UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

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.

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

Matthews Asia Funds | Semi-Annual Report

June 30, 2014 | matthewsasia.com

ASIA FIXED INCOME STRATEGY

Matthews Asia Strategic Income Fund

ASIA GROWTH AND INCOME STRATEGIES

Matthews Asian Growth and Income Fund

Matthews Asia Dividend Fund

Matthews China Dividend Fund

ASIA GROWTH STRATEGIES

Matthews Asia Focus Fund

Matthews Asia Growth Fund

Matthews Pacific Tiger Fund

Matthews Emerging Asia Fund

Matthews China Fund

Matthews India Fund

Matthews Japan Fund

Matthews Korea Fund

ASIA SMALL COMPANY STRATEGIES

Matthews Asia Small Companies Fund

Matthews China Small Companies Fund

ASIA SPECIALTY STRATEGY

Matthews Asia Science and Technology Fund

'14

Performance and Expenses (June 30, 2014)

*  These figures are from the fund's prospectus dated as of April 30, 2014, and may differ from the actual expense ratios for fiscal year 2013, as shown in the financial highlights section of this report.

†  Fund is closed to most new investors.

1.  Matthews has contractually agreed to waive fees and reimburse expenses until August 31, 2015 to the extent needed to limit Total Annual Fund Operating Expenses to 0.90% by waiving class specific and non-class specific expenses for the Institutional Class and agreed 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 the Institutional Class and class specific expenses may be waived solely for the Institutional Class, the Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may exceed 0.90%. If the expenses fall below the expense limitation in a year within three years after Matthews has made such a waiver or reimbursement, the Fund may reimburse Matthews up to an amount not to cause the expenses for that year to exceed the expense limitation. The fee waiver and expense reimbursement may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days' written notice.

2.  Matthews has contractually agreed to waive fees and reimburse expenses until August 31, 2015 to the extent needed to limit Total Annual Fund Operating Expenses to 1.25% by waiving class specific and non-class specific expenses for the Institutional Class and agreed 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 the Institutional Class and class specific expenses may be waived solely for the Institutional Class, the Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may exceed 1.25%. If the expenses fall below the expense limitation in a year within three years after Matthews has made such a waiver or reimbursement, the Fund may reimburse Matthews up to an amount not to cause the expenses for that year to exceed the expense limitation. The fee waiver and expense reimbursement may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days' written notice.

3.  Matthews has contractually agreed to waive fees and reimburse expenses until August 31, 2015 to the extent needed to limit Total Annual Fund Operating Expenses to 1.50%. If the expenses fall below the expense limitation in a year within three years after Matthews has made such a waiver or reimbursement, the Fund may reimburse Matthews up to an amount not to cause the expenses for that year to exceed the expense limitation. The fee waiver and expense reimbursement may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days' written notice.

4.  Institutional Class Shares were first offered on April 30, 2013. For performance since that date, please see each Fund's performance table in the report. Performance for the Institutional Class Shares prior to its inception is based on the performance of the Investor Class. Performance differences between the Institutional Class and Investor Class may arise due to differences in fees charged to each class.

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.

Contents

Cover photo: Jinnamgwan Pavilion, the largest single-story pavilion in Korea

This report has been prepared for Matthews Asia Funds shareholders. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current Matthews Asia Funds prospectus, which contains more complete information about the Funds' investment objectives, risks and expenses. Additional copies of the prospectus or summary prospectus may be obtained at matthewsasia.com. Please read the prospectus carefully before you invest or send money.

The views and opinions in this report were current as of June 30, 2014. 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.

1944–2014

In Memory of Geoffrey H. Bobroff

Message to Shareholders from the Acting Chairman of the Board of Trustees

Dear Shareholders,

On July 19, mutual fund investors everywhere lost a friend most never knew they had. Geoff Bobroff, Chairman of the Board of Trustees of the Matthews Asia Funds, and a well-known mutual fund industry consultant, passed away unexpectedly.

Within the mutual fund industry, Geoff was known for his encyclopedic knowledge of all aspects of the business and his ability to translate that knowledge into insightful recommendations. However, most mutual fund investors barely knew of him. This is unfortunate because Geoff imparted what was perhaps his greatest influence toward improving the experience that investors receive from their fund investments. This will be his lasting legacy for Matthews Asia Funds Shareholders.

