2.26 | |||||||||||||
| Total from investment operations |
(0.83 | ) | 0.50 | (1.01 | ) | 1.58 | 2.56 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.26 | ) | (0.21 | ) | (0.27 | ) | (0.26 | ) | (0.35 | ) | ||||||||||
| Net realized gains on investments |
(1.29 | ) | (3.33 | ) | (0.10 | ) | (1.95 | ) | (0.25 | ) | ||||||||||
| Return of capital |
(0.57 | ) | — | — | — | — | ||||||||||||||
| Total distributions |
(2.12 | ) | (3.54 | ) | (0.37 | ) | (2.21 | ) | (0.60 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$15.47 | $18.42 | $21.46 | $22.84 | $23.47 | |||||||||||||||
| TOTAL RETURN |
(5.18% | ) | 2.41% | (4.42% | ) | 6.84% | 11.96% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$495,900 | $709,767 | $947,740 | $1,286,309 | $1,642,090 | |||||||||||||||
| Ratio of expenses to average net assets |
1.18% | 1.14% | 1.11% | 1.08% | 1.12% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.24% | 0.89% | 1.09% | 1.06% | 1.33% | |||||||||||||||
| Portfolio turnover4 |
|
83.82% |
|
66.22% | 10.23% | 6.29% | 9.61% | |||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 20161 | 20151 | 20141 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$18.39 | $21.44 | $22.81 | $23.45 | $21.49 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)2 |
0.22 | 0.25 | 0.28 | 0.26 | 0.36 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(1.03 | ) | 0.27 | (1.25 | ) | 1.36 | 2.25 | |||||||||||||
| Total from investment operations |
(0.81 | ) | 0.52 | (0.97 | ) | 1.62 | 2.61 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.28 | ) | (0.24 | ) | (0.30 | ) | (0.31 | ) | (0.40 | ) | ||||||||||
| Net realized gains on investments |
(1.29 | ) | (3.33 | ) | (0.10 | ) | (1.95 | ) | (0.25 | ) | ||||||||||
| Return of capital |
(0.57 | ) | — | — | — | — | ||||||||||||||
| Total distributions |
(2.14 | ) | (3.57 | ) | (0.40 | ) | (2.26 | ) | (0.65 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4)3 |
— | — | — | — | — | |||||||||||||||
| Net Asset Value, end of year |
$15.44 | $18.39 | $21.44 | $22.81 | $23.45 | |||||||||||||||
| TOTAL RETURN |
(5.06% | ) | 2.50% | (4.22% | ) | 6.97% | 12.22% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$15,874 | $24,276 | $52,478 | $117,678 | $390,744 | |||||||||||||||
| Ratio of expenses to average net assets |
1.03% | 0.99% | 0.95% | 0.91% | 0.91% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.32% | 1.09% | 1.27% | 1.13% | 1.58% | |||||||||||||||
| Portfolio turnover4 |
|
83.82% |
|
66.22% | 10.23% | 6.29% | 9.61% | |||||||||||||
| 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 | 133 |
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.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$26.43 | $26.46 | $16.28 | $17.51 | $13.59 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.01 | (0.05 | ) | 0.07 | 0.08 | 0.11 | ||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.33 | ) | 0.26 | 10.29 | (1.13 | ) | 4.17 | |||||||||||||
| Total from investment operations |
(0.32 | ) | 0.21 | 10.36 | (1.05 | ) | 4.28 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.03 | ) | (0.05 | ) | (0.18 | ) | (0.09 | ) | |||||||||||
| Net realized gains on investments |
(0.46 | ) | (0.23 | ) | (0.14 | ) | (0.01 | ) | (0.27 | ) | ||||||||||
| Total distributions |
(0.46 | ) | (0.26 | ) | (0.19 | ) | (0.19 | ) | (0.36 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 0.02 | 0.01 | 0.01 | — | 2 | ||||||||||||||
| Net Asset Value, end of year |
$25.65 | $26.43 | $26.46 | $16.28 | $17.51 | |||||||||||||||
| TOTAL RETURN |
(1.23% | ) | 0.90% | 63.71% | (5.90% | ) | 31.54% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$967,009 | $1,151,948 | $974,838 | $427,861 | $607,800 | |||||||||||||||
| Ratio of expenses to average net assets |
1.12% | 1.11% | 1.12% | 1.13% | 1.18% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.02% | (0.17% | ) | 0.32% | 0.48% | 0.65% | ||||||||||||||
| Portfolio turnover3 |
15.76% | 9.51% | 14.86% | 8.70% | 7.03% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$26.49 | $26.49 | $16.31 | $17.53 | $13.61 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.04 | 0.01 | 0.09 | 0.10 | 0.14 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.30 | ) | 0.26 | 10.29 | (1.11 | ) | 4.17 | |||||||||||||
| Total from investment operations |
(0.26 | ) | 0.27 | 10.38 | (1.01 | ) | 4.31 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
— | (0.06 | ) | (0.08 | ) | (0.21 | ) | (0.12 | ) | |||||||||||
| Net realized gains on investments |
(0.46 | ) | (0.23 | ) | (0.14 | ) | (0.01 | ) | (0.27 | ) | ||||||||||
| Total distributions |
(0.46 | ) | (0.29 | ) | (0.22 | ) | (0.22 | ) | (0.39 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 0.02 | 0.02 | 0.01 | — | 2 | ||||||||||||||
| Net Asset Value, end of year |
$25.77 | $26.49 | $26.49 | $16.31 | $17.53 | |||||||||||||||
| TOTAL RETURN |
(1.00% | ) | 1.12% | 63.80% | (5.67% | ) | 31.74% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$551,202 | $353,879 | $109,331 | $3,234 | $36,166 | |||||||||||||||
| Ratio of expenses to average net assets |
0.91% | 0.90% | 0.94% | 0.95% | 0.98% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.16% | 0.02% | 0.38% | 0.61% | 0.87% | |||||||||||||||
| Portfolio turnover3 |
15.76% | 9.51% | 14.86% | 8.70% | 7.03% | |||||||||||||||
| 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.
| 134 | 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.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$18.97 | $15.70 | $16.20 | $12.27 | $11.34 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.08 | 0.04 | 0.05 | 0.03 | 0.10 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.01 | ) | 3.23 | (0.48 | ) | 4.12 | 0.84 | |||||||||||||
| Total from investment operations |
0.07 | 3.27 | (0.43 | ) | 4.15 | 0.94 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.16 | ) | — | (0.08 | ) | (0.24 | ) | (0.01 | ) | |||||||||||
| Net realized gains on investments |
(0.05 | ) | — | — | — | — | ||||||||||||||
| Total distributions |
(0.21 | ) | — | (0.08 | ) | (0.24 | ) | (0.01 | ) | |||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | 0.01 | 0.02 | — | 2 | |||||||||||||
| Net Asset Value, end of year |
$18.83 | $18.97 | $15.70 | $16.20 | $12.27 | |||||||||||||||
| TOTAL RETURN |
0.40% | 20.83% | (2.60% | ) | 34.03% | 8.32% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$1,685,872 | $1,330,743 | $467,854 | $312,988 | $82,463 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.98% | 0.99% | 1.03% | 1.10% | 1.20% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.98% | 0.99% | 1.03% | 1.10% | 1.20% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.43% | 0.22% | 0.32% | 0.19% | 0.81% | |||||||||||||||
| Portfolio turnover3 |
55.15% | 24.19% | 42.52% | 22.72% | 48.58% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$19.00 | $15.71 | $16.20 | $12.26 | $11.34 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.10 | 0.05 | 0.09 | 0.06 | 0.12 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
— | 2 | 3.24 | (0.50 | ) | 4.12 | 0.84 | |||||||||||||
| Total from investment operations |
0.10 | 3.29 | (0.41 | ) | 4.18 | 0.96 | ||||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.19 | ) | — | (0.09 | ) | (0.26 | ) | (0.04 | ) | |||||||||||
| Net realized gains on investments |
(0.05 | ) | — | — | — | — | ||||||||||||||
| Total distributions |
(0.24 | ) | — | (0.09 | ) | (0.26 | ) | (0.04 | ) | |||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 3 | 0.01 | 0.02 | — | 3 | |||||||||||||
| Net Asset Value, end of year |
$18.86 | $19.00 | $15.71 | $16.20 | $12.26 | |||||||||||||||
| TOTAL RETURN |
0.51% | 20.94% | (2.47% | ) | 34.27% | 8.47% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$1,302,317 | $618,583 | $154,750 | $59,702 | $22,233 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
0.88% | 0.87% | 0.90% | 0.96% | 1.04% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
0.88% | 0.87% | 0.90% | 0.96% | 1.04% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.54% | 0.28% | 0.58% | 0.41% | 0.99% | |||||||||||||||
| Portfolio turnover4 |
55.15% | 24.19% | 42.52% | 22.72% | 48.58% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Greater than $(0.01) per share. |
| 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 | 135 |
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.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$6.15 | $5.65 | $5.95 | $5.64 | $4.59 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.02 | 0.01 | — | 2 | — | 2 | — | 2 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.41 | ) | 0.83 | (0.05 | ) | 0.57 | 1.10 | |||||||||||||
| Total from investment operations |
(0.39 | ) | 0.84 | (0.05 | ) | 0.57 | 1.10 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.01 | ) | — | (0.02 | ) | — | ||||||||||||
| Net realized gains on investments |
(0.43 | ) | (0.33 | ) | (0.25 | ) | (0.24 | ) | (0.05 | ) | ||||||||||
| Total distributions |
(0.51 | ) | (0.34 | ) | (0.25 | ) | (0.26 | ) | (0.05 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$5.25 | $6.15 | $5.65 | $5.95 | $5.64 | |||||||||||||||
| TOTAL RETURN |
(6.32% | ) | 15.16% | (0.73% | ) | 10.11% | 24.05% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$142,726 | $147,685 | $127,774 | $138,830 | $141,247 | |||||||||||||||
| Ratio of expenses to average net assets |
1.15% | 1.10% | 1.11% | 1.13% | 1.16% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.41% | 0.18% | 0.04% | 0.02% | 0.01% | |||||||||||||||
| Portfolio turnover3 |
34.73% | 20.36% | 17.37% | 46.20% | 34.84% | |||||||||||||||
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$6.18 | $5.68 | $5.96 | $5.67 | $4.61 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
(0.02 | ) | 0.02 | 0.05 | — | 2 | — | 2 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.37 | ) | 0.83 | (0.08 | ) | 0.56 | 1.11 | |||||||||||||
| Total from investment operations |
(0.39 | ) | 0.85 | (0.03 | ) | 0.56 | 1.11 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.09 | ) | (0.02 | ) | — | (0.03 | ) | — | ||||||||||||
| Net realized gains on investments |
(0.43 | ) | (0.33 | ) | (0.25 | ) | (0.24 | ) | (0.05 | ) | ||||||||||
| Total distributions |
(0.52 | ) | (0.35 | ) | (0.25 | ) | (0.27 | ) | (0.05 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | — | 2 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$5.27 | $6.18 | $5.68 | $5.96 | $5.67 | |||||||||||||||
| TOTAL RETURN |
(6.31% | ) | 15.27% | (0.39% | ) | 9.87% | 24.16% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$7,462 | $59,982 | $91,431 | $12,283 | $8,597 | |||||||||||||||
| Ratio of expenses to average net assets |
0.97% | 0.93% | 0.93% | 0.97% | 1.00% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
(0.31% | ) | 0.28% | 0.87% | (0.03% | ) | (0.07% | ) | ||||||||||||
| Portfolio turnover3 |
34.73% | 20.36% | 17.37% | 46.20% | 34.84% | |||||||||||||||
| 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.
| 136 | 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.
