Matthews Asia Growth Fund NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number811-08510

Matthews International Funds

(Exact name of registrant as specified in charter)

Four Embarcadero Center, Suite 550

San Francisco, CA 94111

(Address of principal executive offices) (Zip code)

William J. Hackett, President

Four Embarcadero Center, Suite 550

San Francisco, CA 94111

(Name and address of agent for service)

Registrant’s telephone number, including area code:415-788-7553

Date of fiscal year end: December 31

Date of reporting period: June 30, 2019

FormN-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 Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1). The Commission may use the information provided on FormN-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by FormN-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in FormN-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, 450 Fifth Street, NW, Washington, DC 20549-0609. 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, 2019 | matthewsasia.com

ASIA FIXED INCOME STRATEGIES

Matthews Asia Strategic Income Fund

Matthews Asia Credit Opportunities Fund

ASIA GROWTH AND INCOME STRATEGIES

Matthews Asian Growth and Income Fund

Matthews Asia Dividend Fund

Matthews China Dividend Fund

ASIA VALUE STRATEGY

Matthews Asia Value Fund

ASIA GROWTH STRATEGIES

Matthews Asia Growth Fund

Matthews Pacific Tiger Fund

Matthews Asia ESG Fund

Matthews Emerging Asia Fund

Matthews Asia Innovators 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

LOGO

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual andsemi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website matthewsasia.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800.789.ASIA (2742).

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with a Fund, you can call 800.789.ASIA (2742) to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held in your account if you invest through your financial intermediary or all Funds held directly with Matthews Asia Funds.

LOGO

Investor Class Performance and Expenses(June 30, 2019)


Investor Class			Average Annual Total Return^†						Inception Date		Prospectus Expense Ratios*		Prospectus Expense Ratios after Fee Waiver and Expense Reimbursement*
Investor Class	1 year		5 years		10 years		Since Inception		Inception Date		Prospectus Expense Ratios*
ASIA FIXED INCOME STRATEGIES

Asia Strategic Income Fund (MAINX)		7.76%		3.85%		n.a.		4.73%		11/30/11		1.15%		1.15%	¹

Asia Credit Opportunities Fund (MCRDX)		9.26%		n.a.		n.a.		5.90%		4/29/16		1.37%		1.15%	¹
ASIA GROWTH AND INCOME STRATEGIES

Asian Growth and Income Fund (MACSX)		7.20%		2.34%		7.08%		8.99%		9/12/94		1.08%		1.08%

Asia Dividend Fund (MAPIX)		-4.35%		4.96%		9.65%		8.45%		10/31/06		1.02%		1.01%	²

China Dividend Fund (MCDFX)		0.86%		11.07%		n.a.		10.43%		11/30/09		1.15%		1.15%
ASIA VALUE STRATEGY

Asia Value Fund (MAVRX)		-1.78%		n.a.		n.a.		9.29%		11/30/15		1.77%		1.50%	³
ASIA GROWTH STRATEGIES

Asia Growth Fund (MPACX)		-5.84%		5.91%		9.89%		8.96%		10/31/03		1.10%		1.10%

Pacific Tiger Fund (MAPTX)		1.14%		5.95%		9.83%		8.54%		9/12/94		1.07%		1.04%	²

Asia ESG Fund (MASGX)		1.05%		n.a.		n.a.		4.68%		4/30/15		2.20%		1.50%	³

Emerging Asia Fund (MEASX)		-9.06%		3.17%		n.a.		4.36%		4/30/13		1.66%		1.48%	³

Asia Innovators Fund (MATFX)		-4.36%		7.34%		12.51%		3.77%		12/27/99		1.19%		1.19%

China Fund (MCHFX)		-3.79%		8.43%		7.42%		9.68%		2/19/98		1.10%		1.10%

India Fund (MINDX)		-3.28%		8.43%		11.02%		10.68%		10/31/05		1.09%		1.09%

Japan Fund (MJFOX)		-9.27%		6.77%		9.54%		5.85%		12/31/98		0.91%		0.91%

Korea Fund (MAKOX)		-12.65%		2.41%		9.77%		5.53%		1/3/95		1.14%		1.14%
ASIA SMALL COMPANY STRATEGIES

Asia Small Companies Fund (MSMLX)		-6.71%		1.45%		9.06%		9.89%		9/15/08		1.51%		1.46%	³

China Small Companies Fund (MCSMX)		-10.36%		8.51%		n.a.		4.99%		5/31/11		1.97%		1.50%	³

†	Annualized performance for periods of at least one year, otherwise cumulative.

*	These figures are from the Funds’ prospectus dated as of April 30, 2019, and may differ from the actual expense ratios for fiscal year 2019, as shown in the financial highlights section of this report.

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 to 0.90% 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 0.90% 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 0.90%. Any amount waived with respect to the Fund pursuant to this agreement is not subject to recoupment. This agreement will remain in place until April 30, 2020 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.

Matthews has contractually agreed to waive a portion of its advisory fee and administrative and shareholder services fee if the Fund’s 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, 2020 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.

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 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, 2020 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.


1		MATTHEWS ASIA FUNDS

Institutional Class Performance and Expenses(June 30, 2019)


Institutional Class			Average Annual Total Return^†						Inception Date		Prospectus Expense Ratios*		Prospectus Expense Ratios after Fee Waiver and Expense Reimbursement*
Institutional Class	1 year		5 years		10 years		Since Inception		Inception Date		Prospectus Expense Ratios*
ASIA FIXED INCOME STRATEGIES

Asia Strategic Income Fund (MINCX)		8.06%		4.12%		n.a.		4.97%		11/30/11		0.96%		0.90%	¹

Asia Credit Opportunities Fund (MICPX)		9.64%		n.a.		n.a.		6.16%		4/29/16		1.18%		0.90%	¹
ASIA GROWTH AND INCOME STRATEGIES

Asian Growth and Income Fund (MICSX)		7.34%		2.49%		n.a.		4.41%		10/29/10		0.93%		0.93%

Asia Dividend Fund (MIPIX)		-4.25%		5.07%		n.a.		6.29%		10/29/10		0.91%		0.90%	²

China Dividend Fund (MICDX)		0.99%		11.24%		n.a.		9.46%		10/29/10		1.01%		1.01%
ASIA VALUE STRATEGY

Asia Value Fund (MAVAX)		-1.48%		n.a.		n.a.		9.58%		11/30/15		1.54%		1.25%	³
ASIA GROWTH STRATEGIES

Asia Growth Fund (MIAPX)		-5.65%		6.11%		n.a.		6.79%		10/29/10		0.93%		0.93%

Pacific Tiger Fund (MIPTX)		1.31%		6.13%		n.a.		6.12%		10/29/10		0.90%		0.88%	²

Asia ESG Fund (MISFX)		1.23%		n.a.		n.a.		4.93%		4/30/15		2.01%		1.25%	³

Emerging Asia Fund (MIASX)		-8.76%		3.42%		n.a.		4.61%		4/30/13		1.50%		1.25%	³

Asia Innovators Fund (MITEX)		-4.11%		7.55%		n.a.		11.38%		4/30/13		1.02%		1.02%

China Fund (MICFX)		-3.55%		8.60%		n.a.		3.75%		10/29/10		0.91%		0.91%

India Fund (MIDNX)		-3.13%		8.64%		n.a.		5.53%		10/29/10		0.90%		0.90%

Japan Fund (MIJFX)		-9.22%		6.86%		n.a.		9.21%		10/29/10		0.85%		0.85%

Korea Fund (MIKOX)		-12.46%		2.59%		n.a.		6.08%		10/29/10		1.02%		1.02%
ASIA SMALL COMPANY STRATEGIES

Asia Small Companies Fund (MISMX)		-6.54%		1.67%		n.a.		3.20%		4/30/13		1.37%		1.25%	³

China Small Companies Fund (MICHX)		-10.08%		n.a.		n.a.		2.62%		11/30/17		1.79%		1.25%	³

†	Annualized performance for periods of at least one year, otherwise cumulative.

*	These figures are from the Funds’ prospectus dated as of April 30, 2019, and may differ from the actual expense ratios for fiscal year 2019, as shown in the financial highlights section of this report.

Matthews has contractually agreed 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 to 0.90%. Any amount waived with respect to the Fund pursuant to this agreement is not subject to recoupment. This agreement will remain in place until April 30, 2020 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.

Matthews has contractually agreed 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 to 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, 2020 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.

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.


matthewsasia.com \| 800.789.ASIA			2

LOGO

Contents



Message to Shareholders from the Investment Advisor			4

Manager Commentaries, Fund Characteristics and Schedules of Investments:

ASIA FIXED INCOME STRATEGIES
Matthews Asia Strategic Income Fund			6
Matthews Asia Credit Opportunities Fund			11

ASIA GROWTH AND INCOME STRATEGIES
Matthews Asian Growth and Income Fund			15
Matthews Asia Dividend Fund			20
Matthews China Dividend Fund			25

ASIA VALUE STRATEGY
Matthews Asia Value Fund			30

ASIA GROWTH STRATEGIES
Matthews Asia Growth Fund			34
Matthews Pacific Tiger Fund			39
Matthews Asia ESG Fund			44
Matthews Emerging Asia Fund			49
Matthews Asia Innovators Fund			54
Matthews China Fund			58
Matthews India Fund			63
Matthews Japan Fund			68
Matthews Korea Fund			73

ASIA SMALL COMPANY STRATEGIES
Matthews Asia Small Companies Fund			78
Matthews China Small Companies Fund			83

Index Definitions			88
Disclosures			89
Disclosure of Fund Expenses			90
Statements of Assets and Liabilities			93
Statements of Operations			105
Statements of Changes in Net Assets			111
Financial Highlights			120
Notes to Financial Statements			137

Cover photo: Chinese New Year lantern and gold coin decorations along the Hong Kong harbor.

This report has been prepared for Matthews International Funds (d/b/a 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, 2019. 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 a 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’ Prospectuses and Statement of Additional Information for more risk disclosure.

LOGO

Message to Shareholders from the Investment Advisor

Dear Valued Investors,

In many respects, the environment for investment has not really improved markedly since the start of the year. Trade tensions linger. Global indicators have weakened. Political tensions have intensified. Only the U.S. remains a bright spot—that perfect mix of good economic growth numbers, low inflation and (hurrah!) potential interest rate cuts to boot.

All of this just drains the appetite of investors for Asia’s equity and bond markets. Everywhere I go, at every conference around the world it seems, Asia remains a top “intended” destination for new funds. And yet for the most part, industry flows suggest that few people are actually acting on their plans.

That is hardly surprising—Asia’s reputation for volatility, the conventional wisdom that it is an export economy, the reticence of Asia’s policymakers to stimulate in a strong dollar environment, and the supercharged (by tax breaks and low wage growth) earnings growth in the U.S. all inveigh against asset allocators making the courageous decision to move funds across the Pacific. After all, who wants to be courageous in this atmosphere? As one client with a flair for humorous exposition told me recently: “It neverfeels good to buy China.”

I think he was right. What we are up against is primarily sentiment. I don’t want to downplay the trade war, the earnings issue, or the growth environment. However, market reactions to tweets on trade are out of proportion to the actual effect on GDP and earnings. Valuations suggest that the current pro-capitalist/anti-labor policies can persist in the U.S. without an economic or political backlash, and a belief that Asia’s policymakers will remain tight-fisted on fiscal and monetary policy assumes a strong dollar regime will continue, which is at odds with the stated intention of the administration to reduce the trade deficit. It seems to me to just be a case of the market justifying “more of the same” and to follow the momentum trade.

That is fine. However, perhaps because of our focus on Asia, we see things slightly differently. We see the steady creep of China’s economic influence through ASEAN and Central Europe, even now, bringing in Italy and Greece into the fold. We see the adjustments being made at the corporate level to circumvent the tariffs imposed by the U.S., and we see the acceleration of the buildout of the manufacturing base in the region. We see a region, in short, adapting to circumstance: fluid, and dynamic. We see a region where borders are being broken down by closer economic cooperation, not built up by economic protectionism.

It’s hard to argue with momentum in the markets—the S&P 500 Index is making new highs as I write this. But it does increasingly feel to me as if pressures are building up to force an inflection in world markets. I doubt a severe recession is in the offing (though I worry about a long stagnation in Europe), but I do think that markets are going to be shaken out of their complacency. It has been a long expansion, after all, and there is little room for policy error. I guess I am not the only one to feel this way and hence, the reticence of people to buy.

For us, the trade issues have offered up opportunities. This is not because we believe there will be a rapid and total resolution—tension will rumble on between the U.S. and China for many a year—but because of the lack of proportion in market movements relative to actual effects of policy. These opportunities are predominantly in China and mostly, though not exclusively, in domestic-demand stocks that were somewhat inexplicably caught up in the weak market sentiment. Indeed, despite the breathless headlines at times and the gladiatorial nature of some of the language, we retain a cool posture.

One thing is clear in the data. The effects of tariffs so far have been: 1) to reduce the trade deficit between the U.S. and China; 2) to increase the trade deficit between the


4		MATTHEWS ASIA FUNDS

U.S. and the rest of Asia (plus Mexico); and to raise the prices of tariffed goods versus non-tariffed goods in the U.S. My interpretation of this is that Chinese manufacturers with factories in ASEAN and Mexico have been running their factories there on extra shifts and the corresponding increase in costs and inefficiencies has been largely borne by the U.S. consumer. The longer-term effects are likely to be simply to accelerate Chinese investment in these areas. And thus, trade wars, far from being easy to win, are complex and unpredictable events with winners and losers that are very different from what the protagonists might expect.

We remain, therefore, wedded to our cause. We are aware of the global macroeconomic risks but we are not paralyzed by them. Indeed, for such complex issues as this, there is perhaps more insight to be gained by talking to the companies who are “at the coal face” rather than trying to divine big trends from newspaper headlines. We will continue to follow where the pursuit of profit opportunity leads us, to be guided by the decisions of entrepreneurs, not by the pronouncements of politicians, and to respect the price signals of the market.

There remains ample scope for corporates to grow profitably by meeting the needs of the domestic consumer. There is plenty of opportunity in economic and political cooperation with neighbors to drive down costs and ramp up efficiency in production and to improve the region’s living standards together. A few years ago, it might have seemed crazy that the U.S. would turn its back on globalization and that China would eagerly take up the role of champion of cross-border economic cooperation. But that is where we now are—the leadership of the global economy may already have passed from one superpower to the other.

With this strategic focus, the future of Asia looks bright beyond the headlines of the day—we continue to target investments in the domestic companies that are driving and profiting from the region’s creation of wealth.

LOGO

Robert Horrocks, PhD

Chief Investment Officer

Matthews International Capital Management, LLC


matthewsasia.com \| 800.789.ASIA			5

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PORTFOLIO MANAGERS

Teresa Kong, CFA
Lead Manager

Satya Patel	Wei Zhang
Co-Manager	Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MAINX	MINCX
CUSIP	577125503	577125602
Inception	11/30/11	11/30/11
NAV	$10.92	$10.93
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.15%	0.96%
After Fee Waiver and Reimbursement²	1.15%	0.90%
Portfolio Statistics
Total # of Positions		36
Net Assets		$113.6 million
Modified Duration³		5.2
Portfolio Turnover⁴		82.32%
Benchmark
Markit iBoxx Asian Local Bond Index*

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 net assets, which include borrowings for investment purposes, in income-producing securities including, but not limited to, dividend paying equity securities, and 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, such as China and India, 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.

Matthews Asia Strategic Income Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Strategic Income Fund returned 8.39% (Investor Class) and 8.63% (Institutional Class), while its benchmark, the Markit iBoxx Asian Local Bond Index, returned 5.27%. For the quarter ending June 30, the Fund returned 2.56% (Investor Class) and 2.72% (Institutional Class) compared to the benchmark return of 2.11% over the same period.

Market Environment:

The combination of supportive central banks and positive trade news led to a constructive environment for Asian fixed income over the second quarter, with Asian credit, currencies and rates all performing positively. The U.S. Federal Reserve, the European Central Bank and emerging market central banks all moved in a dovish direction during the quarter, seemingly ending the momentum for higher rates around the world. Meanwhile, the G-20 Summit ended without an escalation in the U.S.–China trade war, at least temporarily removing the risk of a further tariff shock from the global economy.

While the quarter was positive overall, geopolitics led to unexpected volatility. The quarter began with a positive tone as data from the U.S. and China implied that fears of a synchronized growth slowdown may have been overdone. Optimism evaporated in early May, however, when President Trump threatened to raise tariffs on all Chinese imports, including consumer-related goods, and attempted to limit U.S. companies from doing business with Chinese tech giant Huawei. By the end of May, equities markets had relinquished most of their year-to-date gains.

For Asia credit, this caused high-yield spreads to widen by about 40 basis points during May and 35 basis points over the quarter. The rally in U.S. rates more than offset this modest spread widening, so total return from credit bonds was positive for the quarter.

Asian local rates generally followed U.S. rates lower over the quarter, albeit to a lesser degree. Asia currency returns were mixed, with some currencies such as the Thai baht, the Philippine peso and the Indonesian rupiah outperforming the U.S. dollar, while others, notably the Chinese renminbi, the Korean won, and the Malaysian ringgit underperforming the U.S. dollar.

Performance Contributors and Detractors:

During the first half and the second quarter, the biggest contributor to Fund performance was the portfolio’s overweight in Asian USD high-yield corporate bonds, which delivered positive performance. Within high-yield corporate bonds, the strongest contributors over the quarter included PT Perusahaan Listrik Negara, a government-owned Indonesian utility, Tata Steel (ABJA Investment Co.) and Indika Energy Capital III bonds. Our exposures to convertible bonds, including CP Foods Holdings, Weibo and Zhongsheng Group Holdings, also contributed strongly within corporate exposures. In addition, our exposure to the Vietnam government-backed Debt & Asset Trading Corp. contributed to outperformance.

The biggest detractors to our performance were our currency forward positions in the Korean won and the Chinese renminbi (RMB), both currencies that underperformed the U.S. dollar over the quarter. Other detractors to performance

(continued)

*	The Index performance reflects the returns of the discontinued predecessor HSBC Asian Local Bond Index up to December 31, 2012 and the returns of the successor Markit iBoxx Asian Local Bond Index thereafter.

1	Prospectus expense ratios.

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 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


6		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		Since Inception		Inception Date
Investor Class (MAINX)		2.56%		8.39%		7.76%		5.38%		3.85%		4.73%		11/30/11
Institutional Class (MINCX)		2.72%		8.63%		8.06%		5.69%		4.12%		4.97%		11/30/11
Markit iBoxx Asian Local Bond Index⁵		2.11%		5.27%		8.42%		3.33%		2.67%		2.79%

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
	2019										2018
	Q1		Q2		Q3		Q4		Total		Q1		Q2		Q3		Q4		Total
Investor (MAINX)	$	0.08	$	0.10		n.a.		n.a.	$	0.19	$	0.12	$	0.10	$	0.07	$	0.00	$	0.29
Inst’l (MINCX)	$	0.09	$	0.11		n.a.		n.a.	$	0.20	$	0.13	$	0.11	$	0.08	$	0.00	$	0.31

Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding. For income distribution history, visit matthewsasia.com.

30-DAY YIELD:

Investor Class: 4.38% (4.35% excluding waivers)

Institutional Class: 4.63% (4.54% excluding waivers)

The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 6/30/19, 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: 5.08%

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 HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

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$.

It is not possible to invest directly in an index. Source: Index data from HSBC, Markit iBoxx and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 88 for index definitions. The Index performance reflects the returns of the discontinued predecessor HSBC Asian Local Bond Index up to December 31, 2012 and the returns of the successor Markit iBoxx Asian Local Bond Index thereafter.



TOP TEN HOLDINGS
	Sector	Currency	% of Net Assets
Debt and Asset Trading Corp., 1.000%, 10/10/2025	Financials	U.S. Dollar		4.6%
HSBC Holdings PLC, 6.375%, 12/29/2049	Financials	U.S. Dollar		4.5%
Standard Chartered PLC, 6.500%, 12/29/2049	Financials	U.S. Dollar		4.4%
Wanda Properties International Co., Ltd., 7.250%, 01/29/2024	Real Estate	U.S. Dollar		4.4%
Sri Lanka Government Bond, 7.850%, 03/14/2029	Foreign Government Bonds	U.S. Dollar		4.1%
SoftBank Group Corp., 6.000%, 07/19/2049	Communication Services	U.S. Dollar		4.1%
Shriram Transport Finance Co., Ltd., 5.700%, 02/27/2022	Financials	U.S. Dollar		3.9%
PB International BV, 7.625%, 01/26/2022	Consumer Discretionary	U.S. Dollar		3.9%
CIFI Holdings Group Co., Ltd., 6.550%, 03/28/2024	Real Estate	U.S. Dollar		3.9%
ABJA Investment Co. Pte, Ltd., 5.450%, 01/24/2028	Materials	U.S. Dollar		3.7%
% OF ASSETS IN TOP TEN				41.5%


matthewsasia.com \| 800.789.ASIA			7



CURRENCY ALLOCATION (%)^6,7
US Dollar			62.1
Singapore Dollar			5.9
China Reminbi			5.9
South Korean Won			5.4
Indonesian Rupiah			5.0
Thai Baht			4.3
Indian Rupee			4.1
Phillipines Peso			3.5
Malaysian Ringgit			2.1
Vietnam Dong			1.7



COUNTRY ALLOCATION (%)^6,7,8
China/Hong Kong			36.0
Indonesia			18.8
India			13.3
Vietnam			6.3
Philippines			5.9
Sri Lanka			4.1
Japan			4.1
Thailand			3.1
Malaysia			2.1
United States			1.7
South Korea			0.3
Cash and Other Assets, Less Liabilities			4.5



SECTOR ALLOCATION (%)^6,7
Financials			24.3
Real Estate			20.7
Foreign Government Bonds			16.5
Communication Services			9.9
Utilities			8.1
Consumer Discretionary			3.9
Materials			3.7
Consumer Staples			3.1
Energy			2.8
Industrials			2.4
Cash and Other Assets, Less Liabilities			4.5

Please note: Foreign Government Bonds category includes Supranationals.



ASSET TYPE BREAKDOWN (%)^6,7
Non-Convertible Corporate Bonds			69.4
Government Bonds			21.1
Convertible Corporate Bonds			5.1
Cash and Other Assets, Less Liabilities			4.5

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

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

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

Matthews Asia Strategic Income Fund

Portfolio Manager Commentary (unaudited) (continued)

included our convertible bond position in Ctrip.com International, Ltd., a Chinese online travel agency, as well as our holding in the RMB-denominated bonds of China Jinmao (Franshion Brilliant), a Chinese property developer.

Notable Portfolio Changes:

We made a number of changes to the portfolio in the second quarter, rotating out of shorter-duration bonds and bonds with higher equity beta, and adding longer-duration bonds and issues with asymmetric risk profiles.

Within corporate bonds, we initiated positions in two Indian issuers: Shriram Transport Finance, an Indian non-bank finance company that issued a U.S.-dollar bond with an attractive spread premium given the recent non-banking financial companies sector (NBFC) funding crisis; and Tata Steel (ABJA Investment), one of the world’s largest steel producers, where we gained exposure through a long-duration issue. We also initiated positions in two Chinese issuers: Logan Property Holdings, a top 20 developer that offered an attractive spread premium given its exposure to China’s Greater Bay Area, and to the technology firm Weibo via convertible bonds that were trading close to their lowest possible level, and which we saw as offering an asymmetric risk profile.

We increased overall duration in the portfolio to 4.5 years from 3.7 years by rotating out of short-duration bonds, including Aluminum Corporation of China (Chinalco Capital Holdings), Olam International and Krung Thai Bank Public, and also by adding longer-duration exposures. We also exited two bond holdings: Huaneng Hong Kong Capital and China Minmetals. Despite being perpetual bonds, they did not offer material duration due to the embedded fixed-to-floating coupon resets.

Outside of corporate bonds, we added to Indian duration via interest-rate swaps to take advantage of lower-than-expected growth and inflation in the country, which we expect to bring about rate cuts. We also added Malaysian government bond exposure given the country’s weak economy, attractive carry profile and as we believe the current market is underpricing the likelihood of rate cuts.

Finally on currency, we increased exposure to the U.S. dollar by cutting exposure to most Asian local currencies, with the Indian rupee and Malaysian ringgit being notable exceptions.

Outlook:

The U.S. and global economies both look to be late cycle, characterized by falling inflation and moderating GDP growth. Fed funds futures are pricing in two interest rate cuts by the Fed before the end of this year. Despite lackluster growth in the U.S., its equities continue to rally.

How is it possible that the bond markets are pricing such negativity while equities are so bullish? Our best explanation for this is that equity markets are pricing in perfect execution by the Fed. In other words, equities are expecting the Fed and other central banks to deliver sufficient rate cuts and loosen monetary policies to extend the current expansion.

Because few Asia government bond curves have fully priced in the dovish G-3 central banks, we maintain a long exposure to interest rate duration in Asia, where the bond markets have more room to rally. We expect that over the coming quarters, Asian central banks will become increasingly dovish, with their respective yield curves falling to price in more rate cuts. This means that even those central banks that may have been reluctant to cut should likely follow suit. We place the more-developed, lower-yielding countries like Thailand, South Korea and Malaysia solidly in that camp. Even the emerging Asian economies of India and Indonesia will have more room to cut rates given subdued domestic inflation.

Given our outlook, the biggest risk is that the equities markets are wrong. This would mean potential credit spread widening. However, in our base case, lower rates globally bodes well for credit spreads to remain stable.


8		MATTHEWS ASIA FUNDS

Matthews Asia Strategic Income Fund

June 30, 2019

Schedule of Investments^a(unaudited)


NON-CONVERTIBLE CORPORATE BONDS: 69.4%


	Face Amount*		Value

CHINA/HONG KONG: 33.9%
HSBC Holdings PLC 6.375%^b, 03/30/25^c		4,900,000		$5,152,350

Standard Chartered PLC 6.500%^b, 04/02/20^c,d		4,950,000		5,017,073

Wanda Properties International Co., Ltd. 7.250%, 01/29/24^d		5,000,000		4,981,250

CIFI Holdings Group Co., Ltd. 6.550%, 03/28/24^d		4,500,000		4,400,035

Franshion Brilliant, Ltd. 5.750%^b, 01/17/22^c,d		3,400,000		3,231,578

China Huaneng Group Co., Ltd. 3.950%, 04/21/26		CNY 20,000,000		2,862,712

Logan Property Holdings Co., Ltd. 5.250%, 02/23/23^d		3,000,000		2,862,354

CITIC Telecom International Finance, Ltd. 6.100%, 03/05/25^d		2,300,000		2,387,868

KWG Group Holdings, Ltd. 5.875%, 11/10/24^d		2,600,000		2,361,388

KWG Group Holdings, Ltd. 7.875%, 09/01/23^d		2,050,000		2,061,760

CIFI Holdings Group Co., Ltd. 7.750%, 09/20/20^d		CNY 12,000,000		1,804,583

Agricultural Bank of China, Ltd. 4.300%, 04/11/29^d		CNY 10,000,000		1,445,324

Total China/Hong Kong				38,568,275



INDONESIA: 13.9%
PB International BV 7.625%, 01/26/22^d		4,300,000		4,452,483

Listrindo Capital BV 4.950%, 09/14/26^d		3,500,000		3,452,750

Indika Energy Capital III Pte, Ltd. 5.875%, 11/09/24^d		3,300,000		3,222,352

PT Perusahaan Listrik Negara 5.250%, 05/15/47^d		2,700,000		2,849,128

Modernland Overseas Pte, Ltd. 6.950%, 04/13/24^d		1,900,000		1,854,649

Total Indonesia				15,831,362



INDIA: 13.3%
Shriram Transport Finance Co., Ltd. 5.700%, 02/27/22^d		4,400,000		4,457,030

ABJA Investment Co. Pte, Ltd. 5.450%, 01/24/28^d		4,440,000		4,249,860

Housing Development Finance Corp., Ltd. 9.000%, 11/29/28		INR 190,000,000		2,872,557

ICICI Bank UK PLC 5.375%^b, 09/26/28^d		SGD 2,750,000		2,054,532

Bajaj Finance, Ltd., Series 246 8.538%, 06/07/22		INR 100,000,000		1,461,039

Total India				15,095,018



JAPAN: 4.1%
SoftBank Group Corp. 6.000%^b, 07/19/23^c,d		4,850,000		4,631,750

Total Japan				4,631,750



PHILIPPINES: 2.5%
Royal Capital BV 4.875%^b, 05/05/24^c,d		2,800,000		2,775,500

Total Philippines				2,775,500


	Face Amount*		Value

UNITED STATES: 1.7%
Sprint Communications, Inc. 6.000%, 11/15/22		1,863,000		$1,942,178

Total United States				1,942,178



TOTALNON-CONVERTIBLE CORPORATE BONDS				78,844,083

(Cost $76,847,011)



FOREIGN GOVERNMENT OBLIGATIONS: 21.1%

VIETNAM: 6.3%
Debt and Asset Trading Corp. 1.000%, 10/10/25^d		6,969,000		5,209,328

Vietnam Government Bond 5.200%, 01/12/22		VND 43,000,000,000		1,917,081

Total Vietnam				7,126,409



INDONESIA: 4.9%
Indonesia Government Bond 9.000%, 03/15/29		IDR 38,000,000,000		2,963,212

Indonesia Government Bond 8.250%, 05/15/29		IDR 34,550,000,000		2,592,320

Total Indonesia				5,555,532



SRI LANKA: 4.1%
Sri Lanka Government Bond 7.850%, 03/14/29^d		4,500,000		4,639,870

Total Sri Lanka				4,639,870



PHILIPPINES: 3.4%
Republic of Philippines 3.900%, 11/26/22		PHP 123,000,000		2,344,475

Republic of Philippines 6.250%, 01/14/36		PHP 70,000,000		1,547,282

Total Philippines				3,891,757



MALAYSIA: 2.1%
Malaysia Government Bond 4.642%, 11/07/33		MYR 9,000,000		2,342,875

Total Malaysia				2,342,875



SOUTH KOREA: 0.3%
Korea Treasury Bond 3.500%, 03/10/24		KRW 400,000,000		377,298

Total South Korea				377,298



TOTAL FOREIGN GOVERNMENT OBLIGATIONS				23,933,741

(Cost $23,021,276)


CONVERTIBLE CORPORATE BONDS: 5.0%

THAILAND: 3.0%
CP Foods Holdings, Ltd., Cnv. 0.500%, 09/22/21^d		2,800,000		3,476,918

Total Thailand				3,476,918


matthewsasia.com \| 800.789.ASIA			9

Matthews Asia Strategic Income Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

CONVERTIBLE CORPORATE BONDS(continued)


	Face Amount*		Value

CHINA/HONG KONG: 2.0%
Weibo Corp., Cnv. 1.250%, 11/15/22		2,400,000		$2,265,666

Total China/Hong Kong				2,265,666



TOTAL CONVERTIBLE CORPORATE BONDS				5,742,584

(Cost $ 5,067,936)


TOTAL INVESTMENTS: 95.5%				108,520,408
(Cost $ 104,936,223)


CASH AND OTHER ASSETS, LESS LIABILITIES: 4.5%				5,108,081


NET ASSETS: 100.0%				$113,628,489

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Security is afix-to-float security, which carries a fixed coupon until a certain date, upon which it switches to a floating rate. Reference rate and spread are provided if the rate is currently floating.

c	Perpetual security with no stated maturity date. First call date is disclosed.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

*	All Values in USD unless otherwise specified

Cnv.	Convertible

CNY	Chinese Renminbi (Yuan)

IDR	Indonesian Rupiah

INR	Indian Rupee

3M MYR-KLIBOR

Three Month Kuala Lumpur Interbank Offered Rate

KRW	Korean Won

6M INR-MIBOR

Six Month Mumbai Inter-Bank Offered Rate

MYR	Malaysian Ringgit

OTC	Over-the-counter

PHP	Philippine Peso

SGD	Singapore Dollar

THB

Thai Baht

6M THB-THBFIX

Six Month Thai Baht Interest Rate Fixing

USD	U.S. Dollar

VND	Vietnamese Dong

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Currency

Purchased

Currency Sold

Counterparty

Settlement
Date

Unrealized
Appreciation
(Depreciation)

CNY 33,648,300

USD 4,900,000

Merrill Lynch & Co., Inc.