Geoff left us a great gift that will serve as the foundation for our future efforts—four guiding principles that he applied not only with the Matthews Asia Funds, but also throughout his career:

a  Investments should be clearly understandable and fill a need
Not a fan of fancy or untested investment strategies, Geoff believed shareholders are best served when skilled managers apply a clearly defined, well-articulated strategy.

a  Fees and expenses should be held to a reasonable level
Geoff knew that investors were attracted to funds with solid returns and reasonable fees. In turn, funds with these characteristics grow in size, allowing their expenses to drop further, reinforcing a cycle of success and fair value.

a  Disclosures should be clear and understandable
Geoff had the uncanny ability to shed his mutual fund expert suit. He could put himself in the place of the average investor and ask whether that investor would understand what he/she is being told. He always insisted that investor communications be as clear and concise as possible.

a  Always follow the rules
Mutual funds are highly regulated because of the potential conflicts of interest between investors and fund sponsors. Even though compliance costs are high, Geoff firmly believed that a deep and strong culture of ethics, supported by compliance, was absolutely critical to investors' faith in their fund investments.

The Matthews Asia Fund family grew significantly during Geoff's tenure and these four guiding principles ensured investors' best interests were always front and center. Continuing this tradition, Geoff recently led negotiations with the Adviser that, subject to final board approval, will lead to a combination of fee breakpoints, expense limits and other provisions that will provide funds investors significant cost reductions as the fund family continues to grow. This is in addition to lower expense caps which were implemented earlier this year.

Always one to be thinking far ahead, Geoff had already been working on a transition plan in anticipation of retiring from the Board of Trustees of the Matthews Asia Funds in several years' time. With his passing, that transition plan has been accelerated, and I will officially become Board Chairman on August 27, 2014. In addition, we are considering new members for the Board with talents that complement the existing Trustees' areas of expertise.

As we move forward, we understand that we cannot fill Geoff's shoes—they were simply too big. Rather, we will cherish the time we spent learning from him. And, we will honor his memory by applying the principles he gave us to benefit the Matthews Asia Funds Shareholders long into the future.

Jonathan F. Zeschin
Acting Chairman of the Board of Trustees
Matthews Asia Funds

Message to Shareholders from the President of Matthews Asia Funds

Dear Shareholders,

Geoff was a very well respected member of the Matthews Asia family and he will be missed sorely. As Chairman of the Board of Trustees of the Matthews Asia Funds, he oversaw a period of great growth in the Funds' range. During his tenure as Chairman, the Funds' assets grew from approximately $7 billion to $26 billion as at the end of June 2014, and he oversaw the launch of seven new and differentiated strategies. Throughout his tenure, Geoff always kept the interests of our Shareholders paramount and their experience was significantly enhanced as economies were achieved that yielded costs savings to fund investors.

He led the Board of Trustees with the highest standards of integrity, professionalism and thoughtfulness. Beyond Matthews Asia Funds, Geoff was widely known and admired by the broader investment management industry. He served with distinction throughout a career spanning almost five decades which included being an attorney with the Securities and Exchange Commission in Washington, D.C. and more recently as President of Bobroff Consulting, a mutual fund consultant and advisory firm. His dedication to the investment management industry was admirable and we often sought his advice and insights.

For those of us fortunate enough to have known Geoff well, we will miss his leadership, his intellect and his exemplary stewardship. We appreciate the fact that Geoff leaves behind a solid independent Board that will carry on his legacy of outstanding guidance with the interest of fund shareholders top of mind. We look forward to working with Jon Zeschin and the entire Board of Trustees in continuing Geoff's commitment to represent the best interest of our Shareholders. Geoff will always be remembered with fondness by the entire Matthews Asia Team.

William J. Hackett
President of the Matthews Asia Funds
Chief Executive Officer, Matthews International Capital Management, LLC

Message to Shareholders from the Investment Advisor

Dear Valued Shareholder,

At the end of last year, investors were treating Asia as simply another emerging region at the mercy of the twists and turns of U.S. economic performance and monetary policy. But things seemed to have changed over the last six months—at least that is the impression that I have received from investors across the world. There is more willingness to think of Asia as a distinct region, like Europe—although it is still a radical change for some investment frameworks—and there is a growing understanding that all emerging markets are not created equal.