|
|
Year Ended Dec. 31 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$19.41 | $21.46 | $19.34 | $18.13 | $14.77 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.09 | 0.02 | 0.09 | 0.11 | 0.17 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.37 | ) | (2.05 | ) | 2.11 | 1.19 | 3.36 | |||||||||||||
| Total from investment operations |
(0.28 | ) | (2.03 | ) | 2.20 | 1.30 | 3.53 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.03 | ) | (0.08 | ) | (0.09 | ) | (0.09 | ) | ||||||||||
| Net realized gains on investments |
— | — | — | — | (0.08 | ) | ||||||||||||||
| Total distributions |
(0.08 | ) | (0.03 | ) | (0.08 | ) | (0.09 | ) | (0.17 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | 0.01 | — | 2 | — | 2 | — | 2 | |||||||||||
| Net Asset Value, end of year |
$19.05 | $19.41 | $21.46 | $19.34 | $18.13 | |||||||||||||||
| TOTAL RETURN |
(1.44% | ) | (9.43% | ) | 11.39% | 7.19% | 23.92% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$254,226 | $387,747 | $599,082 | $407,352 | $366,753 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
1.49% | 1.48% | 1.47% | 1.47% | 1.50% | |||||||||||||||
| 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% | 1.47% | 1.50% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
0.45% | 0.08% | 0.44% | 0.58% | 1.06% | |||||||||||||||
| Portfolio turnover |
44.44% | 3 | 48.29% | 3 | 21.70% | 3 | 37.01% | 3 | 27.95% | |||||||||||
|
|
Year Ended Dec. 31 |
Period Ended Dec. 31, 20134 |
||||||||||||||
| INSTITUTIONAL CLASS | 2016 | 2015 | 2014 | |||||||||||||
| Net Asset Value, beginning of period |
$19.40 | $21.46 | $19.33 | $19.44 | ||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||
| Net investment income (loss)1 |
0.12 | 0.11 | 0.15 | 0.18 | ||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions, and foreign capital gains taxes |
(0.36 | ) | (2.10 | ) | 2.10 | (0.16 | ) | |||||||||
| Total from investment operations |
(0.24 | ) | (1.99 | ) | 2.25 | 0.02 | ||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||
| Net investment income |
(0.13 | ) | (0.08 | ) | (0.12 | ) | (0.13 | ) | ||||||||
| Net realized gains on investments |
— | — | — | — | ||||||||||||
| Total distributions |
(0.13 | ) | (0.08 | ) | (0.12 | ) | (0.13 | ) | ||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | 0.01 | — | 2 | — | 2 | |||||||||
| Net Asset Value, end of period |
$19.03 | $19.40 | $21.46 | $19.33 | ||||||||||||
| TOTAL RETURN |
(1.24% | ) | (9.23% | ) | 11.65% | 0.13% | 5 | |||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||
| Net assets, end of period (in 000’s) |
$174,962 | $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) |
1.34% | 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% | 1.25% | 1.26% | 1.25% | 6 | |||||||||||
| Ratio of net investment income (loss) to average net assets |
0.64% | 0.53% | 0.70% | 1.39% | 6 | |||||||||||
| Portfolio turnover3 |
44.44% | 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 | 137 |
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 | |||||||||||||||||||
| INVESTOR CLASS | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
| Net Asset Value, beginning of year |
$8.79 | $9.21 | $9.89 | $7.76 | $7.04 | |||||||||||||||
| INCOME (LOSS) FROM INVESTMENT OPERATIONS: |
||||||||||||||||||||
| Net investment income (loss)1 |
0.10 | 0.08 | 0.01 | 0.02 | 0.03 | |||||||||||||||
| Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions |
(0.28 | ) | 0.27 | (0.33 | ) | 2.22 | 0.68 | |||||||||||||
| Total from investment operations |
(0.18 | ) | 0.35 | (0.32 | ) | 2.24 | 0.71 | |||||||||||||
| LESS DISTRIBUTIONS FROM: |
||||||||||||||||||||
| Net investment income |
(0.03 | ) | (0.06 | ) | (0.02 | ) | (0.11 | ) | (0.02 | ) | ||||||||||
| Net realized gains on investments |
(0.37 | ) | (0.72 | ) | — | — | — | |||||||||||||
| Return of capital |
— | — | (0.34 | ) | — | — | ||||||||||||||
| Total distributions |
(0.40 | ) | (0.78 | ) | (0.36 | ) | (0.11 | ) | (0.02 | ) | ||||||||||
| Paid-in capital from redemption fees (Note 4) |
— | 2 | 0.01 | — | 2 | — | 2 | 0.03 | ||||||||||||
| Net Asset Value, end of year |
$8.21 | $8.79 | $9.21 | $9.89 | $7.76 | |||||||||||||||
| TOTAL RETURN |
(2.35% | ) | 4.07% | (3.33% | ) | 28.85% | 10.53% | |||||||||||||
| RATIOS/SUPPLEMENTAL DATA |
||||||||||||||||||||
| Net assets, end of year (in 000’s) |
$16,101 | $21,546 | $22,068 | $26,674 | $10,266 | |||||||||||||||
| Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5) |
2.24% | 2.10% | 1.90% | 2.04% | 3.26% | |||||||||||||||
| Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator |
1.50% | 1.50% | 1.67% | 2.00% | 2.00% | |||||||||||||||
| Ratio of net investment income (loss) to average net assets |
1.17% | 0.80% | 0.14% | 0.17% | 0.40% | |||||||||||||||
| Portfolio turnover |
63.15% | 72.49% | 32.42% | 10.28% | 34.01% | |||||||||||||||
| 1 | Calculated using the average daily shares method. |
| 2 | Less than $0.01 per share. |
See accompanying notes to financial statements.
| 138 | MATTHEWS ASIA FUNDS |
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 eighteen separate series of shares (each a “Fund” and collectively, the “Funds”): Matthews Asia Strategic Income Fund, Matthews Asia Credit Opportunities 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 Asia Innovators Fund (formerly known as Matthews Asia Science and Technology Fund), Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, and Matthews China Small Companies 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.
The Matthews Japan Fund closed to most new investors effective after market closing on July 29, 2016, but will continue to accept investments from existing shareholders.
| 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. Swap agreements are valued utilizing quotes received daily by the Funds’ pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. 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 isolate that portion of gains and losses on investments in fixed income 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 value 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, foreign exchange etc.).
Level 3: Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments and derivative financial instruments).
| matthewsasia.com | 800.789.ASIA | 139 |
Table of Contents
Notes to Financial Statements (continued)
The summary of inputs used to determine the fair valuation of the Fund’s investments and derivative financial instruments as of December 31, 2016 is as follows:
| Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund |
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 |
||||||||||||||||||||||||||||
| Bangladesh |
$— | $— | $— | $— | $— | $— | $13,888,472 | |||||||||||||||||||||
| China/Hong Kong |
— | — | 103,985,010 | 113,546,169 | 231,708 | 203,375 | 60,812,421 | |||||||||||||||||||||
| Indonesia |
— | — | 41,856,264 | — | — | — | 9,276,318 | |||||||||||||||||||||
| Israel |
— | — | — | — | 21,054 | — | — | |||||||||||||||||||||
| Japan |
— | — | — | 56,089,309 | — | — | — | |||||||||||||||||||||
| Luxembourg |
— | — | — | 70,000,003 | — | — | — | |||||||||||||||||||||
| Malaysia |
— | — | 59,023,379 | — | 68,045 | — | — | |||||||||||||||||||||
| Pakistan |
— | — | — | — | — | — | 10,474,474 | |||||||||||||||||||||
| Philippines |
— | — | — | — | — | — | 5,342,670 | |||||||||||||||||||||
| Singapore |
— | — | — | — | 49,095 | — | — | |||||||||||||||||||||
| Sri Lanka |
— | — | — | — | — | — | 14,099,829 | |||||||||||||||||||||
| South Korea |
— | — | — | — | 25,502 | — | — | |||||||||||||||||||||
| Taiwan |
— | — | 58,591,949 | 169,004,432 | 19,858 | — | — | |||||||||||||||||||||
| United States |
— | — | 50,223,270 | — | 83,429 | 622,922 | — | |||||||||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||||||||||
| Foreign Government Obligationsa |
21,478,460 | 1,703,330 | — | — | — | — | — | |||||||||||||||||||||
| Non-Convertible Corporate Bondsa |
35,572,911 | 11,272,116 | — | — | — | — | — | |||||||||||||||||||||
| Convertible Corporate Bondsa |
6,474,000 | 1,981,750 | 276,171,458 | — | — | — | — | |||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||||||
| Australia |
— | — | 106,382,109 | 66,424,770 | — | 250,737 | 25,901,759 | |||||||||||||||||||||
| Bangladesh |
— | — | — | — | — | — | — | |||||||||||||||||||||
| China/Hong Kong |
— | — | 546,754,533 | 1,365,073,605 | 422,039 | 3,256,134 | 31,182,604 | |||||||||||||||||||||
| India |
— | — | 34,958,369 | 174,082,776 | — | 319,770 | 77,352,770 | |||||||||||||||||||||
| Indonesia |
— | — | 27,793,314 | 169,959,648 | — | 332,962 | 76,403,810 | |||||||||||||||||||||
| Japan |
— | — | 190,965,770 | 1,422,016,611 | 168,531 | 295,413 | 236,868,571 | |||||||||||||||||||||
| Malaysia |
— | — | 70,821,544 | — | 40,244 | 692,583 | — | |||||||||||||||||||||
| New Zealand |
— | — | 40,507,614 | — | — | — | — | |||||||||||||||||||||
| Norway |
— | — | 37,946,444 | — | — | — | — | |||||||||||||||||||||
| Philippines |
— | — | 22,516,322 | 43,902,431 | — | — | 13,632,417 | |||||||||||||||||||||
| Singapore |
— | — | 356,151,158 | 266,876,148 | 117,072 | 1,272,388 | — | |||||||||||||||||||||
| South Korea |
— | — | 215,784,703 | 227,157,725 | 533,609 | 1,120,903 | — | |||||||||||||||||||||
| Sri Lanka |
— | — | — | — | — | — | 5,868,083 | |||||||||||||||||||||
| Switzerland |
— | — | — | — | 43,884 | 316,772 | — | |||||||||||||||||||||
| Taiwan |
— | — | 63,194,417 | 50,597,807 | 132,643 | 812,697 | 3,302,464 | |||||||||||||||||||||
| Thailand |
— | — | 34,263,076 | 75,848,343 | 16,204 | 274,100 | 7,043,266 | |||||||||||||||||||||
| United Kingdom |
— | — | — | — | 10,789 | — | — | |||||||||||||||||||||
| Vietnam |
— | — | 34,658,289 | 65,458,618 | — | — | 14,300,756 | |||||||||||||||||||||
| Preferred Equities: |
||||||||||||||||||||||||||||
| South Korea |
— | — | 88,265,803 | 241,654,580 | 268,835 | — | — | |||||||||||||||||||||
| Total Market Value of Investments |
$63,525,371 | $14,957,196 | $2,460,814,795 | $4,577,692,975 | $2,252,541 | $9,770,756 | $605,750,684 | |||||||||||||||||||||
| a | Industry, countries, or security types are disclosed on the Schedule of Investments. |
| Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund |
|||||||
| Derivative Financial Instruments1 |
||||||||
| Assets |
||||||||
| Level 2: |
||||||||
| Other Significant Observable Inputs | ||||||||
| Foreign Currency Exchange Contracts |
$182,537 | $— | ||||||
| Liabilities |
||||||||
| Level 2: |
||||||||
| Other Significant Observable Inputs | ||||||||
| Credit default swaps |
(30,907 | ) | (7,727 | ) | ||||
| 1 | Derivative financial instruments are foreign currency exchange contracts and swaps. Foreign currency exchange contracts and swaps are valued at the unrealized appreciation/depreciation on the instrument. |
