Unassociated Document
Matthews
Japan Fund
SUMMARY
PROSPECTUS
|
April 30,
2010
|
TICKER:
MJFOX
Before you invest, you may want to
review the Fund’s Prospectus, which contains more information about the Fund and
its risks. You can find the Fund’s Prospectus and other information about the
Fund online at www.matthewsasia.com/prospectus. You may also obtain this
information at no additional cost by calling 800.789.ASIA (2742) or by sending
an e-mail request to prospectus@matthewsasia.com. The Fund’s Prospectus and
Statement of Additional Information, both dated April 30, 2010, are incorporated
by reference into this Summary Prospectus.
Investment Objective
Long-term capital
appreciation
Fees and Expenses of the
Fund
This table describes the fees and
expenses that you may pay if you buy and hold shares of this
Fund.
SHAREHOLDER
FEES
|
|
|
(fees paid directly from your
investment)
|
|
|
Redemption
Fee
|
|
|
(as a percentage
of amount redeemed on shares held fewer than 90
days)
|
|
2.00%
|
|
|
|
ANNUAL OPERATING
EXPENSES
|
|
|
(expenses that you pay each year
as a percentage of the value of your investment)
|
|
Management
Fees
|
|
0.69%
|
Distribution
(12b-1) Fees
|
|
None
|
Other
Expenses
|
|
0.60%
|
Administration
and Shareholder Servicing Fees
|
0.19%
|
|
Total
Annual Operating Expenses
|
|
1.29%
|
EXAMPLE OF FUND
EXPENSES
This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in other
mutual funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
One
year: $131
|
Three
years: $409
|
Five
years: $708
|
Ten
years: $1,556
|
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover may indicate higher transaction costs and may result
in higher taxes when Fund shares are held in a taxable account. These costs,
which are not reflected in annual fund operating expenses or in the example of
fund expenses, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 127% of the average value of its
portfolio.
Principal Investment
Strategy
Under normal market conditions, the
Matthews Japan Fund seeks to achieve its investment objective by investing at
least 80% of its total net assets, which include borrowings for investment
purposes, in the common and preferred stocks of companies located in Japan. A
company is considered to be “located” in a country if it (i) is organized under
the laws of that country; (ii) derives at least 50% of its revenues or profits
from goods produced or sold, investments made, services performed, or has at
least 50% of its assets located within that country; (iii) has the primary
trading markets for its securities in that country; or (iv) is a governmental
entity or an agency, instrumentality or a political subdivision of that
country.
Principal Risks of
Investment
Political, Social and
Economic Risks: The value
of the Fund’s assets may be adversely affected by political, economic, social
and religious instability; inadequate investor protection; changes in laws or
regulations of countries within the Asian region (including countries in which
the Fund invests, as well as the broader region); international relations with
other nations; natural disasters; corruption and military activity. The Asian
region, and particularly China, Japan and South Korea, may be adversely affected
by political, military, economic and other factors related to North Korea. In
addition, China’s long-running conflict over Taiwan, border disputes with many
of its neighbors and historically strained relations with Japan could adversely
impact economies in the region. The economies of many Asian countries differ
from the economies of more developed countries in many respects, such as rate of
growth, inflation, capital reinvestment, resource self-sufficiency, financial
system stability, the national balance of payments position and sensitivity to
changes in global trade. Certain Asian countries are highly dependent upon and
may be affected by developments in the United States, Europe and other Asian
economies.
Currency Risks:
When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of
the foreign currency increasing or decreasing against the value of the U.S.
dollar. The value of an investment denominated in a foreign currency will
decline in dollar terms if that currency weakens against the dollar. While the
Fund is permitted to hedge currency risks, Matthews does not anticipate doing so
at this time.
Trading Markets and
Depositary Receipts: Asian
securities may trade in the form of depositary receipts, including American,
European and Global Depositary Receipts. Although depositary receipts have risks
similar to the securities that they represent, they may also involve higher
expenses and may trade at a discount (or premium) to the underlying security. In
addition, depositary receipts may not pass through voting and other shareholder
rights, and may be less liquid than the underlying securities listed on an
exchange.
Volatility:
The smaller size and lower
levels of liquidity in emerging markets, as well as other factors, may result in
changes in the prices of Asian securities that are more volatile than those of
companies in more developed regions. This volatility can cause the price of the
Fund’s shares (NAV) to go up or down dramatically. Because of this volatility,
it is recommended that you invest in the Fund only for the long term (at least
five years).
Risks associated with
Japan: Poor performance of
the global economy has negatively affected equity returns in Japan, and may
continue to do so. Japan’s economy and stock market have in the recent past had
a strong correlation with the U.S. economic cycle and U.S. stock markets, and
thus Japan’s economy may continue to be affected by current economic problems in
the U.S. Japan also has a growing economic relationship with China and other
Southeast Asian countries, and thus Japan’s economy may also be affected by
economic, political or social instability in those countries (whether resulting
from local or global events).