This change of heart toward Asia has no doubt been helped by several factors. But I would emphasize two elements in particular: growth prospects and valuations. First, taking growth, I quote a fellow panelist in Hong Kong, a few months ago, who had been asked about potential catalysts for the markets. He replied with, "You know, one day, we are just going to get bored of being negative." And this finally appears to be the case. Asia has a lot going for it in the long term—fast rates of productivity growth, driven by better education and increased investment in capital, made possible by high savings rates. Countries seen as most vulnerable last year—India and Indonesia—appear to have taken some steps toward reform. Indeed, the difference between the political climate in Asia and in the Western economies is quite stark. The U.S. and Europe, though recovering, still seem to be underperforming and the political rhetoric is mainly focused on demand management—fiscal and monetary stimulus. Closely related is the question of wealth and income inequality. Policy is focused on trying to get people to spend more.

In Asia, over the last 18 months, we have seen the three giant economies put in place reformist governments: Xi Jinping in China, Shinzo Abe in Japan, and most recently Narendra Modi in India. Yes, there is a vast element of demand stimulus in Abenomics, but there is also much more emphasis on the supply side—labor force reform, corporate governance and financial reform. In China, financial reform, too, seems to be at the heart of policy as China tries to improve the pricing of risk and the allocation of capital across its private economy. Modi's ascent to power in India has been greeted with comparisons to Ronald Reagan and Margaret Thatcher. And if he is successful in achieving, on a national scale, what he did in his home state of Gujarat, then India should see a wave of productivity growth. So as one half of the world tries to get the filling back into the pie, the other half is busy trying to grow the pie.

The second element that is in Asia's favor is valuations. Valuations remain at a discount to long-term averages on a variety of measures, including price-to-earnings ratios, price-to-book and dividend yield. In Asia, equities look unequivocally cheap, relative to the rest of the world. Based on Factset aggregates, and using a composite analysis by any of the most commonly used measures of valuation, Asia is trading at a significant discount to the U.S. or anywhere else in the world, for that matter, save Eastern Europe. And this remains the same whether one looks at the Far East, Asia, Asia Pacific, Asia ex Japan or Asia Pacific ex Japan.

Despite all this, we often hear concerns that the sectors Matthews likes to invest in trade at a premium to the markets. This is generally, true. So we must believe we are getting something in return for that premium. First, we would argue that a significant portion of that premium is accounted for by the fact

that we invest relatively little in China's banks, or in any regional banks whose primary role is to funnel savings into the less efficiently run state-sponsored industries. This segment is trading at a well-deserved discount. Second, because benchmarks tend to be biased toward old-industry (heavy industrials, materials, energy) in Asia, we feel they are backward-looking. Third, we focus on long-term returns, which mean favoring cash-generative businesses with good capital allocation, high rates of marginal return on capital and management with good track records of either sharing corporate cash flows with minority investors or reinvesting sensibly in the business. We believe we are getting ample compensation in return for the premium we pay. And even then, when we look at the portfolio valuations in a global context, they are often trading either in-line or at a discount to U.S. and European equities with, we believe, better growth prospects.

Indeed, it is the growth strategies that have performed best in the past year or so. Small company strategies, too. This is not unusual in a period of recovering growth and rising interest rates, as the markets become more willing to value the long-term prospects of a business rather than focusing on immediately extracting cash. I would expect the markets to continue to hold a bias toward growth companies, if the current environment persists.

So, sentiment has improved markedly. But it is still wise to inject a note or two of caution. The conditions that caused market jitters have not gone away—a stronger U.S. dollar, some current account deficits and high rates of inflation. Indonesia, which had started to address these issues, has not given politicians as clear cut a reformist mandate as we hoped. Thailand is still sorting through its own political face-off. And the markets are starting to price in expectations for reform in India and Japan. But I really don't feel that we are in a situation where markets are oblivious to bad news. After all, Asia has gone through more than three years of de-rating based on concerns over slowing growth and financial vulnerability. I am comforted by the fact that corporate earnings growth in the portfolios appears to have held up fairly well and the politicians are trying to deal with the region's weaknesses. So I remain optimistic in the light of Asia's growth prospects and a reasonable cushion from valuations.

It is a privilege to serve as your investment advisor.