| 140 | MATTHEWS ASIA FUNDS |
Table of Contents
| 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 |
$— | $21,712,490 | $10,543,992 | $— | $— | $1,535,861 | ||||||||||||||||||
| Consumer Staples |
— | — | 42,019,379 | — | — | 161,351 | ||||||||||||||||||
| Financials |
— | — | 61,755,051 | — | — | — | ||||||||||||||||||
| Health Care |
— | — | 91,597,073 | — | — | 440,831 | ||||||||||||||||||
| Industrials |
794,906 | — | — | 38,220,218 | — | 956,092 | ||||||||||||||||||
| Information Technology |
7,270,886 | 71,938,734 | 134,384,285 | — | — | 374,345 | ||||||||||||||||||
| Telecommunication Services |
5,590,611 | — | — | — | 4,333,428 | — | ||||||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Consumer Discretionary |
32,410,790 | 43,526,828 | 85,635,860 | 687,961,166 | 24,724,833 | 2,984,149 | ||||||||||||||||||
| Consumer Staples |
13,489,795 | 4,384,460 | 244,972,524 | 335,518,943 | 9,964,658 | 440,793 | ||||||||||||||||||
| Energy |
4,071,142 | 20,584,636 | — | — | 4,105,887 | 360,810 | ||||||||||||||||||
| Financials |
28,055,156 | 166,092,403 | 402,533,628 | 538,141,017 | 27,157,444 | 649,883 | ||||||||||||||||||
| Health Care |
11,892,763 | 2,135,246 | 127,903,460 | 286,175,586 | 8,322,470 | 1,874,158 | ||||||||||||||||||
| Industrials |
28,466,783 | 38,987,522 | 143,958,522 | 675,345,159 | 4,555,629 | 3,524,177 | ||||||||||||||||||
| Information Technology |
17,862,658 | 82,049,900 | 88,597,625 | 209,034,939 | 25,308,921 | 1,706,838 | ||||||||||||||||||
| Materials |
8,160,873 | 25,157,305 | 47,585,668 | 86,616,584 | 4,754,930 | 404,448 | ||||||||||||||||||
| Real Estate |
7,817,421 | 23,151,859 | — | 96,655,051 | — | 690,310 | ||||||||||||||||||
| Telecommunication Services |
10,815,404 | — | — | — | — | — | ||||||||||||||||||
| Utilities |
3,745,743 | 14,139,835 | — | — | — | — | ||||||||||||||||||
| Preferred Equities: |
||||||||||||||||||||||||
| Consumer Discretionary |
— | — | — | — | 3,690,257 | — | ||||||||||||||||||
| Consumer Staples |
— | — | — | — | 10,150,161 | — | ||||||||||||||||||
| Energy |
— | — | — | — | 1,772,553 | — | ||||||||||||||||||
| Financials |
— | — | — | — | 3,769,139 | — | ||||||||||||||||||
| Information Technology |
— | — | — | — | 11,892,394 | — | ||||||||||||||||||
| Materials |
— | — | — | — | 2,978,440 | — | ||||||||||||||||||
| Level 3: Significant Unobservable Inputs |
||||||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||||||
| Information Technology |
— | — | — | — | — | 251 | ||||||||||||||||||
| Total Market Value of Investments |
$180,444,931 | $513,861,218 | $1,481,487,067 | $2,953,668,663 | $147,481,144 | $16,104,297 | ||||||||||||||||||
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Notes to Financial Statements (continued)
| Matthews Pacific Tiger Fund |
Matthews Asia ESG Fund |
Matthews Emerging Asia Fund |
Matthews Asia Innovators Fund* |
Matthews Asia Small Companies Fund |
||||||||||||||||
| Assets: | ||||||||||||||||||||
| Investments: | ||||||||||||||||||||
| Level 1: Quoted Prices |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| Bangladesh |
$— | $363,443 | $26,392,406 | $1,989,052 | $— | |||||||||||||||
| China/Hong Kong |
454,963,767 | 244,224 | 1,641,648 | 16,941,411 | 24,005,583 | |||||||||||||||
| India |
— | 61,082 | 1,761,073 | — | 4,648,275 | |||||||||||||||
| Indonesia |
21,232,562 | — | 6,594,549 | — | 11,450,925 | |||||||||||||||
| Israel |
— | — | — | — | 5,626,158 | |||||||||||||||
| Japan |
6,638,752 | 147,417 | — | 217,664 | 5,256,968 | |||||||||||||||
| Luxembourg |
— | 162,333 | — | — | — | |||||||||||||||
| Malaysia |
140,686,783 | — | — | — | 6,451,451 | |||||||||||||||
| Pakistan |
— | 162,933 | 30,313,384 | — | — | |||||||||||||||
| Philippines |
— | 191,578 | 10,856,013 | 2,740,989 | 3,950,543 | |||||||||||||||
| Singapore |
12,514,744 | 120,269 | — | — | 6,666,362 | |||||||||||||||
| South Korea |
— | 104,767 | — | — | — | |||||||||||||||
| Sri Lanka |
— | 143,220 | 13,195,600 | 1,099,561 | — | |||||||||||||||
| Taiwan |
— | 270,015 | — | — | — | |||||||||||||||
| Thailand |
— | — | — | — | — | |||||||||||||||
| United States |
210,898,083 | — | — | 577,109 | — | |||||||||||||||
| Vietnam |
— | — | 9,951,127 | — | — | |||||||||||||||
| Warrants: |
||||||||||||||||||||
| Malaysia |
3,796,898 | — | — | — | — | |||||||||||||||
| Level 2: Other Significant Observable Inputs |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| Australia |
— | — | 2,405,135 | 1,526,128 | — | |||||||||||||||
| Bangladesh |
— | — | 4,933,205 | — | — | |||||||||||||||
| China/Hong Kong |
1,566,913,518 | 1,482,140 | 18,205,774 | 16,100,332 | 107,550,782 | |||||||||||||||
| India |
1,297,816,503 | 1,338,588 | 25,022,705 | 9,440,292 | 43,097,667 | |||||||||||||||
| Indonesia |
461,268,379 | 249,095 | 24,130,464 | 9,054,319 | 24,592,947 | |||||||||||||||
| Japan |
— | 880,220 | — | — | 4,132,632 | |||||||||||||||
| Luxembourg |
— | — | — | — | — | |||||||||||||||
| Malaysia |
94,166,609 | — | — | — | 9,996,503 | |||||||||||||||
| Pakistan |
— | 168,315 | 19,634,340 | — | — | |||||||||||||||
| Philippines |
193,150,069 | 186,028 | 4,098,821 | — | 6,633,871 | |||||||||||||||
| Singapore |
— | 115,806 | 2,211,633 | 1,320,626 | 14,055,540 | |||||||||||||||
| South Korea |
879,253,589 | 715,025 | — | 16,660,748 | 52,920,496 | |||||||||||||||
| Sri Lanka |
— | — | 1,715,568 | — | — | |||||||||||||||
| Switzerland |
187,948,244 | — | — | — | — | |||||||||||||||
| Taiwan |
410,830,768 | 808,554 | — | 10,355,034 | 58,163,447 | |||||||||||||||
| Thailand |
394,409,877 | 402,454 | 1,673,652 | 3,780,609 | 20,420,097 | |||||||||||||||
| Vietnam |
175,290,668 | 72,038 | 26,698,033 | 2,419,539 | 4,281,360 | |||||||||||||||
| Preferred Equities: |
||||||||||||||||||||
| South Korea |
— | 173,961 | — | 5,616,660 | — | |||||||||||||||
| Level 3: Significant Unobservable Inputs |
||||||||||||||||||||
| Common Equities: |
||||||||||||||||||||
| China/Hong Kong |
43,840,293 | — | — | — | — | |||||||||||||||
| Pakistan |
— | — | 332,382 | — | — | |||||||||||||||
| Total Market Value of Investments |
$6,555,620,106 | $8,563,505 | $231,767,512 | $99,840,073 | $413,901,607 | |||||||||||||||
| * | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 142 | MATTHEWS ASIA FUNDS |
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Foreign securities that are valued based on market quotations are categorized as Level 1 in the fair value hierarchy. 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, 2016, 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, 2015. 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 Growth and Income Fund | $78,945,709 | $— | ||||||
| Matthews Asia Dividend Fund | 71,353,674 | 32,808,738 | ||||||
| Matthews Asia Value Fund | 131,224 | 17,884 | ||||||
| Matthews Asia Growth Fund | 9,109,588 | 7,898,915 | ||||||
| Matthews Pacific Tiger Fund | 89,251,767 | — | ||||||
| Matthews Asia ESG Fund | 601,960 | 71,542 | ||||||
| Matthews Emerging Asia Fund | 36,517,208 | 19,408,023 | ||||||
| Matthews India Fund | 155,973,854 | 33,817,527 | ||||||
| Matthews Asia Small Companies Fund | 42,339,170 | 33,500,447 | ||||||
| Matthews China Small Companies Fund | 1,777,025 | 488,608 | ||||||
Level 3 securities consisted of equities that, as of December 31, 2016, 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).
A reconciliation of Level 3 investments for which significant unobservable inputs were used to determine value are as follows:
| Matthews Pacific Tiger Fund |
Matthews Emerging Asia Fund |
Matthews China Fund |
Matthews China Small Companies Fund |
|||||||||||||
| Common Equities — China/Hong Kong |
Common Equities — Pakistan |
Common Equities — Financials |
Common Equities — Information Technology |
|||||||||||||
| Balance as of 12/31/15 (market value) | $82,848,600 | $— | $20,510,781 | $7,548 | ||||||||||||
| Accrued discounts/premiums | — | — | — | — | ||||||||||||
| Realized gain/(loss) | 29,119,614 | — | 4,977,110 | — | ||||||||||||
| Change in unrealized appreciation/(depreciation) | (54,602,591 | ) | 85,182 | (8,501,572 | ) | (7,297 | ) | |||||||||
| Purchases | 51,084,765 | 247,200 | — | — | ||||||||||||
| Sales | (64,610,095 | ) | — | (16,986,319 | ) | — | ||||||||||
| Transfers into Level 3* | — | — | — | — | ||||||||||||
| Transfers out of Level 3* | — | — | — | — | ||||||||||||
| Balance as of 12/31/16 (market value) | $43,840,293 | $332,382 | $— | $251 | ||||||||||||
| Net change in unrealized appreciation/(depreciation) on Level 3 investments held as of 12/31/16** | ($7,244,472 | ) | $85,182 | $— | ($7,297) | |||||||||||
| * | 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, 2016, 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, 2015 subsequently resumed trading and were transferred from Level 3 to Level 1, Level 2 or were sold.
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Notes to Financial Statements (continued)
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 |
Unobservable Input - Proxy Factor Price Movement |
|||||||||
| Matthews Pacific Tiger Fund Assets: | ||||||||||||
| Common Equity |
$43,840,293 | Last Price2 Multiplied by Proxy factor3 | Proxy factor3 | -8% | ||||||||
| Matthews Emerging Asia Fund Assets: | ||||||||||||
| Common Equity |
$332,382 | Last Price2 Multiplied by Proxy factor4 | Proxy factor4 | 42% | ||||||||
| 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 Shenzhen Stock Exchange Composite Index. |
| 4 | Proxy factor considers movement of the Pakistan Stock Exchange All-Share Index. |
| C. | BASIS OF CONSOLIDATION: The accompanying consolidated financial statements of Matthews China Fund and Matthews Asia Dividend Fund (the “Investing Funds”) include 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 applied for and received a license from the China Securities Regulatory Commission as a Qualified Foreign Institutional Investor (“QFII”) and had 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 could purchase. Access to the quota is 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. 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. |
In September 2016, the Board of Directors of the Matthews A Share Selections Fund, LLC adopted resolutions authorizing the termination and liquidation of the Matthews A Share Selections Fund, LLC. Consequently, as of September 30, 2016, the U Series Funds sold their securities and effectively ceased investment operations. The outstanding interests of each U Series Fund were redeemed by its respective Investing Fund.
| 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.
