Form 497K
*The Matthews Japan Fund is closed to most new investors. The Fund will continue to accept investments from existing shareholders.
However, once a shareholder closes an account, additional investments in the Fund will not be accepted from that shareholder. Please see Who Can Invest in a Closed Fund? in the statutory prospectus for more details.
Matthews Japan Fund*
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SUMMARY PROSPECTUSINVESTOR CLASS |
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April 30, 2018 |
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TICKER: MJFOX
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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0.29% |
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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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0.95% |
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Fee Waiver and Expense Reimbursement1 |
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(0.01%) |
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Total Annual Fund Operating Expenses After Fee Waiver and Expense
Reimbursement |
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0.94% |
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1 |
Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Funds 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, 2019 and may be terminated
(i) at any time by the Board of Trustees upon 60 days prior written notice to Matthews; or (ii) by Matthews at the annual expiration date of the agreement upon 60 days prior written notice to the Trust, in each case without
payment of any penalty. |
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: $96 |
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Three years: $302 |
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Five years: $525 |
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Ten years: $1,165 |
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 44% of
the average value of its portfolio.
PS-MJFOX-0418
Principal Investment Strategy
Under normal market conditions, the Matthews Japan Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include
borrowings for investment purposes, in the common and preferred stocks of companies located in Japan. 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.
The Fund seeks to invest in companies capable of sustainable growth based on the fundamental
characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; managements depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and
financial health. The Fund may invest in companies of any market capitalization. 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.
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.
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.
Risks Associated with Japan: The Japanese economy has only recently emerged from a prolonged economic
downturn. Since the year 2000, Japans economic growth rate has remained relatively low. The economy is characterized by an aging demographic, declining population, large government debt and highly regulated labor market. Economic
growth is dependent on domestic consumption, deregulation and consistent government policy. International trade, particularly with the U.S., also impacts growth and adverse economic conditions in the U.S. or other such trade partners may affect
Japan. Japan also has a growing economic relationship with China and other Southeast Asian countries, and thus Japans economy may also be affected by economic, political or social instability in those countries (whether
resulting from local or global events).
Continued
on Page 4
2 MATTHEWS JAPAN FUND
Past Performance
The bar chart below shows the Funds performance for the past 10 years 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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5 years |
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10 years |
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Since Inception (12/31/98) |
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Matthews Japan Fund |
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Return before taxes |
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33.14% |
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16.09% |
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7.11% |
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6.86% |
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Return after taxes on
distributions1 |
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31.97% |
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15.74% |
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6.73% |
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6.31% |
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Return after taxes on distributions and sale of Fund shares1 |
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19.73% |
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13.00% |
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5.68% |
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5.55% |
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MSCI Japan Index |
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(reflects no deduction for fees, expenses or taxes) |
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24.39% |
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11.48% |
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3.39% |
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3.95% |
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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: Kenichi Amaki has been a Portfolio Manager of the Matthews Japan Fund since 2010.
Co-Manager: Taizo
Ishida has been a Portfolio Manager of the Matthews Japan Fund since 2006.
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Risks Associated with Smaller and Medium-Size Companies: Smaller and medium-size companies may be subject to a number of risks not associated with larger, more established companies, potentially making their stock prices more volatile and increasing the risk of loss.
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 JAPAN FUND