07/10/19

$1,014

IDR 36,000,000,000

USD 2,500,000

Merrill Lynch & Co., Inc.

08/05/19

36,733

KRW 1,174,350,000

USD 1,000,000

Merrill Lynch & Co., Inc.

08/05/19

15,835

THB 149,433,600

USD 4,800,000

Merrill Lynch & Co., Inc.

08/05/19

77,304

130,886

USD 2,904,866

CNY 20,000,000

Merrill Lynch & Co., Inc.

07/10/19

(8,217

)

USD 1,446,759

CNY 10,000,000

Merrill Lynch & Co., Inc.

07/10/19

(9,782

)

SGD 8,509,410

USD 6,300,000

Merrill Lynch & Co., Inc.

08/05/19

(6,387

)

KRW 10,075,320,000

USD 9,000,000

Merrill Lynch & Co., Inc.

08/05/19

(284,654

)

USD 1,670,904

SGD 2,300,000

Merrill Lynch & Co., Inc.

08/05/19

(30,190

)

USD 2,436,548

IDR 36,000,000,000

Merrill Lynch & Co., Inc.

08/05/19

(100,184

)

USD 2,852,660

KRW 3,400,000,000

Merrill Lynch & Co., Inc.

08/05/19

(88,406

)

USD 986,683

KRW 1,174,350,000

Merrill Lynch & Co., Inc.

08/05/19

(29,152

)

(556,972

)

Net Unrealized Depreciation

($426,086

)

OTC INTEREST RATE SWAPS

Floating Rate

Paid by Fund

Fixed Rate

Received by Fund

Counterparty

Termination

Date

Notional
Amount (000)

Value

Upfront
Premium
Paid
(Received)

Unrealized
Depreciation

Rate

Frequency

Rate

Frequency

6M INR-MIBOR, (0.31)%

Semi-annual

5.46%

Semi-annual

Bank of America, N.A.

06/19/2024

INR 204,000

($9,867

)

—

($9,867

)

3M MYR-KLIBOR, 3.46%

Quarterly

3.30%

Quarterly

Bank of America, N.A.

06/19/2024

MYR 13,000

(9,076

)

—

(9,076

)

6M THB-THBFIX, 1.48%

Semi-annual

1.61%

Semi-annual

Bank of America, N.A.

06/21/2024

THB 281,000

(35,226

)

—

(35,226

)

Total

($54,169

)

—

($54,169

)

See accompanying notes to financial statements.


10		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Teresa Kong, CFA	Satya Patel
Lead Manager	Lead Manager

FUND FACTS

	Investor	Institutional
Ticker	MCRDX	MICPX
CUSIP	577130677	577130669
Inception	4/29/16	4/29/16
NAV	$10.47	$10.47
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.37%	1.18%
After Fee Waiver and Reimbursement²	1.15%	0.90%
Portfolio Statistics
Total # of Positions		29
Net Assets		$57.4 million
Modified Duration³		5.0
Portfolio Turnover⁴		49.06%
Benchmark
J.P. Morgan Asia Credit Index

OBJECTIVE

Total return over the long term.

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 debt and debt-related instruments issued by companies as well as governments, quasi-governmental entities, and supra-national institutions in Asia. Debt and debt-related instruments typically include bonds, debentures, bills, securitized instruments (which are vehicles backed by pools of assets such as loans or other receivables), notes, certificates of deposit and other bank obligations, bank loans, senior secured bank debt, convertible debt securities, exchangeable bonds, credit-linked notes, inflation-linked instruments, repurchase agreements, payment-in-kind securities and derivative instruments with fixed income characteristics. Asia consists of all countries and markets in Asia, such as China and Indonesia, in addition to the developed, emerging, and frontier countries and markets in the Asian region.

Matthews Asia Credit Opportunities Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Credit Opportunities Fund returned 9.39% (Investor Class) and 9.63% (Institutional Class) while its benchmark, the J.P. Morgan Asia Credit Index (JACI), returned 8.04%. For the quarter ending June 30, the Fund returned 3.16% (Investor Class) and 3.23% (Institutional Class) compared to the benchmark return of 3.00% over the same period.

Market Environment:

Asian credit markets enjoyed a positive first half, with high yield credit spreads peaking at 622 basis points (6.22%) in early January and ending June at 539 basis points (5.39%). The first quarter was characterized by a strong risk-on environment and spread tightening. Despite spreads widening modestly in the second quarter, the combination of falling U.S. interest rates and coupon income resulted in positive total returns for investors in the asset class.

The constructive environment for Asian credit over the period was largely due to supportive central banks around the world. The U.S. Federal Reserve, the European Central Bank and emerging market central banks all moved in a dovish direction, seemingly ending the momentum for higher rates around the world. Meanwhile, the G-20 Summit ended without an escalation of the U.S.–China trade war, at least temporarily removing the risk of a further tariff shock from the global economy.

While the second quarter was positive overall, geopolitics led to unexpected volatility in credit spreads. The quarter began with a continuation of the positive tone in risk markets from the first quarter, as data from the U.S. and China implied that fears of a synchronized growth slowdown may have been overdone. As the U.S.–China trade war flared up, however, spreads widened in May, before gradually tightening as the late-June G-20 summit approached.

Performance Contributors and Detractors:

During the first half and the second quarter, the biggest contributor to performance was the portfolio’s overweight allocation to Asian high yield bonds, which as a group outperformed in the risk-on environment. Within high yield corporate bonds, the strongest contributors over the quarter included Tata Steel (ABJA Investment), Lippo Karawaci (Theta Capital) and the Vietnam government-backed Debt and Asset Trading. Tata Steel performed well as it has moved toward a deleveraging plan following an unsuccessful merger of its European operations. Lippo Karawaci continues to execute on its turnaround plan, which includes raising new capital and increasing discipline around capital expenditures. Our exposure to convertible bonds, including Weibo and CP Foods Holdings as well as our positions in SoftBank Group and HSBC Holdings perpetual bonds, were also contributors.

The biggest detractors to performance were our positions in Indika (Indo Energy Finance II BV), our convertible bond positions in China Mengniu Dairy and Ctrip.com International, a Chinese online travel agency. The Indika bonds were sold during the quarter to buy longer-dated bonds of the same issuer, allowing us to extend our duration. The longer-dated Indika bonds were in fact among our highest contributors to returns in the quarter.

(continued)

1	Prospectus expense ratios.

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 to 0.90% 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 0.90% 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 0.90%. Any amount waived with respect to the Fund pursuant to this agreement is not subject to recoupment. This agreement will remain in place until April 30, 2020 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.

4	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			11



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Retuns
	3 Months		YTD		1 Year		3 Years		Since Inception		Inception Date
Investor Class (MCRDX)		3.16%		9.39%		9.26%		5.73%		5.90%		4/29/2016
Institutional Class (MICPX)		3.23%		9.63%		9.64%		6.02%		6.16%		4/29/2016
J.P. Morgan Asia Credit Index⁵		3.00%		8.04%		10.01%		4.04%		4.51%

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 moreor 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-endperformance, visit matthewsasia.com.



INCOME DISTRIBUTION HISTORY
	2019										2018
	Q1		Q2		Q3		Q4		Total		Q1		Q2		Q3		Q4		Total
Investor (MCRDX)	$	0.10	$	0.10		n.a.		n.a.	$	0.20	$	0.09	$	0.09	$	0.06	$	0.10	$	0.33
Inst’l (MICPX)	$	0.10	$	0.11		n.a.		n.a.	$	0.21	$	0.09	$	0.09	$	0.06	$	0.11	$	0.36

Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding. For income distribution history, visit matthewsasia.com.

30-DAY YIELD:

Investor Class: 4.85% (4.69% excluding waivers)

Institutional Class: 5.10% (4.89% excluding waivers)

Source: BNY Mellon Investment Servicing (US) Inc.

YIELD TO WORST: 5.93%

Source: FactSet Research Systems

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

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$.

It is not possible to invest directly in an index. Source: Index data from J.P. Morgan and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 88 for index definition.



TOP TEN HOLDINGS
	Sector	Currency	% of Net Assets
Franshion Brilliant, Ltd., 5.750%, 07/17/2067	Real Estate	U.S. Dollar		5.0%
Debt and Asset Trading Corp., 1.000%, 10/10/2025	Financials	U.S. Dollar		4.9%
Indika Energy Capital III Pte, Ltd., 5.875%, 11/09/2024	Energy	U.S. Dollar		4.9%
Shriram Transport Finance Co., Ltd., 5.700%, 02/27/2022	Financials	U.S. Dollar		4.4%
Pakistan Government Bond, 6.875%, 12/05/2027	Foreign Government Bonds	U.S. Dollar		4.4%
HSBC Holdings PLC, 6.375%, 12/29/2049	Financials	U.S. Dollar		4.4%
ABJA Investment Co. Pte, Ltd., 5.450%, 01/24/2028	Materials	U.S. Dollar		4.3%
PB International BV, 7.625%, 01/26/2022	Consumer Discretionary	U.S. Dollar		4.3%
Wanda Properties International Co., Ltd., 7.250%, 01/29/2024	Real Estate	U.S. Dollar		4.2%
Standard Chartered PLC, 6.500%, 12/29/2049	Financials	U.S. Dollar		4.1%
% OF ASSETS IN TOP TEN				44.9%


12		MATTHEWS ASIA FUNDS

Matthews Asia Credit Opportunities Fund

Portfolio Manager Commentary (unaudited) (continued)

Notable Portfolio Changes:

With weaker-than-expected economic data released in the U.S. leading to speculation about rate cuts by the Fed, we increased duration in the portfolio to 4.6 years from 3.5 years over the quarter. We achieved this both by rotating into longer duration issues of companies we already owned, such as CIFI Holdings Group and KWG Group Holdings, as well as by adding exposure to longer duration securities of other issuers, including the Indonesian state-owned enterprises INALUM (PT Indonesia Asahan Aluminium Perser) and PLN (PT Perusahaan Listrik Negara), both of which are investment grade-rated, thereby allowing us to add duration without taking on excessive spread duration.

New bonds added to the portfolio included Shriram Transport Finance, an Indian non-bank finance company that issued a USD bond with an attractive spread premium given the recent NBFCs funding crisis, and Pakistan Government Bonds, which are long-duration bonds of a high yield country under an IMF-led turnaround program.

In China, we initiated positions in two companies: China Jinmao (Franshion Brilliant, Ltd.) perpetual bonds, higher yielding bonds of a central SOE-backed property developer, and the technology firm Weibo, via convertible bonds trading close to their lowest possible level, which we see as offering an asymmetric risk profile.

We sold a number of bonds that had reached their price target and had limited upside for the portfolio. These included India’s Bharti Airtel, Krung Thai Bank Public in Thailand, Indonesia’s Tower Bersama (TBG Global), and in China, Chinalco Capital Holdings and China Minmetals. In addition, we sold several convertible bond holdings that were short duration and/or had reached our price target. These included China Mengniu Dairy, CP Foods Holdings, Ctrip.com International and Johnson Electric Holdings.

Outlook:

In our view, Asian high yield bonds continue to offer attractive value for long-term investors. Asian high yield credit spreads are 86 basis points (0.86%) above their historic averages and are about 132 basis points (1.32%) above U.S. high yield spreads at the index level. We think there is room for this relationship to tighten back closer to historical levels. Default rates in Asia have remained low and we believe could stay low in the medium term as interest costs and recession risks remain low. For many of the riskiest borrowers, refinancing has become easier in 2019 as investor risk appetite has returned. We believe this continues to be a key risk to monitor, and we prefer to invest in holdings that have taken steps to refinance upcoming maturities or improve their balance sheets in other ways to be resilient to further turmoil.

We continue to see value in Chinese property, particularly given the magnitude of the sell-off last year. Policymakers are incrementally easing restrictions on developers, pointing to an improving business environment in the second half of the year. We also see value in a number of sectors in Indonesia, including manufacturing and mining. With the momentum among developed and emerging market central banks shifting toward synchronized easing, we expect domestic business environments in Asia to be supportive in an environment of slowing global growth and trade.

To be sure, there continue to be risks on the horizon. If a further slowdown in global growth materializes, we expect investor appetite for emerging markets to diminish. Any re-escalation in trade shocks could also put pressure on Asian fixed income markets. If the Chinese economy deteriorates, corporate defaults will likely rise, and Asian credit could come under pressure. Our base case, however, remains a benign one, with most of the key global macro tail risks fading, with supportive central banks and Chinese economic growth to rebound.



CURRENCY ALLOCATION (%)^6,7
US Dollar			100.0



COUNTRY ALLOCATION (%)^6,7,8
China/Hong Kong			31.6
Indonesia			25.7
India			8.7
Vietnam			7.4
Sri Lanka			4.8
Pakistan			4.4
Australia			3.8
Philippines			3.6
Japan			3.3
United States			0.8
Cash and Other Assets, Less Liabilities			5.9



SECTOR ALLOCATION (%)^6,7
Real Estate			24.3
Financials			21.7
Foreign Government Bonds			11.6
Materials			8.4
Communication Services			7.6
Utilities			7.6
Energy			4.9
Consumer Discretionary			4.3
Industrials			3.6
Cash and Other Assets, Less Liabilities			5.9



ASSET TYPE BREAKDOWN (%)^6,7
Non-Convertible Corporate Bonds			74.9
Government Bonds			16.6
Convertible Corporate Bonds			2.6
Cash and Other Assets, Less Liabilities			5.9

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

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

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


matthewsasia.com \| 800.789.ASIA			13

Matthews Asia Credit Opportunities Fund

June 30, 2019

Schedule of Investments^a(unaudited)


NON-CONVERTIBLE CORPORATE BONDS: 74.9%		FOREIGN GOVERNMENT OBLIGATIONS: 16.6%


	Face Amount*		Value

CHINA/HONG KONG: 28.9%
Franshion Brilliant, Ltd. 5.750%^b, 01/17/22^c,d		3,000,000		$2,851,392

HSBC Holdings PLC 6.375%^b, 03/30/25^c		2,400,000		2,523,600

Wanda Properties International Co., Ltd. 7.250%, 01/29/24^d		2,400,000		2,391,000

Standard Chartered PLC 6.500%^b, 04/02/20^c,d		2,350,000		2,381,842

CIFI Holdings Group Co., Ltd. 6.550%, 03/28/24^d		2,300,000		2,248,907

Logan Property Holdings Co., Ltd. 5.250%, 02/23/23^d		1,500,000		1,431,177

KWG Group Holdings, Ltd. 7.875%, 09/01/23^d		1,300,000		1,307,458

KWG Group Holdings, Ltd. 5.875%, 11/10/24^d		1,100,000		999,049

CITIC Telecom International Finance, Ltd. 6.100%, 03/05/25^d		462,000		479,650

Total China/Hong Kong				16,614,075



INDONESIA: 25.7%
Indika Energy Capital III Pte, Ltd. 5.875%, 11/09/24^d		2,900,000		2,831,764

PB International BV 7.625%, 01/26/22^d		2,400,000		2,485,107

PT Indonesia Asahan Aluminium Perser 6.757%, 11/15/48^d		1,900,000		2,334,443

PT Perusahaan Listrik Negara 5.250%, 05/15/47^d		2,100,000		2,215,988

Listrindo Capital BV 4.950%, 09/14/26^d		2,200,000		2,170,300

Theta Capital Pte, Ltd. 6.750%, 10/31/26^d		1,500,000		1,373,815

Modernland Overseas Pte, Ltd. 6.950%, 04/13/24^d		1,400,000		1,366,584

Total Indonesia				14,778,001



INDIA: 8.7%
Shriram Transport Finance Co., Ltd. 5.700%, 02/27/22^d		2,500,000		2,532,404

ABJA Investment Co. Pte, Ltd. 5.450%, 01/24/28^d		2,600,000		2,488,656

Total India				5,021,060



AUSTRALIA: 3.9%
Australia & New Zealand Banking Group, Ltd. 6.750%^b, 06/15/26^c,d		2,000,000		2,207,500

Total Australia				2,207,500



PHILIPPINES: 3.6%
Royal Capital BV 4.875%^b, 05/05/24^c,d		2,100,000		2,081,625

Total Philippines				2,081,625



JAPAN: 3.3%
SoftBank Group Corp. 6.000%^b, 07/19/23^c,d		2,000,000		1,910,000

Total Japan				1,910,000



UNITED STATES: 0.8%
Sprint Communications, Inc. 6.000%, 11/15/22		420,000		437,850

Total United States				437,850



TOTALNON-CONVERTIBLE CORPORATE BONDS				43,050,111

(Cost $42,252,120)


	Face Amount*		Value

VIETNAM: 7.4%
Debt and Asset Trading Corp. 1.000%, 10/10/25^d		3,800,000		$2,840,500

Socialist Republic of Vietnam 5.500%, 03/12/28		1,410,000		1,384,396

Total Vietnam				4,224,896



SRI LANKA: 4.8%
Sri Lanka Government Bond 7.850%, 03/14/29^d		1,000,000		1,031,082

Sri Lanka Government Bond 6.125%, 06/03/25^d		900,000		877,325

Sri Lanka Government Bond 6.850%, 11/03/25^d		850,000		852,351

Total Sri Lanka				2,760,758



PAKISTAN: 4.4%
Pakistan Government Bond 6.875%, 12/05/27^d		2,500,000		2,525,500

Total Pakistan				2,525,500



TOTAL FOREIGN GOVERNMENT OBLIGATIONS				9,511,154

(Cost $9,417,338)


CONVERTIBLE CORPORATE BONDS: 2.6%

CHINA/HONG KONG: 2.6%
Weibo Corp., Cnv. 1.250%, 11/15/22		1,600,000		1,510,444

Total China/Hong Kong				1,510,444



TOTAL CONVERTIBLE CORPORATE BONDS				1,510,444

(Cost $1,411,881)


TOTAL INVESTMENTS: 94.1%				54,071,709
(Cost $53,081,339)


CASH AND OTHER ASSETS, LESS LIABILITIES: 5.9%				3,373,363


NET ASSETS: 100.0%				$57,445,072

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Security is afix-to-float security, which carries a fixed coupon until a certain date, upon which it switches to a floating rate. Reference rate and spread are provided if the rate is currently floating.

c	Perpetual security with no stated maturity date. First call date is disclosed.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

*	All Values in USD unless otherwise specified

Cnv.	Convertible

USD	U.S. Dollar

See accompanying notes to financial statements.


14		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Robert J. Horrocks, PhD				Kenneth Lowe, CFA
Lead Manager				Lead Manager

John Paul Lech
Co-Manager



FUND FACTS

	Investor	Institutional
Ticker	MACSX	MICSX
CUSIP	577130206	577130842
Inception	9/12/94	10/29/10
NAV	$15.54	$15.51
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.08%	0.93%
Portfolio Statistics
Total # of Positions		62
Net Assets		$1.4 billion
Weighted Average Market Cap		$59.3 billion
Portfolio Turnover²		32.24%
Benchmark
MSCI AC Asia ex Japan Index

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 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, including high yield securities, 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.

Matthews Asian Growth and Income Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asian Growth and Income Fund returned 12.92% (Investor Class), and 13.02% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.83%. For the quarter ending June 30, 2019, the Fund returned 2.07% (Investor Class and Institutional Class), while its benchmark returned –0.56%.

Market Environment:

The first half of the year delivered fairly strong performance for Asian equities, with the majority of these gains coming in the first quarter following poor performance in 2018. Concerns last year included a tightening of U.S. dollar liquidity, weakening economic growth and trade tensions between the U.S. and China, among others. This narrative changed somewhat during the first half, primarily regarding monetary policy as the U.S. Federal Reserve and other central banks across the globe moved from a gradual tightening of policy back toward a more dovish stance. This was helpful for risk assets and reduced any lingering funding pressures that may have existed. Trade tensions, on the other hand, were a moving target and a resolution appeared more likely at the start of 2019 than in recent months.

These geopolitical tensions drove an increase in volatility for Asian equities during the second quarter. That drove the Chinese market to being the region’s weakest performer during the quarter, while domestic demand-oriented countries in Southeast Asia delivered solid gains.

Performance Contributors and Detractors:

Despite our more conservative investment style and an equity market that delivered double-digit returns, the portfolio was ahead of its benchmark for the first half.

The largest driver of this positive performance for both the half and the quarter came from the portfolio’s holdings in China and Hong Kong. This included leaders in their fields such as pan-Asian life insurer AIA Group, which continues to be a significant holding for the Fund. The company gained from solid operating performance alongside excitement over greater access to mainland China as the government further opens up the financial sector. The portfolio’s increasing weight in China has largely come from our inclusion of more A-shares, and these have produced strong performance for the Fund. Over the quarter, Shanghai International Airport was the strongest contributor to returns as the company delivered impressive revenue growth on the back of rising passenger traffic and growing duty-free revenues—trends that we expect to continue.

Our holdings here are largely domestic demand-driven and over the half Chinese consumer companies generally helped our performance in the first half. Leading dairy company Yili Industrial rose on healthy first-quarter revenue growth as the company gained market share and expanded further into product extensions. Household appliance companies Midea Group and Zhejiang Supor were similarly robust as their respective brand power was highlighted in superior results to peers despite a slightly more challenging macroeconomic backdrop.

Elsewhere during the second quarter, a couple of the portfolio’s Singaporean holdings gained, with shares of Singapore Telecommunications rising as the company recovered from what has been a relatively difficult competitive environment in recent years. Shares of Singapore Technologies Engineering, the national defense contractor, also moved up on improving order flow across its aerospace, electronics and marine divisions.

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			15



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MACSX)		2.07%		12.92%		7.20%		5.07%		2.34%		7.08%		8.99%			9/12/94
Institutional Class (MICSX)		2.07%		13.02%		7.34%		5.21%		2.49%		n.a.		4.41%			10/29/10
MSCI AC Asia ex Japan Index³		-0.56%		10.83%		-0.18%		11.81%		5.14%		8.17%		4.50%	⁴



INCOME DISTRIBUTION HISTORY
	2019						2018
	June		December		Total		June		December		Total
Investor (MACSX)	$	0.17		n.a.	$	0.17	$	0.22	$	0.10	$	0.32
Inst’l (MICSX)	$	0.18		n.a.	$	0.18	$	0.24	$	0.11	$	0.35

Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding. For income distribution history, visit matthewsasia.com.

30-DAY YIELD:

1.60% (Investor Class) 1.74% (Institutional Class)

Source: BNY Mellon Investment Servicing (US) Inc.

DIVIDEND YIELD: 3.21%

The dividend yield (trailing) for the portfolio is the weighted average sum of the dividends paid by each equity security held by the Fund over the 12 months ended 6/30/19 divided by the current price of each equity as of 6/30/19. 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 HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

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 88 for index definition.

Calculated from 8/31/94.



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
AIA Group, Ltd.	Financials	China/Hong Kong		3.8%
Taiwan Semiconductor Manufacturing Co., Ltd.	Information Technology	Taiwan		3.4%
Tencent Holdings, Ltd.	Communication Services	China/Hong Kong		2.8%
Samsung Electronics Co., Ltd.	Information Technology	South Korea		2.5%
Housing Development Finance Corp., Ltd.	Financials	India		2.2%
Singapore Telecommunications, Ltd.	Communication Services	Singapore		2.1%
United Overseas Bank, Ltd.	Financials	Singapore		2.1%
Macquarie Korea Infrastructure Fund	Financials	South Korea		2.1%
LG Household & Health Care, Ltd., Pfd.	Consumer Staples	South Korea		2.0%
Broadcom, Inc.	Information Technology	United States		1.9%
% OF ASSETS IN TOP TEN				24.9%

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


16		MATTHEWS ASIA FUNDS

Matthews Asian Growth and Income Fund

Portfolio Manager Commentary (unaudited) (continued)

There were few detractors to performance during the half, but the largest of these was Bank of the Philippine Islands. Although we believe it to be a well-managed institution, recent results were disappointing due to rising costs. Hong Kong-based Pacific Textiles also fell as a major customer had weaker-than-expected orders. Over the quarter, the largest detractor to performance was South Korean water purification company Woongjin Coway. Concerns arose that the company may be forced to pay a royalty to its parent and may have overpaid for some assets.

Notable Portfolio Changes:

We initiated five new positions over the quarter. This included two new convertible bond holdings in Chinese internet company Weibo and Malaysian glove maker Top Glove. We believe that the former is a strong credit that was underpriced, offering us an attractive yield of around 5% on entry despite the company’s robust balance sheet and healthy cash generation. Top Glove offered a fairly attractive 4% yield at entry and was at only a 25% conversion premium. Our view is that the company still has attractive growth through capacity expansion as well as more technologically advanced production lines.

Within equities, we added three new holdings. The first of these was Fortune REIT, a real estate investment trust (REIT) company in Hong Kong that operates 16 neighborhood-oriented malls in the city. We think that the company has a conservative balance sheet, visible cash flows and growth opportunities through asset enhancement initiatives and rental reversions. This should provide the opportunity for an attractive blend of growth and income. In China, we increased our domestic demand oriented exposure through adding Yum China. We believe that this leading quick-service restaurant chain has an excellent management team that has the potential to grow sustainably through expanding its KFC store network and through improving Pizza Hut’s delivery capability. The stock was also reasonably valued at around 21x P/E upon our entry. Finally, we added consumer company Ace Hardware Indonesia. Similarly, this is a leading franchise whose track record is impressive. Although not cheap at about 24x P/E, it does provide a dividend yield of around 2% and we expect that management should be able to grow for many years through store expansion and category extensions.

These new positions were funded through exiting the convertible bonds of Huazhu Group, Bangkok Dusit Medical Services, Johnson Electric and Lotte Shopping as well as equity shares of KT&G.

Outlook:

The interplay of weakening growth, reasonably high debt levels, high levels of geopolitical tension but loosening monetary policy globally is likely to continue for the foreseeable future. Although there may be a trade deal between the U.S. and China, differing ideologies around politics and economics, in particular, are likely to continue to generate market volatility. Trade imbalances and protectionist policies remain a risk for markets and these have already played a role in creating what is a reasonably slow environment for economic growth globally.

For Asian companies in particular, we have witnessed a decline in earnings expectations, with a consensus that now anticipates earnings-per-share (EPS) growth to be in the low single-digit range for 2019. Although disappointing, this is at least still positive in the short term and is expected to bounce back next year. Valuations, however, are now less supportive than at the end of 2018.

From the portfolio’s standpoint, we believe this to be a fairly attractive environment. We believe our focus on quality investing with a long-term time horizon leaves us less susceptible to higher levels of volatility. Our view is that environments such as this, if accompanied by patience and discipline, can create some attractive opportunities to deploy capital. Further, the portfolio is already well-placed with an array of high-caliber companies at appealing valuations that we believe can deliver the opportunity for an attractive combination of growth and income.