| 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. |
| 144 | MATTHEWS ASIA FUNDS |
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| 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, Matthews Asia Strategic Income Fund and Matthews Asia Credit Opportunities 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, 2016 and December 31, 2015 were as follows:
| YEAR ENDED DECEMBER 31, 2016 | Ordinary Income |
Net Long-Term Capital Gains |
Total Taxable Distributions |
Return of Capital |
||||||||||||
| Matthews Asia Strategic Income Fund | $2,603,309 | $— | $2,603,309 | $— | ||||||||||||
| Matthews Asia Credit Opportunities Fund* | 517,291 | — | 517,291 | — | ||||||||||||
| Matthews Asian Growth and Income Fund | 82,341,797 | 145,377,175 | 227,718,972 | — | ||||||||||||
| Matthews Asia Dividend Fund | 88,322,312 | 30,585,305 | 118,907,617 | 27,044,586 | ||||||||||||
| Matthews China Dividend Fund | 3,471,251 | 2,629,943 | 6,101,194 | — | ||||||||||||
| Matthews Asia Value Fund | 148,584 | — | 148,584 | — | ||||||||||||
| Matthews Asia Focus Fund | 157,979 | — | 157,979 | — | ||||||||||||
| Matthews Asia Growth Fund | 7,210,721 | — | 7,210,721 | — | ||||||||||||
| Matthews Pacific Tiger Fund | 60,675,860 | 121,713,006 | 182,388,866 | — | ||||||||||||
| Matthews Asia ESG Fund | 139,740 | — | 139,740 | — | ||||||||||||
| Matthews Emerging Asia Fund | 2,483,804 | 2,100,210 | 4,584,014 | — | ||||||||||||
| Matthews Asia Innovators Fund** | — | 10,623,880 | 10,623,880 | — | ||||||||||||
| Matthews China Fund | 8,205,173 | 39,869,615 | 48,074,788 | 17,942,653 | ||||||||||||
| Matthews India Fund | 112,375 | 26,797,862 | 26,910,237 | — | ||||||||||||
| Matthews Japan Fund | 26,243,561 | 9,535,726 | 35,779,287 | — | ||||||||||||
| Matthews Korea Fund | 2,252,578 | 13,672,732 | 15,925,310 | — | ||||||||||||
| Matthews Asia Small Companies Fund | 2,452,388 | — | 2,452,388 | — | ||||||||||||
| Matthews China Small Companies Fund | 57,353 | 747,907 | 805,260 | — | ||||||||||||
Subsequent to December 31, 2016, it was determined that a portion of the distributions to the shareholders of each of the Matthews Asia Dividend Fund and the Matthews China Fund had exceeded the earnings and profits for each Fund for the 2016 tax year. Accordingly, a portion of the distributions have been reclassified as a return of capital. The breakdowns per share of the 2016 distributions are as follows:
| Total Cumulative Distributions for the Fiscal Year |
% Breakdown of the Total Cumulative Distributions for the Fiscal Year |
|||||||||||||||||||||||||||||||||||||||
|
Net |
Short-Term Capital Gains |
Long Term Capital Gains |
Return of Capital |
Total |
Net |
Short-Term Capital Gains |
Long Term Capital Gains |
Return of Capital |
Total | |||||||||||||||||||||||||||||||
| Matthews Asia Dividend Fund—Investor Class | $0.29 | $0.00 | $0.11 | $0.09 | $0.49 | 60 | % | 0 | % | 21 | % | 19 | % | 100 | % | |||||||||||||||||||||||||
| Matthews Asia Dividend Fund—Institutional Class | $0.31 | $0.00 | $0.11 | $0.09 | $0.51 | 62 | % | 0 | % | 20 | % | 18 | % | 100 | % | |||||||||||||||||||||||||
| Matthews China Fund—Investor Class | $0.26 | $0.00 | $1.29 | $0.57 | $2.12 | 12 | % | 0 | % | 60 | % | 28 | % | 100 | % | |||||||||||||||||||||||||
| Matthews China Fund—Institutional Class | $0.28 | $0.00 | $1.29 | $0.57 | $2.14 | 13 | % | 0 | % | 60 | % | 27 | % | 100 | % | |||||||||||||||||||||||||
| 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 Asia Innovators Fund** | — | 25,836,171 | 25,836,171 | |||||||||
| 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 Credit Opportunities Fund commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| matthewsasia.com | 800.789.ASIA | 145 |
Table of Contents
Notes to Financial Statements (continued)
| 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. Financial statements reflect security transactions on trade date. Gains or losses on the sale of securities are determined on the identified cost basis. Interest income is recorded on the accrual basis. 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. Dividend income is generally recorded on the ex-dividend date net of any foreign taxes withheld at the source. 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. |
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: QFII accounts 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. These amounts, if any, are included in “Segregated foreign currency at value” on the Statements of Assets and Liabilities. 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. |
| 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. |
| K. | RECENT ACCOUNTING GUIDANCE: In October 2016, the Securities and Exchange Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements filed with the SEC on or after August 1, 2017; adoption will have no effect on the Funds’ net assets or results of operations. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statement disclosures. |
In December 2016, the Financial Accounting Standards Board issued an accounting standards update that makes technical changes to various sections of the accounting standards codification. The changes require a reporting entity to disclose, for Level 2 and Level 3 fair value measurements, a change in either or both a valuation approach and a valuation technique and the reason(s) for the change. These disclosure changes are effective for fiscal years, beginning after December 15, 2016, and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Funds’ financial statement disclosures.
| 3. | DERIVATIVE FINANCIAL INSTRUMENTS |
Each of the Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund engages in derivative transactions for a variety of purposes, including managing interest rate, currency and credit exposure. In particular, each Fund may seek to take on currency exposure by using derivatives such as currency forwards, and the Matthews Asia Strategic Income Fund may also employ a currency overlay strategy in an effort to enhance returns and moderate volatility. Derivative financial instruments and transactions in which each Fund may engage include financial futures contracts, swaps and/or forward foreign currency exchange contracts. The currency overlay strategy involves long and short positions on one or more currencies. As a result, each 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 a Fund and the price of financial futures contracts and credit default swaps 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) a 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 contacts in the statement of assets and liabilities as they are not subject to netting arrangements.
Swaps: Certain Funds enter into swap contracts to manage exposure to issuers, markets and securities to reduce their risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which they are not otherwise exposed (credit risk). Such contracts are agreements between the Funds and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC Swaps”) or centrally cleared (“centrally cleared swaps”).
| 146 | MATTHEWS ASIA FUNDS |
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For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statements of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statements of Assets and Liabilities. Payments received or paid are recorded in the Statements of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Funds’ basis in the contract, if any. Generally, the basis of the contract is the amortized premium received or paid.
The Funds may buy credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Funds will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.
Counterparty Credit Risk: A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
A Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by such Fund.
With exchange traded futures and centrally cleared swaps, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.
In order to better define its contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, a Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between each Fund and a counterparty that governs OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event a Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.
Collateral requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by a Fund and the counterparty. Cash collateral that has been pledged to cover obligations of a Fund, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral. Non-cash collateral pledged by a Fund, if any, is noted in the Schedules of Investments.
For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.
The Funds have implemented the disclosure requirements pursuant to FASB Accounting Standards update No. 2011-11, Disclosures about Offsetting Assets and Liabilities, that requires disclosures to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards. Under this guidance the Funds disclose in the statements of assets and liabilities both gross and net information about instruments and transactions eligible for offset such as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the Funds disclose collateral received and posted in connection with master netting agreements or similar arrangements.
The following tables present the Funds’ OTC derivatives by counterparty net of amounts available for offset under an ISDA Master agreement or similar agreements and net of the related collateral received or pledged by the Funds:
| Matthews Asia Strategic Income Fund | ||||||||||||
| Counterparty |
Gross Liabilities in the Statements of Assets and Liabilities |
Collateral Pledged1 |
(Assets)/Liabilities Availabe for Offset |
Net Amount of Liabilities2 |
||||||||
| Bank of America, N.A. | $216,678 | $— | $— | $216,678 | ||||||||
| Matthews Asia Credit Opportunities Fund | ||||||||||||
| Counterparty |
Gross Liabilities in the Statements of Assets and Liabilities |
Collateral Pledged1 |
(Assets)/Liabilities Availabe for Offset |
Net Amount of Liabilities2 |
||||||||
| Bank of America, N.A. | $54,170 | $— | $— | $54,170 | ||||||||
| 1 | Excess of collateral pledged for individual counterparty may not be shown for financial reporting purposes. |
| 2 | Represents the net amount payable to the counterparty in the event of default. |
| matthewsasia.com | 800.789.ASIA | 147 |
Table of Contents
Notes to Financial Statements (continued)
Derivative Financial Instruments Categorized by Risk Exposure:
As of December 31, 2016, the fair values of derivative financial instruments were as follows:
| Statements of Assets and Liabilities Location | Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities Fund |
||||||||
| Asset Derivatives | ||||||||||
| Forward foreign currency exchange contracts | Unrealized appreciation on forward foreign currency exchange contracts | $182,537 | $— | |||||||
|
|
|
|
|
|||||||
| Liability Derivatives | ||||||||||
| Credit contracts | Value (unrealized depreciation on swaps; swaps premium received) | (216,678 | ) | (54,170 | ) | |||||
|
|
|
|
|
|||||||
For the fiscal year ended December 31, 2016, the effects of derivative financial instruments on the Statements of Operations were as follows:
| Derivative type | Statements of Operations Location | Matthews Asia Strategic Income Fund |
Matthews Asia Credit Opportunities |
|||||||
| Net Realized Gain (Loss) |
||||||||||
| Foreign currency contracts: | ||||||||||
| Foreign currency exchange contracts |
Net realized gain (loss) on foreign currency related transactions | ($389,857 | ) | $— | ||||||
| Credit default swaps: | ||||||||||
| Credit contracts |
Net realized gain (loss) on swaps | (2,845 | ) | (711 | ) | |||||
|
|
|
|
|
|||||||
| Total | ($392,702 | ) | ($711 | ) | ||||||
|
|
|
|
|
|||||||
| Net Change in Unrealized Appreciation (Depreciation) |
||||||||||
| Foreign currency contracts: | ||||||||||
| Foreign currency exchange contracts |
Net change in unrealized appreciation/depreciation on foreign currency related translations | ($114,037 | ) | $— | ||||||
| Credit default swaps: | ||||||||||
| Credit contracts |
Net change in unrealized appreciation/depreciation on swaps | (30,907 | ) | (7,727 | ) | |||||
|
|
|
|
|
|||||||
| Total | ($144,944 | ) | ($7,727 | ) | ||||||
|
|
|
|
|
|||||||
The notional amounts disclosed on the Matthews Asia Strategic Income and Matthews Credit Opportunities Funds’ Schedules of Investments are indicative of the activity for the period November 15, 2016—December 31, 2016 for buy protection on credit default swaps. Regarding forward foreign currency exchange contracts entered into by the Matthews Asia Strategic Income Fund, the average notional ending quarterly amounts purchased in USD were $7,441,199 and the average notional ending quarterly amounts sold in USD were $10,550,000.