In the longer term, Japan will have to
address the effects of an aging population, such as a shrinking workforce and
higher welfare costs. To date, Japan has had restrictive immigration policies
that, combined with other demographic concerns, appear to be having a negative
impact on the economy. Japan’s growth prospects appear to be dependent on its
export capabilities. Japan’s neighbors, in particular China, have become
increasingly important export markets. Despite a deepening in the economic
relationship between Japan and China, the countries’ political relationship has
at times been strained in recent years. Should political tension increase, it
could adversely affect the economy, especially the export sector, and
destabilize the region as a whole. Japan also remains heavily dependent on oil
imports, and higher commodity prices could therefore have a negative impact on
the economy.
Past Performance
The bar chart below shows the Fund’s
performance for the past 10 years and how it has varied from year to year,
reflective of the Fund’s volatility. Also shown are the best and worst quarters
for this time period. The table below shows the Fund’s performance over certain
periods of time, along with performance of its benchmark index. The index
performance does not take into consideration fees, expenses or taxes. The
information presented below is past performance and is not a prediction of
future results. Both the bar chart and performance table assume reinvestment of
all dividends and distributions. For the Fund’s most recent month-end
performance, please visit matthewsasia.com or call
800.789.2742.
ANNUAL RETURNS FOR YEARS ENDED
12/31
![](g8.jpg) |
Best Quarter
Q3 2003
37.26%
Worst Quarter
Q4 2000
-21.54%
|
AVERAGE ANNUAL TOTAL RETURNS FOR
PERIODS ENDED DECEMBER 31, 2009
|
|
|
|
|
Since
Inception
|
|
1 year
|
5 years
|
10 years
|
(12/31/98)
|
Matthews
Japan Fund
|
|
|
|
|
Return before
taxes
|
10.06%
|
-5.49%
|
-3.85%
|
3.11%
|
Return after
taxes on distributions1
|
9.68%
|
-5.78%
|
-4.43%
|
2.45%
|
Return after taxes on
distributions and sale of Fund shares1
|
7.21%
|
-4.53%
|
-3.39%
|
2.42%
|
MSCI
Japan Index
|
6.39%
|
-0.70%
|
-3.55%
|
1.10%
|
Tokyo
Stock Price Index
|
5.22%
|
-1.21%
|
-4.17%
|
1.43%
|
1
|
After-tax returns
are calculated using the highest historical individual federal marginal
income tax rates and do not reflect the impact of state and local taxes.
Actual after-tax returns depend on an investor’s tax situation and may
differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements,
such as 401(k) plans or individual retirement
accounts.
|
Investment Advisor
Matthews International Capital
Management, LLC (“Matthews”)
Portfolio Managers
Lead
Manager: Taizo Ishida has
been a Portfolio Manager of the Japan Fund since 2006.
Co-Manager:
Kenichi Amaki has been a
Portfolio Manager of the Japan Fund since 2010.
Matthews
Japan Fund
Summary
Prospectus continued
Purchase and Sale of Fund
Shares
You may purchase and sell shares
directly through the Fund’s transfer agent, by calling 800.789.ASIA (2742) or
online at matthewsasia.com. Shares of the Funds may also be purchased and sold
through various securities brokers and benefit plan administrators or their
sub-agents (“Third-Party Intermediaries”). You may purchase and redeem shares by
electronic bank transfer, check, or wire. You buy and redeem shares at the
Fund’s next-determined net asset value (NAV) after the Fund receives your
request in good order. NAVs are determined only on days when the NYSE is open
for regular trading. The minimum initial and subsequent investment amounts for
various types of accounts offered by the Fund are shown
below.
Type of
Account
|
Minimum Initial
Investment
|
Subsequent
Investments
|
Non-retirement
|
$2,500
|
$100
|
Retirement and
Coverdell
|
$500
|
$50
|
Tax Information
The Fund’s distributions are taxable,
and will be taxed as ordinary income or capital gains, unless you are investing
through a tax-deferred arrangement, such as a 401(k) plan or an individual
retirement account. Ordinary income and capital gains for such accounts are
taxed on a deferred basis.
Payments to Broker-Dealers and Other
Financial Intermediaries
If you purchase shares of the Fund
through a broker-dealer or other financial intermediary (such as a bank),
Matthews may pay the intermediary for the sale of Fund shares and related
services. Shareholders who purchase or hold shares through an intermediary may
inquire about such payments from that intermediary. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment. Ask your
salesperson or visit your financial intermediary’s web site for more
information.
800.789.ASIA | matthewsasia.com