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 Funds performance. Because the Fund is newly formed and commenced operations on November 30, 2015, no
portfolio turnover rate data is available for the Fund.
Principal Investment Strategy
Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for
investment purposes, in common stock, preferred stock and other equity securities, and convertible securities of any maturity and in those that are unrated, or would be below investment grade if rated, of companies located in Asia. Asia consists of
all countries and markets in Asia and includes developed, emerging, and frontier countries and markets in the Asian region. A company is considered to be located in a country or a region if it has substantial ties to that country or
region, and currently, Matthews makes that determination primarily based on one or more of the following five criteria: if the company (i) is organized under the laws of that country or any country in that region; (ii) derives at least 50%
of its revenues or profits from goods produced or sold, investments made, or services performed, or has at least 50% of its assets located, within that country or region; (iii) has the primary trading markets for its securities in that country
or region; (iv) has its principal place of business in or is otherwise headquartered in that country or region; or (v) is a governmental entity or an agency, instrumentality or a political subdivision of that country or any country in that
region. The Fund may also invest in depositary receipts, including American, European and Global Depositary Receipts.
Matthews is a fundamental investor
and will seek to construct a diversified portfolio of securities of undervalued companies from the Asian region. The Fund will seek to invest in Asian companies that Matthews believes are high quality, undervalued companies that have strong balance
sheets, are focused on their shareholders, and are well-positioned to take advantage of Asias economic and financial evolution. The Fund attempts to offer investors a relatively stable means of participating in the economic prospects of the
Asian region. The Fund may invest in companies of any size, including smaller size companies. Matthews measures a companys size with respect to fundamental criteria such as, but not limited to, market capitalization, book value, revenues,
profits, cash flow, dividends paid and number of employees.
Matthews value investment process focuses on a companys intrinsic value. Matthews
seeks out companies whose share price trades at a substantial discount to its estimate of the companys intrinsic value. Intrinsic value includes both tangible and intangible, and quantitative and qualitative factors such as: a sound balance
sheet, competitive market position, strong management, and favorable shareholder orientation. Investing in a company with a sound balance sheet (without excessive leverage) helps to reduce the risk of reliance on external sources of capital and
gives management the ability to build value opportunistically. Matthews also seeks out companies with a competitive position in their industry and
region. Matthews seeks out companies with strong management that includes good corporate governance, a clear business strategy, integrity, and a demonstrated capacity for adaptability. Matthews
also focuses on companies with a history of generating high incremental returns on capital. Matthews seeks companies whose management has built value for shareholders and has a good capital allocation track record.
Matthews seeks to create an investable universe of value companies that it believes trade at market values with discounts to their intrinsic value, have
strong financial and market positions, have strong management and are oriented to creating value for their shareholders. Matthews assesses companies within this universe according to each of these factors. Generally, Matthews will establish larger
positions in companies trading at a greater discount to Matthews estimate of their intrinsic value (taking into account other concerns such as diversification, risk management and liquidity). The Fund may sell positions as their market price
approaches their intrinsic value, when more attractive alternatives are identified, or Matthews believes that corporate governance issues may have developed.
Although Matthews generally believes that investors benefit in the long term when their assets are fully invested, Matthews also believes that some types of
funds that employ a value investing approach, such as the Fund, may benefit from holding cash under certain market conditions (e.g., when Matthews considers equity markets to be overvalued) so that the Fund could deploy capital during market
downturns. As a result, the Fund may, subject to other requirements and limitations, hold up to 15% of its net assets in cash or cash equivalent investments.
Principal Risks of Investment
There is no guarantee that your investment in the Fund will increase in value. The value of your investment in the Fund could go down, meaning you could lose
money. The principal risks of investing in the Fund are:
Political, Social and Economic Risks of Investing in Asia: The value of the Funds 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, Chinas 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