| 148 | MATTHEWS ASIA FUNDS |
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| 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, 2016 | Year Ended December 31, 2015 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS ASIA STRATEGIC INCOME FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
1,159,976 | $12,036,561 | 1,323,678 | $13,608,885 | ||||||||||||
| Shares issued through reinvestment of distributions |
200,404 | 2,086,240 | 156,283 | 1,568,876 | ||||||||||||
| Shares redeemed |
(1,179,567 | ) | (12,189,837 | ) | (2,031,972 | ) | (20,725,933 | ) | ||||||||
| Net increase (decrease) |
180,813 | $1,932,964 | (552,011 | ) | ($5,548,172 | ) | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
394,381 | $4,226,734 | 514,725 | $5,309,238 | ||||||||||||
| Shares issued through reinvestment of distributions |
48,941 | 509,450 | 34,909 | 350,189 | ||||||||||||
| Shares redeemed |
(262,800 | ) | (2,759,738 | ) | (205,825 | ) | (2,100,037 | ) | ||||||||
| Net increase (decrease) |
180,522 | $1,976,446 | 343,809 | $3,559,390 | ||||||||||||
| MATTHEWS ASIAN CREDIT OPPORTUNITIES FUND* |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
1,262,312 | $12,795,706 | ||||||||||||||
| Shares issued through reinvestment of distributions |
33,461 | 340,366 | ||||||||||||||
| Shares redeemed |
(296,818 | ) | (3,053,588 | ) | ||||||||||||
| Net increase (decrease) |
998,955 | $10,082,484 | ||||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
604,202 | $6,052,800 | ||||||||||||||
| Shares issued through reinvestment of distributions |
8,340 | 85,105 | ||||||||||||||
| Shares redeemed |
— | — | ||||||||||||||
| Net increase (decrease) |
612,542 | $6,137,905 | ||||||||||||||
| MATTHEWS ASIAN GROWTH AND INCOME FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
22,685,379 | $370,706,327 | 25,916,582 | $466,448,198 | ||||||||||||
| Shares issued through reinvestment of distributions |
9,221,755 | 142,699,973 | 9,143,700 | 150,474,022 | ||||||||||||
| Shares redeemed |
(46,658,662 | ) | (755,701,576 | ) | (76,976,258 | ) | (1,349,111,339 | ) | ||||||||
| Net increase (decrease) |
(14,751,528 | ) | ($242,295,276 | ) | (41,915,976 | ) | ($732,189,119 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
20,043,072 | $329,220,035 | 11,883,290 | $212,136,578 | ||||||||||||
| Shares issued through reinvestment of distributions |
4,935,874 | 76,286,208 | 3,858,797 | 63,544,851 | ||||||||||||
| Shares redeemed |
(22,147,192 | ) | (352,353,051 | ) | (30,034,472 | ) | (523,307,730 | ) | ||||||||
| Net increase (decrease) |
2,831,754 | $53,153,192 | (14,292,385 | ) | ($247,626,301 | ) | ||||||||||
| MATTHEWS ASIA DIVIDEND FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
27,984,752 | $444,670,505 | 35,125,000 | $570,435,753 | ||||||||||||
| Shares issued through reinvestment of distributions |
4,679,731 | 75,148,885 | 5,242,086 | 83,243,373 | ||||||||||||
| Shares redeemed |
(41,501,686 | ) | (644,529,546 | ) | (51,950,453 | ) | (827,708,599 | ) | ||||||||
| Net increase (decrease) |
(8,837,203 | ) | ($124,710,156 | ) | (11,583,367 | ) | ($174,029,473 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
30,119,651 | $475,655,888 | 52,931,529 | $860,637,014 | ||||||||||||
| Shares issued through reinvestment of distributions |
2,741,360 | 44,022,850 | 2,615,057 | 41,384,032 | ||||||||||||
| Shares redeemed |
(35,037,220 | ) | (546,747,812 | ) | (60,382,643 | ) | (945,927,066 | ) | ||||||||
| Net increase (decrease) |
(2,176,209 | ) | ($27,069,074 | ) | (4,836,057 | ) | ($43,906,020 | ) | ||||||||
| MATTHEWS CHINA DIVIDEND FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
3,715,788 | $52,252,711 | 9,804,629 | $151,536,779 | ||||||||||||
| Shares issued through reinvestment of distributions |
373,101 | 5,189,800 | 724,059 | 10,466,697 | ||||||||||||
| Shares redeemed |
(4,710,228 | ) | (63,571,849 | ) | (7,269,925 | ) | (106,195,533 | ) | ||||||||
| Net increase (decrease) |
(621,339 | ) | ($6,129,338 | ) | 3,258,763 | $55,807,943 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
1,816,522 | $24,989,758 | 1,122,001 | $16,210,502 | ||||||||||||
| Shares issued through reinvestment of distributions |
60,896 | 851,567 | 78,571 | 1,153,826 | ||||||||||||
| Shares redeemed |
(1,024,910 | ) | (12,705,300 | ) | (2,376,571 | ) | (35,363,363 | ) | ||||||||
| Net increase (decrease) |
852,508 | $13,136,025 | (1,175,999 | ) | ($17,999,035 | ) | ||||||||||
| * | Investor Class and Institutional Class commencement of operations on April 29, 2016. |
| matthewsasia.com | 800.789.ASIA | 149 |
Table of Contents
Notes to Financial Statements (continued)
| Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS ASIA VALUE FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
116,636 | $1,176,796 | 161,193 | $1,602,501 | ||||||||||||
| Shares issued through reinvestment of distributions |
13,611 | 137,070 | 179 | 1,748 | ||||||||||||
| Shares redeemed |
(35,718 | ) | (356,533 | ) | (34 | ) | (333 | ) | ||||||||
| Net increase (decrease) |
94,529 | $957,333 | 161,338 | $1,603,916 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
94 | $1,000 | 14,500 | $145,000 | ||||||||||||
| Shares issued through reinvestment of distributions |
1,100 | 10,942 | 60 | 581 | ||||||||||||
| Shares redeemed |
— | — | — | — | ||||||||||||
| Net increase (decrease) |
1,194 | $11,942 | 14,560 | $145,581 | ||||||||||||
| MATTHEWS ASIA FOCUS FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
50,201 | $471,150 | 250,574 | $2,466,477 | ||||||||||||
| Shares issued through reinvestment of distributions |
7,605 | 70,199 | 8,502 | 74,221 | ||||||||||||
| Shares redeemed |
(162,641 | ) | (1,484,289 | ) | (411,977 | ) | (3,802,344 | ) | ||||||||
| Net increase (decrease) |
(104,835 | ) | ($942,940 | ) | (152,901 | ) | ($1,261,646 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
43,659 | $429,950 | 85,035 | $790,900 | ||||||||||||
| Shares issued through reinvestment of distributions |
9,439 | 87,218 | 11,279 | 98,578 | ||||||||||||
| Shares redeemed |
(108,595 | ) | (989,167 | ) | (152,717 | ) | (1,345,220 | ) | ||||||||
| Net increase (decrease) |
(55,497 | ) | ($471,999 | ) | (56,403 | ) | ($455,742 | ) | ||||||||
| MATTHEWS ASIA GROWTH FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
2,949,928 | $63,405,015 | 10,116,539 | $220,731,758 | ||||||||||||
| Shares issued through reinvestment of distributions |
188,951 | 3,971,819 | — | — | ||||||||||||
| Shares redeemed |
(8,189,460 | ) | (174,198,638 | ) | (11,770,308 | ) | (246,526,119 | ) | ||||||||
| Net increase (decrease) |
(5,050,581 | ) | ($106,821,804 | ) | (1,653,769 | ) | ($25,794,361 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
3,415,256 | $73,020,609 | 5,203,260 | $112,251,892 | ||||||||||||
| Shares issued through reinvestment of distributions |
74,896 | 1,584,032 | — | — | ||||||||||||
| Shares redeemed |
(6,008,790 | ) | (125,728,091 | ) | (6,990,514 | ) | (146,485,176 | ) | ||||||||
| Net increase (decrease) |
(2,518,638 | ) | ($51,123,450 | ) | (1,787,254 | ) | ($34,233,284 | ) | ||||||||
| MATTHEWS PACIFIC TIGER FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
17,131,149 | $413,602,913 | 18,629,799 | $505,974,505 | ||||||||||||
| Shares issued through reinvestment of distributions |
2,559,033 | 60,214,039 | 11,411,932 | 263,383,421 | ||||||||||||
| Shares redeemed |
(28,593,668 | ) | (674,989,402 | ) | (29,132,577 | ) | (758,670,355 | ) | ||||||||
| Net increase (decrease) |
(8,903,486 | ) | ($201,172,450 | ) | 909,154 | $10,687,571 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
56,472,145 | $1,339,949,453 | 66,516,041 | $1,778,275,629 | ||||||||||||
| Shares issued through reinvestment of distributions |
2,784,965 | 65,450,776 | 11,636,136 | 268,329,315 | ||||||||||||
| Shares redeemed |
(44,079,703 | ) | (1,030,520,290 | ) | (99,756,044 | ) | (2,521,022,303 | ) | ||||||||
| Net increase (decrease) |
15,177,407 | $374,879,939 | (21,603,867 | ) | ($474,417,359 | ) | ||||||||||
| MATTHEWS ASIA ESG FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
392,569 | $3,433,859 | 482,804 | $4,562,170 | ||||||||||||
| Shares issued through reinvestment of distributions |
9,403 | 85,286 | 1,806 | 16,466 | ||||||||||||
| Shares redeemed |
(154,929 | ) | (1,375,756 | ) | (132,628 | ) | (1,222,043 | ) | ||||||||
| Net increase (decrease) |
247,043 | $2,143,389 | 351,982 | $3,356,593 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
190,080 | $1,675,988 | 186,254 | $1,805,130 | ||||||||||||
| Shares issued through reinvestment of distributions |
6,022 | 54,320 | 2,307 | 20,899 | ||||||||||||
| Shares redeemed |
(1,101 | ) | (10,096 | ) | (4,586 | ) | (41,516 | ) | ||||||||
| Net increase (decrease) |
195,001 | $1,720,212 | 183,975 | $1,784,513 | ||||||||||||
| 150 | MATTHEWS ASIA FUNDS |
Table of Contents
| Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS EMERGING ASIA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
7,191,280 | $93,797,154 | 3,222,545 | $37,424,394 | ||||||||||||
| Shares issued through reinvestment of distributions |
201,637 | 2,637,405 | 29,906 | 334,053 | ||||||||||||
| Shares redeemed |
(6,553,598 | ) | (74,847,077 | ) | (2,594,387 | ) | (29,676,907 | ) | ||||||||
| Net increase (decrease) |
839,319 | $21,587,482 | 658,064 | $8,081,540 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
3,585,928 | $43,671,071 | 4,382,373 | $50,726,364 | ||||||||||||
| Shares issued through reinvestment of distributions |
147,701 | 1,936,356 | 16,011 | 179,162 | ||||||||||||
| Shares redeemed |
(1,388,856 | ) | (16,821,786 | ) | (1,342,327 | ) | (15,050,048 | ) | ||||||||
| Net increase (decrease) |
2,344,773 | $28,785,641 | 3,056,057 | $35,855,478 | ||||||||||||
| MATTHEWS ASIA INNOVATORS FUND* |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
1,489,685 | $17,976,640 | 2,583,487 | $36,194,231 | ||||||||||||
| Shares issued through reinvestment of distributions |
824,801 | 8,528,446 | 1,321,498 | 16,095,853 | ||||||||||||
| Shares redeemed |
(4,537,543 | ) | (51,381,223 | ) | (2,600,415 | ) | (35,098,196 | ) | ||||||||
| Net increase (decrease) |
(2,223,057 | ) | ($24,876,137 | ) | 1,304,570 | $17,191,888 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
338,687 | $3,702,742 | 248,176 | $3,444,526 | ||||||||||||
| Shares issued through reinvestment of distributions |
76,287 | 791,856 | 320,936 | 3,915,412 | ||||||||||||
| Shares redeemed |
(1,763,369 | ) | (19,884,862 | ) | (2,079,401 | ) | (31,121,491 | ) | ||||||||
| Net increase (decrease) |
(1,348,395 | ) | ($15,390,264 | ) | (1,510,289 | ) | ($23,761,553 | ) | ||||||||
| MATTHEWS CHINA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
2,148,342 | $35,732,757 | 5,141,080 | $120,488,105 | ||||||||||||
| Shares issued through reinvestment of distributions |
3,793,239 | 62,095,323 | 6,355,104 | 116,616,158 | ||||||||||||
| Shares redeemed |
(12,420,378 | ) | (207,255,992 | ) | (17,118,626 | ) | (385,888,737 | ) | ||||||||
| Net increase (decrease) |
(6,478,797 | ) | ($109,427,912 | ) | (5,622,442 | ) | ($148,784,474 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
499,092 | $7,772,205 | 628,563 | $14,774,529 | ||||||||||||
| Shares issued through reinvestment of distributions |
130,030 | 2,125,988 | 234,182 | 4,290,241 | ||||||||||||
| Shares redeemed |
(921,220 | ) | (16,175,742 | ) | (1,990,574 | ) | (45,026,079 | ) | ||||||||
| Net increase (decrease) |
(292,098 | ) | ($6,277,549 | ) | (1,127,829 | ) | ($25,961,309 | ) | ||||||||
| MATTHEWS INDIA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
9,247,717 | $242,746,822 | 30,620,097 | $867,318,320 | ||||||||||||
| Shares issued through reinvestment of distributions |
624,141 | 16,190,215 | 408,995 | 10,507,217 | ||||||||||||
| Shares redeemed |
(15,766,962 | ) | (410,982,081 | ) | (24,282,755 | ) | (667,371,469 | ) | ||||||||
| Net increase (decrease) |
(5,895,104 | ) | ($152,045,044 | ) | 6,746,337 | $210,454,068 | ||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
11,428,013 | $300,476,619 | 9,976,872 | $279,880,654 | ||||||||||||
| Shares issued through reinvestment of distributions |
105,665 | 2,753,632 | 23,353 | 601,584 | ||||||||||||
| Shares redeemed |
(3,502,779 | ) | (93,248,613 | ) | (768,413 | ) | (21,157,535 | ) | ||||||||
| Net increase (decrease) |
8,030,899 | $209,981,638 | 9,231,812 | $259,324,703 | ||||||||||||
| MATTHEWS JAPAN FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
74,348,475 | $1,376,674,296 | 53,437,657 | $989,896,404 | ||||||||||||
| Shares issued through reinvestment of distributions |
1,004,971 | 18,963,796 | — | — | ||||||||||||
| Shares redeemed |
(55,996,138 | ) | (1,083,210,353 | ) | (13,073,985 | ) | (233,136,140 | ) | ||||||||
| Net increase (decrease) |
19,357,308 | $312,427,739 | 40,363,672 | $756,760,264 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
46,376,072 | $877,486,384 | 25,203,856 | $462,758,856 | ||||||||||||
| Shares issued through reinvestment of distributions |
187,215 | 3,536,499 | — | — | ||||||||||||
| Shares redeemed |
(10,076,300 | ) | (190,036,960 | ) | (2,491,900 | ) | (44,833,156 | ) | ||||||||
| Net increase (decrease) |
36,486,987 | $690,985,923 | 22,711,956 | $417,925,700 | ||||||||||||
| * | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
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Notes to Financial Statements (continued)
| Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| MATTHEWS KOREA FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
8,524,610 | $50,478,123 | 7,063,187 | $45,732,771 | ||||||||||||
| Shares issued through reinvestment of distributions |
2,345,781 | 12,432,626 | 1,247,048 | 7,432,409 | ||||||||||||
| Shares redeemed |
(7,683,043 | ) | (45,259,031 | ) | (6,893,554 | ) | (42,613,047 | ) | ||||||||
| Net increase (decrease) |
3,187,348 | $17,651,718 | 1,416,681 | $10,552,133 | ||||||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
3,215,987 | $19,291,961 | 1,949,647 | $12,656,326 | ||||||||||||
| Shares issued through reinvestment of distributions |
125,391 | 668,333 | 33,764 | 202,244 | ||||||||||||
| Shares redeemed |
(11,634,445 | ) | (70,448,790 | ) | (8,378,869 | ) | (48,454,588 | ) | ||||||||
| Net increase (decrease) |
(8,293,067 | ) | ($50,488,496 | ) | (6,395,458 | ) | ($35,596,018 | ) | ||||||||
| MATTHEWS ASIA SMALL COMPANIES FUND |
||||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
1,475,764 | $28,101,064 | 8,497,848 | $182,977,362 | ||||||||||||
| Shares issued through reinvestment of distributions |
55,224 | 1,077,417 | 23,288 | 441,546 | ||||||||||||
| Shares redeemed |
(8,162,469 | ) | (159,237,120 | ) | (16,455,313 | ) | (348,268,552 | ) | ||||||||
| Net increase (decrease) |
(6,631,481 | ) | ($130,058,639 | ) | (7,934,177 | ) | ($164,849,644 | ) | ||||||||
| Institutional Class |
||||||||||||||||
| Shares sold |
1,431,111 | $26,873,891 | 11,287,130 | $246,873,661 | ||||||||||||
| Shares issued through reinvestment of distributions |
66,423 | 1,294,585 | 47,417 | 898,076 | ||||||||||||
| Shares redeemed |
(3,758,085 | ) | (71,115,927 | ) | (3,476,347 | ) | (67,815,813 | ) | ||||||||
| Net increase (decrease) |
(2,260,551 | ) | ($42,947,451 | ) | 7,858,200 | $179,955,924 | ||||||||||
| MATTHEWS CHINA SMALL COMPANIES FUND |
| |||||||||||||||
| Investor Class |
||||||||||||||||
| Shares sold |
253,087 | $2,130,881 | 766,278 | $7,633,873 | ||||||||||||
| Shares issued through reinvestment of distributions |
91,953 | 794,479 | 202,804 | 1,752,230 | ||||||||||||
| Shares redeemed |
(837,034 | ) | (7,080,001 | ) | (911,884 | ) | (8,642,334 | ) | ||||||||
| Net increase (decrease) |
(491,994 | ) | ($4,154,641 | ) | 57,198 | $743,769 | ||||||||||
As of December 31, 2016 a 2.00% redemption fee was 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 shares were purchased, and first redeem the shares that have been 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.