COUNTRY ALLOCATION (%)^6,7
China/Hong Kong			39.8
Singapore			10.8
South Korea			10.7
Taiwan			6.6
Australia			5.3
United States			3.4
India			3.2
France			3.2
Thailand			2.9
Indonesia			2.9
Japan			2.4
Malaysia			2.3
United Kingdom			1.9
Philippines			1.5
Vietnam			1.2
Cash and Other Assets, Less Liabilities			1.9



SECTOR ALLOCATION (%)⁷
Financials			21.0
Consumer Discretionary			15.5
Information Technology			12.6
Consumer Staples			11.8
Industrials			11.6
Communication Services			11.5
Real Estate			7.3
Materials			3.0
Health Care			2.5
Utilities			1.4
Cash and Other Assets, Less Liabilities			1.9



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			51.6
Large Cap ($10B–$25B)			15.7
Mid Cap ($3B–10B)			21.7
Small Cap (under $3B)			9.2
Cash and Other Assets, Less Liabilities			1.9



ASSET TYPE BREAKDOWN (%)^7,8
Common Equities and ADRs			84.3
Convertible Corporate Bonds			11.7
Preferred Equities			2.0
Cash and Other Assets, Less Liabilities			1.9

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

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

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


matthewsasia.com \| 800.789.ASIA			17

Matthews Asian Growth and Income Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 84.4%


	Shares		Value

CHINA/HONG KONG: 34.0%
AIA Group, Ltd.		5,037,600		$54,400,553

Tencent Holdings, Ltd.		891,600		40,335,466

Techtronic Industries Co., Ltd.		3,370,500		25,820,834

Shanghai International Airport Co., Ltd. A Shares		2,017,375		24,638,342

CK Hutchison Holdings, Ltd.		2,454,172		24,207,338

Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		4,816,875		23,471,788

Jiangsu Expressway Co., Ltd. H Shares		15,674,000		22,307,310

Jardine Matheson Holdings, Ltd.		353,100		22,271,083

HKT Trust & HKT, Ltd.		13,920,000		22,096,087

Midea Group Co., Ltd. A Shares		2,825,801		21,409,157

NetEase, Inc. ADR		82,100		20,998,717

Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. A Shares		1,181,683		20,965,300

HSBC Holdings PLC ADR		491,833		20,529,109

Zhejiang Supor Co., Ltd. A Shares		1,853,470		20,482,679

CK Asset Holdings, Ltd.		2,590,172		20,291,611

CLP Holdings, Ltd.		1,801,200		19,848,862

Pacific Textiles Holdings, Ltd.		24,255,000		19,203,656

Fortune, REIT		11,459,000		15,753,187

Yum China Holdings, Inc.		337,200		15,578,640

Minth Group, Ltd.		5,740,000		15,480,526

China Mobile, Ltd. ADR		284,200		12,871,418

Total China/Hong Kong				482,961,663



SINGAPORE: 9.1%
Singapore Telecommunications, Ltd.		11,375,800		29,444,169

United Overseas Bank, Ltd.		1,518,600		29,357,788

Ascendas, REIT		10,652,400		24,580,118

Singapore Technologies Engineering, Ltd.		7,695,325		23,569,108

Venture Corp., Ltd.		1,836,900		22,178,154

Total Singapore				129,129,337



SOUTH KOREA: 7.2%
Samsung Electronics Co., Ltd.		865,909		35,260,110

Macquarie Korea Infrastructure Fund		2,862,946		29,242,104

Orange Life Insurance, Ltd.^b,c		725,855		19,900,255

Woongjin Coway Co., Ltd.		269,756		18,082,635

Total South Korea				102,485,104



TAIWAN: 6.6%
Taiwan Semiconductor Manufacturing Co., Ltd.		6,372,187		48,736,933

Advantech Co., Ltd.		2,806,000		23,896,147

Taiwan Secom Co., Ltd.		7,519,000		21,448,620

Total Taiwan				94,081,700



AUSTRALIA: 5.3%
Macquarie Group, Ltd.		254,688		22,465,035

Orora, Ltd.		9,511,447		21,665,573

CSL, Ltd.		111,781		16,926,314

Domino’s Pizza Enterprises, Ltd.		541,502		14,310,740

Total Australia				75,367,662


	Shares		Value

UNITED STATES: 3.4%
Broadcom, Inc.		93,200		$26,828,552

Cognizant Technology Solutions Corp. Class A		349,400		22,148,466

Total United States				48,977,018



INDIA: 3.2%
Housing Development Finance Corp., Ltd.		979,513		31,102,622

Bharti Infratel, Ltd.		3,801,128		14,706,569

Total India				45,809,191



FRANCE: 3.2%
LVMH Moet Hennessy Louis Vuitton SE		56,340		23,951,576

Pernod Ricard SA		113,136		20,836,990

Total France				44,788,566



INDONESIA: 2.9%
PT Bank Rakyat Indonesia Persero		73,603,900		22,723,371

PT Ace Hardware Indonesia		140,794,300		18,040,037

Total Indonesia				40,763,408



JAPAN: 2.4%
Kao Corp.		243,000		18,541,962

KDDI Corp.		618,000		15,726,053

Total Japan				34,268,015



UNITED KINGDOM: 1.9%
Prudential PLC		1,227,872		26,805,739

Total United Kingdom				26,805,739



PHILIPPINES: 1.5%
Bank of the Philippine Islands		13,755,224		21,082,037

Total Philippines				21,082,037



THAILAND: 1.4%
Kasikornbank Public Co., Ltd.		3,282,300		20,131,939

Total Thailand				20,131,939



VIETNAM: 1.2%
Vietnam Dairy Products JSC		3,100,633		16,382,838

Total Vietnam				16,382,838



MALAYSIA: 1.1%
Genting Malaysia BHD		19,518,500		15,315,738

Total Malaysia				15,315,738



TOTAL COMMON EQUITIES		1,198,349,955

(Cost $1,063,370,675)


18		MATTHEWS ASIA FUNDS

Matthews Asian Growth and Income Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)


CONVERTIBLE CORPORATE BONDS: 11.7%		PREFERRED EQUITIES: 2.0%


	Face Amount*		Value

CHINA/HONG KONG: 5.8%
Zhongsheng Group Holdings, Ltd., Cnv.
0.000%, 05/23/23^c		HKD 149,000,000		$19,424,271

Harvest International Co., Cnv. 0.000%, 11/21/22^c		HKD 150,000,000		19,238,334

China Overseas Finance Investment Cayman V, Ltd., Cnv.
0.000%, 01/05/23^c		17,000,000		18,736,808

China Mengniu Dairy Co., Ltd., Series 2319, Cnv.
0.000%, 06/05/22^c		17,000,000		16,857,215

Weibo Corp., Cnv. 1.250%, 11/15/22		8,083,000		7,630,573

Total China/Hong Kong				81,887,201



SINGAPORE: 1.7%

CapitaLand, Ltd., Cnv. 1.950%, 10/17/23^c		SGD 34,000,000		24,724,983

Total Singapore				24,724,983



THAILAND: 1.5%

CP Foods Holdings, Ltd., Cnv. 0.500%, 09/22/21^c		17,200,000		21,358,210

Total Thailand				21,358,210



SOUTH KOREA: 1.4%

LG Chem, Ltd., Cnv. 0.000%, 04/16/21^c		20,600,000		20,681,863

Total South Korea				20,681,863



MALAYSIA: 1.3%

Top Glove Labuan, Ltd., Cnv. 2.000%, 03/01/24^c		18,076,000		17,895,240

Total Malaysia				17,895,240



TOTAL CONVERTIBLE CORPORATE BONDS				166,547,497

(Cost $165,180,443)


	Shares		Value

SOUTH KOREA: 2.0%
LG Household & Health Care, Ltd., Pfd.		41,042		$28,664,656

Total South Korea				28,664,656



TOTAL PREFERRED EQUITIES				28,664,656

(Cost $11,577,044)


TOTAL INVESTMENTS: 98.1%				1,393,562,108
(Cost $1,240,128,162)


CASH AND OTHER ASSETS, LESS LIABILITIES: 1.9%				26,839,079


NET ASSETS: 100.0%				$1,420,401,187

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

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 Funds’ Board of Trustees. At June 30, 2019, the aggregate value is $19,900,255, which is 1.40% of net assets.

c	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

*	All Values in USD unless otherwise specified

ADR	American Depositary Receipt

BHD

Berhad

Cnv.	Convertible

HKD	Hong Kong Dollar

JSC	Joint Stock Co.

Pfd.

Preferred

REIT	Real Estate Investment Trust

SGD	Singapore Dollar

USD	U.S. Dollar

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			19

LOGO


PORTFOLIO MANAGERS

Yu Zhang, CFA
Lead Manager

Robert Horrocks, PhD		Vivek Tanneeru
Co-Manager		Co-Manager

Sherwood Zhang, CFA
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MAPIX	MIPIX
CUSIP	577125107	577130750
Inception	10/31/06	10/29/10
NAV	$16.83	$16.82
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.02%	0.91%
After Fee Waiver and Reimbursement²	1.01%	0.90%
Portfolio Statistics
Total # of Positions		68
Net Assets		$6.1 billion
Weighted Average Market Cap		$41.1 billion
Portfolio Turnover³		39.75%
Benchmark
MSCI AC Asia Pacific Index

OBJECTIVE

Total return with an emphasis on providing current income.

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 dividend-paying equity securities 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. The Fund may also invest in convertible debt and equity securities of companies located in Asia.

Matthews Asia Dividend Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Dividend Fund returned 5.82% (Investor Class) and 5.88% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 10.71% over the same period. For the quarter ending June 30, the Fund returned –1.16% (Investor Class) and –1.19% (Institutional Class), while the benchmark returned 0.90%.

Market Environment:

After a strong rally in the first quarter of 2019, Asian equities were unable to sustain the positive momentum during the second quarter. A sudden collapse in U.S.–China trade negotiations weighed heavily on the market. Together with the renewed concerns over the strength of the global economy, market volatility spiked. It wasn’t until June when central banks globally stepped in to signal a readiness to support growth via monetary easing that Asia’s markets began to stabilize again.

Performance Contributors and Detractors:

The Fund’s underperformance year to date has disappointed. Our investment process, which involves a barbell-approach to investing in both higher-yielding dividend-paying stocks together with faster-growing dividend growth stocks, remains unchanged. However, poor stock selection drove the bulk of the Fund’s relative underperformance for the first half of the year. Consumer staples holdings were among the performance detractors. Known for their defensive business models with strong cash flow generation and steady dividend payments, these stocks traditionally have been positive return contributors. But as some of these businesses have begun facing certain structural changes—whether via market disruption brought by new product technologies, changing consumer preference or rising labor cost pressures from demographic changes and government policy intervention—the resilience of those businesses has somewhat eroded. As a result, their share prices languished during the period. This painful investment experience has led us to recognize the need to better emphasize identifying structural trends earlier on, to better foresee the investment implications and take more decisive action.

On the flip side, among the top performance contributors during the first half was our holding in Chongqing Brewery, a regional beer company listed in the onshore China A-share market. Our initial investment thesis of seeking a sustained profit margin improvement supported by an accelerating beer product “premiumization” trend in China and easing competition intensity whereby major beer brands are prioritizing profit improvement over market share gain, started to play out this year. In addition, the pending public listing of Budweiser’s Asia-Pacific beer business further attracted investor attention in the region’s beer industry. As a result, Chongqing Brewery, a well-run operation under the ownership of Carlsberg, is seeing positive share price movement.

Notable Portfolio Changes:

During the second quarter, we initiated a few new positions, one of which was Yunnan Hongxiang Yixintang Pharmaceutical Group, a drugstore chain in mainland China. One of China’s key health care reforms involves separating drug dispensing functions from Chinese hospitals, which should boost the prescription drug business at drug retailers and bring additional customer traffic for higher-margin, non-prescription drug businesses. At the same time, rising pharmacy quality-control standards and stricter tax compliance for running drugstore businesses also favor large-scale players over small, individual-store operators. This

(continued)

1	Prospectus expense ratios.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


20		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MAPIX)		-1.16%		5.82%		-4.35%		6.74%		4.96%		9.65%		8.45%			10/31/06
Institutional Class (MIPIX)		-1.19%		5.88%		-4.25%		6.84%		5.07%		n.a.		6.29%			10/29/10
MSCI AC Asia Pacific Index⁴		0.90%		10.71%		-0.76%		10.40%		4.70%		7.36%		4.25%	⁵

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
	2019										2018
	Q1		Q2		Q3		Q4		Total		Q1		Q2		Q3		Q4		Total
Investor (MAPIX)	$	0.03	$	0.12		n.a.		n.a.	$	0.15	$	0.01	$	0.19	$	0.11	$	0.00	$	0.31
Inst’l (MIPIX)	$	0.04	$	0.12		n.a.		n.a.	$	0.16	$	0.02	$	0.20	$	0.11	$	0.00	$	0.33

Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding and a return of capital. For distribution history please visit matthewsasia.com.

30-DAY YIELD:

Investor Class: 1.67% (1.66% excluding waivers)

Institutional Class: 1.78% (1.77% excluding waivers)

Source: BNY Mellon Investment Servicing (US) Inc.

DIVIDEND YIELD: 2.86%

Source: FactSet Research Systems, Bloomberg, MICM.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 10/31/06.



TOP TEN HOLDINGS⁶
	Sector	Country	% of Net Assets
Shenzhou International Group Holdings, Ltd.	Consumer Discretionary	China/Hong Kong		3.8%
Hyundai Mobis Co., Ltd.	Consumer Discretionary	South Korea		3.4%
Taiwan Semiconductor Manufacturing Co., Ltd.	Information Technology	Taiwan		3.3%
Minth Group, Ltd.	Consumer Discretionary	China/Hong Kong		3.1%
Hoya Corp.	Health Care	Japan		2.7%
BGF Retail Co., Ltd.	Consumer Staples	South Korea		2.6%
Anritsu Corp.	Information Technology	Japan		2.5%
China Mobile, Ltd.	Communication Services	China/Hong Kong		2.5%
MISUMI Group, Inc.	Industrials	Japan		2.4%
Kao Corp.	Consumer Staples	Japan		2.3%
% OF ASSETS IN TOP TEN				28.6%

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


matthewsasia.com \| 800.789.ASIA			21



COUNTRY ALLOCATION (%)^7,8
China/Hong Kong			42.8
Japan			22.7
South Korea			11.2
Singapore			5.3
Taiwan			4.4
India			2.3
Thailand			1.9
Indonesia			1.9
Philippines			1.7
Australia			1.6
Bangladesh			1.1
Vietnam			1.1
Cash and Other Assets, Less Liabilities			2.0


SECTOR ALLOCATION (%)⁸
Consumer Discretionary			20.6
Consumer Staples			17.8
Financials			13.5
Communication Services			9.6
Industrials			8.2
Information Technology			7.7
Utilities			4.7
Health Care			4.3
Materials			4.1
Real Estate			3.9
Energy			3.6
Cash and Other Assets, Less Liabilities			2.0


MARKET CAP EXPOSURE (%)⁸
Mega Cap (over $25B)			27.7
Large Cap ($10B–$25B)			19.4
Mid Cap ($3B–10B)			26.6
Small Cap (under $3B)			24.3
Cash and Other Assets, Less Liabilities			2.0

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, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Asia Dividend Fund

Portfolio Manager Commentary (unaudited) (continued)

could further speed up the overall drugstore industry consolidation—a long-term growth driver for leading players such as Yixintang. We believe the company is well-positioned to take advantage of this favorable industry trend. Operating a cash-generative drug retailing business model, with a modest 30% payout ratio, the company also has what we view as untapped potential to deliver significant growth in its dividends. During the first half of the year, we exited a few existing holdings such as China Resources Power, Japan Tobacco, and Nitori Holdings as their business fundamentals no longer supported our initial investment thesis.

Outlook:

As China and the U.S. restarted trade negotiations in early July, Asia’s markets seemed to experience temporary relief from tensions. The medium- to long-term outlook for these bilateral relations, however, is still cloudy given the structural differences between the two countries’ political systems and economic growth models. Despite this uncertainty, policymakers in both Asia and the U.S. have signaled a willingness to use policy-support measures to address any significant slowdown. In the meantime, with investor expectations now reset mostly due to macroeconomic concerns and on Asia’s equity valuations continuing to trade below long-term averages, we remain constructive that, from a bottom-up perspective, Asia’s markets currently offer attractive opportunities for long-term investors.


22		MATTHEWS ASIA FUNDS

Matthews Asia Dividend Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 95.0%


	Shares		Value

CHINA/HONG KONG: 42.9%
Shenzhou International Group Holdings, Ltd.		16,551,200		$228,319,044

Minth Group, Ltd.^†		69,311,000		186,928,707

China Construction Bank Corp. H Shares		160,706,000		138,529,202

Chongqing Brewery Co., Ltd. A Shares		19,996,770		137,499,008

AIA Group, Ltd.		12,475,600		134,722,792

China Mobile, Ltd.		14,531,500		132,289,923

China Merchants Bank Co., Ltd. H Shares		25,783,000		127,946,064

China Petroleum & Chemical Corp. H Shares		178,734,000		121,757,146

WH Group, Ltd.^b,c		119,822,000		121,546,601

China Gas Holdings, Ltd.		28,746,800		106,823,255

HKBN, Ltd.		56,401,123		101,698,141

Ping An Insurance Group Co. of China, Ltd. H Shares		8,180,000		98,363,487

Huaneng Power International, Inc. H Shares		156,780,000		92,328,683

Sun Art Retail Group, Ltd.		85,088,500		80,636,965

Yuexiu Transport Infrastructure, Ltd.^†		97,328,000		79,489,455

China Education Group Holdings, Ltd.^c		49,804,000		77,955,555

Beijing Capital International Airport Co., Ltd. H Shares		88,320,000		77,401,264

Fuyao Glass Industry Group Co., Ltd. H Shares^b,c		23,075,200		71,655,442

Huaneng Lancang River Hydropower, Inc. A Shares		111,137,793		65,877,680

Yixintang Pharmaceutical Group Co., Ltd. A Shares		15,577,958		64,779,970

Melco Resorts & Entertainment, Ltd. ADR		2,692,500		58,481,100

China East Education Holdings, Ltd.^b,c,d		40,040,000		56,997,171

Crystal International Group, Ltd.^b,c		118,408,500		52,657,609

Far East Horizon, Ltd.		48,595,000		49,704,168

Café de Coral Holdings, Ltd.		15,844,000		47,137,966

Hua Hong Semiconductor, Ltd.^b,c		19,254,000		37,338,403

Shanghai Jin Jiang International Hotels Group Co., Ltd. H Shares^†		122,102,000		24,839,724

China Mobile, Ltd. ADR		458,000		20,742,820

China Petroleum & Chemical Corp. ADR		79,100		5,394,620

Dairy Farm International Holdings, Ltd.		116,900		835,587

Total China/Hong Kong				2,600,677,552



JAPAN: 22.6%
Hoya Corp.		2,145,100		164,860,056

Anritsu Corp.^†		8,806,500		153,562,339

MISUMI Group, Inc.		5,869,600		147,954,123

Kao Corp.		1,834,900		140,010,891

Pigeon Corp.		3,077,300		124,094,811

NTT DoCoMo, Inc.		5,221,100		121,818,354

BELLSYSTEM24 Holdings, Inc.^†		5,762,500		79,845,707

KATITAS Co., Ltd.^†		2,134,900		79,538,069

Nifco, Inc.		2,943,300		73,079,823

Outsourcing, Inc.		5,932,400		72,376,063

Fuji Seal International, Inc.		2,296,900		70,404,409

Eiken Chemical Co., Ltd.^†		3,751,500		59,526,577

Mitsubishi Pencil Co., Ltd.		2,628,400		42,212,755

MANI, INC.		562,000		36,165,185

Rohm Co., Ltd.		137,300		9,250,710

Total Japan				1,374,699,872


	Shares		Value

SOUTH KOREA: 8.2%
Hyundai Mobis Co., Ltd.		1,011,216		$206,311,768

BGF Retail Co., Ltd.^†		865,926		158,238,761

Samsung Fire & Marine Insurance Co., Ltd.		310,982		72,180,467

Woori Financial Group, Inc.		4,973,275		60,523,347

Total South Korea				497,254,343



SINGAPORE: 5.3%
United Overseas Bank, Ltd.		6,954,100		134,437,638

Ascendas India Trust^†		57,863,800		58,163,169

CapitaLand Retail China Trust, REIT		49,800,000		57,441,153

CapitaLand Commercial Trust, REIT		24,708,000		39,649,017

NetLink NBN Trust^c		48,877,500		32,151,497

Total Singapore				321,842,474



TAIWAN: 4.4%
Taiwan Semiconductor Manufacturing Co., Ltd.		13,740,469		105,092,383

Taiwan Semiconductor Manufacturing Co., Ltd. ADR		2,362,340		92,532,858

China Steel Chemical Corp.^†		15,589,000		67,558,380

Total Taiwan				265,183,621



INDIA: 2.3%
ITC, Ltd.		18,225,998		72,273,466

Minda Industries, Ltd.^†		14,660,782		67,586,347

Total India				139,859,813



THAILAND: 1.9%
Thai Beverage Public Co., Ltd.		189,041,400		116,047,947

Total Thailand				116,047,947



INDONESIA: 1.9%
PT United Tractors		46,212,800		92,205,939

PT Cikarang Listrindo^b,c		366,537,800		22,576,608

Total Indonesia				114,782,547



PHILIPPINES: 1.7%
Globe Telecom, Inc.		2,372,405		104,740,511

Total Philippines				104,740,511



AUSTRALIA: 1.6%
Breville Group, Ltd.^†		8,308,554		95,551,702

Total Australia				95,551,702



BANGLADESH: 1.1%
GrameenPhone, Ltd.		16,109,639		69,401,008

Total Bangladesh				69,401,008



VIETNAM: 1.1%
Vietnam Dairy Products JSC		12,584,135		66,490,887

Total Vietnam				66,490,887



TOTAL COMMON EQUITIES				5,766,532,277

(Cost $4,918,863,757)


matthewsasia.com \| 800.789.ASIA			23

Matthews Asia Dividend Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

PREFERRED EQUITIES: 3.0%


	Shares		Value

SOUTH KOREA: 3.0%
LG Chem, Ltd., Pfd.		654,186		$110,935,621

Samsung Electronics Co., Ltd., Pfd.		2,132,283		70,715,805

Total South Korea				181,651,426



TOTAL PREFERRED EQUITIES				181,651,426

(Cost $134,471,361)


TOTAL INVESTMENTS: 98.0%				5,948,183,703
(Cost $5,053,335,118)


CASH AND OTHER ASSETS, LESS LIABILITIES: 2.0%				118,345,262


NET ASSETS: 100.0%				$6,066,528,965

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

c	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

d	Non-income producing security.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

ADR	American Depositary Receipt

JSC	Joint Stock Co.

Pfd.

Preferred

REIT	Real Estate Investment Trust

See accompanying notes to financial statements.


24		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Sherwood Zhang, CFA
Lead Manager

Yu Zhang, CFA		S. Joyce Li, CFA
Co-Manager		Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MCDFX	MICDX
CUSIP	577125305	577130735
Inception	11/30/09	10/29/10
NAV	$16.29	$16.29
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.15%	1.01%
Portfolio Statistics
Total # of Positions		48
Net Assets		$378.7 million
Weighted Average Market Cap		$45.1 billion
Portfolio Turnover²		66.47%
Benchmark
MSCI China Index

OBJECTIVE

Total return with an emphasis on providing current income.

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 dividend-paying equity securities of companies located in China. China includes its administrative and other districts, such as Hong Kong. The Fund may also invest in convertible debt and equity securities of companies located in China.

Matthews China Dividend Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews China Dividend Fund returned 15.51% (Investor Class) and 15.58% (Institutional Class), outperforming its benchmark, the MSCI China Index, which returned 13.08%. For the quarter ending June 30, the Fund returned –0.66% (Investor Class) and –0.60% (Institutional Class), while its benchmark returned –3.92%.

Market Environment:

Just as the market seemed to be optimistically anticipating successful U.S.–China negotiations early in the year, President Trump’s tweets presented new obstacles. China’s equity market consequently suffered in May as the U.S. threatened to impose tariffs on Chinese exports, and trade negotiations broke down. In addition, the U.S. government declared a ban on the sale of U.S. technology to Chinese telecommunication giant Huawei Technologies. Considering the sales revenue that Huawei generated for U.S. companies, the unprecedented ban highlighted to investors the heightened risk of a technology cold war between the two nations, and led many to wonder whether more Chinese companies could lose their access to critical U.S. technology and supply chain. Investors finally found some relief later in the second quarter after President Trump and President Xi met during the G-20 Summit in Japan, and agreed to resume negotiations and ease some restrictions on sales to Huawei.

Meanwhile, the outlook for U.S. monetary policy changed dramatically in May as the markets anticipated the U.S. Federal Reserve would shift from its path of gradually raising interest rates and begin cutting rates.

Performance Contributors and Detractors:

Huaxin Cement, a leading cement company based in central China, was the top contributor to Fund performance in the first half of the year. This little-known company is actually a majority-owned subsidiary of global cement leader LafargeHolcim, a Swiss multinational. Huaxin nearly quadrupled its dividends per share this year on the back of strong earnings growth, and we consider its B-shares to still be attractively priced compared to many peers listed in China’s A-share and H-share markets. Wuliangye Yibin, the leading high-end “baijiu” (Chinese white liquor) maker was the second-largest contributor during the first six months of the year as the company endeavored to close its product price gap with the top competitor Kweichow Moutai. Wuliangye Yibin recently launched a new version of its key product with some success, and has been warmly welcomed by investors.

China Everbright, a financial holding company, was the largest detractor to performance during the first half, as its earnings were hurt by a sharp drop in the stock of its subsidiary in 2018. We decided to exit the position.

During the first six months of the year, the Fund’s outperformance was driven by both sector allocation and security selection. Our stock selection among the consumer discretionary sector was the main performance detractor, but this was offset by strong sector allocation and stock selection in the consumer staples sector.

Notable Portfolio Changes:

During the quarter, we initiated a position in Yixintang Pharmaceutical, the leading pharmaceutical retail chain in southwestern China. We believe the company is well-positioned to grow revenues and earnings from China’s changing landscape of prescription drug distribution.

The Fund also participated in the Hong Kong IPO of China East Education Holdings during the quarter. China East Education is known for its strong niche in

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			25



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Year		5 Year		Since Inception			Inception Date
Investor Class (MCDFX)		-0.66%		15.51%		0.86%		15.15%		11.07%		10.43%			11/30/09
Institutional Class (MICDX)		-0.60%		15.58%		0.99%		15.31%		11.24%		9.46%			10/29/10
MSCI China Index³		-3.92%		13.08%		-6.55%		14.51%		7.58%		4.89%	⁴

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
	2019						2018
	June		December		Total		June		December		Total
Investor (MCDFX)	$	0.24		n.a.	$	0.24	$	0.34	$	0.06	$	0.40
Inst’l (MICDX)	$	0.25		n.a.	$	0.25	$	0.36	$	0.07	$	0.43

Note: This table does not include capital gains distributions. Totals may differ by $0.02 due to rounding. For income distribution history, visit matthewsasia.com.

30-DAY YIELD:

1.58% (Investor Class) 1.74% (Institutional Class)

Source: BNY Mellon Investment Servicing (US) Inc.

DIVIDEND YIELD: 3.16%

Source: FactSet Research Systems, Bloomberg, MICM.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 11/30/09.



TOP TEN HOLDINGS⁵
	Sector	% of Net Assets
Tencent Holdings, Ltd.	Communication Services		4.7%
China Merchants Bank Co., Ltd.	Financials		3.2%
HKBN, Ltd.	Communication Services		3.1%
Altaba, Inc.	Consumer Discretionary		3.0%
CITIC Telecom International Holdings, Ltd.	Communication Services		2.8%
New Oriental Education & Technology Group, Inc.	Consumer Discretionary		2.7%
Huaxin Cement Co., Ltd.	Materials		2.7%
China Petroleum & Chemical Corp.	Energy		2.5%
China Mobile, Ltd.	Communication Services		2.4%
Melco Resorts & Entertainment, Ltd.	Consumer Discretionary		2.4%
% OF ASSETS IN TOP TEN			29.5%

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


26		MATTHEWS ASIA FUNDS

Matthews China Dividend Fund

Portfolio Manager Commentary (unaudited) (continued)

culinary education, training chefs for the country’s booming dining industry, and it is continuing to research other professional services area for growth. We believe professional talent is critical for China to develop its service industry. As the government has underinvested in this area, private companies could add strong value.

We exited our position in HSBC Holdings due to changes in the interest rate outlook and a lack of strong earnings growth drivers for the group. In addition, we sold Fanhua, a leading Chinese insurance broker, as its rich valuations premium compared to leading insurance companies in China and Hong Kong appears unjustified.

Outlook:

Continuing market volatility, driven by uncertainty over U.S.–China trade negotiations, has been disruptive to fundamental investors like us, as our core competence lies in analyzing company financials and strategies, rather than reading the tea leaves of geopolitical developments. President Trump’s announcement following the G-20 meeting was fairly significant as it appeared that he has neither the interest nor intention of starting a new cold war with China. If this is indeed true, the Chinese equities market will again be driven by fundamentals and, we believe, current valuations are attractive and earnings appear quite positive.



COUNTRY ALLOCATION (%)^6,7
China/Hong Kong			91.8
Taiwan			3.1
Singapore			2.0
Cash and Other Assets, Less Liabilities			3.1


SECTOR ALLOCATION (%)⁷
Consumer Discretionary			23.7
Consumer Staples			14.2
Communication Services			13.0
Financials			9.2
Industrials			8.1
Information Technology			7.4
Real Estate			6.1
Health Care			4.6
Materials			4.5
Utilities			3.8
Energy			2.5
Cash and Other Assets, Less Liabilities			3.1


MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			24.2
Large Cap ($10B–$25B)			14.5
Mid Cap ($3B–10B)			14.4
Small Cap (under $3B)			43.7
Cash and Other Assets, Less Liabilities			3.1

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

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


matthewsasia.com \| 800.789.ASIA			27

Matthews China Dividend Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 93.9%


	Shares		Value

CONSUMER DISCRETIONARY: 20.7%
Textiles, Apparel & Luxury Goods: 7.6%
JNBY Design, Ltd.^b		4,216,000		$7,743,486

Lao Feng Xiang Co., Ltd. B Shares		2,093,003		7,336,873

Nan Liu Enterprise Co., Ltd.		1,144,000		6,020,633

Pacific Textiles Holdings, Ltd.		6,504,000		5,149,478

Crystal International Group, Ltd.^b,c		5,330,500		2,370,534

				28,621,004

Diversified Consumer Services: 6.4%
New Oriental Education & Technology Group, Inc. ADR^d		107,700		10,401,666

Hope Education Group Co., Ltd.^b,c		55,670,000		7,934,898

China East Education Holdings, Ltd.^b,c,d		4,036,500		5,745,981

				24,082,545

Hotels, Restaurants & Leisure: 4.7%
Melco Resorts & Entertainment, Ltd. ADR		410,300		8,911,716

Shanghai Jin Jiang International Hotels Group Co., Ltd. H Shares		32,316,000		6,574,180

Haichang Ocean Park Holdings, Ltd.^b,c,d		14,458,000		2,391,667

				17,877,563

Automobiles: 2.0%
Geely Automobile Holdings, Ltd.		4,491,000		7,700,417

Total Consumer Discretionary				78,281,529



CONSUMER STAPLES: 14.2%
Food Products: 5.9%
Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		1,557,511		7,589,478

Nissin Foods Co., Ltd.		10,492,000		7,576,933

WH Group, Ltd.^b,c		6,960,000		7,060,176

				22,226,587

Beverages: 4.4%
Wuliangye Yibin Co., Ltd. A Shares		492,749		8,483,952

Anhui Gujing Distillery Co., Ltd. B Shares		954,693		8,287,655

				16,771,607

Food & Staples Retailing: 3.9%
Sun Art Retail Group, Ltd.		7,852,000		7,441,211

Yixintang Pharmaceutical Group Co., Ltd. A Shares		1,747,600		7,267,286

				14,708,497

Total Consumer Staples				53,706,691



COMMUNICATION SERVICES: 13.0%
Diversified Telecommunication Services: 5.9%
HKBN, Ltd.		6,475,957		11,676,944

CITIC Telecom International Holdings, Ltd.		27,051,000		10,726,584

				22,403,528

Interactive Media & Services: 4.7%
Tencent Holdings, Ltd.		391,800		17,724,804


Wireless Telecommunication Services: 2.4%
China Mobile, Ltd. ADR		198,930		9,009,540

Total Communication Services				49,137,872



FINANCIALS: 9.1%
Capital Markets: 3.8%
Hong Kong Exchanges & Clearing, Ltd.		225,900		7,983,327

Shenwan Hongyuan Group Co., Ltd. H Shares^b,c,d		18,637,282		6,441,704

				14,425,031


	Shares		Value
Banks: 3.2%
China Merchants Bank Co., Ltd. H Shares		2,442,500		$12,120,710

Insurance: 2.1%
Ping An Insurance Group Co. of China, Ltd. H Shares		674,000		8,104,767

Total Financials				34,650,508



INDUSTRIALS: 8.1%
Machinery: 3.9%
Yangzijiang Shipbuilding Holdings, Ltd.		6,601,300		7,479,073

Shanghai Mechanical and Electrical Industry Co., Ltd. B Shares		4,326,069		7,376,203

				14,855,276

Transportation Infrastructure: 2.2%
Guangdong Provincial Expressway Development Co., Ltd. B Shares		10,498,218		8,297,119


Marine: 2.0%
SITC International Holdings Co., Ltd.		7,413,000		7,569,559

Total Industrials				30,721,954



INFORMATION TECHNOLOGY: 7.4%
Software: 2.2%
Shanghai Baosight Software Co., Ltd. B Shares		4,527,403		8,253,044


IT Services: 2.1%
SUNeVision Holdings, Ltd.		9,201,000		8,016,605


Semiconductors & Semiconductor Equipment: 1.6%
Hua Hong Semiconductor, Ltd.^b,c		3,058,000		5,930,240


Electronic Equipment, Instruments & Components: 1.5%
Vivotek, Inc.		1,421,000		5,652,685

Total Information Technology				27,852,574



REAL ESTATE: 6.0%
Real Estate Management & Development: 4.0%
China Overseas Property Holdings, Ltd.		14,845,000		7,739,604

Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. B Shares		6,143,370		7,436,390

				15,175,994

Equity REITs: 2.0%
CapitaLand Retail China Trust, REIT		6,721,400		7,752,710

Total Real Estate				22,928,704



HEALTH CARE: 4.6%
Pharmaceuticals: 1.7%
Tianjin Zhongxin Pharmaceutical Group Corp., Ltd. S Shares		6,837,100		6,294,412


Health Care Providers & Services: 1.6%
Genertec Universal Medical Group Co., Ltd.^b,c		7,748,500		6,198,276


Biotechnology: 0.7%
Shanghai Haohai Biological Technology Co., Ltd. H Shares^b,c		491,400		2,678,452


Life Sciences Tools & Services: 0.6%
BBI Life Sciences Corp.^b		7,861,000		2,193,758

Total Health Care				17,364,898



MATERIALS: 4.5%
Construction Materials: 2.6%
Huaxin Cement Co., Ltd. B Shares		4,343,492		10,067,441


28		MATTHEWS ASIA FUNDS

Matthews China Dividend Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)


COMMON EQUITIES(continued)		CLOSED-END FUNDS: 3.0%


	Shares		Value
Containers & Packaging: 1.9%
Greatview Aseptic Packaging Co., Ltd.		12,346,000		$7,060,219

Total Materials				17,127,660



UTILITIES: 3.8%
Independent Power and Renewable Electricity Producers: 1.9%
Huaneng Lancang River Hydropower, Inc. A Shares		12,398,442		7,351,828


Gas Utilities: 1.9%
China Gas Holdings, Ltd.		1,926,000		7,157,026

Total Utilities				14,508,854



ENERGY: 2.5%
Oil, Gas & Consumable Fuels: 2.5%
China Petroleum & Chemical Corp. H Shares		13,758,000		9,372,223

Total Energy				9,372,223



TOTAL COMMON EQUITIES				355,653,467

(Cost $329,416,543)


	Shares		Value

CONSUMER DISCRETIONARY: 3.0%
Internet & Direct Marketing Retail: 3.0%
Altaba, Inc.^d		163,100		$11,314,247

Total Consumer Discretionary				11,314,247



TOTALCLOSED-END FUNDS				11,314,247

(Cost $10,912,532)


TOTAL INVESTMENTS: 96.9%				366,967,714
(Cost $340,329,075)


CASH AND OTHER ASSETS, LESS LIABILITIES: 3.1%				11,702,207


NET ASSETS: 100.0%				$378,669,921

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

d	Non-income producing security.