Robert Horrocks, PhD
Chief Investment Officer
Matthews International Capital Management, LLC

ASIA FIXED INCOME STRATEGY

PORTFOLIO MANAGERS

FUND FACTS

Portfolio Statistics

Benchmark

HSBC Asian Local Bond Index

Redemption Fee

2% within first 90 calendar days of purchase

OBJECTIVE

Total return over the long term with an emphasis on income.

STRATEGY

Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total assets, which include borrowings for investment purposes, in income-producing securities including, but not limited to, debt and debt-related instruments issued by governments, quasi-governmental entities, supra-national institutions, and companies in Asia. Asia consists of all countries and markets in Asia and includes developed, emerging, and frontier countries and markets in the Asian region. Investments may be denominated in any currency, and may represent any part of a company's capital structure from debt to equity or with features of both.

1  Prospectus expense ratios.

2  Matthews has contractually agreed to waive fees and reimburse expenses until August 31, 2015 to the extent needed to limit Total Annual Fund Operating Expenses to 0.90% by waiving class specific and non-class specific expenses for the Institutional Class and agreed 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 the Institutional Class and class specific expenses may be waived solely for the Institutional Class, the Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may exceed 0.90%. If the expenses fall below the expense limitation in a year within three years after Matthews has made such a waiver or reimbursement, the Fund may reimburse Matthews up to an amount not to cause the expenses for that year to exceed the expense limitation. The fee waiver and expense reimbursement may be terminated at any time by the Board of Trustees or the Trust on behalf of the Fund on 60 days' written notice.

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 2013 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.

Matthews Asia Strategic Income Fund

Portfolio Manager Commentary

For the first half of 2014, the Matthews Asia Strategic Income Fund returned 4.54% (Investor Class) and 4.53% (Institutional Class) while its benchmark, the HSBC Asian Local Bond Index, returned 5.00%. For the quarter ending June 30, the Fund returned 2.61% (Investor Class) and 2.56% (Institutional Class) while its benchmark returned 3.06%.

Market Environment:

The first half of 2014 was characterized by unusual stability in the bond markets. It certainly has been a reversal of fortunes from the sell-off of 2013, with bond markets generally rallying steadily over the past six months. Within this environment, Asian credit, currencies and interest rates have largely posted remarkably steady gains with little volatility. With the exception of a few markets, most Asian markets saw interest rates fall and currencies appreciate relative to the U.S. dollar. This rebound was driven by a combination of markets overshooting during the so-called "taper tantrum" last year and fundamental policy reforms to protect against another bout of unexpected tapering.

Performance Contributors and Detractors:

Key contributors to performance included our holdings in Sri Lankan government bonds, Indonesian government bonds and Australian corporates. Sri Lankan bond prices rose as interest rates fell steadily during the first half of the year. Indonesia was the best performer in the first quarter but lost some of those gains in the second quarter from currency depreciation and a moderate rise in yields. Stock prices for Australian corporates did well as interest rates declined and the Australian dollar steadily appreciated.

The main detractors to performance included our holdings in Home Inns & Hotels Management convertible bonds and our bonds denominated in renminbi. Home Inns, which operates a chain of budget hotels in China, underperformed earlier this year primarily due to the slowdown in China's economy. As travel among small- and medium-size enterprises fell, Home Inns saw a decline both in revenue per room, as well as in occupancy rates. Despite the softness in outlook, we remain confident in this holding given the company's strong balance sheet. Our holdings denominated in renminbi fell as the currency depreciated relative to the U.S. dollar over this period. We believe the renminbi's elevated level of volatility is not only to be expected, but healthy for a liberalizing currency.

Outlook:

While we struggle to pin down what might catalyze higher volatility for the rest of the markets, a few usual suspects come to mind, including an oil crisis, weakness in Europe and a potential move into the higher default part of the credit cycle in Asia. During this period of relative calm, a myriad of potential risks lurk around the corner. As such, we are particularly vigilant about the quality of the balance sheets of our portfolio holdings. This means monitoring for changes in liquidity—especially nuanced changes in working capital—which typically acts as a "canary

(continued)

PERFORMANCE AS OF JUNE 30, 2014

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

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:

Investor Class: 4.51% (4.30% excluding expense waiver)

Inst'l Class: 4.71% (4.49% excluding expense waiver)

The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 6/30/14, 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:

6.09%

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, J.P. Morgan and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 79 for index definitions.