The Funds (or their agents) attempt to contact shareholders whom the Funds (or their agents) believe have violated the Funds’ policies and procedures related to short-term trading and market-timing activity, and notify them that they will no longer be permitted to buy (or exchange) shares of the Funds. When a shareholder has purchased shares of the Funds through an intermediary, the Funds may not be able to notify the shareholder of a violation of the Funds’ policies or that the Funds have taken steps to address the situation (for example, the Funds may be unable to notify a shareholder that his or her privileges to purchase or exchange shares of the Funds have been terminated). Nonetheless, additional purchase and exchange orders for such investors will not be accepted by the Funds.
The Funds may reject for any reason, or cancel as permitted or required by law, any purchase or exchange, including transactions deemed to represent excessive trading, at any time.
| 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 the prior Investment Advisory Agreement dated August 13, 2004, as amended (the “Prior Advisory Agreement”) and the current Investment Advisory Agreement dated February 1, 2016, as amended (the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, 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 Asia Credit Opportunities 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. Each of the Matthews Asia Strategic Income Fund
| 152 | MATTHEWS ASIA FUNDS |
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and Matthews Asia Credit Opportunities Fund pays Matthews an annual fee of 0.65% of such Fund’s 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 pays Matthews a monthly fee at the annual rate using the applicable management fee calculated based on the actual number of days of that month and based on the Fund’s average daily net asset value for the month.
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 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 Expense Agreement”), Matthews agrees to waive fees and reimburse expenses to a Fund if its expense ratio exceeds a certain percentage level. Effective April 29, 2016 for all Funds, except Matthews Asia Strategic Income Fund, Matthews Asia Credit Opportunities 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 those of the Institutional Class and because 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 and Matthews Asia Credit Opportunities Fund this level is 0.90% 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 those of the Institutional Class and because 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. 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 the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will continue through April 30, 2018, may be extended for additional periods not exceeding one year, and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date.
On December 31, 2016, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:
| Expiring December 31, | ||||||||||||
| 2017 | 2018 | 2019 | ||||||||||
| Matthews Asia Strategic Income Fund | $79,504 | $113,621 | $123,474 | |||||||||
| Matthews Asia Credit Opportunities Fund* | — | — | 110,447 | |||||||||
| Matthews Asia Value Fund | — | 41,279 | 211,035 | |||||||||
| Matthews Asia Focus Fund | 62,897 | 87,252 | 111,801 | |||||||||
| Matthews Asia ESG Fund | — | 183,985 | 163,853 | |||||||||
| Matthews Emerging Asia Fund | 152,283 | 452,048 | 553,167 | |||||||||
| Matthews Asia Small Companies Fund | 15,270 | 113,037 | 252,008 | |||||||||
| Matthews China Small Companies Fund | 63,212 | 133,327 | 142,295 | |||||||||
| * | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
Investment advisory fees charged, waived fees and reimbursed additional expenses for the year ended December 31, 2016, 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 | $426,049 | ($123,474 | ) | $302,575 | ||||||||
| Matthews Asia Credit Opportunities Fund* | 66,127 | (110,447 | ) | (44,320 | ) | |||||||
| Matthews Asian Growth and Income Fund | 19,401,795 | (2,182 | ) | 19,399,613 | ||||||||
| Matthews Asia Dividend Fund | 31,417,886 | (173,279 | ) | 31,244,607 | ||||||||
| Matthews China Dividend Fund | 1,123,179 | — | 1,123,179 | |||||||||
| Matthews Asia Value Fund | 14,034 | (211,035 | ) | (197,001 | ) | |||||||
| Matthews Asia Focus Fund | 73,684 | (111,801 | ) | (38,117 | ) | |||||||
| Matthews Asia Growth Fund | 4,484,357 | — | 4,484,357 | |||||||||
| Matthews Pacific Tiger Fund | 45,566,740 | (522,856 | ) | 45,043,884 | ||||||||
| Matthews Asia ESG Fund | 52,381 | (163,853 | ) | (111,472 | ) | |||||||
| Matthews Emerging Asia Fund | 1,695,506 | (553,167 | ) | 1,142,339 | ||||||||
| Matthews Asia Innovators Fund** | 964,368 | — | 964,368 | |||||||||
| Matthews China Fund | 3,980,422 | — | 3,980,422 | |||||||||
| Matthews India Fund | 10,314,168 | — | 10,314,168 | |||||||||
| Matthews Japan Fund | 19,807,446 | (14,338 | ) | 19,793,108 | ||||||||
| Matthews Korea Fund | 1,194,852 | — | 1,194,852 | |||||||||
| Matthews Asia Small Companies Fund | 5,325,434 | (252,008 | ) | 5,073,426 | ||||||||
| Matthews China Small Companies Fund | 191,203 | (142,295 | ) | 48,908 | ||||||||
| * | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
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Table of Contents
Notes to Financial Statements (continued)
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 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, 2016, 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 | $93,640 | $— | $93,640 | |||||||||
| Matthews Asia Credit Opportunities Fund* | 14,418 | — | 14,418 | |||||||||
| Matthews Asian Growth and Income Fund | 4,171,933 | (2,182 | ) | 4,169,751 | ||||||||
| Matthews Asia Dividend Fund | 6,755,698 | (173,279 | ) | 6,582,419 | ||||||||
| Matthews China Dividend Fund | 241,428 | — | 241,428 | |||||||||
| Matthews Asia Value Fund | 3,015 | — | 3,015 | |||||||||
| Matthews Asia Focus Fund | 15,846 | — | 15,846 | |||||||||
| Matthews Asia Growth Fund | 964,821 | — | 964,821 | |||||||||
| Matthews Pacific Tiger Fund | 9,794,580 | (522,856 | ) | 9,271,724 | ||||||||
| Matthews Asia ESG Fund | 11,244 | — | 11,244 | |||||||||
| Matthews Emerging Asia Fund | 242,127 | — | 242,127 | |||||||||
| Matthews Asia Innovators Fund** | 207,389 | — | 207,389 | |||||||||
| Matthews China Fund | 856,119 | — | 856,119 | |||||||||
| Matthews India Fund | 2,216,690 | — | 2,216,690 | |||||||||
| Matthews Japan Fund | 4,254,896 | (14,338 | ) | 4,240,558 | ||||||||
| Matthews Korea Fund | 257,280 | — | 257,280 | |||||||||
| Matthews Asia Small Companies Fund | 761,317 | — | 761,317 | |||||||||
| Matthews China Small Companies Fund | 27,330 | — | 27,330 | |||||||||
| * | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
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 statements of assets and liabilities as well as the statements of operations. Additional information concerning these services and fees is contained in the Funds’ prospectuses.
| 154 | MATTHEWS ASIA FUNDS |
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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, 2016 were as follows:
| Administration and Accounting Fees |
||||
| Matthews Asia Strategic Income Fund | $5,250 | |||
| Matthews Asia Credit Opportunities Fund* | 814 | |||
| Matthews Asian Growth and Income Fund | 233,912 | |||
| Matthews Asia Dividend Fund | 378,790 | |||
| Matthews China Dividend Fund | 13,542 | |||
| Matthews Asia Value Fund | 169 | |||
| Matthews Asia Focus Fund | 888 | |||
| Matthews Asia Growth Fund | 54,070 | |||
| Matthews Pacific Tiger Fund | 549,368 | |||
| Matthews Asia ESG Fund | 631 | |||
| Matthews Emerging Asia Fund | 13,582 | |||
| Matthews Asia Innovators Fund** | 11,628 | |||
| Matthews China Fund | 47,996 | |||
| Matthews India Fund | 124,351 | |||
| Matthews Japan Fund | 238,741 | |||
| Matthews Korea Fund | 14,406 | |||
| Matthews Asia Small Companies Fund | 42,666 | |||
| Matthews China Small Companies Fund | 1,532 | |||
| * | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
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.
Cross trades for the year ended December 31, 2016, 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. For the year ended December 31, 2016, the purchase and sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:
| Purchases | Sales | |||||||
| Matthews Asia Dividend Fund | $4,639,670 | $— | ||||||
| Matthews Emerging Asia Fund | 90,507 | — | ||||||
| Matthews Asia Innovators Fund | — | 553,442 | ||||||
| Matthews China Fund | — | 4,311,006 | ||||||
| Matthews Korea Fund | 553,442 | — | ||||||
| Matthews Asia Small Companies Fund | 405,733 | 824,904 | ||||||
During the year ended December 31, 2016, Matthews China Fund received a reimbursement of $58,405 from an affiliate, which is included in payment by affiliate in the Statements of Operations, relating to an operational error.
As of December 31, 2016, Matthews and its affiliates held significant shares in the Funds as follows:
| Shares held by Matthews and its Affiliates |
Percentage of Outstanding Shares |
|||||||
| Matthews Asia Strategic Income Fund | 1,437,526 | 22% | ||||||
| Matthews Asia Credit Opportunities Fund | 1,196,293 | 74% | ||||||
| Matthews Asia Value Fund | 100,216 | 37% | ||||||
| Mathews Asia Focus Fund | 151,122 | 13% | ||||||
| Matthews Asia ESG Fund | 343,028 | 35% | ||||||
| Matthews China Small Companies Fund | 390,469 | 20% | ||||||
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 $1,017,000 in aggregate for regular compensation during the year ended December 31, 2016.