ADR	American Depositary Receipt

REIT	Real Estate Investment Trust

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			29

LOGO


PORTFOLIO MANAGERS

Beini Zhou, CFA
Lead Manager

Michael B. Han, CFA
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MAVRX	MAVAX
CUSIP	577130693	577130685
Inception	11/30/15	11/30/15
NAV	$11.62	$11.55
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.77%	1.54%
After Fee Waiver and Reimbursement²	1.50%	1.25%
Portfolio Statistics
Total # of Positions		34
Net Assets		$25.0 million
Weighted Average Market Cap		$26.8 billion
Portfolio Turnover³		48.29%
Benchmark
MSCI AC Asia ex Japan Index

OBJECTIVE

Long-term capital appreciation.

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 companies located in Asia. The Fund 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.

Matthews Asia Value Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Value Fund returned 7.00% (Investor Class) and 7.14% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.83% over the same period. For the quarter ending June 30, the Fund returned –1.61% (Investor Class) and –1.54% (Institutional Class), while its benchmark returned –0.56%.

Market Environment:

U.S.–China trade war news, a macroeconomic slowdown in major economies, including China, and geopolitical tension between the U.S. and Iran all added to global market uncertainty in recent months. Yet U.S. markets approached record highs in early July. Global equity investors seemed to perceive an alternate—far rosier—reality. The only logical reason that might bridge the dichotomy is low interest rates. The U.S. Federal Reserve seemed to make a 180-degree turn during the second quarter from its tightening stance in late 2018, apparently signaling a rate cut ahead.

Performance Contributors and Detractors:

The Fund lagged its benchmark during the first half of the year, primarily due to the lower beta of the overall portfolio composition as well as weak performance by South Korea’s market.

A top detractor during the year-to-date period was Clear Media, a holding that we have previously commented on extensively. The company is China’s dominant bus shelter advertising concessionaire. From late 2018 through the first half of 2019, China’s macroeconomic slowdown translated into an overall slowdown in ad spending across many sectors. Brand advertising, which is typically featured in bus shelters, was hit particularly hard. The firm had stated that it expects a double-digit decline in its top line for the first half of the year. This led to its recent share price weakness. We continue to hold Clear Media shares, however, as we believe company fundamentals should rebound once brand ad spending in China recovers.

Honma Golf, the Hong Kong-listed Japanese golf club and accessory company, was another major detractor during the first half of the year. The firm announced its March-end full-year results during the second quarter. Earnings were weaker than expected with full-year operating profits down by double digits year over year. We feel positive after meeting with management recently and learning of some high-profile new hires in various key positions, including the head of global supply chain. Along with these key hires, the firm has been making a concerted effort and taking a methodical approach to entering the U.S. market.

On a positive note, two Chinese stocks, Anhui Gujing Distillery and Huifu Payment, were among the top contributors during the first half of the year. Anhui Gujing is a well-known liquor brand in China, and is the provincial leader in Anhui province. Many of the liquor stocks in the industry reported solid growth in recent periods so the gains in growth were seen widely across the sector, which saw good share price performance in the first half.

Huifu Payment is a provider of merchant payment services in China, and is among the largest merchant acquirers targeting micro-merchants in the country. Its business model is akin to U.S. mobile payments company Square. Following the firm’s

(continued)

1	Prospectus expense ratios.

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 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, 2020 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.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


30		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		Since Inception		Inception Date
Investor Class (MAVRX)		-1.61%		7.00%		-1.78%		10.52%		9.29%		11/30/15
Institutional Class (MAVAX)		-1.54%		7.14%		-1.48%		10.80%		9.58%		11/30/15
MSCI AC Asia ex Japan Index⁴		-0.56%		10.83%		-0.18%		11.81%		10.37%

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Plotted monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
Naspers, Ltd.	Consumer Discretionary	China/Hong Kong		7.9%
China National Accord Medicines Corp., Ltd.	Health Care	China/Hong Kong		6.5%
CK Hutchison Holdings, Ltd.	Industrials	China/Hong Kong		5.1%
Samsung SDI Co., Ltd., Pfd.	Information Technology	South Korea		4.4%
Anhui Gujing Distillery Co., Ltd.	Consumer Staples	China/Hong Kong		4.1%
Huifu Payment, Ltd.	Information Technology	China/Hong Kong		3.9%
Shinyoung Securities Co., Ltd.	Financials	South Korea		3.7%
Haw Par Corp., Ltd.	Health Care	Singapore		3.5%
Geumhwa PSC Co., Ltd.	Industrials	South Korea		3.4%
Straits Trading Co., Ltd.	Materials	Singapore		3.4%
% OF ASSETS IN TOP TEN				45.9%

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


matthewsasia.com \| 800.789.ASIA			31



COUNTRY ALLOCATION (%)^6,7
China/Hong Kong			38.5
South Korea			28.2
Japan			12.7
Singapore			6.9
Taiwan			1.7
Malaysia			1.6
United States			1.3
India			0.8
Indonesia			0.6
Cash and Other Assets, Less Liabilities			7.7



SECTOR ALLOCATION (%)⁷
Consumer Discretionary			18.9
Health Care			15.6
Industrials			14.7
Information Technology			12.2
Communication Services			9.1
Financials			8.9
Consumer Staples			7.7
Materials			5.1
Cash and Other Assets, Less Liabilities			7.7



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			21.6
Large Cap ($10B–$25B)			10.8
Mid Cap ($3B–10B)			13.3
Small Cap (under $3B)			46.7
Cash and Other Assets, Less Liabilities			7.7

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

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Asia Value Fund

Portfolio Manager Commentary (unaudited) (continued)

Hong Kong IPO last summer, we initiated a position in the company when its share price fell considerably after its listing. We believe Huifu Payment’s business model as well as its relationship with AliPay and Wechat Pay, two third-party digital payment giants affiliated with Alibaba and Tencent respectively, have not been well understood by the market. The fees that small merchants pay to accept non-cash payments for offline transactions in China are a mere fraction of that seen in the U.S. but recent regulatory action in China has led to rising fees. Barring a significant slowdown in China, we believe the firm should see solid growth over the next few years.

Notable Portfolio Changes:

We did not initiate any new positions during the second quarter. We did, however, add to some existing positions. We also exited a handful of holdings, including Nissin Food. Nissin Food is the China/Hong Kong subsidiary of the Japanese instant-noodle giant. The firm went public in Hong Kong in late 2017. We initiated the position in the same month after its poor initial public offering debut. The share price has done well since then and we sold out the position recently as it is now trading at around 10x Earnings Before Interest and Taxation (EBIT), in line with our estimated intrinsic value of the business.

We continued to consolidate the portfolio to fewer higher-quality holdings, and ended the quarter with 34 companies.

Outlook:

It is unclear what a market top would look like, but we believe we may be closer to a major market top given that Chinese coffee chain Luckin Coffee, which is less than two years old (and which is giving Starbucks China a run for its money), just went public and fetched a valuation close to US$5 billion. Never mind that its revenue was a little over US$100 million with more than US$200 million in operating losses last year.

The market, of course, is not dictated by wishful thinking. So, we remain undistracted by what we consider to be U.S.–China trade war noise. Trade deal or not in the near term, we do not think President Trump’s China deals will have much bearing on the long-term prospects of many of the quality businesses that we examine. Rather than discussing the trade war topic in meetings with management, we think it is a better use of time to further our understanding of what makes a company’s business model tick, relative to its competition. We firmly believe that it is the deep understanding of the latter rather than the former that will be a key long-term source of alpha that we seek to generate for our clients.


32		MATTHEWS ASIA FUNDS

Matthews Asia Value Fund

June 30, 2019

Schedule of Investments^a(unaudited)


COMMON EQUITIES: 81.0%


	Shares		Value

CHINA/HONG KONG: 38.5%
Naspers, Ltd. N Shares		8,200		$1,984,812

China National Accord Medicines Corp., Ltd. B Shares		462,107		1,626,616

CK Hutchison Holdings, Ltd.		129,500		1,277,356

Anhui Gujing Distillery Co., Ltd. B Shares		116,800		1,013,937

Huifu Payment, Ltd.^b,c,d		1,770,400		970,423

Clear Media, Ltd.		1,393,000		809,583

China Mobile, Ltd.		79,500		723,741

China Isotope & Radiation Corp.		303,000		715,061

Shandong Weigao Group Medical Polymer Co., Ltd. H Shares		296,000		268,600

Huangshan Tourism Development Co., Ltd. B Shares		204,887		216,853

Total China/Hong Kong				9,606,982



SOUTH KOREA: 16.9%
Shinyoung Securities Co., Ltd.		17,510		913,742

Geumhwa PSC Co., Ltd.		29,568		858,721

NAVER Corp.		7,387		730,064

DGB Financial Group, Inc.		91,987		649,681

Hyundai Greenfood Co., Ltd.		55,158		626,140

Young Poong Corp.		697		434,625

Total South Korea				4,212,973



JAPAN: 12.7%
YAMADA Consulting Group Co., Ltd.		31,300		581,406

Asante, Inc.		29,700		580,343

Gakujo Co., Ltd.		47,300		523,260

Honma Golf, Ltd.^b,d		491,500		426,587

Medikit Co., Ltd.		7,400		406,326

Ohashi Technica, Inc.		27,300		359,767

San-A Co., Ltd.		7,100		284,079

Total Japan				3,161,768



SINGAPORE: 6.9%
Haw Par Corp., Ltd.		84,200		878,717

Straits Trading Co., Ltd.		509,100		843,137

Total Singapore				1,721,854



TAIWAN: 1.7%
P-Duke Technology Co., Ltd.		145,000		433,893

Total Taiwan				433,893



MALAYSIA: 1.6%
Genting BHD		243,700		399,556

Total Malaysia				399,556



UNITED STATES: 1.3%
Cognizant Technology Solutions Corp. Class A		5,100		323,289

Total United States				323,289



INDIA: 0.8%
Wipro, Ltd.		48,962		199,315

Total India				199,315


	Shares		Value

INDONESIA: 0.6%
PT Mitra Pinasthika Mustika		2,618,100		$158,533

Total Indonesia				158,533



TOTAL COMMON EQUITIES				20,218,163

(Cost $20,467,640)


PREFERRED EQUITIES: 11.3%

SOUTH KOREA: 11.3%
Samsung SDI Co., Ltd., Pfd.		13,796		1,091,394

Samsung Fire & Marine Insurance Co., Ltd., Pfd.		4,018		666,183

Hyundai Motor Co., Ltd., 2nd Pfd.		8,095		605,609

Samsung Electronics Co., Ltd., Pfd.		14,134		468,745

Total South Korea				2,831,931



TOTAL PREFERRED EQUITIES				2,831,931

(Cost $2,867,604)


TOTAL INVESTMENTS: 92.3%				23,050,094
(Cost $23,335,244)


CASH AND OTHER ASSETS, LESS LIABILITIES: 7.7%				1,921,255


NET ASSETS: 100.0%				$24,971,349

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

c	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

BHD

Berhad

Pfd.

Preferred

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			33

LOGO


PORTFOLIO MANAGERS

Taizo Ishida
Lead Manager

Weihao Xu
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MPACX	MIAPX
CUSIP	577130867	577130776
Inception	10/31/03	10/29/10
NAV	$26.04	$26.25
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.10%	0.93%
Portfolio Statistics
Total # of Positions		62
Net Assets		$1.1 billion
Weighted Average Market Cap		$30.9 billion
Portfolio Turnover²		12.12%
Benchmark
MSCI AC Asia Pacific Index

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks 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. The Fund may also invest in the convertible securities, of any duration or quality, of Asian companies.

Matthews Asia Growth Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Growth Fund returned 15.78% (Investor Class) and 15.89% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 10.71% over the same period. For the quarter ending June 30, the Fund returned 1.28% (Investor Class) and 1.35% (Institutional Class), while the benchmark returned 0.90%.

Market Environment:

Asia’s capital markets rallied at the start of the year, led by Chinese equities. Volatility flared in May, followed by a rebound for equity prices in June. The dominant factors driving Asia’s capital markets over the short term were political, stemming from rhetoric around trade relations between the U.S. and China. Following the recent G-20 Summit, the tone of dialogue surrounding trade issues improved, even though negotiations provided few details and trade issues are likely to linger. Despite recent volatility, China’s domestic markets and the Hong Kong market were among the best-performing markets in Asia.

Japanese equities posted solid gains in the first half, even as global markets experienced swings in sentiment. Early this year, the U.S. Federal Reserve’s pause in rate hikes improved investor sentiment and Japan’s equity valuations came back from their lowest levels since the start of the Abenomics era. In May, however, trade friction between U.S. and China intensified, dampening Japanese export companies and Japan’s technology sector in particular. The Bank of Japan’s most recent Tankan Survey (announced July 1) showed further deterioration in the outlook among respondents within the manufacturing sector, reflecting weakness in exports, especially among semiconductor-related products.

Performance Contributors and Detractors:

The Fund outperformed its benchmark in the first half. The majority of the outperformance was generated during the first quarter, with performance largely flat in the second quarter. Our stock selection in China, the health care sector and small companies contributed to performance. Detractors included the Fund’s allocation to Sri Lanka, its underweight to information technology and stock selection in large companies.

At an individual stock level, Chinese health care stocks were among the Fund’s top contributors to performance in the first half. Health care demand in China remains robust and we continue to see the growth of domestic health care companies as part of a long-term, secular trend. Examples of our holdings in this sector include Jiangsu Hengrui Medicine, a leading Chinese drug manufacturer, and Wuxi Biologics, one of China’s largest providers of outsourcing services for clinical trials. Both companies were top contributors in the half. Meanwhile, Genscript Biotech, a Nanjing-based Chinese biotech company, is a leader in global gene synthesis and DNA synthesis services markets. Genscript was also a top contributor in the half.

A detractor from performance was Chinese search engine Baidu. As Chinese consumers increasingly move to other platforms to perform searches, Baidu could see its user base shrink. Valuations for Baidu are currently fairly low, so the stock could have upside potential if the company can rekindle its growth. We continue to evaluate and monitor the position.

Notable Portfolio Changes:

Recent IPOs provided us with opportunities to invest in Chinese health care companies. In the second quarter, we added positions in drug manufacturers Hansoh Pharmaceutical Group and NextCure. We also added a position in Chinese

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


34		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
				Average Annual Total Returns
	3 Months	YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MPACX)	1.28%		15.78%		-5.84%		9.58%		5.91%		9.89%		8.96%			10/31/03
Institutional Class (MIAPX)	1.35%		15.89%		-5.65%		9.78%		6.11%		n.a.		6.79%			10/29/10
MSCI AC Asia Pacific Index³	0.90%		10.71%		-0.76%		10.40%		4.70%		7.36%		6.92%	⁴

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 10/31/03.



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
Shenzhou International Group Holdings, Ltd.	Consumer Discretionary	China/Hong Kong		3.9%
Baozun, Inc.	Consumer Discretionary	China/Hong Kong		3.6%
HDFC Bank, Ltd.	Financials	India		3.6%
PT Bank Rakyat Indonesia Persero	Financials	Indonesia		3.6%
CSL, Ltd.	Health Care	Australia		3.3%
M3, Inc.	Health Care	Japan		3.0%
Wuxi Biologics Cayman, Inc.	Health Care	China/Hong Kong		3.0%
Terumo Corp.	Health Care	Japan		2.8%
Sony Corp.	Consumer Discretionary	Japan		2.7%
Jiangsu Hengrui Medicine Co., Ltd.	Health Care	China/Hong Kong		2.7%
% OF ASSETS IN TOP TEN				32.2%

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


matthewsasia.com \| 800.789.ASIA			35



COUNTRY ALLOCATION (%)^6,7
Japan			37.9
China/Hong Kong			30.7
Indonesia			8.2
India			4.9
Australia			4.4
Bangladesh			3.7
Sri Lanka			2.1
Thailand			1.6
Philippines			1.5
Vietnam			1.5
Taiwan			1.0
United States			0.6
Cash and Other Assets, Less Liabilities			2.0



SECTOR ALLOCATION (%)⁷
Health Care			33.5
Consumer Discretionary			21.4
Financials			13.5
Consumer Staples			8.9
Industrials			8.4
Communication Services			8.0
Information Technology			2.4
Energy			1.1
Materials			0.8
Cash and Other Assets, Less Liabilities			2.0



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			28.1
Large Cap ($10B–$25B)			21.1
Mid Cap ($3B–10B)			20.5
Small Cap (under $3B)			28.2
Cash and Other Assets, Less Liabilities			2.0

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

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Asia Growth Fund

Portfolio Manager Commentary (unaudited) (continued)

biopharma company Innovent Biologics. In China’s social media space, we added a position in Bilibili, an online platform for sharing short videos with a growing user base. Bilibili’s platform specifically caters to Gen Z, representing consumers age 24 and younger. Gen Z grew up using mobile devices and spends more for internet content than other groups. Turning to Japan, we initiated a position in SBI Holdings, the largest online broker and second-largest among all brokerages in Japan. Unlike competitors, SBI Holding’s core demographics are younger customers in their 30s and 40s, a customer base that is set to grow given Japan pensions are no longer sufficient enough to support retirement life. In Indonesia, we initiated a position in Bank Tabungan Pensiunan Nasi, a microlender with a niche market representing high growth potential.

In the second quarter, we exited positions in Japanese financial services provider Orix and Indonesian conglomerate Astra International. Both companies were long-term holdings that generated attractive returns over full market cycles. Both companies seem to be shifting into lower growth modes, however, so we exited the positions.

Outlook:

Looking ahead, economic signals appear somewhat mixed. On the positive side, interest rates are widely expected to ease or hold steady, while oil prices seem to remain in check. Both conditions are positive for Asia currencies. While trade tensions have temporarily softened, several issues remain unresolved and U.S. President Donald Trump’s negotiation style has been unpredictable. Against this backdrop of uncertainty, China’s policymakers have signaled a willingness to take a more proactive stance in using fiscal and monetary policy to support growth.

While Japanese equities experienced healthy gains in the first quarter, the macro environment remains muted and second quarter broad market equity returns were mixed. Underlying fundamentals are still on a downward path, and developments surrounding trade frictions remain unpredictable. We do not expect any dramatic outcomes or resolution of the current issues. On a positive note, corporate inventory levels have declined quickly in the past six months. Recent earnings results showed an earnings decline in many sectors but absolute profit levels remain higher than during past downturns.

Elsewhere in the region, elections in India and Indonesia resulted in wins for the incumbents, adding political stability to both countries. With elections concluded, reform cycles in both countries could get a boost.


36		MATTHEWS ASIA FUNDS

Matthews Asia Growth Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 98.0%


	Shares		Value

JAPAN: 37.9%
M3, Inc.		1,843,300		$33,826,142

Terumo Corp.		1,041,400		31,110,218

Sony Corp.		577,800		30,363,375

Nidec Corp.		218,500		30,007,696

SoftBank Group Corp.		613,800		29,563,878

Keyence Corp.		43,800		27,012,445

Pigeon Corp.		544,900		21,973,569

TechnoPro Holdings, Inc.		399,800		21,341,912

PeptiDream, Inc.^b		411,000		21,109,770

Nitori Holdings Co., Ltd.		133,400		17,702,480

Seria Co., Ltd.		633,000		14,641,631

Mercari, Inc.^b		531,300		14,153,197

Japan Elevator Service Holdings Co., Ltd.		555,100		14,100,831

Eisai Co., Ltd.		238,500		13,517,280

Ariake Japan Co., Ltd.		208,300		13,179,763

Sosei Group Corp.^b		550,900		12,177,272

FANUC Corp.		63,400		11,780,528

SanBio Co., Ltd.^b		364,200		11,731,016

SBI Holdings, Inc.		446,400		11,087,789

Sysmex Corp.		153,200		10,022,358

HEALIOS KK^b		553,300		9,238,371

Nitto Denko Corp.		184,700		9,142,004

Kyoritsu Maintenance Co., Ltd.		176,400		8,259,517

CYBERDYNE, Inc.^b		768,500		4,484,394

Link And Motivation, Inc.		564,400		3,185,789

Total Japan				424,713,225



CHINA/HONG KONG: 30.6%
Shenzhou International Group Holdings, Ltd.		3,155,000		43,522,318

Baozun, Inc. ADR^b		818,500		40,810,410

Wuxi Biologics Cayman, Inc.^b,c,d		3,693,000		33,131,764

Jiangsu Hengrui Medicine Co., Ltd. A Shares		3,123,824		30,063,350

Genscript Biotech Corp.^b		11,934,000		29,945,395

BeiGene, Ltd. ADR^b		223,300		27,678,035

Huazhu Group, Ltd. ADR		686,700		24,892,875

Alibaba Group Holding, Ltd. ADR^b		127,200		21,554,040

Tencent Music Entertainment Group ADR^b		920,200		13,793,798

Shenzhen Inovance Technology Co., Ltd. A Shares^b		4,069,575		13,600,582

Autohome, Inc. ADR^b		145,500		12,457,710

Innovent Biologics, Inc.^b,c,d		3,500,500		11,825,942

Yixintang Pharmaceutical Group Co., Ltd. A Shares		2,654,796		11,039,804

Shanghai Haohai Biological Technology Co., Ltd. H Shares^c,d		1,873,800		10,213,436

Bilibili, Inc. ADR^b		592,100		9,633,467

Baidu, Inc. ADR^b		51,600		6,055,776

Hansoh Pharmaceutical Group Co., Ltd.^b,c,d		1,070,000		2,828,514

Total China/Hong Kong				343,047,216


	Shares		Value

INDONESIA: 8.2%
PT Bank Rakyat Indonesia Persero		129,492,600		$39,977,615

PT Bank Tabungan Pensiunan Nasional Syariah^b		89,471,600		21,849,107

PT Ace Hardware Indonesia		82,006,700		10,507,555

PT Indofood CBP Sukses Makmur		13,577,500		9,759,116

PT Mayora Indah		54,105,900		9,500,090

Total Indonesia				91,593,483



INDIA: 4.9%
HDFC Bank, Ltd.		1,148,086		40,666,637

ITC, Ltd.		2,925,894	��	11,602,355

PC Jeweller, Ltd.		3,698,554		2,425,263

Total India				54,694,255



AUSTRALIA: 4.4%
CSL, Ltd.		240,892		36,476,805

Oil Search, Ltd.		2,481,915		12,376,911

Total Australia				48,853,716



BANGLADESH: 3.7%
Square Pharmaceuticals, Ltd.		8,767,712		27,292,287

BRAC Bank, Ltd.^b		17,927,755		14,105,003

Total Bangladesh				41,397,290



SRI LANKA: 2.1%
Sampath Bank PLC^†		21,899,216		17,276,809

LOLC Holdings PLC^b		12,121,473		6,249,775

Total Sri Lanka				23,526,584



THAILAND: 1.6%
Major Cineplex Group Public Co., Ltd.		18,967,100		18,086,447

Total Thailand				18,086,447



PHILIPPINES: 1.5%
Jollibee Foods Corp.		2,007,890		11,045,979

Emperador, Inc.^b		37,942,500		5,657,865

Total Philippines				16,703,844



VIETNAM: 1.5%
Vietnam Dairy Products JSC		3,116,592		16,467,160

Total Vietnam				16,467,160



TAIWAN: 1.0%
St. Shine Optical Co., Ltd.		630,000		11,197,753

Total Taiwan				11,197,753


matthewsasia.com \| 800.789.ASIA			37

Matthews Asia Growth Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)


	Shares		Value

UNITED STATES: 0.6%
NextCure, Inc.^b		450,000		$6,741,000

Total United States				6,741,000



TOTAL INVESTMENTS: 98.0%				1,097,021,973
(Cost $877,988,873)


CASH AND OTHER ASSETS, LESS LIABILITIES: 2.0%				22,806,092


NET ASSETS: 100.0%				$1,119,828,065

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

ADR	American Depositary Receipt

JSC	Joint Stock Co.

See accompanying notes to financial statements.


38		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Sharat Shroff, CFA
Lead Manager

Rahul Gupta	Raymond Deng
Co-Manager	Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MAPTX	MIPTX
CUSIP	577130107	577130834
Inception	9/12/94	10/29/10
NAV	$28.91	$28.90
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.07%	0.90%
After Fee Waiver and Reimbursement²	1.04%	0.88%
Portfolio Statistics
Total # of Positions		63
Net Assets		$9.2 billion
Weighted Average Market Cap		$72.0 billion
Portfolio Turnover³		11.48%
Benchmark
MSCI AC Asia ex Japan Index

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of companies located in Asia ex Japan, which consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging and frontier countries and markets in the Asian region.

Matthews Pacific Tiger Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Pacific Tiger Fund returned 7.63% (Investor Class) and 7.72% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.83% over the same period. For the quarter ending June 30, 2019, the Fund returned 0.03% (Investor Class) and 0.10% (Institutional Class), while the benchmark returned –0.56%.

Market Environment:

The first half of the year felt like a roller-coaster ride for equity investors across the region. Asia’s capital markets rallied at the start of the year, led by Chinese equities. Volatility flared in May, followed by a rebound in equity prices in June. The dominant factors driving Asia capital markets over the short term were political, stemming from rhetoric around trade relations between the U.S. and China. Following the recent G-20 Summit, the tone of trade dialogue improved, even though negotiations provided few details and trade issues are likely to linger. On a positive note, China’s policymakers seem to be taking a more proactive stance in preparing China for a more uncertain macroeconomic environment. Despite recent volatility, China’s domestic markets and the Hong Kong market were among the best-performing markets in Asia.

Outside of China, Asian markets were generally positive, but seemed lackluster compared with China’s markets. Chinese equities returned roughly 14% year to date, while India and Indonesia’s equity markets each notched roughly 8% gains respectively for the same period. Currencies were somewhat stable with the exception of the Taiwanese dollar and the Korean won, which were more exposed to the tech cycle. Larger companies tended to do better, perhaps due to index flows, but also in their prospects for having slightly better earnings profiles than some smaller companies.

Contributors and Detractors:

The Fund lagged its benchmark in the first half. Several factors weighed on relative performance, one of the most significant being an overweight allocation to India. Our holdings in India are the natural outcome of our bottom-up stock selection process. The Indian companies in our portfolio embody, we believe, many attractive investment attributes and provide opportunities for finding uncorrelated earnings growth. In the short term, however, our Indian holdings caused performance to trail the benchmark.

From a sector standpoint, our holdings in communication services were also a detractor from relative performance. While the benchmark tends to be concentrated in a couple of big technology names in China, the Fund takes a more diversified approach to investing in Asia’s digital economy, seeking to spread our holdings across the region. One such holding is Naver, South Korea’s largest search engine. To expand its business beyond search advertising revenues, Naver is looking to diversify its business model to include gaming, e-commerce payments and cloud-based services. To achieve these goals, Naver is making near-term investments that weigh on its earnings profile. However, we continue to like the company’s long-term prospects.

For the most recent quarter, the Fund was slightly ahead of its benchmark. Strong stock selection, particularly in China, was a contributor to performance in the quarter. We continue to see increased investment opportunities in China, especially in China’s dynamic service sector, which we discuss in the next section.

(continued)

1	Prospectus expense ratios.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			39



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MAPTX)		0.03%		7.63%		1.14%		8.72%		5.95%		9.83%		8.54%			9/12/94
Institutional Class (MIPTX)		0.10%		7.72%		1.31%		8.91%		6.13%		n.a.		6.12%			10/29/10
MSCI AC Asia ex Japan Index⁴		-0.56%		10.83%		-0.18%		11.81%		5.14%		8.17%		4.50%	⁵

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 8/31/94.



TOP TEN HOLDINGS⁶
	Sector	Country	% of Net Assets
Ping An Insurance Group Co. of China, Ltd.	Financials	China/Hong Kong		4.0%
Inner Mongolia Yili Industrial Group Co., Ltd.	Consumer Staples	China/Hong Kong		3.6%
China Resources Land, Ltd.	Real Estate	China/Hong Kong		3.6%
Tencent Holdings, Ltd.	Communication Services	China/Hong Kong		3.5%
AIA Group, Ltd.	Financials	China/Hong Kong		3.3%
Alibaba Group Holding, Ltd.	Consumer Discretionary	China/Hong Kong		3.2%
China Resources Beer Holdings Co., Ltd.	Consumer Staples	China/Hong Kong		2.9%
NAVER Corp.	Communication Services	South Korea		2.9%
DKSH Holding AG	Industrials	Switzerland		2.6%
Kotak Mahindra Bank, Ltd.	Financials	India		2.6%
% OF ASSETS IN TOP TEN				32.2%

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


40		MATTHEWS ASIA FUNDS

Matthews Pacific Tiger Fund

Portfolio Manager Commentary (unaudited) (continued)

Notable Portfolio Changes:

Recent IPOs provided opportunities for the Fund to invest in Chinese health care and education companies, sectors we believe are poised to benefit from rising incomes and domestic consumer spending. To fund new positions, we trimmed holdings in South Korea and Malaysia. Meanwhile, we also rotated capital within the portfolio. A few existing holdings experienced temporary aberrations in their earnings profiles, creating opportunities to add to high-conviction positions. Before committing additional capital, we conducted thorough due diligence to garner the confidence that any disruptions were short term in nature. Beyond China, we also added capital around the margins to holdings in Indonesia.