6  The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods.

TOP TEN POSITIONS⁷

7  Holdings may combine more than one security from same issuer and related depositary receipts.

CURRENCY ALLOCATION (%)^8,9

COUNTRY ALLOCATION (%)^9,10

SECTOR ALLOCATION (%)⁹

Please note: Foreign Government Bonds category includes Supranationals.

ASSET TYPE BREAKDOWN (%)^8,9

8  Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent; the values may not sum to 100% due to rounding.

9  Cash and other assets may include forward currency exchange contracts and certain derivative instruments that have been marked-to-market.

10  Not all countries where the Fund may invest are included in the benchmark index.

Matthews Asia Strategic Income Fund

Portfolio Manager Commentary (continued)

in the coal mine," foretelling potential liquidity issues that may loom ahead. We hope that by being proactive, we can continue to aim for strong risk-adjusted returns for our shareholders.

Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.

Matthews Asia Strategic Income Fund  June 30, 2014

Schedule of Investments (unaudited)

NON-CONVERTIBLE CORPORATE BONDS: 60.8%

FOREIGN GOVERNMENT OBLIGATIONS: 21.6%

Matthews Asia Strategic Income Fund  June 30, 2014

Schedule of Investments (unaudited) (continued)

FOREIGN GOVERNMENT OBLIGATIONS (continued)

CONVERTIBLE CORPORATE BONDS: 8.6%

COMMON EQUITIES: 4.6%

a  Variable rate security. The rate represents the rate in effect at June 30, 2014.

b  Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The security may be resold in transactions exempt from registration normally to qualified institutional buyers. The security has been determined to be liquid in accordance with procedures adopted by the Fund's Board of Directors.

c  Cost for federal income tax purposes is $51,681,245 and net unrealized appreciation consists of:

*  All values are in USD unless otherwise noted.

AUD  Australian Dollar

BHD  Berhad

Cnv.  Convertible

CNY  Chinese Renminbi (Yuan)

IDR  Indonesian Rupiah

INR  Indian Rupee

JPY  Japanese Yen

KRW  Korean Won

LKR  Sri Lankan Rupee

MYR  Malaysian Ringgit

REIT  Real Estate Investment Trust

SGD  Singapore Dollar

USD  U.S. Dollar

Matthews Asia Strategic Income Fund  June 30, 2014

Schedule of Investments (unaudited) (continued)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:

FINANCIAL FUTURES CONTRACTS SOLD SHORT AS OF JUNE 30, 2014 WERE AS FOLLOWS:

See accompanying notes to financial statements.

ASIA GROWTH AND INCOME STRATEGIES

PORTFOLIO MANAGERS

Robert J. Horrocks, PhD

Lead Manager

Kenneth Lowe, CFA

Lead Manager

FUND FACTS

Portfolio Statistics

Benchmark

MSCI AC Asia ex Japan Index

Redemption Fee

2% within first 90 calendar days of purchase

OBJECTIVE

Long-term capital appreciation. The Fund also seeks to provide some current income.

STRATEGY

Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its total net assets, which include borrowings for investment purposes, in dividend-paying common stock, preferred stock and other equity securities, and convertible securities as well as fixed-income securities, of any duration or quality, of companies located in Asia, which consists of all countries and markets in Asia, including developed, emerging and frontier countries and markets in the Asian region.

1  Prospectus expense ratios.

2  The lesser of fiscal year 2013 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.

Matthews Asian Growth and Income Fund

Portfolio Manager Commentary

For the first half of 2014, the Matthews Asian Growth and Income Fund gained 4.91% (Investor Class) and 5.00% (Institutional Class), underperforming its benchmark, the MSCI All Country Asia ex Japan Index, which rose 6.57%. For the quarter ending June 30, the Fund gained 4.41% (Investor Class) and 4.50% (Institutional Class) while its benchmark rose 7.30%.

Market Environment:

The second quarter of the year was one of political change during what is an unusually busy period. In May, Narendra Modi—deemed a progressive politician with a strong track record of economic growth—was elected as India's new prime minister, with his party securing the largest mandate for change since the 1970s. In Thailand, we saw the 12^th coup since the Siamese Revolution of 1932, as the military junta dissolved Parliament and suspended the constitution. Although worrying politically, domestic equity markets have been moderately strong as many are accustomed to such shifts and there is a belief that this may signal an economic bottom. Finally, in Indonesia, markets stuttered as the July presidential race tightens.