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Table of Contents
Notes to Financial Statements (continued)
| 6. | INVESTMENTS |
The value of investment transactions made for affiliated and unaffiliated holdings for the year ended December 31, 2016 were as follows:
| Affiliated Purchases | Proceeds from Affiliated Sales |
Unaffiliated Purchases | Proceeds from Unaffiliated Sales |
|||||||||||||
| Matthews Asia Strategic Income Fund | $— | $— | $46,460,788 | $43,852,624 | ||||||||||||
| Matthews Asia Credit Opportunities Fund* | — | — | 17,319,048 | 2,603,120 | ||||||||||||
| Matthews Asian Growth and Income Fund | — | — | 433,417,060 | 799,591,025 | ||||||||||||
| Matthews Asia Dividend Fund | — | 5,350,404 | 1,853,613,754 | 2,071,029,777 | ||||||||||||
| Matthews China Dividend Fund | — | — | 121,615,840 | 120,599,525 | ||||||||||||
| Matthews Asia Value Fund | — | — | 1,145,514 | 345,046 | ||||||||||||
| Matthews Asia Focus Fund | — | — | 2,234,651 | 3,581,902 | ||||||||||||
| Matthews Asia Growth Fund | — | — | 91,396,232 | 248,171,893 | ||||||||||||
| Matthews Pacific Tiger Fund | 54,645,673 | 8,948,924 | 328,829,890 | 384,475,374 | ||||||||||||
| Matthews Asia ESG Fund | — | — | 4,835,811 | 1,160,859 | ||||||||||||
| Matthews Emerging Asia Fund | 1,834,739 | — | 97,415,318 | 57,129,205 | ||||||||||||
| Matthews Asia Innovators Fund** | — | — | 129,195,135 | 173,094,121 | ||||||||||||
| Matthews China Fund | — | — | 505,966,105 | 676,596,840 | ||||||||||||
| Matthews India Fund | 1,726,270 | 8,295,648 | 236,869,550 | 234,779,518 | ||||||||||||
| Matthews Japan Fund | 151,738,186 | 18,190,488 | 2,464,509,800 | 1,564,432,843 | ||||||||||||
| Matthews Korea Fund | — | — | 60,528,805 | 102,176,215 | ||||||||||||
| Matthews Asia Small Companies Fund | — | — | 228,673,366 | 397,705,728 | ||||||||||||
| Matthews China Small Companies Fund | — | — | 11,687,287 | 16,007,487 | ||||||||||||
| * | Matthews Asia Credit Opportunities Fund commenced operations on April 29, 2016. |
| ** | The Fund’s name changed from Matthews Asia Science and Technology Fund to Matthews Asia Innovators Fund on April 29, 2016. |
| 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, 2016, 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, 2016 is as follows:
| Shares Held at Dec. 31, 2015 |
Shares Purchased |
Shares Sold |
Shares Held at Dec. 31, 2016 |
Value at Dec. 31, 2016 |
Dividend Income Jan. 1, 2016– Dec. 31, 2016 |
Net Realized Gain (Loss) Jan. 1, 2016– Dec. 31, 2016 |
||||||||||||||||||||||
| MATTHEWS ASIA DIVIDEND FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| Anritsu Corp.† |
7,564,500 | 1,345,200 | 2,588,200 | 6,321,500 | $— | $— | $— | |||||||||||||||||||||
| Ascendas India Trust |
53,470,700 | — | — | 53,470,700 | 37,388,446 | 2,107,323 | — | |||||||||||||||||||||
| Breville Group, Ltd. |
10,644,019 | — | — | 10,644,019 | 66,424,770 | 2,265,651 | — | |||||||||||||||||||||
| CapitaLand Retail China Trust, REIT† |
43,232,400 | — | — | 43,232,400 | — | — | — | |||||||||||||||||||||
| China Machinery Engineering Corp. H Shares† |
53,811,000 | 2,781,000 | 56,592,000 | — | — | — | — | |||||||||||||||||||||
| Greatview Aseptic Packaging Co., Ltd.† |
109,030,000 | — | 87,117,000 | 21,913,000 | — | — | — | |||||||||||||||||||||
| Minth Group, Ltd. |
59,535,000 | — | 1,572,000 | 57,963,000 | 179,973,467 | 4,199,865 | 5,180,206 | |||||||||||||||||||||
| Sercomm Corp.† |
11,111,000 | 1,569,000 | 12,680,000 | — | — | — | — | |||||||||||||||||||||
| Spotless Group Holdings, Ltd.† |
48,823,125 | 9,587,962 | 58,411,087 | — | — | — | — | |||||||||||||||||||||
| Yuexiu Transport Infrastructure, Ltd. |
109,322,000 | — | 8,354,000 | 100,968,000 | 63,070,437 | 3,944,217 | 750,208 | |||||||||||||||||||||
| Total Affiliates |
$346,857,120 | $12,517,056 | $5,930,414 | |||||||||||||||||||||||||
| MATTHEWS PACIFIC TIGER FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| Cheil Worldwide, Inc. |
6,154,297 | 350,000 | — | 6,504,297 | $84,577,686 | $3,190,534 | $— | |||||||||||||||||||||
| Fuyao Glass Industry Group Co., Ltd. H Shares |
31,836,000 | 3,000,000 | — | 34,836,000 | 107,598,788 | 3,999,167 | — | |||||||||||||||||||||
| Green Cross Corp. |
846,872 | — | 70,000 | 776,872 | 100,888,309 | 1,123,111 | 3,794,822 | |||||||||||||||||||||
| Hyflux, Ltd.† |
43,084,530 | — | 7,893,800 | 35,190,730 | — | — | — | |||||||||||||||||||||
| Just Dial, Ltd. |
— | 3,557,718 | — | 3,557,718 | 17,719,550 | — | — | |||||||||||||||||||||
| Synnex Technology International Corp. |
98,191,354 | 4,909,567 | †† | — | 103,100,921 | 103,604,589 | 4,643,422 | — | ||||||||||||||||||||
| Tata Power Co., Ltd. |
165,620,436 | 6,000,000 | — | 171,620,436 | 191,526,692 | 3,243,668 | — | |||||||||||||||||||||
| Total Affiliates |
$605,915,614 | $16,199,902 | $3,794,822 | |||||||||||||||||||||||||
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| Shares Held at Dec. 31, 2015 |
Shares Purchased |
Shares Sold |
Shares Held at Dec. 31, 2016 |
Value at Dec. 31, 2016 |
Dividend Income Jan. 1, 2016– Dec. 31, 2016 |
Net Realized Gain (Loss) Jan. 1, 2016– Dec. 31, 2016 |
||||||||||||||||||||||
| MATTHEWS EMERGING ASIA FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| National Seed JSC |
554,535 | 425,050 | — | 979,585 | $3,985,771 | $87,853 | $— | |||||||||||||||||||||
| Total Affiliates |
$3,985,771 | $87,853 | $— | |||||||||||||||||||||||||
| MATTHEWS INDIA FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| eClerx Services, Ltd. |
3,135,581 | 80,326 | 463,976 | 2,751,931 | $56,765,926 | $46,135 | $3,422,074 | |||||||||||||||||||||
| VST Industries, Ltd. |
1,215,704 | — | 30,000 | 1,185,704 | 42,019,379 | 1,274,991 | 167,714 | |||||||||||||||||||||
| Total Affiliates |
$98,785,305 | $1,321,126 | $3,589,788 | |||||||||||||||||||||||||
| MATTHEWS JAPAN FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| AIT Corp.† |
1,130,300 | — | 1,130,300 | — | $— | $— | $— | |||||||||||||||||||||
| Broadleaf Co., Ltd.† |
753,800 | 1,408,200 | 2,162,000 | — | — | — | — | |||||||||||||||||||||
| Daiken Medical Co., Ltd. |
1,755,200 | — | — | 1,755,200 | 12,061,852 | 261,293 | — | |||||||||||||||||||||
| Doshisha Co., Ltd. |
1,643,200 | 506,900 | 160,700 | 1,989,400 | 35,681,117 | 969,491 | 108,620 | |||||||||||||||||||||
| eGuarantee, Inc.† |
841,800 | 63,000 | 904,800 | — | — | — | — | |||||||||||||||||||||
| Financial Products Group Co.† |
3,258,800 | 2,145,500 | 1,476,800 | 3,927,500 | — | — | — | |||||||||||||||||||||
| Infomart Corp. |
— | 7,131,100 | ††† | 592,100 | 6,539,000 | 38,158,813 | 378,506 | 354,674 | ||||||||||||||||||||
| MORESCO Corp.† |
774,500 | — | 774,500 | — | — | — | — | |||||||||||||||||||||
| N Field Co., Ltd.† |
1,006,400 | — | 1,006,400 | — | — | — | — | |||||||||||||||||||||
| Sac’s Bar Holdings, Inc.† |
1,480,350 | 330,000 | 727,250 | 1,083,100 | — | — | — | |||||||||||||||||||||
| Septeni Holdings Co., Ltd. |
— | 7,039,100 | ††† | — | 7,039,100 | 24,070,158 | 144,106 | — | ||||||||||||||||||||
| TechnoPro Holdings, Inc. |
1,380,700 | 931,300 | 266,200 | 2,045,800 | 65,389,317 | 2,253,284 | 1,452,238 | |||||||||||||||||||||
| Trancom Co., Ltd.† |
429,400 | 161,100 | 168,700 | 421,800 | — | — | — | |||||||||||||||||||||
| W-Scope Corp. |
— | 2,397,100 | ††† | 81,800 | 2,315,300 | 34,692,828 | 49,201 | 1,776,100 | ||||||||||||||||||||
| Total Affiliates |
$210,054,085 | $4,055,881 | $3,691,632 | |||||||||||||||||||||||||
| MATTHEWS ASIA SMALL COMPANIES FUND | ||||||||||||||||||||||||||||
| Name of Issuer: | ||||||||||||||||||||||||||||
| FineTek Co., Ltd.† |
3,192,920 | — | 3,192,920 | — | $— | $— | $— | |||||||||||||||||||||
| Total Affiliates |
$— | $— | $— | |||||||||||||||||||||||||
| † | Issuer was not an affiliated company as of December 31, 2016. |
| †† | Includes stock dividend during the period. |
| ††† | Includes stock split during the period. |
| 8. | INCOME TAX INFORMATION |
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, 2016. 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, 2016, 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 | $— | $— | ($2,203,539 | ) | ||||||||
| Matthews Asia Credit Opportunities Fund | 35,884 | — | — | |||||||||
| Matthews Asian Growth and Income Fund | — | 43,466,302 | — | |||||||||
| Matthews Asia Dividend Fund | — | — | — | |||||||||
| Matthews China Dividend Fund | — | 2,153,185 | — | |||||||||
| Matthews Asia Value Fund | 2,785 | — | — | |||||||||
| Matthews Asia Focus Fund | 61,966 | — | (894,180 | ) | ||||||||
| Matthews Asia Growth Fund | 4,045,305 | 3,690,162 | — | |||||||||
| Matthews Pacific Tiger Fund | 220,925 | 4,258,407 | — | |||||||||
| Matthews Asia ESG Fund | — | — | (42,774 | ) | ||||||||
| Matthews Emerging Asia Fund | 252,817 | — | — | |||||||||
| Matthews Asia Innovators Fund | — | 9,515,228 | — | |||||||||
| Matthews China Fund | — | — | — | |||||||||
| Matthews India Fund | 624,623 | 13,449,266 | — | |||||||||
| Matthews Japan Fund | — | 62,287,264 | — | |||||||||
| Matthews Korea Fund | 633,338 | 9,975,497 | — | |||||||||
| Matthews Asia Small Companies Fund | 1,443,824 | — | (1,481,217 | ) | ||||||||
| Matthews China Small Companies Fund | 168,416 | 124,303 | — | |||||||||
| Late Year Losses* |
Other Temporary Differences |
Unrealized Appreciation (Depreciation)** |
Total Accumulated Earnings/Deficit |
|||||||||||||
| Matthews Asia Strategic Income Fund | ($121,441 | ) | $— | $146,556 | ($2,178,424 | ) | ||||||||||
| Matthews Asia Credit Opportunities Fund | — | — | 135,222 | 171,106 | ||||||||||||
| Matthews Asian Growth and Income Fund | (7,187,374 | ) | — | 24,626,608 | 60,905,536 | |||||||||||
| Matthews Asia Dividend Fund | (10,884,608 | ) | (22,388 | ) | 526,417,131 | 515,510,135 | ||||||||||
| Matthews China Dividend Fund | (13,952 | ) | — | 3,350,878 | 5,490,111 | |||||||||||
| Matthews Asia Value Fund | — | (3,753 | ) | 81,232 | 80,264 | |||||||||||
| Matthews Asia Focus Fund | — | — | (908,546 | ) | (1,740,760 | ) | ||||||||||
| Matthews Asia Growth Fund | — | — | 104,600,674 | 112,336,141 | ||||||||||||
| Matthews Pacific Tiger Fund | — | — | 1,219,350,508 | 1,223,829,840 | ||||||||||||
| Matthews Asia ESG Fund | (13,364 | ) | — | (109,270 | ) | (165,408 | ) | |||||||||
| Matthews Emerging Asia Fund | — | — | 24,016,967 | 24,269,784 | ||||||||||||
| Matthews Asia Innovators Fund | — | — | 14,337,889 | 23,853,117 | ||||||||||||
| Matthews China Fund | (1,208,997 | ) | — | 2,419,797 | 1,210,800 | |||||||||||
| Matthews India Fund | — | (9,061 | ) | 191,986,538 | 206,051,366 | |||||||||||
| Matthews Japan Fund | (2,221,694 | ) | — | 78,512,868 | 138,578,438 | |||||||||||
| Matthews Korea Fund | — | — | 35,125,881 | 45,734,716 | ||||||||||||
| Matthews Asia Small Companies Fund | — | — | 10,339,947 | 10,302,554 | ||||||||||||
| Matthews China Small Companies Fund | — | — | (238,293 | ) | 54,426 | |||||||||||
| * | As permitted by the Internal Revenue Service, 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. |
As of December 31, 2016, 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: | Short-term Losses |
Long-term Losses |
Total | |||||||||
| Matthews Asia Strategic Income Fund | $1,806,590 | $396,949 | $2,203,539 | |||||||||
| Matthews Asia Focus Fund | 153,688 | 740,492 | 894,180 | |||||||||
| Matthews Asia ESG Fund | 42,774 | — | 42,774 | |||||||||
| Matthews Asia Small Companies Fund | 1,481,217 | — | 1,481,217 | |||||||||