Outlook:

Media coverage of U.S. and China trade relations tends to focus on short-term developments. Investing with a long-term view, we try to ignore the noise and remain focused on the fundamentals that actually drive growth. We pay particular attention to company earnings, as well as secular trends we see on the ground. Amid current headlines, it is easy for investors to lose sight of the transformation that is taking place among China’s enormous middle class. Income growth has expanded rapidly from the eastern seaboard of China to the country’s vast interior. We expect consumers in less-developed urban centers to drive China’s economic growth for many years to come, so we continue to look for businesses that are geared toward that opportunity set.

Outside of China, recent elections in India and Indonesia resulted in wins for incumbents, adding a sense of political stability in both countries. With elections concluded, we are optimistic that reform cycles in both countries could get a boost. In the near term, an easing monetary environment may loosen some of the constraints on liquidity, and hence be a bit more supportive of growth. Inspired by the innovation and grit of Asia’s entrepreneurs, we will continue to look for opportunities across the market-cap spectrum, including small and medium-size enterprises. As always, we will invest in companies that we believe have sustainable growth prospects that harness the rising spending power of Asia’s middle class.



COUNTRY ALLOCATION (%)^7,8
China/Hong Kong			39.6
India			19.0
South Korea			10.8
Indonesia			7.4
Thailand			5.0
Taiwan			4.6
Philippines			2.6
Switzerland			2.6
Malaysia			2.1
United States			1.8
Vietnam			1.7
Japan			0.6
Cash and Other Assets, Less Liabilities			2.3



SECTOR ALLOCATION (%)⁸
Financials			26.3
Consumer Staples			19.8
Communication Services			15.2
Consumer Discretionary			9.3
Real Estate			7.4
Information Technology			6.8
Industrials			4.5
Health Care			4.3
Utilities			2.9
Materials			1.3
Cash and Other Assets, Less Liabilities			2.3



MARKET CAP EXPOSURE (%)⁸
Mega Cap (over $25B)			44.0
Large Cap ($10B–$25B)			29.0
Mid Cap ($3B–10B)			17.0
Small Cap (under $3B)			7.7
Cash and Other Assets, Less Liabilities			2.3

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, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


matthewsasia.com \| 800.789.ASIA			41

Matthews Pacific Tiger Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 97.7%


	Shares		Value

CHINA/HONG KONG: 39.5%
Ping An Insurance Group Co. of China, Ltd. H Shares		30,234,000		$363,560,105

Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		68,177,514		332,217,077

China Resources Land, Ltd.		74,174,000		326,572,216

Tencent Holdings, Ltd.		7,067,800		319,743,166

AIA Group, Ltd.		27,718,000		299,323,988

Alibaba Group Holding, Ltd. ADR^b		1,709,800		289,725,610

China Resources Beer Holdings Co., Ltd.		56,607,775		268,933,693

Hong Kong Exchanges & Clearing, Ltd.		6,114,000		216,069,327

Yum China Holdings, Inc.		3,721,510		171,933,762

China Mobile, Ltd. ADR		3,604,226		163,235,396

Dairy Farm International Holdings, Ltd.		22,254,946		159,075,728

Guotai Junan Securities Co., Ltd. H Shares^b,c,d,^†		82,304,600		146,600,437

Fuyao Glass Industry Group Co., Ltd. H Shares^c,d,^†		42,879,200		133,152,824

Kweichow Moutai Co., Ltd. A Shares		917,973		131,796,532

Sinopharm Group Co., Ltd. H Shares		26,574,800		93,572,345

iQIYI, Inc. ADR^b		3,754,400		77,528,360

Fuyao Glass Industry Group Co., Ltd. A Shares		17,242,604		57,177,673

Wise Talent Information Technology Co., Ltd.^b,d		16,143,400		42,777,933

China East Education Holdings, Ltd.^b,c,d		18,000,000		25,623,104

Hansoh Pharmaceutical Group Co., Ltd.^b,c,d		6,230,000		16,468,822

Total China/Hong Kong				3,635,088,098



INDIA: 19.0%
Kotak Mahindra Bank, Ltd.		10,967,393		234,691,669

HDFC Bank, Ltd.		6,223,409		220,440,901

Housing Development Finance Corp., Ltd.		6,154,197		195,415,131

Tata Power Co., Ltd.^†		180,316,487		180,304,311

Titan Co., Ltd.		9,015,327		174,383,624

ITC, Ltd.		39,202,500		155,453,795

Sun Pharmaceutical Industries, Ltd.		24,286,809		141,153,627

Container Corp. of India, Ltd.		16,080,979		132,755,885

Dabur India, Ltd.		21,117,482		122,528,005

GAIL India, Ltd.		20,024,384		90,474,546

United Spirits, Ltd.^b		6,778,030		57,437,259

Just Dial, Ltd.^b,^†		3,307,840		36,462,147

Thermax, Ltd.		312,681		4,793,209

Total India				1,746,294,109



SOUTH KOREA: 10.8%
NAVER Corp.		2,670,205		263,898,727

Samsung Electronics Co., Ltd.		4,755,250		193,635,405

DB Insurance Co., Ltd.^†		3,570,463		183,370,247

Cheil Worldwide, Inc.^†		5,852,726		149,023,639

Orion Holdings Corp.^†		5,656,566		84,072,589

E-Mart, Inc.		377,002		45,699,097

S-1 Corp.		483,483		40,867,744

Amorepacific Corp.		175,449		25,062,891

Green Cross Corp.		95,114		10,026,227

Total South Korea				995,656,566


	Shares		Value

INDONESIA: 7.4%
PT Bank Central Asia		100,580,000		$213,438,421

PT Telekomunikasi Indonesia Persero		589,405,600		172,746,344

PT Indofood CBP Sukses Makmur		181,522,600		130,473,223

PT Surya Citra Media		533,163,200		60,807,753

PT Mitra Keluarga Karyasehat^b,d		383,065,700		51,371,137

PT Telekomunikasi Indonesia Persero ADR		1,710,640		50,019,114

Total Indonesia				678,855,992



THAILAND: 5.0%
Central Pattana Public Co., Ltd.		94,089,000		230,193,099

The Siam Cement Public Co., Ltd.		7,522,950		115,792,323

Kasikornbank Public Co., Ltd.		18,431,800		113,051,175

Total Thailand				459,036,597



TAIWAN: 4.6%
Delta Electronics, Inc.		33,921,182		172,402,441

President Chain Store Corp.		16,271,608		157,474,027

Synnex Technology International Corp.		72,350,921		90,992,688

Total Taiwan				420,869,156



PHILIPPINES: 2.6%
SM Prime Holdings, Inc.		164,670,771		119,265,680

GT Capital Holdings, Inc.		6,482,364		119,008,394

Total Philippines				238,274,074



SWITZERLAND: 2.6%
DKSH Holding AG^†		4,039,869		236,718,475

Total Switzerland				236,718,475



MALAYSIA: 2.1%
Public Bank BHD		19,583,194		109,046,413

IHH Healthcare BHD		47,676,300		66,962,526

IHH Healthcare BHD		11,543,000		16,048,916

Total Malaysia				192,057,855



UNITED STATES: 1.8%
Cognizant Technology Solutions Corp. Class A		2,592,900		164,363,931

Total United States				164,363,931



VIETNAM: 1.7%
Vietnam Dairy Products JSC		28,991,060		153,180,278

Total Vietnam				153,180,278



JAPAN: 0.6%
LINE Corp. ADR^b		2,094,000		58,925,160

Total Japan				58,925,160



TOTAL INVESTMENTS: 97.7%				8,979,320,291
(Cost $6,298,369,126)


CASH AND OTHER ASSETS, LESS LIABILITIES: 2.3%				213,646,393


NET ASSETS: 100.0%				$9,192,966,684


42		MATTHEWS ASIA FUNDS

Matthews Pacific Tiger Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

ADR	American Depositary Receipt

BHD

Berhad

JSC	Joint Stock Co.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			43

LOGO


PORTFOLIO MANAGERS

Vivek Tanneeru
Lead Manager

Winnie Chwang
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MASGX	MISFX
CUSIP	577130727	577130719
Inception	4/30/15	4/30/15
NAV	$10.94	$10.93
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	2.20%	2.01%
After Fee Waiver and Reimbursement²	1.50%	1.25%
Portfolio Statistics
Total # of Positions		66
Net Assets		$45.5 million
Weighted Average Market Cap		$12.7 billion
Portfolio Turnover³		22.93%
Benchmark
MSCI AC Asia ex Japan Index

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of companies of any market capitalization located in Asia that Matthews believes satisfy one or more of its environmental, social and governance (“ESG”) standards. Asia consists of all countries and markets in Asia and includes developed, emerging, and frontier countries and markets in the Asia region. The Fund may also invest in convertible securities and fixed-income securities, of any duration or quality, including high yield securities, of Asian companies.

Matthews Asia ESG Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia ESG Fund returned 9.62% (Investor Class) and 9.74% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.83%. For the quarter ending June 30, 2019, the Matthews Asia ESG Fund returned –2.15% (Investor Class) and –2.06% (Institutional Class), while the benchmark returned –0.56%.

Market Environment:

The Thai baht was Asia’s top-performing currency relative to the U.S. dollar (up 6.17%) during the first half, while the Pakistani rupee was the worst (down –13.11%) for the same period. Currencies that appreciated relative to the dollar included the Japanese yen (up 1.83%), the Indonesian rupiah (up 1.79%) and the Indian rupee (up 1.79%). The Chinese renminbi was roughly flat (down –0.04%). Currencies that depreciated included the South Korean won (down –3.36%) and the Taiwan dollar (down –1.04%). Turning to financial markets, China’s equity markets, as represented by the MSCI China Index (up 14.02%), were the top performers in the region for the first half, despite trade tensions. Many other Asian equity markets also enjoyed gains in the period, including Taiwan, South Korea, Malaysia and Thailand.

From a sector perspective, real estate, consumer discretionary, information technology and financials were the top-performing sectors in the benchmark in the first half. In contrast, health care was the only sector with negative benchmark returns for the first half.

Performance Contributors and Detractors:

The Fund underperformed its benchmark during the first half of the year, particularly in the second quarter, which negated the Fund’s outperformance in the first quarter. This underperformance was largely due to the Fund’s higher allocation to small companies relative to the benchmark, and lower allocation to the region’s largest companies relative to the benchmark. During the period, Asian markets experienced a rally, disproportionately benefiting larger companies over smaller companies. The outperformance of larger companies may have been driven in part by flows into index funds. Over a full market cycle, having meaningful exposure to smaller companies can offer attractive opportunities for generating alpha, but this same exposure can cause periods of underperformance over the shorter term.

A contributor to performance during the period was New Oriental Education & Technology Group, a tutoring services company serving students in China. We initiated a position in this company in early 2019 after its stock price was beaten down toward the end of 2018 due to negative sentiment around government regulations for private education services providers and a general market sell-off. We believed the company had the scale and resources to comply with regulations, providing the company with a competitive edge over smaller players in the

(continued)

1	Prospectus expense ratios.

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 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, 2020 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.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


44		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
				Average Annual Total Returns
	3 Months	YTD		1 Year		3 Year		Since Inception		Inception Date
Investor Class (MASGX)	-2.15%		9.62%		1.05%		9.80%		4.68%		4/30/15
Institutional Class (MISFX)	-2.06%		9.74%		1.23%		10.07%		4.93%		4/30/15
MSCI AC Asia ex Japan Index⁴	-0.56%		10.83%		-0.18%		11.81%		3.59%

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Plotted Monthly. The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of Fund shares. Values are in US$.

It is not possible to invest directly in an index. Source: Index data from Morgan Stanley Capital International; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 88 for index definition.



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
Inner Mongolia Yili Industrial Group Co., Ltd.	Consumer Staples	China/Hong Kong		5.0%
Samsung SDI Co., Ltd., Pfd.	Information Technology	South Korea		4.8%
Shriram City Union Finance, Ltd.	Financials	India		3.8%
Bandhan Bank, Ltd.	Financials	India		3.5%
Unicharm Corp.	Consumer Staples	Japan		3.4%
IndusInd Bank, Ltd.	Financials	India		3.0%
Syngene International, Ltd.	Health Care	India		2.5%
PT Bank Rakyat Indonesia Persero	Financials	Indonesia		2.5%
MTR Corp., Ltd.	Industrials	China/Hong Kong		2.5%
BRAC Bank, Ltd.	Financials	Bangladesh		2.4%
% OF ASSETS IN TOP TEN				33.4%

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


matthewsasia.com \| 800.789.ASIA			45



COUNTRY ALLOCATION (%)^6,7
China/Hong Kong			30.3
India			18.6
Japan			15.3
Taiwan			8.0
South Korea			7.9
Bangladesh			5.1
Indonesia			5.0
Singapore			3.2
Thailand			2.3
Philippines			2.0
Vietnam			1.2
Pakistan			0.8
Cash and Other Assets, Less Liabilities			0.3



SECTOR ALLOCATION (%)⁷
Financials			19.0
Industrials			17.6
Health Care			16.2
Consumer Discretionary			11.7
Consumer Staples			11.3
Information Technology			9.6
Communication Services			8.6
Real Estate			2.2
Materials			1.9
Utilities			1.6
Cash and Other Assets, Less Liabilities			0.3



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			13.5
Large Cap ($10B–$25B)			25.4
Mid Cap ($3B–10B)			19.1
Small Cap (under $3B)			41.8
Cash and Other Assets, Less Liabilities			0.3

6	Not all countries are included in the benchmark index.

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Asia ESG Fund

Portfolio Manager Commentary (unaudited) (continued)

industry. While New Oriental Education & Technology Group is a large company in the sector, we believe it still has considerable room to grow as its current market share is only a small slice of the overall opportunity set for private tutoring services in China’s largest, most economically developed cities. Less-developed urban centers in China present further growth opportunities. We believe there also is further upside from its online initiatives that work in conjunction with its offline classroom infrastructure.

A detractor during the period was Indian multinational tractor and automotive manufacturer Mahindra & Mahindra. The tractor side of its business has been a strong performer over the past few years, but that cycle has shifted on concerns over potentially lower rural income growth prospects due to an adverse monsoon season in India. Meanwhile, automotive sales in India have generally been weak, creating negative sentiment toward automakers in general. Mahindra & Mahindra’s auto sales have held up better than the large auto market in India, benefiting from the company’s introduction of three new passenger vehicles late in 2018. While the company’s stock price closed the period near an all-time low, we continue to like the company’s long-term prospects and have been opportunistically adding to the position.

Notable Portfolio Changes:

As mentioned in the contributors section, we added a position in New Oriental Education & Technology Group to the portfolio in the second quarter. Offering the potential for attractive growth, the company is a good match for the Fund’s objectives across many criteria. Education is a basic building block for economic progress, as well as an essential element for improving quality of life for Asia’s growing middle class.

Outlook:

Looking ahead, economic signals appear somewhat mixed. On the positive side, interest rates are widely expected to ease or hold steady, while oil prices seem to remain in check. Both conditions are positives for Asia currencies. While trade tensions have temporarily softened, several issues remain unresolved and U.S. President Donald Trump’s negotiation style is unpredictable. Against this backdrop of uncertainty, China’s policymakers have signaled a willingness to take a more proactive stance in using fiscal and monetary policy to support growth. Elsewhere in the region, elections in India and Indonesia resulted in wins for the incumbents, adding a sense of political stability in both countries. With elections concluded, reform cycles in both countries could get a boost.

While sentiment had improved considerably by the end of the volatile first half of 2019, macroeconomic risks remain and trade tensions could resurface. The Fund’s focus on high-quality companies has historically helped the portfolio weather bouts of volatility by providing an element of downside protection during market drops. In addition, our strong focus on investing in cash flow-generative companies also has created a lower volatility approach to growth investing in Asia. We continue to look for companies that can grow profits and cash flows sustainably, while improving economic, social or environmental outcomes across the region.


46		MATTHEWS ASIA FUNDS

Matthews Asia ESG Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 94.9%


	Shares		Value

CHINA/HONG KONG: 30.3%
Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		462,700		$2,254,656

MTR Corp., Ltd.		165,500		1,114,782

HKBN, Ltd.		571,000		1,029,583

CSPC Pharmaceutical Group, Ltd.		618,000		996,741

China Conch Venture Holdings, Ltd.		282,000		996,364

New Oriental Education & Technology Group, Inc. ADR^b		10,300		994,774

Wuxi Biologics Cayman, Inc.^b,c,d		101,500		910,608

Hong Kong Exchanges & Clearing, Ltd.		22,100		781,016

Haier Electronics Group Co., Ltd.		258,000		715,903

Guangdong Investment, Ltd.		312,000		616,887

Ping An Healthcare and Technology Co., Ltd.^b,c,d		139,800		583,614

Tencent Music Entertainment Group ADR^b		38,000		569,620

Xinyi Glass Holdings, Ltd.		466,000		489,512

AIA Group, Ltd.		36,800		397,400

Contemporary Amperex Technology Co., Ltd. A Shares^b		38,300		384,833

Beijing Urban Construction Design & Development Group Co., Ltd. H Shares^c,d		879,000		267,806

Han’s Laser Technology Industry Group Co., Ltd. A Shares		45,775		229,784

58.com, Inc. ADR^b		3,500		217,595

Wise Talent Information Technology Co., Ltd.^b,d		80,800		214,110

Total China/Hong Kong				13,765,588



INDIA: 18.6%
Shriram City Union Finance, Ltd.		74,250		1,742,513

Bandhan Bank, Ltd.^c,d		205,001		1,599,604

IndusInd Bank, Ltd.		67,634		1,382,025

Syngene International, Ltd.^c,d		236,604		1,146,094

Mahindra & Mahindra, Ltd.		111,832		1,061,556

TeamLease Services, Ltd.^b		12,129		517,460

Lupin, Ltd.		46,743		511,090

Ipca Laboratories, Ltd.		16,712		222,204

Wipro, Ltd.		48,684		198,184

Power Grid Corp. of India, Ltd.		30,178		90,471

Total India				8,471,201



JAPAN: 15.3%
Unicharm Corp.		51,900		1,564,710

Tsukui Corp.		194,500		930,067

Sohgo Security Services Co., Ltd.		19,000		878,222

Fuji Seal International, Inc.		27,900		855,189

LITALICO, Inc.^b		33,300		582,099

UT Group Co., Ltd.		21,600		528,463

Sosei Group Corp.^b		21,300		470,822

Koa Corp.		35,500		462,002

Bunka Shutter Co., Ltd.		60,000		455,532

Career Co., Ltd.		39,700		219,250

Total Japan				6,946,356


	Shares		Value

TAIWAN: 8.0%
Poya International Co., Ltd.		62,000		$839,148

Sporton International, Inc.		140,903		833,824

Delta Electronics, Inc.		121,000		614,975

Merida Industry Co., Ltd.		76,000		449,172

Zhen Ding Technology Holding, Ltd.		136,000		435,095

Taiwan Semiconductor Manufacturing Co., Ltd.		56,000		428,309

Sitronix Technology Corp.		11,000		46,061

Total Taiwan				3,646,584



BANGLADESH: 5.1%
BRAC Bank, Ltd.^b		1,361,221		1,070,967

Square Pharmaceuticals, Ltd.		224,957		700,250

GrameenPhone, Ltd.		132,537		570,975

Total Bangladesh				2,342,192



INDONESIA: 5.0%
PT Bank Rakyat Indonesia Persero		3,706,400		1,144,259

PT Jaya Real Property		12,125,100		454,879

PT Arwana Citramulia		10,223,600		362,518

PT BFI Finance Indonesia		7,542,100		320,316

Total Indonesia				2,281,972



SINGAPORE: 3.2%
SATS, Ltd.		164,400		634,311

Raffles Medical Group, Ltd.		553,400		425,515

Delfi, Ltd.		423,000		406,430

Total Singapore				1,466,256



SOUTH KOREA: 3.1%
iMarketKorea, Inc.		58,673		597,936

KT Skylife Co., Ltd.		30,220		276,164

Hanon Systems		21,106		213,250

DGB Financial Group, Inc.		28,334		200,116

Samjin Pharmaceutical Co., Ltd.		5,358		139,449

Total South Korea				1,426,915



THAILAND: 2.3%
Total Access Communication Public Co., Ltd. NVDR		609,300		1,052,644

Total Thailand				1,052,644



PHILIPPINES: 2.0%
Puregold Price Club, Inc.		1,041,230		914,815

Total Philippines				914,815



VIETNAM: 1.2%
Nam Long Investment Corp.		427,423		534,333

Total Vietnam				534,333



PAKISTAN: 0.8%
Abbott Laboratories Pakistan, Ltd.		117,150		348,069

Total Pakistan				348,069



TOTAL COMMON EQUITIES				43,196,925

(Cost $39,987,355)


matthewsasia.com \| 800.789.ASIA			47

Matthews Asia ESG Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

PREFERRED EQUITIES: 4.8%


	Shares		Value

SOUTH KOREA: 4.8%
Samsung SDI Co., Ltd., Pfd.		27,361		$2,164,513

Total South Korea				2,164,513



TOTAL PREFERRED EQUITIES				2,164,513

(Cost $ 1,955,650)


TOTAL INVESTMENTS: 99.7%				45,361,438
(Cost $ 41,943,005)


CASH AND OTHER ASSETS, LESS LIABILITIES: 0.3%				133,379


NET ASSETS: 100.0%				$45,494,817

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

ADR	American Depositary Receipt

NVDR	Non-voting Depositary Receipt

Pfd.

Preferred

See accompanying notes to financial statements.


48		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Taizo Ishida	Robert Harvey, CFA
Lead Manager	Lead Manager

FUND FACTS

	Investor	Institutional
Ticker	MEASX	MIASX
CUSIP	577125883	577125875
Inception	4/30/13	4/30/13
NAV	$12.29	$12.35
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.66%	1.50%
After Fee Waiver and Reimbursement²	1.48%	1.25%
Portfolio Statistics
Total # of Positions		64
Net Assets		$428.5 million
Weighted Average Market Cap		$2.5 billion
Portfolio Turnover³		26.09%
Benchmark
MSCI Emerging Markets Asia Index
Redemption Fee
2% within first 90 calendar days of purchase

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of companies located in Asia excluding Japan, South Korea, Hong Kong and Singapore. The Fund may also invest in the convertible securities, of any duration or quality, of companies located in Asia excluding Japan, South Korea, Hong Kong and Singapore. Under normal market conditions, the Fund is expected to invest a substantial portion of its net assets in the emerging countries and markets in the Asian region, including, but not limited to, Bangladesh, Cambodia, China (including Taiwan, but excluding Hong Kong), India, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Thailand, and Vietnam.

Matthews Emerging Asia Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Emerging Asia Fund returned –1.68% (Investor Class) and –1.52% (Institutional Class), while its benchmark, the MSCI Emerging Markets Asia Index, returned 9.87% over the same period. For the quarter ending June 30, 2019, the Matthews Emerging Asia Fund returned –6.47% (Investor Class) and –6.37% (Institutional Class), while the benchmark returned –1.13%.

Market Environment:

The first six months of 2019 were generally positive for Asian and emerging markets. China’s equity markets (up 13.08%) were the top performers in the region for the first half, despite trade tensions. Many other Asian equity markets also enjoyed gains in the period, including Taiwan, South Korea, Malaysia and Thailand. Pakistan’s equity market was the weakest performer in the region (down –13.82%).

As economic data in the U.S continued to soften, the U.S. Federal Reserve began to use language suggesting the potential for future rate cuts. The prospect of lower U.S. rates has provided support to Asian and emerging market currencies against the U.S. dollar as well as allowed emerging market central banks to ease monetary conditions supporting their economies.

Amid trade tensions in the period between the U.S. and China, many U.S. manufacturers that have traditionally operated in China looked to less-developed parts of Asia for opportunities to relocated operations. Vietnam, in particular, has received increased interest from companies looking to move production over the long term.

Performance Contributors and Detractors:

A significant detractor from performance in the first half of the year were the Fund’s holdings in Pakistan. Pakistan’s equity markets continued to suffer negative sentiment as its economy grappled with a weak currency, higher inflation, weaker growth and higher interest rates. But consumption continues apace in some areas of spending. The IMF also announced a financial-assistance package of US$6 billion to help the country stabilize its economy. Pakistan’s economy has gone through a dark tunnel, but with reforms it could, in our view, emerge stronger and more resilient.

A contributor to performance, meanwhile, was stock selection in Indonesia. Among the Fund’s top-performing securities, three were Indonesian financial companies. Bank Tabungan Pensiunan Nasional Syariah, Bank Mandiri and Adira Dinamika Multi Finance each generated double-digit returns in the first half. Bank Tabungan Pensiunan Nasional Syariah is a sharia commercial bank serving millions of low-income families in Indonesia, growing its revenues as incomes rise. Bank Mandiri is the largest bank in Indonesia, offering diversified lending and financial services. And Adira Dinamika Multi Finance provides consumer financing for motorcycles and cars.

Notable Portfolio Changes:

During the second quarter, we initiated a new position in Commercial Bank of Ceylon, a Sri Lankan bank with operations in Sri Lanka, Bangladesh and Maldives.

(continued)

1	Prospectus expense ratios.

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 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, 2020 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.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			49



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		Since Inception		Inception Date
Investor Class (MEASX)		-6.47%		-1.68%		-9.06%		1.13%		3.17%		4.36%		4/30/13
Institutional Class (MIASX)		-6.37%		-1.52%		-8.76%		1.39%		3.42%		4.61%		4/30/13
MSCI Emerging Markets Asia Index⁴		-1.13%		9.87%		-1.95%		11.58%		4.85%		5.42%

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
British American Tobacco Bangladesh Co., Ltd.	Consumer Staples	Bangladesh		3.3%
Vinh Hoan Corp.	Consumer Staples	Vietnam		3.2%
Saigon Beer Alcohol Beverage Corp.	Consumer Staples	Vietnam		3.2%
Cosco Capital, Inc.	Consumer Staples	Philippines		3.2%
Phu Nhuan Jewelry JSC	Consumer Discretionary	Vietnam		3.0%
PT Bank Mandiri Persero	Financials	Indonesia		3.0%
Square Pharmaceuticals, Ltd.	Health Care	Bangladesh		2.9%
L&T Finance Holdings, Ltd.	Financials	India		2.9%
PT Kino Indonesia	Consumer Staples	Indonesia		2.7%
PT Bank Tabungan Pensiunan Nasional Syariah	Financials	Indonesia		2.7%
% OF ASSETS IN TOP TEN				30.1%

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


50		MATTHEWS ASIA FUNDS

Matthews Emerging Asia Fund

Portfolio Manager Commentary (unaudited) (continued)

We also exited positions in The City Bank, a Bangladeshi private bank; Dinh Vu Port Investment, a Vietnamese port services provider; and Hum Network, a broadcasting company based in Pakistan. We used proceeds from the sales of these securities to rotate capital within the portfolio, selectively adding to companies with the most attractive valuations and long-term growth potential.

Outlook:

Looking ahead, geopolitical risks in the Middle East could lead to higher oil prices should tensions between Iran and the U.S. or U.K. escalate. Higher oil prices would present challenges for many emerging economies that import most of their energy. On a positive note, elections in India and Indonesia resulted in wins for the incumbents, adding a sense of political stability in both countries. With elections concluded, reform cycles in both countries could get a boost. Elsewhere, Vietnam continues to perform well, having a strong domestic economy and strong domestic demand. Also, we are seeing continued foreign direct investment in Vietnam, which could keep its economy in good stead. The Fund remains focused on the least-developed economies in Asia, which we believe have attractive structural growth potential over the long term.



COUNTRY ALLOCATION (%)^6,7
Vietnam			20.0
Indonesia			19.3
Bangladesh			12.5
Sri Lanka			10.3
Pakistan			10.2
Philippines			9.0
India			8.8
China/Hong Kong			3.5
Australia			0.9
Singapore			0.7
Cash and Other Assets, Less Liabilities			4.8



SECTOR ALLOCATION (%)⁷
Consumer Staples			30.4
Financials			22.4
Consumer Discretionary			19.3
Industrials			7.2
Health Care			5.9
Materials			3.1
Information Technology			3.0
Real Estate			2.7
Energy			1.2
Cash and Other Assets, Less Liabilities			4.8



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			3.0
Large Cap ($10B–$25B)			2.5
Mid Cap ($3B–10B)			11.2
Small Cap (under $3B)			78.5
Cash and Other Assets, Less Liabilities			4.8

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

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


matthewsasia.com \| 800.789.ASIA			51

Matthews Emerging Asia Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 95.2%


	Shares		Value

VIETNAM: 20.0%
Vinh Hoan Corp.		3,648,160		$13,790,939

Saigon Beer Alcohol Beverage Corp.		1,166,670		13,775,662

Phu Nhuan Jewelry JSC		4,127,364		12,952,499

Nam Long Investment Corp.		6,686,161		8,358,556

Taisun International Holding Corp.^†		2,127,000		8,296,034

Mobile World Investment Corp.		1,360,605		5,424,478

Military Commercial Joint Stock Bank		5,602,258		5,032,683

Domesco Medical Import Export JSC		1,464,250		4,523,750

Vietnam National Seed Group JSC^†		1,126,522		4,248,929

Thien Long Group Corp.		1,717,046		4,127,185

Tien Phong Plastic JSC^b		1,861,224		2,715,366

Lix Detergent JSC		1,254,405		2,314,500

Total Vietnam				85,560,581



INDONESIA: 19.3%
PT Bank Mandiri Persero		22,312,800		12,668,070

PT Kino Indonesia		57,504,900		11,763,522

PT Bank Tabungan Pensiunan Nasional Syariah^b		47,530,100		11,606,926

PT Gudang Garam		2,005,200		10,915,333

PT Ramayana Lestari Sentosa		99,165,900		9,897,287

PT Adira Dinamika Multi Finance		12,164,900		8,481,633

PT Hexindo Adiperkasa		22,802,000		4,938,886

PT Mayora Indah		21,437,800		3,764,118

PT BFI Finance Indonesia		73,579,500		3,124,948

PT Catur Sentosa Adiprana		70,131,000		2,915,005

PT Matahari Department Store		10,458,400		2,555,014

Total Indonesia				82,630,742



BANGLADESH: 12.5%
British American Tobacco Bangladesh Co., Ltd.		882,150		14,099,909

Square Pharmaceuticals, Ltd.		4,057,147		12,629,158

Berger Paints Bangladesh, Ltd.		519,834		9,003,906

BRAC Bank, Ltd.^b		11,427,267		8,990,620

Olympic Industries, Ltd.		1,548,417		4,373,615

Marico Bangladesh, Ltd.		239,603		4,282,096

Total Bangladesh				53,379,304



SRI LANKA: 10.3%
Sampath Bank PLC		13,699,337		10,807,731

John Keells Holdings PLC		13,729,019		10,789,058

Teejay Lanka PLC		29,116,858		5,361,613

Ceylon Cold Stores PLC		1,376,891		4,447,523

LOLC Holdings PLC^b		7,511,241		3,872,761

Commercial Bank of Ceylon PLC		6,298,901		3,279,804

Expolanka Holdings PLC		94,231,424		3,043,254

Ceylon Tobacco Co. PLC		361,292		2,620,209

Total Sri Lanka				44,221,953


	Shares		Value

PAKISTAN: 10.2%
PAK Suzuki Motor Co., Ltd.^†		5,826,000		$8,350,053

Indus Motor Co., Ltd.		1,084,910		8,176,181

Meezan Bank, Ltd.		12,560,697		6,853,148

United Bank, Ltd.		4,824,000		4,450,461

Shifa International Hospitals, Ltd.^†		2,783,351		3,829,612

GlaxoSmithKline Consumer Healthcare Pakistan, Ltd.		2,770,557		3,347,214

ICI Pakistan, Ltd.		936,350		3,120,991

Hascol Petroleum, Ltd.		6,977,877		2,997,320

Pakistan Petroleum, Ltd.		1,670,095		1,511,468

Akzo Nobel Pakistan, Ltd.		1,975,300		1,237,113

Total Pakistan				43,873,561



PHILIPPINES: 9.0%
Cosco Capital, Inc.		102,051,200		13,714,257

Universal Robina Corp.		3,030,400		9,819,608

Shakey’s Pizza Asia Ventures, Inc.		22,796,200		6,184,585

Emperador, Inc.^b		30,712,800		4,579,795

STI Education Systems Holdings, Inc.		296,157,000		4,277,470

Total Philippines				38,575,715



INDIA: 8.8%
L&T Finance Holdings, Ltd.		7,526,004		12,551,341

Vakrangee, Ltd.		15,511,435		7,597,393

Praj Industries, Ltd.		2,525,370		5,144,155

Shriram Transport Finance Co., Ltd.		268,352		4,200,300

PC Jeweller, Ltd.		6,189,535		4,058,681

Caplin Point Laboratories, Ltd.		489,805		3,202,289

Poly Medicure, Ltd.		343,725		952,337

Total India				37,706,496



CHINA/HONG KONG: 3.5%
Luk Fook Holdings International, Ltd.		2,797,000		8,760,465

Tongda Group Holdings, Ltd.		69,640,000		5,342,205

Future Bright Holdings, Ltd.		16,806,000		924,716

Total China/Hong Kong				15,027,386



AUSTRALIA: 0.9%
Oil Search, Ltd.		746,290		3,721,628

Total Australia				3,721,628



SINGAPORE: 0.7%
Yoma Strategic Holdings, Ltd.		10,610,166		3,022,157

Total Singapore				3,022,157



TOTAL INVESTMENTS: 95.2%				407,719,523
(Cost $445,813,418)


CASH AND OTHER ASSETS, LESS LIABILITIES: 4.8%				20,767,701


NET ASSETS: 100.0%				$428,487,224


52		MATTHEWS ASIA FUNDS

Matthews Emerging Asia Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

JSC	Joint Stock Co.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			53

LOGO


PORTFOLIO MANAGERS

Michael J. Oh, CFA
Lead Manager

Sunil Asnani	Tiffany Hsiao, CFA
Co-Manager	Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MATFX	MITEX
CUSIP	577130883	577125859
Inception	12/27/99	4/30/13
NAV	$13.41	$13.49
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.19%	1.02%
Portfolio Statistics
Total # of Positions		43
Net Assets		$292.3 million
Weighted Average Market Cap		$98.7 billion
Portfolio Turnover²		85.73%
Benchmark
MSCI AC Asia ex Japan Index

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of companies located in Asia that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets. Asia consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region.

