Form 497K
Matthews Asia Value Fund
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SUMMARY PROSPECTUSINVESTOR CLASS |
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April 30, 2018 |
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TICKER: MAVRX
Before you invest, you may
want to review the Funds Prospectus, which contains more information about the Fund and its risks. You can find the Funds Prospectus and other information about the Fund online at 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 Funds Prospectus and Statement of Additional Information, both dated April 30, 2018, 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)
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Maximum Account Fee on Redemptions (for wire redemptions only) |
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$9 |
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ANNUAL OPERATING EXPENSES
(expenses that you pay
each year as a percentage of the value of your investment)
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Management Fees |
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0.66% |
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Distribution (12b-1) Fees |
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0.00% |
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Other Expenses |
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1.66% |
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Administration and Shareholder Servicing Fees |
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0.14% |
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Total Annual Fund Operating Expenses |
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2.32% |
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Fee Waiver and Expenses Reimbursement1 |
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(0.82%) |
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Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement |
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1.50% |
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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 (which is offered through a
separate prospectus to eligible investors) 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, 2019 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. |
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 Funds operating expenses remain the
same. The example reflects the expense limitation for the one year period only. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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One year: $153 |
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Three years: $646 |
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Five years: $1,166 |
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Ten years: $2,593 |
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. During the most recent fiscal year, the Funds portfolio turnover rate was 32% of
the average value of its portfolio.
PS-MAVRX-0418
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 or other issuer is considered to be located in a country or a region, and a security or instrument will
deemed to be an Asian (or specific country) security or instrument, if it has substantial ties to that country or region. Matthews currently makes that determination based primarily on one or more of the following criteria: (A) with respect to
a company or issuer, whether (i) it is organized under the laws of that country or any country in that region; (ii) it 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) it has the primary trading markets for its securities in that country or region; (iv) it has its principal place of business in or is otherwise
headquartered in that country or region; or (v) it is a governmental entity or an agency, instrumentality or a political subdivision of that country or any country in that region; and (B) with respect to an instrument or issue, whether
(i) its issuer is headquartered or organized in that country or region; (ii) it is issued to finance a project with significant assets or operations in that country or region; (iii) it is secured or backed by assets located in that
country or region; (iv) it is a component or its issuer is included in a recognized securities index for the country or region; or (v) it is denominated in the currency of an Asian country and addresses at least one of the other above
criteria. The term located and the associated criteria listed above have been defined in such a way that Matthews has latitude in determining whether an issuer should be included within a region or country. 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% or more 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. Deflationary factors could also reemerge in certain Asian markets, the potential effects of which are difficult to forecast. While certain Asian governments will have the ability to offset deflationary
conditions through fiscal or budgetary measures, others will lack the capacity to do so. Certain Asian countries are highly dependent upon and may be affected by developments in the United States, Europe and other Asian economies. Chinas
economy, particularly its export-oriented industries, may be adversely impacted by trade or political disputes with Chinas major trading partners, including the U.S. In addition, as its consumer class emerges, Chinas domestically
oriented industries may be especially sensitive to changes in government policy and investment cycles. Chinas currency, which historically has been managed in a tight range relative to the U.S. dollar, may in the future be subject to greater
uncertainty as Chinese authorities change the policies that determine the exchange rate mechanism. Global economic conditions, and international trade, affecting Asian economies and companies could deteriorate as a result of political instability
and uncertainty, and politically motivated actions, in the United States and Europe, as well as increased tensions with certain nations such as Russia.
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. Additionally, Asian countries may utilize formal or informal currency-exchange controls or capital controls. Capital controls may impose restrictions on the Funds ability to repatriate
investments or income. Such controls may also affect the value of the Funds holdings.
Continued
on Page 4
2 MATTHEWS ASIA VALUE FUND
Past Performance
The bar chart below shows the Funds performance for each full calendar year since its inception and how it has varied from year to year, reflective of
the Funds volatility and some indication of risk. Also shown are the best and worst quarters for this time period. The table below shows the Funds performance over certain periods of time, along with performance of its benchmark index.
The information presented below is past performance, before and after taxes, and is not a prediction of future results. Both the bar chart and performance table assume reinvestment of all dividends and distributions. For the Funds most recent month-end performance, please visit matthewsasia.com or call 800.789.ASIA (2742).