Against this noisy backdrop and strong markets, the Fund delivered around 75% of the market's upside for the second quarter, a number that is fairly representative of what has been achieved in similar, past environments. In our opinion, this is to be expected as the aim of the strategy is to deliver upside participation in Asia's growth, but with a keen eye on capital preservation.

Performance Contributors and Detractors:

Our holdings in South Korea, particularly preferred shares, continued to do well and benefited Fund performance most during the second quarter. Preferred shares rose as market participants continue to look for yield enhancement in a market that has the lowest dividend payout ratio in the region. Such shares tend to trade at a discount to the common stock, and holders of preferred shares generally enjoy similar rights, with the exception of voting rights. The lack of voting rights has posed less of a concern recently as Korea's corporate governance standards have appeared to be improving.

A number of our tobacco stocks were also strong through the quarter. Although they operate in different regulatory environments, Korea's KT&G, Japan Tobacco and British American Tobacco Malaysia all benefited from actual or potential tax increases. The hope is that these taxes will be passed on to the consumer and boost earnings. Further, we also see potential upside risk to capital management through increased dividends.

More disappointingly, Australia was the biggest detractor to second quarter performance as our holdings in Orica and Coca-Cola Amatil stuttered. The former is a mining explosives producer that delivered a fairly weak first half result and downgraded expectations for its full year numbers. Although a tough environment, we believe that the company is still well-placed over the long term.

We exited Coca-Cola Amatil during the quarter as the company continued to struggle with increased competition, pricing pressure from customers and some poor historical strategic decisions. Additionally, our

(continued)

PERFORMANCE AS OF JUNE 30, 2014

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

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:

1.74% (Investor Class) 1.90% (Institutional Class)

The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 6/30/14, 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: 3.30%

The dividend yield (trailing) for the portfolio is the weighted average sum of the dividend paid per share during the last 12 months divided by the current price. 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 79 for index definition.

4  Calculated from 8/31/94.

5  The Lipper Category Average does not reflect sales charges and is based on total return, including reinvestment of dividends and capital gains for the stated periods.

TOP TEN HOLDINGS⁶

6  Holdings may combine more than one security from same issuer and related depositary receipts.

COUNTRY ALLOCATION (%)⁷

SECTOR ALLOCATION (%)

MARKET CAP EXPOSURE (%)⁸

ASSET TYPE BREAKDOWN (%)⁹

7  Not all countries where the Fund may invest are included in the benchmark index.

8  Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent; the values may not sum to 100% due to rounding.

9  Bonds are not included in the MSCI All Country Asia ex Japan Index.

Matthews Asian Growth and Income Fund

Portfolio Manager Commentary (continued)

underweight positions in India and information technology both hurt relative performance. Although these may be exciting times for India if Prime Minister Modi is able to implement a reformist agenda, we still struggle to find many interesting bottom-up opportunities as valuations remain high.

Notable Portfolio Changes:

During the quarter, we added New Zealand casino owner and operator SKYCITY Entertainment. Although not a high growth entity, recent regulatory changes and capital expenditure from the company present some exciting opportunities for increased cash generation to accompany an already healthy 5% yield.

Outlook:

Looking ahead, there are still a number of uncertainties across many parts of the region. Political events in Thailand and Indonesia, for example, could pose challenges, whilst the reform agenda for India's Modi and China's Xi are both largely unproven. The coming months and years should provide greater clarity into the true impetus for reform that may be needed to carry on Asia's productivity gains. Compounding these issues are uncertainties in the monetary and fiscal policies of the West. From a valuation perspective, the recent market bounce has left equal weighted valuations at 16x price to earnings*. With all of these factors at play, stock selection and valuation discipline remain key.

*  Price-Earnings Ratio (P/E Ratio) is a valuation ratio of a company's current share price compared to its per-share earnings and is calculated as the market value per share divided by the Earnings per Share (EPS).

Matthews Asian Growth and Income Fund  June 30, 2014

Schedule of Investments (unaudited)

COMMON EQUITIES: 84.1%