Matthews Asia Innovators Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Innovators Fund returned 19.09% (Investor Class) and 19.17% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.83% over the same period. For the quarter ending June 30, 2019, the Fund returned 1.67% (Investor Class) and 1.81% (Institutional Class), while the benchmark returned –0.56%.

Market Environment:

Asia’s capital markets rallied at the start of the year, led by Chinese equities. Volatility flared in May, followed by a rebound for equity prices in June. The dominant factors driving Asia capital markets over the short term were political, stemming from rhetoric around trade relations between the U.S. and China. Following the recent G-20 Summit, the tone of dialogue surrounding trade issues improved, even though negotiations provided few details and trade issues are likely to linger. Despite recent volatility, China’s domestic markets and the Hong Kong market were among the best-performing markets in Asia.

As economic data in the U.S continued to soften, the U.S. Federal Reserve began to use language suggesting the potential for future rate cuts. The prospect of lower U.S. rates provided support to Asian and emerging market currencies against the U.S. dollar as well as allowed emerging market central banks to ease monetary conditions to support their economies. While China’s policymakers have not yet rolled out significant stimulus, market participants seemed reassured by incremental shifts in policy support for economic growth.

Performance Contributors and Detractors:

The Fund outperformed its benchmark in the first half, as well as in the second quarter. An important contributor to performance was stock selection in China. When the U.S.–China trade negotiations faltered toward the end of 2018, we saw an opportunity to buy quality Chinese growth stocks at lower valuations. We took advantage of market conditions to concentrate our China holdings into fewer positions, while adding to some of our existing, higher-conviction names. This approach yielded strong results in the first half as Chinese equities rallied, outperforming the rest of Asia. A mild detractor from performance during the period, meanwhile, was stock selection in South Korea.

Among individual stocks, a major contributor during the first half was China International Travel Service, an operator of duty-free stores. With a dominant market position in duty-free stores in China, the company has been well-positioned to take advantage of several secular trends, including increased outbound Chinese travel, rising incomes and rising luxury sales. Consumers who used to make duty-free purchases abroad can now make them at home. The company’s focus on China’s domestic consumers provides attractive growth potential and we believe the company has demonstrated strong execution on its marketing plans.

In contrast, South Korean food producer Orion detracted from performance. The company’s stock price declined on slowing domestic sales growth, but we remain constructive on the company’s underlying business model. In addition to selling its products in South Korea, it also sells in Vietnam and Russia, where sales have been stronger. Orion’s product innovation remains sound and we continue to like the company’s long-term prospects, so we will continue to monitor and evaluate the position.

Notable Portfolio Changes:

During the second quarter, we added several new stocks to the portfolio. Among these new positions, Innovent Biologics is one of China’s largest biosimilar companies, with a strong pipeline of new products in development. We believe Innovent

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


54		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MATFX)		1.67%		19.09%		-4.36%		12.26%		7.34%		12.51%		3.77%			12/27/1999
Institutional Class (MITEX)		1.81%		19.17%		-4.11%		12.49%		7.55%		n.a.		11.38%			4/30/2013
MSCI AC Asia ex Japan Index³		-0.56%		10.83%		-0.18%		11.81%		5.14%		8.17%		6.24%	⁴

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 12/31/99.



TOP TEN HOLDINGS⁵
	Sector	Country	% of Net Assets
Alibaba Group Holding, Ltd.	Consumer Discretionary	China/Hong Kong		7.2%
HDFC Bank, Ltd.	Financials	India		5.8%
Tencent Holdings, Ltd.	Communication Services	China/Hong Kong		5.4%
Ping An Insurance Group Co. of China, Ltd.	Financials	China/Hong Kong		4.5%
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd.	Consumer Staples	China/Hong Kong		3.9%
China International Travel Service Corp., Ltd.	Consumer Discretionary	China/Hong Kong		3.7%
Jiangsu Hengrui Medicine Co., Ltd.	Health Care	China/Hong Kong		3.7%
AIA Group, Ltd.	Financials	China/Hong Kong		3.4%
Inner Mongolia Yili Industrial Group Co., Ltd.	Consumer Staples	China/Hong Kong		3.1%
PT Bank Rakyat Indonesia Persero	Financials	Indonesia		3.0%
% OF ASSETS IN TOP TEN				43.7%

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


matthewsasia.com \| 800.789.ASIA			55



COUNTRY ALLOCATION (%)^6,7
China/Hong Kong			61.6
India			11.9
South Korea			10.2
Indonesia			5.6
Bangladesh			2.5
Vietnam			2.4
Philippines			1.4
Cash and Other Assets, Less Liabilities			4.4



SECTOR ALLOCATION (%)⁷
Financials			23.8
Consumer Discretionary			19.0
Communication Services			17.1
Health Care			14.6
Consumer Staples			14.0
Information Technology			4.3
Real Estate			2.8
Cash and Other Assets, Less Liabilities			4.4



MARKET CAP EXPOSURE (%)⁷
Mega Cap (over $25B)			55.8
Large Cap ($10B–$25B)			10.3
Mid Cap ($3B–10B)			15.3
Small Cap (under $3B)			14.2
Cash and Other Assets, Less Liabilities			4.4

Not all countries are included in the benchmark index.

Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Asia Innovators Fund

Portfolio Manager Commentary (unaudited) (continued)

is well-positioned to capture market share in oncology treatments. Another new Chinese health care company, drug manufacturer Hansoh Pharmaceutical Group, is a recent IPO in China’s domestic A-share market. Hansoh focused on oncology, as well as other treatments. Turning to South Korea, we added pharmaceutical company Hugel, which continues to innovate, revamping its product line-up and channel strategies. During the second quarter, we exited several positions, including the Mumbai-based Induslnd Bank and Bangkok-based banking group Kasikornbank. In both cases, we were seeking to replace these holdings with higher quality, more innovative companies.

Outlook:

Looking ahead, we expect interest rates to ease or hold steady, while oil prices seem to remain in check. Both conditions are positives for Asia currencies. China’s policymakers also have signaled a willingness to take a more proactive stance in using fiscal and monetary policy to support growth. Elections in India and Indonesia resulted in wins for the incumbents, adding a sense of political stability in both countries. With elections concluded, reform cycles in both countries could get a boost.

Trade tensions between the U.S. and China present both risks and opportunities. While these tensions can disrupt markets over the short term, we believe they strengthen the case for investing in Asia equities over the long term. China is likely to become increasingly self-sufficient as it looks for ways to replace imports impacted by tariffs and is likely to create shifts in the competitive landscape in the process. Investing with a long-term view, we seek to take advantage of short-term market disruptions by buying quality growth companies at attractive valuations.

Innovative companies will continue to find ways to grow and prosper. Asia’s consumers enjoy rising income levels and consistently seek to upgrade their quality of life in areas from health care and education, to technology and consumer staples. The growing purchasing power of the Asian consumer creates attractive opportunities for long-term investors with a sharp focus on innovation.


56		MATTHEWS ASIA FUNDS

Matthews Asia Innovators Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 93.3%


	Shares		Value

CHINA/HONG KONG: 61.7%
Alibaba Group Holding, Ltd. ADR^b		124,300		$21,062,635

Tencent Holdings, Ltd.		350,300		15,847,369

Ping An Insurance Group Co. of China, Ltd. H Shares		1,090,000		13,107,115

Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. A Shares		643,650		11,419,573

China International Travel Service Corp., Ltd. A Shares		841,872		10,876,208

Jiangsu Hengrui Medicine Co., Ltd. A Shares		1,118,055		10,760,042

AIA Group, Ltd.		933,800		10,084,015

Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		1,877,336		9,147,929

China Resources Land, Ltd.		1,870,000		8,233,209

Wuxi Biologics Cayman, Inc.^b,c,d		910,000		8,164,069

Momo, Inc. ADR		177,900		6,368,820

Bilibili, Inc. ADR^b		383,600		6,241,172

Silergy Corp.		307,000		6,018,933

58.com, Inc. ADR^b		85,000		5,284,450

Meituan Dianping Class B^b,d		567,100		4,981,013

GreenTree Hospitality Group, Ltd. ADR		371,077		4,824,001

Tencent Music Entertainment Group ADR^b		296,156		4,439,379

Genscript Biotech Corp.^b		1,510,000		3,788,968

Haidilao International Holding, Ltd.^c,d		890,000		3,713,926

BeiGene, Ltd. ADR^b		29,600		3,668,920

Innovent Biologics, Inc.^b,c,d		1,084,000		3,662,140

Midea Group Co., Ltd. A Shares		407,821		3,089,780

iQIYI, Inc. ADR^b		123,300		2,546,145

Sun Art Retail Group, Ltd.		1,606,000		1,521,980

Hansoh Pharmaceutical Group Co., Ltd.^b,c,d		542,000		1,432,761

Total China/Hong Kong				180,284,552



INDIA: 11.9%
HDFC Bank, Ltd.		478,904		16,963,376

Housing Development Finance Corp., Ltd.		215,007		6,827,149

Info Edge India, Ltd.		172,029		5,606,484

Kotak Mahindra Bank, Ltd.		247,560		5,297,546

Total India				34,694,555



SOUTH KOREA: 7.9%
LG Household & Health Care, Ltd.		5,389		6,137,885

Orion Corp.		73,241		5,872,008

Hugel, Inc.^b		10,869		3,950,842

Yuhan Corp.		17,230		3,650,232

NAVER Corp.		35,741		3,532,315

Total South Korea				23,143,282



INDONESIA: 5.6%
PT Bank Rakyat Indonesia Persero		28,877,400		8,915,178

PT Bank Tabungan Pensiunan Nasional Syariah^b		19,829,700		4,842,444

PT Mayora Indah		15,221,400		2,672,623

Total Indonesia				16,430,245


	Shares		Value

BANGLADESH: 2.4%
Square Pharmaceuticals, Ltd.		1,161,588		$3,615,811

BRAC Bank, Ltd.^b		4,508,541		3,547,181

Total Bangladesh				7,162,992



VIETNAM: 2.4%
Mobile World Investment Corp.		983,293		3,920,206

Phu Nhuan Jewelry JSC		960,253		3,013,467

Total Vietnam				6,933,673



PHILIPPINES: 1.4%
Puregold Price Club, Inc.		4,761,770		4,183,646

Total Philippines				4,183,646



TOTAL COMMON EQUITIES				272,832,945

(Cost $226,903,809)


PREFERRED EQUITIES: 2.3%

SOUTH KOREA: 2.3%
Samsung Electronics Co., Ltd., Pfd.		199,826		6,627,102

Total South Korea				6,627,102



TOTAL PREFERRED EQUITIES				6,627,102

(Cost $5,710,033)


TOTAL INVESTMENTS: 95.6%				279,460,047
(Cost $232,613,842)


CASH AND OTHER ASSETS, LESS LIABILITIES: 4.4%				12,858,940


NET ASSETS: 100.0%				$292,318,987

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

ADR	American Depositary Receipt

JSC	Joint Stock Co.

Pfd.

Preferred

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			57

LOGO


PORTFOLIO MANAGERS

Andrew Mattock, CFA
Lead Manager

Winnie Chwang
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MCHFX	MICFX
CUSIP	577130701	577130818
Inception	2/19/98	10/29/10
NAV	$17.57	$17.55
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.10%	0.91%
Portfolio Statistics
Total # of Positions		46
Net Assets		$863.5 million
Weighted Average Market Cap		$158.3 billion
Portfolio Turnover²		96.98%
Benchmarks
MSCI China Index
MSCI China All Shares Index

OBJECTIVE

Long-term capital appreciation.

STRATEGY

Matthews China Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews China Fund returned 22.27% (Investor Class) and 22.47% (Institutional Class), while its benchmark, the MSCI China Index, returned 13.08% over the same period. For the quarter ending June 30, 2019, the Matthews China Fund returned –1.46% (Investor Class) and –1.40% (Institutional Class), while the benchmark returned –3.92%.

Market Environment:

Chinese equities posted some of the strongest results in Asia in the first six months, even amid rising volatility during the second quarter. Equity prices rallied from January through April, then fell in May as trade-related uncertainty escalated. In June, equities regained a bit of ground as trade conflicts receded. While China’s policymakers have not yet rolled out significant stimulus, market participants seemed reassured by incremental shifts in policy support for economic growth. These efforts include a mild easing in credit policy, accommodative monetary policy and a fiscal policy that includes consumer-friendly tax cuts. Chinese corporate earnings remain relatively robust and valuations continue to be some of the most attractive within emerging markets. While the Chinese economy is slowing slightly, the government’s easing posture could help to mitigate some tail risks in the near term.

Performance Contributors and Detractors:

The Fund outperformed its benchmark in the first half, while also providing some downside protection during the volatile second quarter. From a sector perspective, stock selection in consumer staples, communication services, financials and real estate were all positive contributors to relative and absolute performance in the first half. The Fund’s holdings in the information technology sector were the only relative detractors in the half due to stock selection.

Among individual stocks, a strong contributor was Wuliangye Yibin. As the second-largest liquor company in China, Wuliangye Yibin specializes in manufacturing “baijiu,” a clear liquor made from grain. Demonstrating high return on invested capital, Wuliangye Yibin also enjoys improving earnings and a solid growth outlook. We believe the company has more room for expanding its profit margins relative to its largest peer. Wuliangye Yibin is introducing premium products into its line-up, which works in its favor and creates an opportunity to grow its overall market share. Consumer spending is an important theme for our bottom-up research process and we find Wuliangye Yibin to be a compelling long-term growth opportunity within the consumer staples sector.

Meanwhile, a detractor was Focus Media Information Technology, one of the largest outdoor advertising companies in China. Focus Media’s advertising capabilities include digital screens in the elevators of commercial buildings, as well as traditional billboards and outdoor poster boards. With access to hundreds of thousands of billboards and digital screens, Focus Media can easily deploy large-scale ad campaigns in China. Owing to softness in the general economy, however, advertising spending has slowed, hurting recent earnings and sending the stock price lower during the reporting period. Despite short-term weakness in its stock price, we continue to like the company’s long-term prospects. We believe it enjoys a strong competitive and dominant position and remains well-positioned for future growth.

Notable Portfolio Changes:

During the second quarter, we added two new positions, Luxshare Precision Industry and Lepu Medical Technology Beijing, both representing China’s domestic A-share market. Luxshare Precision Industry is a handset component maker

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


58		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MCHFX)		-1.46%		22.27%		-3.79%		18.21%		8.43%		7.42%		9.68%			2/19/98
Institutional Class (MICFX)		-1.40%		22.47%		-3.55%		18.45%		8.60%		n.a.		3.75%			10/29/10
MSCI China Index³		-3.92%		13.08%		-6.55%		14.51%		7.58%		6.39%		4.47%	⁴
MSCI China All Shares Index³		-3.76%		17.70%		-2.39%		9.93%		8.00%		5.06%		n.a.	⁵

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 2/28/98.

Index performance data prior to 11/25/08 is not available.



TOP TEN HOLDINGS⁵
	Sector	% of Net Assets
Alibaba Group Holding, Ltd.	Consumer Discretionary		10.9%
Tencent Holdings, Ltd.	Communication Services		9.5%
Ping An Insurance Group Co. of China, Ltd.	Financials		4.9%
China Construction Bank Corp.	Financials		4.5%
Industrial & Commercial Bank of China, Ltd.	Financials		4.5%
New China Life Insurance Co., Ltd.	Financials		4.1%
Agricultural Bank of China, Ltd.	Financials		3.8%
AIA Group, Ltd.	Financials		3.3%
China Resources Land, Ltd.	Real Estate		2.9%
Wuliangye Yibin Co., Ltd.	Consumer Staples		2.8%
% OF ASSETS IN TOP TEN			51.2%

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


matthewsasia.com \| 800.789.ASIA			59



COUNTRY ALLOCATION (%)⁶
China/Hong Kong			94.9
Cash and Other Assets, Less Liabilities			5.1



SECTOR ALLOCATION (%)⁶
Financials			30.6
Consumer Discretionary			23.0
Communication Services			14.6
Real Estate			8.0
Consumer Staples			6.6
Information Technology			4.5
Health Care			3.4
Materials			2.4
Energy			0.9
Industrials			0.8
Cash and Other Assets, Less Liabilities			5.1



MARKET CAP EXPOSURE (%)⁶
Mega Cap (over $25B)			64.0
Large Cap ($10B-$25B)			10.8
Mid Cap ($3B-10B)			17.3
Small Cap (under $3B)			2.8
Cash and Other Assets, Less Liabilities			5.1

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews China Fund

Portfolio Manager Commentary (unaudited) (continued)

moving into new business areas by focusing on higher value manufacturing opportunities and diversifying its client base. The company demonstrates strong execution and its addressable market continues to expand. Lepu Medical Technology, a pharmaceutical and medical device company, has expanded its core business from medical stents to include cardiovascular drugs. Earlier this year, Lepu was also first to market with a new product line of biodegradable stents, designed to dissolve after use. The company projects attractive profit growth and is attractively valued. During the quarter, we exited a small position in China Shenhua Energy, as we saw little upside potential in coal prices, which remained the most important earnings catalyst for the company.

Outlook:

We are incrementally more positive in our outlook for China. Following the recent G-20 Summit, the tone of dialogue surrounding trade issues improved. Though negotiations provided few details, they likely represented the best outcome that the market could expect. Mindful of how fluid trade talks tend to be, we believe it is possible the upcoming 2020 U.S. presidential elections could put additional pressure on President Trump to negotiate. Skepticism around trade aside, Chinese corporate earnings continue to be among the strongest in emerging markets, albeit with a moderate slowdown in economic activity in China. Should the Chinese economy slow further, most market watchers expect Chinese policymakers to act swiftly to maintain economic stability.

We continue to find a lot of value in the current market, especially given frequent shifts in sentiment related to daily headlines. Investing with a long-term view, we ignore the noise and focus on the fundamentals that promote growth. We pay particular attention to company earnings, as well as secular trends we see on the ground. Amid the current news cycle, it is easy for investors to lose sight of the transformation that is taking place among China’s enormous middle class. Income growth has expanded rapidly from the eastern seaboard of China to the country’s vast interior. We expect consumers in less-developed urban centers to drive China’s economic growth for many years and look for businesses geared toward those opportunity sets.


60		MATTHEWS ASIA FUNDS

Matthews China Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 94.9%


	Shares		Value

FINANCIALS: 30.6%
Banks: 12.9%
China Construction Bank Corp. H Shares		45,327,660		$39,072,620

Industrial & Commercial Bank of China, Ltd. H Shares		53,423,000		38,994,591

Agricultural Bank of China, Ltd. H Shares		78,928,000		33,033,536

				111,100,747


Insurance: 12.3%
New China Life Insurance Co., Ltd. H Shares		7,274,600		35,397,289
AIA Group, Ltd.		2,625,200		28,349,280

Ping An Insurance Group Co. of China, Ltd. A Shares		1,933,411		24,991,582

Ping An Insurance Group Co. of China, Ltd. H Shares		1,457,000		17,520,244

				106,258,395


Capital Markets: 5.4%
Hong Kong Exchanges & Clearing, Ltd.		458,100		16,189,296

CITIC Securities Co., Ltd. H Shares		7,671,000		15,998,882

China International Capital Corp., Ltd. H Shares^b,c		7,311,600		14,758,382

				46,946,560

Total Financials				264,305,702



CONSUMER DISCRETIONARY: 23.0%
Internet & Direct Marketing Retail: 14.0%
Alibaba Group Holding, Ltd. ADR^d		555,300		94,095,585

Ctrip.com International, Ltd. ADR^d		386,900		14,280,479

JD.com, Inc. ADR^d		423,779		12,836,266

				121,212,330


Hotels, Restaurants & Leisure: 3.1%
China International Travel Service Corp., Ltd. A Shares		1,129,178		14,587,936

Galaxy Entertainment Group, Ltd.		1,744,000		11,731,889

				26,319,825


Household Durables: 2.3%
Midea Group Co., Ltd. A Shares		2,606,891		19,750,626


Automobiles: 2.0%
Brilliance China Automotive Holdings, Ltd.		15,866,000		17,546,067


Specialty Retail: 1.6%
Zhongsheng Group Holdings, Ltd.		4,934,000		13,757,201

Total Consumer Discretionary				198,586,049



COMMUNICATION SERVICES: 14.6%
Interactive Media & Services: 13.7%
Tencent Holdings, Ltd.		1,821,300		82,394,554

58.com, Inc. ADR^d		212,700		13,223,559

Momo, Inc. ADR		242,300		8,674,340

YY, Inc. ADR^d		119,900		8,355,831

SINA Corp.^d		142,600		6,150,338

				118,798,622


Entertainment: 0.9%
Tencent Music Entertainment Group ADR^d		290,700		4,357,593

iQIYI, Inc. ADR^d		148,600		3,068,590

				7,426,183

Total Communication Services				126,224,805


	Shares		Value

REAL ESTATE: 8.0%
Real Estate Management & Development: 8.0%
China Resources Land, Ltd.		5,768,000		$25,395,267

Times China Holdings, Ltd.		9,295,000		18,609,247

CIFI Holdings Group Co., Ltd.		21,900,000		14,430,633

China Overseas Property Holdings, Ltd.		20,890,000		10,891,232

Total Real Estate				69,326,379



CONSUMER STAPLES: 6.6%
Beverages: 5.0%
Wuliangye Yibin Co., Ltd. A Shares		1,410,347		24,282,783

Kweichow Moutai Co., Ltd. A Shares		132,789		19,064,972

				43,347,755


Food Products: 1.6%
Inner Mongolia Yili Industrial Group Co., Ltd. A Shares		2,722,997		13,268,687

Total Consumer Staples				56,616,442



INFORMATION TECHNOLOGY: 4.5%
Electronic Equipment, Instruments & Components: 2.8%
Luxshare Precision Industry Co., Ltd. A Shares		2,520,340		9,135,184

AVIC Jonhon OptronicTechnology Co., Ltd. A Shares		1,813,623		8,848,497

Kingboard Holdings, Ltd.		2,409,500		6,710,845

				24,694,526


IT Services: 0.8%
Chinasoft International, Ltd.		14,170,000		6,979,702


Technology Hardware, Storage & Peripherals: 0.7%
Focus Media Information Technology Co., Ltd. A Shares		7,504,767		5,799,184


Semiconductors & Semiconductor Equipment: 0.2%
ASM Pacific Technology, Ltd.		148,100		1,518,381

Total Information Technology				38,991,793



HEALTH CARE: 3.5%
Pharmaceuticals: 1.8%
Sino Biopharmaceutical, Ltd.		14,706,000		15,045,349


Health Care Equipment & Supplies: 1.0%
Lepu Medical Technology Beijing Co., Ltd. A Shares		2,634,606		8,838,487


Health Care Technology: 0.7%
Ping An Healthcare and Technology Co., Ltd.^b,c,d		1,396,400		5,829,464

Total Health Care				29,713,300



MATERIALS: 2.4%
Construction Materials: 1.7%

Anhui Conch Cement Co., Ltd. A Shares		2,202,329		13,319,104

China Jushi Co., Ltd. A Shares		996,797		1,385,630

				14,704,734

Chemicals: 0.7%
Wanhua Chemical Group Co., Ltd. A Shares		969,634		6,053,111

Total Materials				20,757,845


matthewsasia.com \| 800.789.ASIA			61

Matthews China Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

COMMON EQUITIES(continued)


	Shares		Value

ENERGY: 0.9%
Oil, Gas & Consumable Fuels: 0.9%
China Petroleum & Chemical Corp. H Shares		11,250,000		$7,663,723

Total Energy				7,663,723



INDUSTRIALS: 0.8%
Professional Services: 0.8%
51job, Inc. ADR^d		94,400		7,127,200

Total Industrials				7,127,200



TOTAL INVESTMENTS: 94.9%				819,313,238
(Cost $797,202,659)


CASH AND OTHER ASSETS, LESS LIABILITIES: 5.1%				44,139,077


NET ASSETS: 100.0%				$863,452,315

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

c	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

d	Non-income producing security.

ADR	American Depositary Receipt

See accompanying notes to financial statements.


62		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Sunil Asnani
Lead Manager

Sharat Shroff, CFA	Peeyush Mittal
Co-Manager	Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MINDX	MIDNX
CUSIP	577130859	577130768
Inception	10/31/05	10/29/10
NAV	$26.92	$27.18
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.09%	0.90%
Portfolio Statistics
Total # of Positions		53
Net Assets		$1.5 billion
Weighted Average Market Cap		$17.3 billion
Portfolio Turnover²		20.87%
Benchmark
S&P Bombay Stock Exchange 100 Index

OBJECTIVE

Long-term capital appreciation.

STRATEGY

Matthews India Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews India Fund returned 2.28% (Investor Class) and 2.34% (Institutional Class) while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned 8.52%. For the quarter ending June 30, the Fund returned –3.06% (Investor Class) and –3.07% (Institutional Class), while its benchmark returned 1.78%.

Market Environment:

India’s equity markets were somewhat more volatile during the second quarter of the year compared to the first quarter. We continued to see investors pull funds out of small- and mid-capitalization stocks in favor of large capitalization stocks.

Earlier in the year, India’s general elections were conducted over seven phases, spanning about six weeks and concluding with the victory of Prime Minister Narendra Modi’s party by a decisive mandate. Stock market reaction after Modi’s party easily secured a majority in the lower house of parliament was relatively muted, suggesting that markets were already discounting Modi’s success.

The Reserve Bank of India (RBI), the country’s central bank, continued with monetary policy easing, cutting repo rates twice during the second quarter amid benign consumer inflation and a softer economic growth rate. The U.S. Federal Reserve indicated a more accommodative monetary policy stance and also allowed the RBI greater freedom to bring down policy rates.

India’s financials sector continued to witness tight liquidity on the back of solvency concerns for some non-banking financial (NBFC) firms. Lack of funding to NBFCs has negatively impacted asset financing across the country. This, in turn, has contributed to slowing GDP growth. Thus far, the central government has been averse to infusing capital in these failing NBFCs, a prudent decision in our view.

Performance Contributors and Detractors:

The Fund’s underperformance during both the second quarter and year-to-date periods could be attributed to a mix of challenges with stock selection and allocation. India’s small- and mid-cap equity markets had underperformed for quite some time and the portfolio’s higher allocation to these segments contributed to the relative underperformance versus the benchmark. Also, our exposure to a few banks with significant exposure to risky assets such as infrastructure leasing and financial services firms was a performance detractor. One such holding was Yes Bank. We had hoped that the bank’s change in management as well as increased scrutiny by the central bank would improve its governance and accounting transparency. However, it had brought forward hitherto undisclosed risk exposure, which led to the stock’s significant underperformance. While we believed the current management had the right intentions, we exited our position as we became more wary of the holding amid its crisis of liquidity and solvency. We also trimmed our exposure to IndusInd Bank, where the problem was less pronounced but our conviction in the management’s ability to deliver secular and profitable growth was shaken.

Another stock-specific challenge to the portfolio during the second quarter came from our position in Blue Dart Express, India’s leading express logistics provider. Blue Dart has not benefited enough from the growth in e-commerce, where it had underinvested in expanding its last-mile reach compared to certain start-up competitors. In recent quarters, the company began to try to rectify the situation by investing more toward this end, and this led to its underperformance. This was driven by a margin contraction, part of which we believe should recover.

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			63



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MINDX)		-3.06%		2.28%		-3.28%		6.61%		8.43%		11.02%		10.68%			10/31/05
Institutional Class (MIDNX)		-3.07%		2.34%		-3.13%		6.81%		8.64%		n.a.		5.53%			10/29/10
S&P Bombay Stock Exchange 100 Index³		1.78%		8.52%		9.04%		12.87%		7.46%		8.06%		10.44%	⁴

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

It is not possible to invest directly in an index. Source: Index data from S&P BSE 100 Index and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 88 for index definition.

Calculated from 10/31/05.



TOP TEN HOLDINGS⁵
	Sector	% of Net Assets
HDFC Bank, Ltd.	Financials		6.0%
Suzuki Motor Corp.	Consumer Discretionary		5.9%
Eicher Motors, Ltd.	Consumer Discretionary		5.0%
Kotak Mahindra Bank, Ltd.	Financials		4.5%
VST Industries, Ltd.	Consumer Staples		4.0%
Axis Bank, Ltd.	Financials		3.9%
Cholamandalam Investment and Finance Co., Ltd.	Financials		3.8%
Wipro, Ltd.	Information Technology		3.3%
ITC, Ltd.	Consumer Staples		3.0%
Shriram City Union Finance, Ltd.	Financials		2.9%
% OF ASSETS IN TOP TEN			42.3%

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


64		MATTHEWS ASIA FUNDS

Matthews India Fund

Portfolio Manager Commentary (unaudited) (continued)

The Fund’s underperformance in the second quarter was partly mitigated by our avoidance of energy stocks, and stock-specific factors within the communication services and health care sectors. Within communication services, we have avoided stressed media and telecom companies. Instead, we held Info Edge India, a profitable and growing internet company. Within health care, we initiated a new position in Syngene International, a leading clinical contract research organization that has been able to build a track record of quality outsourced custom research within small molecules. While Syngene is not immune to pricing pressures, its business is quite sticky and underpenetrated, leaving enough headroom for profitable growth.