ANNUAL RETURNS FOR YEARS ENDED 12/31
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2017
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1 year |
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Since Inception (11/30/15) |
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Matthews Asia Value Fund |
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Return before taxes |
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36.12% |
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19.22% |
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Return after taxes on
distributions1 |
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33.44% |
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16.76% |
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Return after taxes on distributions and sale of Fund shares1 |
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20.91% |
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13.88% |
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MSCI All Country Asia ex Japan Index |
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(reflects no deduction for fees, expenses or taxes) |
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42.08% |
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21.32% |
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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 investors 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: Beini Zhou, CFA, has been a Portfolio Manager of the Matthews Asia Value Fund since its inception in 2015.
Co-Manager: Michael B. Han, CFA,
has been a Portfolio Manager of the Matthews Asia Value Fund since its inception in 2015.
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Risks Associated with Emerging and Frontier Markets: Many Asian countries are considered emerging or frontier
markets (newer or less developed emerging markets are also sometimes referred to as frontier markets). Such markets are often less stable politically and economically than developed markets such as the United States, and investing in these markets
involves different and greater risks. There may be less publicly available information about companies in many Asian countries, and the stock exchanges and brokerage industries in many Asian countries typically do not have the level of government
oversight as do those in the United States. Securities markets of many Asian countries are also substantially smaller, less liquid and more volatile than securities markets in the United States.
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 Funds 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 (typically five years or longer).
Value Stock Risk: Value stocks involve the risk that they may never reach their
expected full market value, either because the market fails to recognize the stocks intrinsic worth, or the expected value was misgauged. They also may decline in price even though they are already undervalued.
Convertible Securities: The Fund may invest in convertible preferred stocks, and convertible bonds and debentures. The risks of convertible bonds and
debentures include repayment risk and interest rate risk. Many Asian convertible securities are not rated by rating agencies like Moodys Investors Service, Inc. (Moodys), Standard and Poors Corporation
(S&P) and Fitch Inc. (Fitch), or, if they are rated, they may be rated below investment grade (these are referred to as junk bonds, which are primarily speculative securities, and include unrated securities,
regardless of quality), which may have a greater risk of default. Investments in convertible securities may also subject the Fund to currency risk and risks associated with foreign exchange rate. Convertible securities may trade less frequently and
in lower volumes, making it difficult for the Fund to value those securities. The Fund may invest in convertible securities of any maturity and in those that are unrated or would be below investment grade if rated. Therefore, credit risk may be
greater for the Fund than for other funds that invest in higher-grade securities.
Risks Associated with Smaller Size Companies: Smaller companies may
offer substantial opportunities for capital growth; they also involve substantial risks, and investments in smaller companies may be considered speculative. Such companies often have limited product lines, markets or financial resources. Smaller
companies may be more dependent on one or few key persons and may lack depth of management. Larger portions of their stock may be held by a small number of investors (including founders and management) than is typical of larger companies. Credit may
be more difficult to obtain (and on less advantageous terms) than for larger companies. As a result, the influence of creditors (and the impact of financial or operating restrictions associated with debt financing) may be greater than in larger or
more established companies. The Fund may have more difficulty obtaining information about smaller companies, making it more difficult to evaluate the impact of market, economic, regulatory and other factors on them. Informational difficulties may
also make valuing or disposing of their securities more difficult than it would for larger companies. Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and the securities of such
companies generally are subject to more abrupt or erratic price movements than more widely held or larger, more established companies or the market indices in general. The value of securities of smaller companies may react differently to political,
market and economic developments than the markets as a whole or than other types of stocks.
Cash Level: This Fund may from time to time maintain up to
15% or more of its net assets in cash and cash equivalents that would not meet the Funds investment objective, especially in rising equity markets.
Purchase and Sale of Fund Shares
You may purchase and sell Fund shares directly through the Funds transfer agent by
calling 800.789.ASIA (2742) or online at matthewsasia.com. Fund shares may also be purchased and sold through various securities brokers and benefit plan administrators or their sub-agents. You may
purchase and redeem Fund shares by electronic bank transfer, check, or wire. The minimum initial and subsequent investment amounts for various types of accounts offered by the Fund are shown below.
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Type of Account |
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Minimum Initial Investment |
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Subsequent Investments |
Non-retirement |
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$2,500 |
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$100 |
Retirement and Coverdell |
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$500 |
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$50 |
The minimum investment requirements do not apply to Trustees, officers and employees of the Fund and Matthews,
and their immediate family members.
Tax Information
The Funds 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. Tax-deferred arrangements may be taxed later upon withdrawal from those accounts.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase Fund shares 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 Fund 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 intermediarys website for more information.
4 MATTHEWS ASIA VALUE FUND