| * | Post-Enactment Losses: Must be utilized prior to losses subject to expiration. |
| 158 | MATTHEWS ASIA FUNDS |
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The following Funds utilized capital loss carryforwards in the current year:
| Utilized Capital Loss Carryforwards |
||||
| Matthews Asia Growth Fund | $19,506,205 | |||
| Matthews Emerging Asia Fund | 883,817 | |||
| Matthews Japan Fund | 64,759,904 | |||
| Matthews Asia Small Companies Fund | 11,288,569 | |||
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, NOL (net operating loss) adjustments, capital gains tax, distributions in excess of current earnings and profits, re-characterization of distributions, investment in swaps, 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, 2016, 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 Gain/(Loss) |
||||||||||
| Matthews Asia Strategic Income Fund | $— | ($749,656 | ) | $749,656 | ||||||||
| Matthews Asia Credit Opportunities Fund | (67,525 | ) | 74,041 | (6,516 | ) | |||||||
| Matthews Asian Growth and Income Fund | — | (88,698 | ) | 88,698 | ||||||||
| Matthews Asia Dividend Fund | — | (2,152,860 | ) | 2,152,860 | ||||||||
| Matthews China Dividend Fund | — | (9,799 | ) | 9,799 | ||||||||
| Matthews Asia Value Fund | (87,548 | ) | 108,512 | (20,964 | ) | |||||||
| Matthews Asia Focus Fund | (585 | ) | (1,007 | ) | 1,592 | |||||||
| Matthews Asia Growth Fund | — | (35,774 | ) | 35,774 | ||||||||
| Matthews Pacific Tiger Fund | — | 5,488,810 | (5,488,810 | ) | ||||||||
| Matthews Asia ESG Fund | (29,415 | ) | 26,159 | 3,256 | ||||||||
| Matthews Emerging Asia Fund | — | (548,987 | ) | 548,987 | ||||||||
| Matthews Asia Innovators Fund | (337,282 | ) | 68,388 | 268,894 | ||||||||
| Matthews China Fund | — | 762,627 | (762,627 | ) | ||||||||
| Matthews India Fund | — | (340,653 | ) | 340,653 | ||||||||
| Matthews Japan Fund | (10,373 | ) | 3,985,724 | (3,975,351 | ) | |||||||
| Matthews Korea Fund | 2,276,321 | 119,373 | (2,395,694 | ) | ||||||||
| Matthews Asia Small Companies Fund | — | (123,559 | ) | 123,559 | ||||||||
| Matthews China Small Companies Fund | — | (9 | ) | 9 | ||||||||
| 9. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued, and has determined that there were no subsequent events that require recognition or disclosure in the financial statements.
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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 Asia Credit Opportunities 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 Asia Innovators Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, and Matthews China Small Companies Fund (hereinafter referred as the “Funds”) as of December 31, 2016, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter 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 as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers, LLP
San Francisco, California
February 27, 2017
| 160 | MATTHEWS ASIA FUNDS |
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For shareholders who do not have a December 31, 2016 tax year-end, this notice is for informational purposes. For the period January 1, 2016 to December 31, 2016, the Funds report the following items with regard to distributions paid during the period. All reports 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, 2016 as Qualified Dividend Income (“QDI”) as defined in the Internal Revenue code as follows:
| QDI Portion | ||||
| Matthews Asia Strategic Income Fund | 0.00% | |||
| Matthews Asia Credit Opportunities Fund | 0.00% | |||
| Matthews Asian Growth and Income Fund | 46.99% | |||
| Matthews Asia Dividend Fund | 100.00% | |||
| Matthews China Dividend Fund | 71.91% | |||
| Matthews Asia Value Fund | 13.91% | |||
| Matthews Asia Focus Fund | 87.06% | |||
| Matthews Asia Growth Fund | 100.00% | |||
| Matthews Pacific Tiger Fund | 87.37% | |||
| Matthews Asia ESG Fund | 64.87% | |||
| Matthews Emerging Asia Fund | 100.00% | |||
| Matthews Asia Innovators Fund | 0.00% | |||
| Matthews China Fund | 100.00% | |||
| Matthews India Fund | 100.00% | |||
| Matthews Japan Fund | 100.00% | |||
| Matthews Korea Fund | 90.09% | |||
| Matthews Asia Small Companies Fund | 100.00% | |||
| Matthews China Small Companies Fund | 41.55% | |||
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, 2016 as follows:
| Matthews Asia Strategic Income Fund | 0.00% | |||
| Matthews Asia Credit Opportunities Fund | 0.00% | |||
| Matthews Asian Growth and Income Fund | 2.76% | |||
| Matthews Asia Dividend Fund | 2.47% | |||
| Matthews China Dividend Fund | 3.07% | |||
| Matthews Asia Value Fund | 1.78% | |||
| Matthews Asia Focus Fund | 13.96% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 3.52% | |||
| Matthews Asia ESG Fund | 0.00% | |||
| Matthews Emerging Asia Fund | 0.00% | |||
| Matthews Asia Innovators 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% |
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Tax Information (unaudited) (continued)
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, 2016 as follows:
| Long-Term Capital Gains | ||||
| Matthews Asian Growth and Income Fund | $145,377,175 | |||
| Matthews Asia Dividend Fund | 30,585,305 | |||
| Matthews China Dividend Fund | 2,629,943 | |||
| Matthews Pacific Tiger Fund | 121,713,006 | |||
| Matthews Emerging Asia Fund | 2,100,210 | |||
| Matthews Asia Innovators Fund | 10,623,880 | |||
| Matthews China Fund | 39,869,615 | |||
| Matthews Japan Fund | 9,535,726 | |||
| Matthews India Fund | 26,797,862 | |||
| Matthews Korea Fund | 13,672,732 | |||
| Matthews China Small Companies Fund | 747,907 | |||
4. Foreign Taxes Paid
The Funds have elected to pass through to their shareholders the foreign taxes paid for year ended December 31, 2016 as follows:
| Foreign Source Income | Foreign Taxes Paid | |||||||
| Matthews Asia Strategic Income Fund | $3,788,660 | $83,576 | ||||||
| Matthews Asian Growth and Income Fund | 90,637,255 | 4,703,648 | ||||||
| Matthews Asia Dividend Fund | 144,959,688 | 9,553,302 | ||||||
| Matthews China Dividend Fund | 6,125,111 | 139,564 | ||||||
| Matthews Asia Value Fund | 50,347 | 4,289 | ||||||
| Matthews Asia Focus Fund | 287,110 | 10,957 | ||||||
| Matthews Asia Growth Fund | 10,780,331 | 1,043,261 | ||||||
| Matthews Pacific Tiger Fund | 117,931,700 | 7,676,005 | ||||||
| Matthews Asia ESG Fund | 197,665 | 21,047 | ||||||
| Matthews Emerging Asia Fund | 5,596,635 | 544,919 | ||||||
| Matthews China Fund | 16,743,868 | 299,605 | ||||||
| Matthews Japan Fund | 46,456,081 | 4,618,299 | ||||||
| Matthews Korea Fund | 2,896,630 | 478,708 | ||||||
| Matthews Asia Small Companies Fund | 10,961,520 | 759,040 | ||||||
| Matthews China Small Companies Fund | 533,420 | 16,041 | ||||||
5. Qualified Interest Income
The Funds report a portion of the net income dividends distributed during the year ended December 31, 2016, as Qualified Interest Income (QII), as defined in the Internal Revenue Code as follows:
| QII Portion | ||||
| Matthews Asia Strategic Income Fund | 6.49% | |||
| Matthews Asia Credit Opportunities Fund | 0.70% | |||
| Matthews Asian Growth and Income Fund | 0.18% | |||
| Matthews Asia Dividend Fund | 0.07% | |||
| Matthews China Dividend Fund | 0.13% | |||
| Matthews Asia Value Fund | 0.35% | |||
| Matthews Asia Focus Fund | 0.14% | |||
| Matthews Asia Growth Fund | 0.05% | |||
| Matthews Pacific Tiger Fund | 0.23% | |||
| Matthews Asia ESG Fund | 0.43% | |||
| Matthews Emerging Asia Fund | 0.48% | |||
| Matthews Asia Innovators Fund | 0.00% | |||
| Matthews China Fund | 0.00% | |||
| Matthews India Fund | 0.00% | |||
| Matthews Japan Fund | 0.23% | |||
| Matthews Korea Fund | 0.00% | |||
| Matthews Asia Small Companies Fund | 0.16% | |||
| Matthews China Small Companies Fund | 0.20% | |||
| 162 | MATTHEWS ASIA FUNDS |
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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, 2016, 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 Asia Credit Opportunities Fund | 100.00% | |||
| Matthews Asian Growth and Income Fund | 100.00% | |||
| Matthews Asia Dividend Fund | 0.00% | |||
| Matthews China Dividend Fund | 0.00% | |||
| Matthews Asia Value Fund | 100.00% | |||
| Matthews Asia Focus Fund | 0.00% | |||
| Matthews Asia Growth Fund | 0.00% | |||
| Matthews Pacific Tiger Fund | 100.00% | |||
| Matthews Asia ESG Fund | 0.00% | |||
| Matthews Emerging Asia Fund | 100.00% | |||
| Matthews Asia Innovators Fund | 0.00% | |||
| Matthews China Fund | 0.00% | |||
| Matthews India Fund | 100.00% | |||
| Matthews Japan Fund | 0.00% | |||
| Matthews Korea Fund | 0.00% | |||
| Matthews Asia Small Companies Fund | 0.00% | |||
| Matthews China Small Companies Fund | 0.00% | |||
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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 Fund Complex Overseen by Trustee |
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). | 18 | 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 1988), Executive Financial Literacy, Inc. (financial executive development programs); Faculty Director and Executive Education Lecturer (1995–2016), 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. | 18 | |||||
| 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). | 18 | |||||
| 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. | 18 | 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 Asia 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. |
| 164 | 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 |
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). | 18 | Director (since 2013), Asian Masters Fund (Australia) (1 Portfolio); Trustee (since 2013), African Wildlife Foundation; Trustee (2010–2016), Oakland Museum of California; Director (since 2017), Hong Kong Securities and Investment Institute. | ||||
| 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). | 18 | 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 Asia Funds (registered investment company). | 18 | Director (since 2004), Matthews Asian Selections Funds PLC (Ireland) (1 Portfolio); Trustee (2001–2004) and Trustee and Chairman of Board (1994–1998), Matthews Asia 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). | 18 | 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. |
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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-1216-205M
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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 $525,698 in 2015 and $566,854 in 2016. |
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 2015 and $0 in 2016. |
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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 $124,963 in 2015 and $139,406 in 2016. 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 2015 and $0 in 2016. |
| (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 $353,683 in 2015 and $503,996 in 2016. |
| (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. |
| (b) | Not applicable. |
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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 March 9, 2017
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 March 9, 2017
By (Signature and Title)* /s/ Shai Malka
Shai Malka, Treasurer
(principal financial officer)
Date March 9, 2017
| * | Print the name and title of each signing officer under his or her signature. |