Notable Portfolio Changes:

We exited Yes Bank and Emami during the second quarter. We had long held our position in Emami but had been trimming it over the years due to rich valuations amid deteriorating fundamentals. During the first half of the year, we sold out of the holding completely as we felt that the company’s internal systems and practices were not robust enough to deal with certain external shocks, including India’s demonetization program, the Goods and Services Tax and recent liquidity issues in the financial sector.

In addition to Syngene, we also initiated new positions in certain small-cap financial companies led by strong management in underpenetrated segments, and in Lupin, a transnational pharmaceutical firm. Lupin’s stock price underwent substantial correction due to certain FDA observations in its plants, which also affected its approval for new molecules in the U.S. market. The company has, however, increased its addressable market size within the domestic market using innovation and by building relationships with doctors using practices that are more sustainable and, in our view, it should be able to recover from its earnings slump in the near to medium term.

Outlook:

A primary challenge seems to be growth, not just in India but globally, and it would be simplistic to believe that India would be immune to the global events such as U.S.–China trade conflicts, Fed policy moves and economic slowdown. Given the backdrop, we believe that India’s central bank should continue to relax monetary policy and we expect Modi to continue pushing for reforms and policy stimulus to return the economy to a higher growth trajectory. Some specific initiatives include affordable housing, an “electricity-for-all” campaign and increasing farmer incomes through a multipronged approach of infrastructure spending, direct benefits transfer and farm productivity measures. Despite government efforts, weak monsoons in India can be a spoilsport. Monsoon rainfall across the country currently is far short of long-term averages, and if the trend continues it is likely to have a negative impact on farm productivity. That in turn would lead to a rise in food inflation. At a sector level, we expect the pricing pressures in overseas pharmaceutical companies to moderate. Within financials, we anticipate India’s liquidity woes to settle and find equilibrium as stronger NBFCs, banks and corporations take over, replacing weaker ones.



COUNTRY ALLOCATION (%)⁶
India			91.2
Japan			5.9
United States			2.3
Cash and Other Assets, Less Liabilities			0.5



SECTOR ALLOCATION (%)⁶
Financials			38.3
Consumer Discretionary			13.7
Consumer Staples			12.5
Information Technology			12.2
Health Care			11.1
Industrials			6.6
Materials			3.0
Communication Services			2.0
Cash and Other Assets, Less Liabilities			0.5



MARKET CAP EXPOSURE (%)⁶
Mega Cap (over $25B)			23.6
Large Cap ($10B–$25B)			12.0
Mid Cap ($3B–10B)			20.5
Small Cap (under $3B)			43.3
Cash and Other Assets, Less Liabilities			0.5

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


matthewsasia.com \| 800.789.ASIA			65

Matthews India Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 99.5%


	Shares		Value

FINANCIALS: 38.3%
Banks: 21.8%
HDFC Bank, Ltd.		2,483,613		$87,972,667

Kotak Mahindra Bank, Ltd.		3,092,902		66,185,130

Axis Bank, Ltd.^b		4,913,532		57,537,242

DCB Bank, Ltd.		11,969,871		41,122,740

IndusInd Bank, Ltd.		1,434,610		29,314,659

Bandhan Bank, Ltd.^c,d		3,589,314		28,007,097

AU Small Finance Bank, Ltd.^c,d		1,009,868		10,302,488

				320,442,023


Consumer Finance: 11.5%
Cholamandalam Investment and Finance Co., Ltd.		13,471,420		55,740,211

Shriram City Union Finance, Ltd.		1,827,872		42,896,835

Bajaj Finance, Ltd.		699,054		37,270,216

Sundaram Finance, Ltd.		695,531		16,844,377

CreditAccess Grameen, Ltd.^b		2,032,000		15,283,440

				168,035,079


Thrifts & Mortgage Finance: 2.7%
Aavas Financiers, Ltd.^b		1,174,534		25,511,265

Housing Development Finance Corp., Ltd.		463,821		14,727,777

				40,239,042


Capital Markets: 2.3%
CRISIL, Ltd.		1,209,256		26,063,099

Indian Energy Exchange, Ltd.^c,d		3,497,308		7,304,502

				33,367,601

Total Financials				562,083,745



CONSUMER DISCRETIONARY: 13.7%
Automobiles: 10.9%
Suzuki Motor Corp.		1,839,100		86,522,548

Eicher Motors, Ltd.		266,539		73,865,116

				160,387,664


Household Durables: 2.8%
Symphony, Ltd.		1,821,995		32,548,750

LA Opala RG, Ltd.		2,937,800		8,254,483

				40,803,233

Total Consumer Discretionary				201,190,897



CONSUMER STAPLES: 12.5%
Tobacco: 7.0%
VST Industries, Ltd.^†		1,167,175		58,149,139

ITC, Ltd.		11,237,066		44,559,519

				102,708,658


Personal Products: 2.8%
Bajaj Consumer Care, Ltd.		6,084,114		29,073,565

Dabur India, Ltd.		1,186,347		6,883,431

Marico, Ltd.		1,003,404		5,390,634

				41,347,630


	Shares		Value
Food Products: 2.7%
Zydus Wellness, Ltd.		1,734,795		$33,624,660

Nestle India, Ltd.		30,163		5,205,543

				38,830,203

Total Consumer Staples				182,886,491



INFORMATION TECHNOLOGY: 12.2%
IT Services: 11.7%
Wipro, Ltd.		12,047,428		49,042,902

NIIT Technologies, Ltd.		1,831,786		35,694,753

Cognizant Technology Solutions Corp. Class A		535,500		33,945,345

Mphasis, Ltd.		1,464,076		21,305,741

eClerx Services, Ltd.		1,786,518		19,844,449

Larsen & Toubro Infotech, Ltd.^c,d		302,596		8,021,258

Tata Consultancy Services, Ltd.		137,397		4,433,726

				172,288,174


Software: 0.5%
Tata Elxsi, Ltd.		578,649		7,418,464

Total Information Technology				179,706,638



HEALTH CARE: 11.1%
Pharmaceuticals: 8.8%
Alembic Pharmaceuticals, Ltd.		4,147,557		30,567,387

Caplin Point Laboratories, Ltd.^†		3,870,311		25,303,651

Ajanta Pharma, Ltd.		1,804,060		24,976,190

Natco Pharma, Ltd.		2,922,192		22,652,429

Lupin, Ltd.		1,337,380		14,622,977

Eris Lifesciences, Ltd.^b,c,d		1,585,606		11,713,879

				129,836,513


Life Sciences Tools & Services: 1.6%
Syngene International, Ltd.^c,d		4,785,970		23,182,911


Health Care Equipment & Supplies: 0.7%
Poly Medicure, Ltd.		3,594,824		9,959,945

Total Health Care				162,979,369



INDUSTRIALS: 6.6%
Machinery: 3.3%
AIA Engineering, Ltd.^b		992,659		25,787,619

Ashok Leyland, Ltd.		18,445,155		23,305,017

				49,092,636


Airlines: 2.0%
InterGlobe Aviation, Ltd.^c,d		1,312,651		29,639,562


Air Freight & Logistics: 1.3%
Blue Dart Express, Ltd.		475,939		18,513,546

Total Industrials				97,245,744



MATERIALS: 3.0%
Chemicals: 2.7%
UPL, Ltd.		1,618,842		21,987,307

Castrol India, Ltd.		5,743,813		11,030,517

Pidilite Industries, Ltd.		322,373		5,671,136

Gulf Oil Lubricants India, Ltd.		105,452		1,313,959

				40,002,919


66		MATTHEWS ASIA FUNDS

Matthews India Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

COMMON EQUITIES(continued)


	Shares		Value
Metals & Mining: 0.3%
NMDC, Ltd.		2,713,195		$4,437,718

Total Materials				44,440,637



COMMUNICATION SERVICES: 2.1%
Interactive Media & Services: 2.1%
Info Edge India, Ltd.		923,698		30,103,632

Total Communication Services				30,103,632



TOTAL INVESTMENTS: 99.5%				1,460,637,153
(Cost $1,291,453,321)


CASH AND OTHER ASSETS, LESS LIABILITIES: 0.5%				8,058,539


NET ASSETS: 100.0%				$1,468,695,692

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

d	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			67

LOGO


PORTFOLIO MANAGERS

Taizo Ishida
Lead Manager

Shuntaro Takeuchi
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MJFOX	MIJFX
CUSIP	577130800	577130792
Inception	12/31/98	10/29/10
NAV	$21.08	$21.12
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	0.91%	0.85%
Portfolio Statistics
Total # of Positions		53
Net Assets		$2.7 billion
Weighted Average Market Cap		$22.7 billion
Portfolio Turnover²		46.11%
Benchmark
MSCI Japan Index

OBJECTIVE

Long-term capital appreciation.

STRATEGY

Matthews Japan Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Japan Fund returned 13.76% (Investor Class) and 13.73% (Institutional Class), while its benchmark, the MSCI Japan Index, returned 7.97% over the same period. For the quarter ending June 30, 2019, the Fund returned 0.96% (Investor Class) and 0.96% (Institutional Class), while its benchmark returned 1.05%.

Market Environment:

Japanese equities posted solid gains in the first half, even as global markets experienced swings in sentiment. Early this year, the U.S. Federal Reserve’s pause in rate hikes improved investor sentiment and Japan equity valuations came back from their lowest levels since the start of the Abenomics era. In May, however, trade friction between U.S. and China intensified, with tariff hikes and a temporary U.S. ban of Huawei products dampening export companies and the technology sector in particular.

The larger macro environment, meanwhile, continues to slow. Global manufacturing PMI for May came in at 49.8, its lowest level since October 2012. A reading of below 50 indicates a contraction of manufacturing activity. The Bank of Japan’s most recent Tankan Survey (announced July 1) showed further deterioration in the outlook among respondents within the manufacturing sector, reflecting the weakness of exports, especially among semiconductor-related products. Domestic consumption remained sluggish, and we expect this will continue with Japan’s consumption tax increasing in October to 10% from the current 8%.

Performance Contributors and Detractors:

The Fund’s outperformance during the first six months of the year was driven by strong stock selection among smaller and midsize companies, which make up roughly half of the portfolio. While index returns were largely driven by large-cap companies performing better than small caps, we were able to overcome the overall trend with stock selection. From a sector perspective, stock selection in information technology (IT), industrials and health care were positive contributors to performance. Our focus on productivity improvement through software, IT services and automation helped us capture attractive returns within the sector, despite the cyclical downturn in semiconductors and sluggish industrial production. Our holdings in the consumer discretionary sector, meanwhile, detracted from performance.

Turning to individual securities, Net One Systems was a strong contributor in the first half. The company is transforming from a hardware-centric business model to one that is maintenance- and service-oriented, experiencing margin expansion along the way. Telecom and venture capital firm SoftBank also contributed to performance. SoftBank’s share price rose following the announcement of a massive 600 billion yen (US$5.5 billion) stock buyback. The recent IPO of transportation network company Uber in the U.S. and other unicorn companies going public also spurred interest in other pre-IPO companies that SoftBank and its Vision Fund currently hold.

The largest detractor from performance was dollar-shop retailer Seria. Seria has long enjoyed much higher operating margins than its peers. Competition has intensified, however, while the overall retail environment remain sluggish. Home fashion goods retailer Ryohin Keikaku also was a detractor to performance, after the company reported fiscal year earnings below the guidance that was revised down only three months earlier. Although we believe in the long-term brand equity of the firm’s marquee products, we continue to monitor and evaluate its growth prospects and execution abilities.

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


68		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MJFOX)		0.96%		13.76%		-9.27%		4.53%		6.77%		9.54%		5.85%			12/31/98
Institutional Class (MIJFX)		0.96%		13.73%		-9.22%		4.61%		6.86%		n.a.		9.21%			10/29/10
MSCI Japan Index³		1.05%		7.97%		-3.83%		8.44%		4.82%		6.11%		3.36%	⁴

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 12/31/98.



TOP TEN HOLDINGS⁵
	Sector	% of Net Assets
Tokio Marine Holdings, Inc.	Financials		4.0%
Terumo Corp.	Health Care		3.4%
Nippon Telegraph & Telephone Corp.	Communication Services		3.4%
Kyowa Exeo Corp.	Industrials		3.4%
Keyence Corp.	Information Technology		3.4%
ITOCHU Techno-Solutions Corp.	Information Technology		3.1%
NET One Systems Co., Ltd.	Information Technology		2.9%
Kao Corp.	Consumer Staples		2.7%
SoftBank Group Corp.	Communication Services		2.7%
Nidec Corp.	Industrials		2.6%
% OF ASSETS IN TOP TEN			31.6%

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


matthewsasia.com \| 800.789.ASIA			69



COUNTRY ALLOCATION (%)⁶
Japan			98.9
Cash and Other Assets, Less Liabilities			1.1



SECTOR ALLOCATION (%)⁶
Industrials			23.8
Information Technology			18.7
Health Care			14.8
Consumer Discretionary			14.3
Consumer Staples			9.1
Communication Services			8.2
Financials			6.3
Real Estate			2.5
Materials			1.1
Cash and Other Assets, Less Liabilities			1.1



MARKET CAP EXPOSURE (%)⁶
Mega Cap (over $25B)			31.5
Large Cap ($10B-$25B)			15.5
Mid Cap ($3B-10B)			26.0
Small Cap (under $3B)			25.9
Cash and Other Assets, Less Liabilities			1.1

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Matthews Japan Fund

Portfolio Manager Commentary (unaudited) (continued)

Notable Portfolio Changes:

During the half, we continued to reduce our exposure to cyclical stocks, taking advantage of the market rally in January. We reallocated the proceeds to higher-quality companies that were sold off toward the end of last year, which were trading at the lower end of their price range despite their ability to grow in a slower macro environment. We also conducted research on high-quality growth companies in cyclical sectors, but we still think it would be premature to build a substantial position in these sectors.

Regarding new positions, we initiated a position in Yahoo Japan. The company in May announced a corporate structure change resulting in Altaba and SoftBank Group selling out and Yahoo Japan coming under the umbrella of SoftBank’s domestic telecom business. The company can now focus on online ads and e-commerce, two bright spots of growth in Japan. We also initiated a position in SBI Holdings, the largest online broker and second-largest among all brokerages in Japan. Unlike its competitors where a majority of assets under management are held by clients in their 60s and 70s, SBI Holding’s core demographics are customers in their 30s and 40s, which is set to grow given that Japan pensions are no longer sufficient to support retirement life. And we initiated a position in Shionogi, a pharmaceutical company focused on small molecule drugs in infectious disease areas. During the quarter, we exited two positions—ORIX and Suzuki Motor—and found more compelling investment themes elsewhere.

Outlook:

While Japanese equities experienced healthy gains in the first quarter, the macro environment remained muted and second-quarter broad market equity returns were mixed. Underlying fundamentals are still on a downward path, and developments surrounding trade frictions remain unpredictable. We do not expect any dramatic outcomes or resolution of current issues. On a positive note, corporate inventory levels have declined quickly in the past six months. Recent earnings results showed an earnings decline in many sectors but absolute profit levels remain higher than during past downturns.

Additionally, given earnings growth no longer drives return-on-equity improvement, share buybacks by Japanese companies are at a record level, with many companies using their cash holdings to bolster equity performance. While valuations have risen a bit, they remain near the low end of their historical range. The MSCI Japan Index’s price-to-book ratio is now 1.20X, up from the lows of a 1.16X level at the end of 2018. While Japanese corporate earnings tend to be procyclical with higher earnings volatility than developed-market peers, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle, driven by better corporate governance and a higher focus on capital efficiency.


70		MATTHEWS ASIA FUNDS

Matthews Japan Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 98.9%


	Shares		Value

INDUSTRIALS: 23.9%
Professional Services: 8.9%
Recruit Holdings Co., Ltd.		1,677,300		$56,159,178

Persol Holdings Co., Ltd.		2,244,200		52,909,484

Nihon M&A Center, Inc.		2,148,800		51,760,257

TechnoPro Holdings, Inc.		928,500		49,564,696

Outsourcing, Inc.		2,255,100		27,512,518

				237,906,133


Building Products: 6.4%
Daikin Industries, Ltd.		498,300		65,246,871

Sanwa Holdings Corp.		5,271,000		56,814,127

Aica Kogyo Co., Ltd.		1,464,900		49,101,807

				171,162,805


Construction & Engineering: 3.4%
Kyowa Exeo Corp.		3,606,600		90,001,037


Electrical Equipment: 2.7%
Nidec Corp.		514,200		70,617,654


Machinery: 2.5%

MISUMI Group, Inc.		1,343,100		33,855,319

SMC Corp.		87,800		32,914,030

				66,769,349

Total Industrials				636,456,978



INFORMATION TECHNOLOGY: 18.7%
IT Services: 8.2%
ITOCHU Techno-Solutions Corp.		3,230,900		83,060,850

NET One Systems Co., Ltd.		2,818,100		77,932,131

Otsuka Corp.		1,416,400		57,119,236

				218,112,217


Electronic Equipment, Instruments & Components: 5.9%
Keyence Corp.		145,000		89,424,762

Shimadzu Corp.		1,482,500		36,496,327

Murata Manufacturing Co., Ltd.		686,700		30,915,736

				156,836,825


Semiconductors & Semiconductor Equipment: 2.4%
Lasertec Corp.		666,200		26,421,381

Rohm Co., Ltd.		340,000		22,907,803

Disco Corp.		86,200		14,224,368

				63,553,552


Software: 2.2%
Infomart Corp.		3,800,700		59,569,180

Total Information Technology				498,071,774



HEALTH CARE: 14.8%
Health Care Equipment & Supplies: 7.7%
Terumo Corp.		3,055,400		91,275,361

Asahi Intecc Co., Ltd.		2,230,400		55,133,519

Nakanishi, Inc.		1,834,800		33,738,602

Sysmex Corp.		372,400		24,362,441

				204,509,923


Health Care Technology: 2.6%
M3, Inc.		3,781,600		69,395,616


	Shares		Value
Pharmaceuticals: 2.5%
Shionogi & Co., Ltd.		725,000		$41,892,561

Eisai Co., Ltd.		458,900		26,008,720

				67,901,281


Biotechnology: 2.0%
PeptiDream, Inc.^b		1,042,100		53,524,309

Total Health Care				395,331,129



CONSUMER DISCRETIONARY: 14.3%
Auto Components: 3.3%
Nifco, Inc.		2,051,600		50,939,614

Denso Corp.		906,200		38,210,927

				89,150,541


Household Durables: 2.6%
Sony Corp.		1,324,000		69,576,165


Specialty Retail: 2.6%
Nitori Holdings Co., Ltd.		516,500		68,540,713


Distributors: 2.2%
PALTAC Corp.		1,068,200		58,855,191


Multiline Retail: 1.8%
Seria Co., Ltd.		1,504,700		34,804,520

Ryohin Keikaku Co., Ltd.		74,100		13,425,788

				48,230,308


Hotels, Restaurants & Leisure: 1.2%
Kyoritsu Maintenance Co., Ltd.		683,600		32,007,970


Internet & Direct Marketing Retail: 0.6%
Mercari, Inc.^b		614,600		16,372,210

Total Consumer Discretionary				382,733,098



CONSUMER STAPLES: 9.1%
Personal Products: 4.7%
Kao Corp.		957,100		73,030,914

Kose Corp.		314,600		53,098,800

				126,129,714


Food Products: 1.7%
Ariake Japan Co., Ltd.		740,700		46,866,301


Household Products: 1.7%
Pigeon Corp.		1,107,700		44,668,970


Food & Staples Retailing: 1.0%
San-A Co., Ltd.		658,700		26,355,317

Total Consumer Staples				244,020,302



COMMUNICATION SERVICES: 8.2%
Diversified Telecommunication Services: 3.4%
Nippon Telegraph & Telephone Corp.		1,956,000		91,129,463


Wireless Telecommunication Services: 2.8%
SoftBank Group Corp.		1,513,200		72,883,773


Interactive Media & Services: 1.5%
Yahoo Japan Corp.		13,680,100		40,240,643


matthewsasia.com \| 800.789.ASIA			71

Matthews Japan Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

COMMON EQUITIES(continued)


	Shares		Value
Entertainment: 0.5%
Nintendo Co., Ltd.		38,400		$14,088,912

Total Communication Services				218,342,791



FINANCIALS: 6.3%
Insurance: 4.0%
Tokio Marine Holdings, Inc.		2,150,800		107,917,177


Capital Markets: 1.2%
SBI Holdings, Inc.		1,265,000		31,420,369


Banks: 1.1%
Mitsubishi UFJ Financial Group, Inc.		6,194,200		29,502,818

Total Financials				168,840,364



REAL ESTATE: 2.5%
Real Estate Management & Development: 2.5%
Relo Group, Inc.		2,686,500		67,846,196

Total Real Estate				67,846,196


	Shares		Value

MATERIALS: 1.1%
Chemicals: 1.1%
Fuso Chemical Co., Ltd.		1,470,500		$29,303,120

Total Materials				29,303,120



TOTAL INVESTMENTS: 98.9%				2,640,945,752
(Cost $2,393,915,292)


CASH AND OTHER ASSETS, LESS LIABILITIES: 1.1%				28,576,964


NET ASSETS: 100.0%				$2,669,522,716

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

See accompanying notes to financial statements.


72		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Michael J. Oh, CFA
Lead Manager

Elli Lee
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MAKOX	MIKOX
CUSIP	577130305	577130826
Inception	1/3/95	10/29/10
NAV	$4.54	$4.58
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.14%	1.02%
Portfolio Statistics
Total # of Positions		38
Net Assets		$150.4 million
Weighted Average Market Cap		$50.1 billion
Portfolio Turnover²		35.60%
Benchmark
Korea Composite Stock Price Index

OBJECTIVE

Long-term capital appreciation.

STRATEGY

Matthews Korea Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Korea Fund returned –0.87% (Investor Class) and –0.65% (Institutional Class), while its benchmark, the Korea Composite Stock Price Index, returned 0.69% over the same period. For the quarter ending June 30, 2019, the Matthews Korea Fund returned –2.16% (Investor Class) and –1.93% (Institutional Class), while the benchmark returned –2.24%.

Market Environment:

South Korea’s equity market was mostly flat in the first half and lagged broader emerging markets as fears of a slowdown in global growth and trade conflicts weighed on sentiment. Exports represent a significant part of South Korea’s GDP, making its economy vulnerable to disruptions in export volume. In addition, corporate earnings were weak, causing valuations to appear more expensive than South Korea’s historical average. The Bank of Korea (BOK) is poised to lower rates to support its sluggish economy but most market participants expect a slow and measured response as the BOK seems content to wait out the U.S.–China trade negotiations before taking monetary action.

Performance Contributors and Detractors:

The Fund underperformed its benchmark in the first half, primarily due to our underweight in the information technology (IT) sector relative to the index. IT stocks rebounded and outperformed South Korea’s broader equity market in the first quarter of 2019, dampening our relative performance. Information technology makes up close to a third of the Korea Composite Stock Price Index, representing what we feel is a high level of concentration risk in a single sector for index-based strategies. As active managers, we seek to manage concentration risk by building a diversified portfolio from the bottom up. From a sector perspective, a contributor to performance was strong stock selection among our health care holdings. The health care sector benefits from a drug development pipeline, an aging domestic population and rising demand for lifestyle upgrades.

Turning to individual securities, Samsung Electronics was a contributor to performance in the first half. As one of the world’s largest supplier of memory chips, Samsung’s stock price rose in the first half on market expectations of a rebound in chip demand and prices. LG Household & Heath Care, a South Korean cosmetics and skin care company, also contributed to performance. A rise in the company’s stock price reflected its solid earnings growth and strong brand recognition. Hyundai Mobis, the parts and services arm of Hyundai Motors, also contributed to returns as a result of the company’s restructuring efforts and earnings recovery. Chat platform Kakao performed well after successfully building a strong customer base within the platform for an integrated payments system and gaining market share in digital advertising.

In contrast, South Korean confectionary maker Orion detracted from performance. Following the gradual easing of tensions between South Korea and China around the THAAD missile tests conducted by the U.S. in 2017, some investors hoped that Orion’s sales to Chinese consumers might regain ground. The recovery ended up being slower than expected and the company’s stock price declined. However, we remain constructive on the company’s underlying business with footprints across the region. Household product maker Lock&Lock’s share price was also volatile amid a restructuring process, but we expect the company to expand its addressable market and products and improve business efficiency. Meanwhile, e-commerce company Café24’s stock price suffered on an earnings miss on hiring, but we maintain a positive view as South Korea’s e-commerce market is still growing and Café 24 should benefit from growing demand in the sector.

(continued)

1	Prospectus expense ratios.

2	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


matthewsasia.com \| 800.789.ASIA			73



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MAKOX)		-2.16%		-0.87%		-12.65%		1.36%		2.41%		9.77%		5.53%			01/03/95
Institutional Class (MIKOX)		-1.93%		-0.65%		-12.46%		1.51%		2.59%		n.a.		6.08%			10/29/10
Korea Composite Stock Price Index³		-2.24%		0.69%		-10.15%		4.48%		0.32%		6.99%		3.00%	⁴

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Korea Composite Stock Price Index performance data may be readjusted periodically by the Korea Exchange due to certain factors, including the declaration of dividends. It is not possible to invest directly in an index. Source: Index data from Korea Composite Stock Price Index and Bloomberg; total return calculations performed by BNY Mellon Investment Servicing (US) Inc. Please see page 88 for index definition.

Calculated from 1/3/95.



TOP TEN HOLDINGS⁵
	Sector	% of Net Assets
Samsung Electronics Co., Ltd., Pfd.	Information Technology		10.6%
LG Household & Health Care, Ltd., Pfd.	Consumer Staples		5.0%
Hyundai Mobis Co., Ltd.	Consumer Discretionary		4.9%
Samsung Electronics Co., Ltd.	Information Technology		4.1%
Samsung Fire & Marine Insurance Co., Ltd., Pfd.	Financials		3.9%
BGF Retail Co., Ltd.	Consumer Staples		3.5%
NAVER Corp.	Communication Services		3.4%
Hyundai Motor Co., Ltd., 2nd Pfd.	Consumer Discretionary		3.3%
Shinhan Financial Group Co., Ltd.	Financials		3.3%
Yuhan Corp.	Health Care		2.9%
% OF ASSETS IN TOP TEN			44.9%

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


74		MATTHEWS ASIA FUNDS

Matthews Korea Fund

Portfolio Manager Commentary (unaudited) (continued)

Notable Portfolio Changes:

During the first half, we exited brick-and-mortar retailer E-Mart, which was getting squeezed by online competitors and saw declining same-store sales growth. Losing conviction in the company’s long-term prospects, we decided to exit the position. Meanwhile, we also exited electronics retailer Lotte Hi-Mart.

Outlook:

A high domestic minimum wage and slowing global trade both present near-term challenges for South Korea’s economy. Regionally, trade conflicts between Japan and South Korea have also begun to surface, driven by political concerns on both sides.

On a positive note, South Korea’s high minimum wage and aging population could encourage more businesses to invest in products and services that improve efficiency and productivity over time. It is early days for these efforts, but we are seeing examples of software as a service, a variation of cloud computing, gain traction as a way for companies to get more productivity out of their workforces. We also continue to see signs of improved corporate governance and shareholder-return policies, which is welcome news for long-term investors.

As South Korea’s overall economic picture remains mixed, we believe active security selection is essential to capturing the country’s long-term growth potential. As bottom-up investors, we look for companies that can grow organically without the assistance of strong macroeconomic tailwinds. We continue to look for companies that can benefit from domestic consumption within South Korea, as well as those companies headquartered in South Korea that are effectively competing and innovating in global markets.



COUNTRY ALLOCATION (%)⁶
South Korea			96.3
Cash and Other Assets, Less Liabilities			3.7



SECTOR ALLOCATION (%)⁶
Information Technology			20.7
Financials			18.0
Consumer Staples			16.4
Consumer Discretionary			15.5
Health Care			8.2
Materials			7.8
Communication Services			4.7
Energy			2.7
Industrials			2.2
Cash and Other Assets, Less Liabilities			3.7



MARKET CAP EXPOSURE (%)⁶
Mega Cap (over $25B)			19.4
Large Cap ($10B–$25B)			33.7
Mid Cap ($3B–10B)			20.0
Small Cap (under $3B)			23.1
Cash and Other Assets, Less Liabilities			3.7

6	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


matthewsasia.com \| 800.789.ASIA			75

Matthews Korea Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 66.8%


	Shares		Value

FINANCIALS: 14.1%
Banks: 7.9%
Shinhan Financial Group Co., Ltd.		127,453		$4,957,168

Hana Financial Group, Inc.		120,567		3,907,858

KB Financial Group, Inc.		74,426		2,950,187

				11,815,213

Capital Markets: 4.3%
Kiwoom Securities Co., Ltd.		46,919		3,324,541

Shinyoung Securities Co., Ltd.		61,635		3,216,362

				6,540,903

Insurance: 1.9%
DB Insurance Co., Ltd.		54,341		2,790,821

Total Financials				21,146,937



CONSUMER DISCRETIONARY: 10.8%
Auto Components: 6.8%
Hyundai Mobis Co., Ltd.		35,852		7,314,649

Hankook Tire & Technology Co., Ltd.		94,882		2,884,301

				10,198,950

Specialty Retail: 2.2%
Cuckoo Homesys Co., Ltd.		75,570		3,324,242

Hotels, Restaurants & Leisure: 1.8%
Modetour Network, Inc.		155,140		2,652,724

Total Consumer Discretionary				16,175,916



CONSUMER STAPLES: 10.2%
Food Products: 4.3%
Orion Corp.		52,951		4,245,282

Orion Holdings Corp.		147,529		2,192,699

				6,437,981

Food & Staples Retailing: 3.5%
BGF Retail Co., Ltd.		28,862		5,274,223

Tobacco: 2.4%
KT&G Corp.		41,762		3,563,776

Total Consumer Staples				15,275,980



INFORMATION TECHNOLOGY: 10.1%
Technology Hardware, Storage & Peripherals: 4.1%
Samsung Electronics Co., Ltd.		150,616		6,133,135

Electronic Equipment, Instruments & Components: 2.7%
Samsung SDI Co., Ltd.		19,888		4,080,308

Semiconductors & Semiconductor Equipment: 1.7%
Koh Young Technology, Inc.		35,047		2,526,604

IT Services: 1.6%
Cafe24 Corp.^b		46,497		2,479,527

Total Information Technology				15,219,574



HEALTH CARE: 8.2%
Pharmaceuticals: 4.5%
Yuhan Corp.		20,558		4,355,280

DongKook Pharmaceutical Co., Ltd.		46,758		2,366,072

				6,721,352

Biotechnology: 2.1%
Hugel, Inc.^b		8,908		3,238,026

Health Care Equipment & Supplies: 1.6%
Interojo Co., Ltd.		108,571		2,410,739

Total Health Care				12,370,117


	Shares		Value

MATERIALS: 5.1%
Metals & Mining: 3.3%
POSCO		17,598		$3,735,792

Korea Zinc Co., Ltd.		2,950		1,216,727

				4,952,519

Containers & Packaging: 1.8%
Lock&Lock Co., Ltd.		200,431		2,708,669

Total Materials				7,661,188



COMMUNICATION SERVICES: 4.7%
Interactive Media & Services: 4.7%
NAVER Corp.		52,345		5,173,303

Kakao Corp.		16,881		1,924,189

Total Communication Services				7,097,492



INDUSTRIALS: 2.2%
Commercial Services & Supplies: 2.2%
S-1 Corp.		39,273		3,319,659

Total Industrials				3,319,659



ENERGY: 1.4%
Oil, Gas & Consumable Fuels: 1.4%
SK Innovation Co., Ltd.		11,055		1,523,819

S-Oil Corp.		8,335		605,377

Total Energy				2,129,196



TOTAL COMMON EQUITIES				100,396,059

(Cost $100,118,871)


PREFERRED EQUITIES: 29.5%

INFORMATION TECHNOLOGY: 10.6%
Technology Hardware, Storage & Peripherals: 10.6%
Samsung Electronics Co., Ltd., Pfd.		481,814		15,979,054

Total Information Technology				15,979,054



CONSUMER STAPLES: 6.2%
Personal Products: 6.2%
LG Household & Health Care, Ltd., Pfd.		10,684		7,461,946

Amorepacific Corp., Pfd.		25,584		1,913,648

Total Consumer Staples				9,375,594



CONSUMER DISCRETIONARY: 4.7%
Automobiles: 4.7%
Hyundai Motor Co., Ltd., 2nd Pfd.		66,302		4,960,236

Hyundai Motor Co., Ltd., Pfd.		31,477		2,158,004

Total Consumer Discretionary				7,118,240



FINANCIALS: 4.0%
Insurance: 4.0%
Samsung Fire & Marine Insurance Co., Ltd., Pfd.		35,724		5,923,023

Total Financials				5,923,023



MATERIALS: 2.7%
Chemicals: 2.7%
LG Chem, Ltd., Pfd.		23,841		4,042,912

Total Materials				4,042,912


76		MATTHEWS ASIA FUNDS

Matthews Korea Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

PREFERRED EQUITIES(continued)


	Shares		Value

ENERGY: 1.3%
Oil, Gas & Consumable Fuels: 1.3%
S-Oil Corp., Pfd.		37,310		$1,922,683

Total Energy				1,922,683



TOTAL PREFERRED EQUITIES				44,361,506

(Cost $36,523,378)


TOTAL INVESTMENTS: 96.3%				144,757,565
(Cost $136,642,249)


CASH AND OTHER ASSETS, LESS LIABILITIES: 3.7%				5,620,429


NET ASSETS: 100.0%				$150,377,994

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	Non-income producing security.

Pfd.

Preferred

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			77

LOGO


PORTFOLIO MANAGERS

Lydia So, CFA
Lead Manager

Beini Zhou, CFA	Tiffany Hsiao, CFA
Co-Manager	Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MSMLX	MISMX
CUSIP	577125206	577125867
Inception	9/15/08	4/30/13
NAV	$17.46	$17.43
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.51%	1.37%
After Fee Waiver and Reimbursement²	1.46%	1.25%
Portfolio Statistics
Total # of Positions		70
Net Assets		$191.6 million
Weighted Average Market Cap		$1.4 billion
Portfolio Turnover³		69.79%
Benchmark
MSCI AC Asia ex Japan Small Cap Index
Redemption Fee
2% within first 90 calendar days of purchase

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of Small Companies located in Asia ex Japan, which consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging and frontier countries and markets in the Asian region.

Matthews Asia Small Companies Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews Asia Small Companies Fund returned 12.65% (Investor Class) and 12.74% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Small Cap Index, returned 5.34%. For the quarter ending June 30, the Fund returned 2.89% (Investor Class) and 2.95% (Institutional Class), outperforming its benchmark, which returned –2.94%.

Market Environment:

Asia’s equity markets and investor sentiment were strong during the first four months of 2019 due to optimism over a resolution in trade talks between the U.S. and China. Developments took a negative turn, however, as President Trump threatened to impose certain tariffs on Chinese goods, as well as certain restrictions on the trading of technology products and services. China announced it would increase tariffs on U.S. goods in response. The escalated tensions led to immediate sell-offs in global markets. In addition, investors braced for the possibility that prolonged political and economic conflicts would weaken the global economy. Hopes for interest rate cuts by the U.S. Federal Reserve grew as recent economic data in the U.S. suggested that the economy might have softened, while investors awaited positive news from negotiations between Trump and President Xi during the late June G-20 summit.

Meanwhile, national elections in Indonesia and India concluded during the second quarter of 2019. As anticipated in Indonesia, President Joko Widodo (Jokowi) won by a wide margin. For his second-term agenda, it is expected that he will act rapidly on major policies aimed at improving efficiencies in the economy and conducive to attracting foreign direct investments (FDI). In India, a major overhang on its equity market was removed following its late May election, which saw a victorious ruling National Democratic Alliance (NDA) led by Prime Minister Narendra Modi.

Performance Contributors and Detractors:

During the first six months of 2019, the portfolio’s absolute return was largely driven by both our overweight and stock selection in China/Hong Kong. Favorable stock selection in South Korea, Taiwan and India were also key factors that helped propel solid absolute performance, especially amid the market sell-offs in the second quarter. For the first six months, our China/Hong Kong holdings Yihai International and Times China Holdings were key performance contributors. Yihai, a hotpot soup-based condiment manufacturer, registered a strong run-up thanks to solid earnings momentum. Likewise, real estate developer Times China impressed investors with solid earnings and project pipelines. However, some holdings in Vietnam and Malaysia were performance detractors due to an uncertain outlook that stemmed from negative corporate developments during the first half of 2019. Vietnam’s Yeah 1 Group, a media platform company, experienced operating issues with a subsidiary, which stood to adversely impact the company’s growth momentum. The company’s share price fell sharply and we exited the holding during the first half of the year.

By sector, our overweight and stock selection in health care, industrials and consumer staples were key drivers for our outperformance over the benchmark, while

(continued)

1	Prospectus expense ratios.

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 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, 2020 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.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


78		MATTHEWS ASIA FUNDS



PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		10 Years		Since Inception			Inception Date
Investor Class (MSMLX)		2.89%		12.65%		-6.71%		6.15%		1.45%		9.06%		9.89%			09/15/08
Institutional Class (MISMX)		2.95%		12.74%		-6.54%		6.37%		1.67%		n.a.		3.20%			04/30/13
MSCI AC Asia ex Japan Small Cap Index⁴		-2.94%		5.34%		-7.69%		4.58%		0.54%		6.08%		6.45%	⁵

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 9/15/08.



TOP TEN HOLDINGS⁶
	Sector	Country	% of Net Assets
Silergy Corp.	Information Technology	China/Hong Kong		3.5%
Vitasoy International Holdings, Ltd.	Consumer Staples	China/Hong Kong		2.7%
Chief Telecom, Inc.	Communication Services	Taiwan		2.1%
Great Tree Pharmacy Co., Ltd.	Consumer Staples	Taiwan		2.1%
Sunny Friend Environmental Technology Co., Ltd.	Industrials	Taiwan		2.0%
PT Arwana Citramulia	Industrials	Indonesia		1.9%
BBI Life Sciences Corp.	Health Care	China/Hong Kong		1.9%
Taiwan Paiho, Ltd.	Consumer Discretionary	Taiwan		1.9%
Douzone Bizon Co., Ltd.	Information Technology	South Korea		1.8%
DCB Bank, Ltd.	Financials	India		1.8%
% OF ASSETS IN TOP TEN				21.7%

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


matthewsasia.com \| 800.789.ASIA			79



COUNTRY ALLOCATION (%)^7,8
China/Hong Kong			27.6
India			14.7
Taiwan			13.2
South Korea			9.2
Thailand			7.3
Indonesia			5.9
Vietnam			5.9
Malaysia			2.6
Singapore			1.5
Australia			1.2
Philippines			1.1
Japan			1.1
Cash and Other Assets, Less Liabilities			8.7



SECTOR ALLOCATION (%)⁸
Information Technology			17.9
Health Care			13.4
Industrials			12.6
Consumer Discretionary			11.8
Financials			10.0
Consumer Staples			9.9
Materials			5.9
Real Estate			5.1
Communication Services			4.7
Cash and Other Assets, Less Liabilities			8.7



MARKET CAP EXPOSURE (%)^8,9
Mega Cap (over $25B)			0.0
Large Cap ($10B–$25B)			0.0
Mid Cap ($3B–10B)			12.7
Small Cap (under $3B)			78.6
Cash and Other Assets, Less Liabilities			8.7

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, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

9	The Fund defines Small Companies as companies with market capitalization generally between $100 million and $3 billion or the largest company included in the Fund’s primary benchmark, the MSCI All Country Asia ex Japan Small Cap Index.

Matthews Asia Small Companies Fund

Portfolio Manager Commentary (unaudited) (continued)

some holdings in the communication services sector lagged. Our health care holding, Procter & Gamble Health, performed strongly in the first half of the year thanks to stable demand in India for vitamin supplements and over-the-counter medicines. Within the information technology sector, South Korea’s Café24, ane-commerce platform enabler, experienced sharp drops in share price and contractions in valuations multiples. While the domestic business was growing well, investors were wary of its investment in overseas expansion plans that have eroded earnings in the short to medium term.

Notable Portfolio Changes:

During the second quarter, we initiated a few positions in China A-share holdings. One new such addition was application software firm Glodon, which focuses on construction engineering and project cost management verticals. We believe there will be a growing need for digitalization in China’s construction industry and are favorably disposed toward Glodon’s early mover advantage and willingness to make investments in cloud services. We also initiated a position in Innovent Biologics, a China-based biopharmaceutical company, during the market sell-off. Valuations became attractive while company fundamentals remained solid. We are constructive on the company’s long-term prospects, namely its drug pipeline and commercialization plans. We did, however, exit China Yuhua Education due to growing uncertainty over the company’s capital allocation decisions and acquisition strategy. In India, we exited auto parts maker Gabriel India due to lack of growth visibility as the end demand in the automobile market continued to soften. With the proceeds we selectively added to existing Indian holdings when we saw share price weakness to build up our positions.

In Indonesia, we initiated a position in Sarimelati Kencana, a master franchisee of Pizza Hut in Indonesia. While the company has been publicly listed for just over a year, it actually has been operating for decades. We like the company because it enjoys strong brand recognition and an ability to expand its store network methodically. We believe that the company is well-positioned to capture the demand of the country’s young demographic.

Outlook:

With major elections having concluded without surprising outcomes in Thailand, Indonesia, the Philippines and India, investors now seem likely to focus on corporate earnings and economic fundamentals. Trade tensions between the U.S. and China may continue to cause market volatility, but we believe that many domestically oriented businesses in Asia could present opportunities for long-term investors as their revenue streams are tied to structural growth in domestic demand propelled by digitization and connectivity. With this backdrop, we have built a portfolio of holdings that possess strong market positioning and sound financial health. We believe that they are well-positioned to grow with a niche focus. We are hopeful that there will be plenty of attractive investment opportunities for us to uncover as market expectations are not currently elevated.

Looking ahead, the trajectory of U.S.–China relations remains unpredictable as the two countries work through conflicts. We are mindful of challenges, such as the impact on consumer sentiment and corporate spending cycles. We remain constructive, however, on China’s solid prospects for transitioning its economy to one that is more service-oriented. We believe this will help mitigate external shocks. China continues to strengthen due to innovation occurring in its health care and technology sectors, as well as the expansion of its digital economy. In spite of an uncertain geopolitical backdrop, we continue to focus on selecting companies that possess the attributes that can lead them to grow and compound in size over the long term.


80		MATTHEWS ASIA FUNDS

Matthews Asia Small Companies Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 91.3%


	Shares		Value

CHINA/HONG KONG: 27.7%
Silergy Corp.		341,000		$6,685,525

Vitasoy International Holdings, Ltd.		1,084,000		5,212,928

BBI Life Sciences Corp.^b		13,101,000		3,656,077

Huifu Payment, Ltd.^b,c,d		5,615,200		3,077,903

Yihai International Holding, Ltd.		591,000		3,066,036

Kingdee International Software Group Co., Ltd.		2,396,000		2,595,552

Times China Holdings, Ltd.		1,277,000		2,556,644

Precision Tsugami China Corp., Ltd.^b		2,368,000		2,535,005

Genscript Biotech Corp.^d		1,008,000		2,529,324

SUNeVision Holdings, Ltd.		2,752,000		2,397,750

SITC International Holdings Co., Ltd.		2,187,000		2,233,189

Glodon Co., Ltd. A Shares		434,100		2,082,632

China Isotope & Radiation Corp.		881,200		2,079,575

Microport Scientific Corp.		2,728,000		2,028,119

Midea Real Estate Holding, Ltd.^b,c		789,800		2,018,757

Shanghai Haohai Biological Technology Co., Ltd. H Shares^b,c		361,100		1,968,231

Innovent Biologics, Inc.^b,c,d		524,000		1,770,260

Qutoutiao, Inc. ADR^d		405,900		1,599,246

China Beststudy Education Group^b,d		3,892,000		1,215,674

Centre Testing International Group Co., Ltd. A Shares		563,470		887,340

Joyoung Co., Ltd. A Shares		262,602		797,123

Total China/Hong Kong				52,992,890



INDIA: 14.7%
DCB Bank, Ltd.		1,010,775		3,472,538

Procter & Gamble Health, Ltd.		52,990		3,157,202

Galaxy Surfactants, Ltd.^b		174,051		3,120,127

Syngene International, Ltd.^b,c		643,288		3,116,043

NIIT Technologies, Ltd.		138,666		2,702,089

Cholamandalam Investment and Finance Co., Ltd.		623,643		2,580,425

AIA Engineering, Ltd.^d		78,841		2,048,157

ICICI Securities, Ltd.^b,c		635,977		2,027,406

Zydus Wellness, Ltd.		67,887		1,315,820

M.M. Forgings, Ltd.		168,660		1,202,507

Shankara Building Products, Ltd.		173,576		1,107,562

Tube Investments of India, Ltd.		183,110		1,018,662

Spencer’s Retail, Ltd.^d		608,513		928,715

Greaves Cotton, Ltd.		189,266		398,171

Total India				28,195,424



TAIWAN: 13.2%
Chief Telecom, Inc.		612,000		3,998,606

Great Tree Pharmacy Co., Ltd.		1,493,414		3,971,918

Sunny Friend Environmental Technology Co., Ltd.		431,000		3,838,653

Taiwan Paiho, Ltd.		1,261,000		3,652,597

Global PMX Co., Ltd.		697,000		2,802,419

Advanced Ceramic X Corp.		335,000		2,605,609

Alchip Technologies, Ltd.		753,000		2,256,299

Kuobrothers Corp.^†		1,321,000		2,232,892

Total Taiwan				25,358,993


	Shares		Value

SOUTH KOREA: 9.2%
Douzone Bizon Co., Ltd.		65,394		$3,532,351

Value Added Technology Co., Ltd.		110,822		2,723,108

Yuhan Corp.		12,367		2,619,990

Tongyang Pile, Inc.^d		454,508		2,348,772

Cafe24 Corp.^d		32,517		1,734,021

Hy-Lok Corp.		116,533		1,725,817

Cosmecca Korea Co., Ltd.		91,586		1,634,322

Koentec Co., Ltd.		132,128		1,346,444

Total South Korea				17,664,825



THAILAND: 7.3%
Plan B Media Public Co., Ltd. F Shares		13,316,600		3,389,178

Rich Sport Public Co., Ltd.		26,802,600		3,204,023

Humanica Public Co., Ltd.		11,168,100		2,878,176

TOA Paint Thailand Public Co., Ltd.		2,066,700		2,459,189

AP Thailand Public Co., Ltd.		8,296,000		2,123,402

Total Thailand				14,053,968



VIETNAM: 5.9%
Saigon Cargo Service Corp.		482,000		3,327,418

Nam Long Investment Corp.		2,402,294		3,003,175

FPT Digital Retail JSC		968,070		2,658,506

Ho Chi Minh City Securities Corp.		2,234,190		2,244,490

Total Vietnam				11,233,589



INDONESIA: 5.8%
PT Arwana Citramulia		103,521,400		3,670,765

PT BFI Finance Indonesia		70,458,800		2,992,410

PT Bank Tabungan Pensiunan Nasional Syariah^d		11,081,900		2,706,218

PT Sarimelati Kencana^b		24,072,700		1,857,317

Total Indonesia				11,226,710



MALAYSIA: 2.6%
Bursa Malaysia BHD		1,904,500		3,226,625

D&O Green Technologies BHD		14,023,700		1,763,956

Total Malaysia				4,990,581



SINGAPORE: 1.5%
Delfi, Ltd.		3,032,700		2,913,902

Total Singapore				2,913,902



AUSTRALIA: 1.2%
OZ Minerals, Ltd.		315,770		2,235,200

Total Australia				2,235,200



PHILIPPINES: 1.1%
Wilcon Depot, Inc.		6,312,200		2,069,776

Total Philippines				2,069,776


matthewsasia.com \| 800.789.ASIA			81

Matthews Asia Small Companies Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)


	Shares		Value

JAPAN: 1.1%
CKD Corp.		200,900		$2,048,648

Total Japan				2,048,648



TOTAL INVESTMENTS: 91.3%				174,984,506

(Cost $176,612,954)


CASH AND OTHER ASSETS, LESS LIABILITIES: 8.7%				16,569,559


NET ASSETS: 100.0%				$191,554,065

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

b	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

d	Non-income producing security.

†	Affiliated Issuer, as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer).

ADR	American Depositary Receipt

BHD

Berhad

JSC	Joint Stock Co.

See accompanying notes to financial statements.


82		MATTHEWS ASIA FUNDS

LOGO


PORTFOLIO MANAGERS

Tiffany Hsiao, CFA
Lead Manager

Lydia So, CFA
Co-Manager

FUND FACTS

	Investor	Institutional
Ticker	MCSMX	MICHX
CUSIP	577125404	577125842
Inception	5/31/11	11/30/17
NAV	$11.37	$11.40
Initial Investment	$2,500	$100,000
Gross Expense Ratio¹	1.97%	1.79%
After Fee Waiver and Reimbursement²	1.50%	1.25%
Portfolio Statistics
Total # of Positions		48
Net Assets		$73.0 million
Weighted Average Market Cap		$2.1 billion
Portfolio Turnover³		76.67%
Benchmark
MSCI China Small Cap Index
Redemption Fee
2% within first 90 calendar days of purchase

OBJECTIVE

Long-term capital appreciation.

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 the common and preferred stocks of Small Companies located in China. China includes its administrative and other districts, such as Hong Kong.

Matthews China Small Companies Fund

Portfolio Manager Commentary (unaudited)

For the first half of 2019, the Matthews China Small Companies Fund returned 18.69% (Investor Class) and 18.87% (Institutional Class), outperforming its benchmark, the MSCI China Small Cap Index, which returned 7.99% over the same period. For the quarter ending June 30, the Fund was mostly flat at 0.80% (Investor Class) and 0.89% (Institutional Class), while its benchmark fell –6.09%.

Market Environment:

Global markets were heavily influenced by geopolitics in the second quarter of 2019 following a first-quarter recovery. In May, U.S. President Donald Trump’s decision to implement additional tariffs on Chinese imports surprised many market participants. All major indices in Hong Kong and China retreated from the first quarter’s strong gains, which had been driven in part by a recovery in investor sentiment over macroeconomic data and also market optimism that incremental fiscal and monetary stimulus policies would further lift consumer sentiment. Such optimistic assumptions were quickly reversed by trade fears in the second quarter. Longer term, we still expect structural growth in China’s economy—particularly among companies that benefit from an increase in domestic sourcing of key value-added components as the trade conflict may escalate.

From both a top-down and bottom-up perspective, we continue to anticipate long-term sustainable growth in the Chinese economy and in corporate earnings. The market’s concerns over escalating trade tensions should, in our view, have little impact on China’s smaller companies given their domestic focus and lower dependence on financial leverage.

Performance Contributors and Detractors:

During the second quarter of 2019, strong stock selection in the information technology and consumer staples sectors contributed most to the Fund’s outperformance versus the benchmark. The biggest drag on performance came from the health care sector due to poor stock selection.

Top contributors to Fund performance during the quarter included Yihai International Holding and Asia Cement China Holdings. Yihai International Holding manufactures and sells a leading hot pot soup base and condiment brand for both restaurants and consumers. We believe the company has strong growth visibility given the popularity of its restaurant chain and its rapidly growing new business in restaurant supplies. Asia Cement China Holdings is a subsidiary of Taiwan’s Asia Cement Corporation and a top producer of cement, concrete and other related products in China’s Jiangxi, Hubei and Sichuan provinces. The cement industry continues to benefit from supply-side reform due to higher environmental considerations in China. The cement business is also relatively insulated from trade conflicts given the difficulty in profitably transporting such materials over long distances.

TK Group Holdings, a plastics and mold manufacturer, was a top detractor to Fund performance during both the first half of the year and in the second quarter. TK Group shares underperformed the market in the first half because the company generates a significant portion of revenues from U.S.-based technology companies. We believe the mid- to long-term position of the company remains sound, however, as it

(continued)

1	Prospectus expense ratios.

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 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, 2020 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.

3	The lesser of fiscal year 2018 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.


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PERFORMANCE AS OF JUNE 30, 2019
					Average Annual Total Returns
	3 Months		YTD		1 Year		3 Years		5 Years		Since Inception			Inception date
Investor Class (MCSMX)		0.80%		18.69%		-10.36%		15.99%		8.51%		4.99%			05/31/11
Institutional Class (MICHX)		0.89%		18.87%		-10.08%		n.a.		n.a.		2.62%			11/30/17
MSCI China Small Cap Index⁴		-6.09%		7.99%		-13.89%		4.47%		1.00%		-0.04%	⁵

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.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT SINCE INCEPTION—INVESTOR CLASS

LOGO

Calculated from 5/31/11



TOP TEN HOLDINGS⁶
	Sector	% of Net Assets
Silergy Corp.	Information Technology		8.2%
SITC International Holdings Co., Ltd.	Industrials		5.2%
Sunny Friend Environmental Technology Co., Ltd.	Industrials		5.1%
Asia Cement China Holdings Corp.	Materials		3.9%
Joy City Property, Ltd.	Real Estate		3.5%
Yihai International Holding, Ltd.	Consumer Staples		3.5%
SUNeVision Holdings, Ltd.	Information Technology		3.0%
Greentown Service Group Co., Ltd.	Industrials		3.0%
China Overseas Property Holdings, Ltd.	Real Estate		2.8%
China Meidong Auto Holdings, Ltd.	Consumer Discretionary		2.6%
% OF ASSETS IN TOP TEN			40.8%

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


84		MATTHEWS ASIA FUNDS

Matthews China Small Companies Fund

Portfolio Manager Commentary (unaudited) (continued)

is included among new supply-chain planning outside of China. Ultimately, TK Group’s customers appear to care more about quality than additional costs due to the significant yield rate differences between good and bad producers.

Notable Portfolio Changes:

During the quarter, we initiated a position in Centre Testing International Group after tracking its operational turnaround for several years. Among non-state-owned enterprises in China, the company is the leading testing and inspections provider for environmental firms, food, consumer and industrial products and electronic materials. Due to changes in management that have driven higher returns on investment for existing assets, we expect strong free cash flow generation on top of rising structural demand to benefit shareholders.

We exited our position in Shanghai Putailai New Energy Technology during the quarter as we expect China’s electric vehicle material and equipment suppliers to have limited demand and pricing visibility after multiple rounds of subsidy cuts. In addition, a newly announced stimulus measure that will instead benefit internal combustion engine cars is likely to hurt electric vehicle demand.

Outlook:

We remain optimistic about China’s small-cap market amid heightened market volatility as we focus rigorously on the sound fundamentals of our portfolio companies. From a macroeconomic perspective, we believe China can stabilize its economy through fiscal spending, tax reform, interest rate adjustments and currency management. In addition, we believe that steps to correct China’s structural issues are on the right track, despite the near-term pains of a deleveraging economy. We are focused on finding innovative and capital-efficient small companies that are relatively insulated from macroeconomic uncertainties. We will continue to seek companies with sustainable, quality earnings streams, strong cash flows and good balance sheets that can weather uncertain economic conditions. We believe sectors such as industrial automation, health care and technology are among the most attractive from a secular growth perspective.



COUNTRY ALLOCATION (%)⁷
China/Hong Kong			86.4
Taiwan			6.2
Japan			2.4
Cash and Other Assets, Less Liabilities			5.0



SECTOR ALLOCATION (%)⁷
Information Technology			22.1
Industrials			18.6
Health Care			14.1
Consumer Discretionary			12.1
Real Estate			9.4
Consumer Staples			7.5
Materials			7.2
Energy			4.1
Cash and Other Assets, Less Liabilities			5.0



MARKET CAP EXPOSURE (%)^7,8
Mega Cap (over $25B)			0.0
Large Cap ($10B-$25B)			0.0
Mid Cap ($3B-10B)			17.7
Small Cap (under $3B)			77.4
Cash and Other Assets, Less Liabilities			5.0

7	Source: FactSet Research Systems. Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

8	The Fund defines Small Companies as companies with market capitalization generally between $100 million and $3 billion or the largest company included in the Fund’s primary benchmark, the MSCI China Small Cap Index.


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Matthews China Small Companies Fund

June 30, 2019

Schedule of Investments^a(unaudited)

COMMON EQUITIES: 95.0%


	Shares		Value

INFORMATION TECHNOLOGY: 22.1%
Semiconductors & Semiconductor Equipment: 11.3%
Silergy Corp.		307,000		$6,018,933

Hua Hong Semiconductor, Ltd.^b,c		708,000		1,372,992

Alchip Technologies, Ltd.		285,000		853,978

				8,245,903

IT Services: 4.4%
SUNeVision Holdings, Ltd.		2,505,000		2,182,545

GDS Holdings, Ltd. ADR^d		26,800		1,006,876

				3,189,421

Software: 3.8%
Kingdee International Software Group Co., Ltd.		1,326,000		1,436,436

Glodon Co., Ltd. A Shares		144,600		693,731

Sangfor Technologies, Inc. A Shares		52,406		667,708

				2,797,875

Electronic Equipment, Instruments & Components: 2.6%
China Youzan, Ltd.^d		30,672,000		1,884,763

China High Precision Automation Group, Ltd.^d,e		195,000		249

				1,885,012

Total Information Technology				16,118,211



INDUSTRIALS: 18.5%
Commercial Services & Supplies: 8.0%
Sunny Friend Environmental Technology Co., Ltd.		415,000		3,696,151

Greentown Service Group Co., Ltd.^c		2,680,000		2,165,600

				5,861,751

Marine: 5.2%
SITC International Holdings Co., Ltd.		3,702,000		3,780,185

Machinery: 3.1%
TK Group Holdings, Ltd.		2,670,000		1,317,825

Precision Tsugami China Corp., Ltd.^c		877,000		938,851

				2,256,676

Professional Services: 2.2%
Centre Testing International Group Co., Ltd. A Shares		1,048,912		1,651,804

Total Industrials				13,550,416



HEALTH CARE: 14.1%
Biotechnology: 7.5%
Innovent Biologics, Inc.^b,c,d		414,000		1,398,640

Shanghai Haohai Biological Technology Co., Ltd. H Shares^b,c		235,500		1,283,629

Zai Lab, Ltd. ADR^d		33,600		1,171,632

CStone Pharmaceuticals^b,c,d		597,000		880,402

Amoy Diagnostics Co., Ltd. A Shares		99,960		763,201

				5,497,504

Life Sciences Tools & Services: 2.3%
Genscript Biotech Corp.^d		416,000		1,043,848

BBI Life Sciences Corp.^c		2,253,000		628,742

				1,672,590

Health Care Equipment & Supplies: 2.1%
China Isotope & Radiation Corp.		351,400		829,281

Microport Scientific Corp.		990,000		736,011

				1,565,292

Health Care Providers & Services: 1.3%
C-MER Eye Care Holdings, Ltd.^c		1,634,000		913,583

Pharmaceuticals: 0.9%
CanSino Biologics, Inc. H Shares^b,c,d		151,200		644,541

Total Health Care				10,293,510


	Shares		Value

CONSUMER DISCRETIONARY: 12.1%
Specialty Retail: 2.6%
China Meidong Auto Holdings, Ltd.		2,752,000		$1,916,469

Leisure Products: 2.4%
Honma Golf, Ltd.^b,c		2,016,500		1,750,179

Textiles, Apparel & Luxury Goods: 2.1%
Pacific Textiles Holdings, Ltd.		1,248,000		988,092

Chow Sang Sang Holdings International, Ltd.		377,000		555,949

				1,544,041

Internet & Direct Marketing Retail: 1.8%
Baozun, Inc. ADR^d		26,600		1,326,276

Diversified Consumer Services: 1.6%
China Yuhua Education Corp., Ltd.^b,c		2,006,000		875,217

China Beststudy Education Group^c,d		916,000		286,114

				1,161,331

Hotels, Restaurants & Leisure: 1.6%
Huangshan Tourism Development Co., Ltd. B Shares		900,596		953,193

Future Bright Holdings, Ltd.		3,000,000		165,069

				1,118,262

Total Consumer Discretionary				8,816,558



REAL ESTATE: 9.4%
Real Estate Management & Development: 9.4%
Joy City Property, Ltd.		20,578,000		2,581,158

China Overseas Property Holdings, Ltd.		3,895,000		2,030,701

Times China Holdings, Ltd.		733,000		1,467,518

Midea Real Estate Holding, Ltd.^b,c		308,400		788,282

Total Real Estate				6,867,659



CONSUMER STAPLES: 7.5%
Food Products: 6.0%
Yihai International Holding, Ltd.		488,000		2,531,685

JonjeeHi-Tech Industrial And Commercial Holding Co., Ltd. A Shares		298,024		1,859,685

				4,391,370

Food & Staples Retailing: 1.5%
Yixintang Pharmaceutical Group Co., Ltd. A Shares		254,626		1,058,846

Total Consumer Staples				5,450,216



MATERIALS: 7.2%
Construction Materials: 3.9%
Asia Cement China Holdings Corp.		1,775,000		2,845,932

Chemicals: 1.8%
China BlueChemical, Ltd. H Shares		4,890,000		1,333,945

Containers & Packaging: 1.5%
CPMC Holdings, Ltd.		2,791,000		1,084,970

Total Materials				5,264,847


86		MATTHEWS ASIA FUNDS

Matthews China Small Companies Fund

June 30, 2019

Schedule of Investments^a(unaudited) (continued)

COMMON EQUITIES(continued)


	Shares		Value

ENERGY: 4.1%
Oil, Gas & Consumable Fuels: 4.1%
China Aviation Oil Singapore Corp., Ltd.		1,637,100		$1,598,808
Sinopec Kantons Holdings, Ltd.		3,394,000		1,419,226

Total Energy				3,018,034



TOTAL INVESTMENTS: 95.0%				69,379,451
(Cost $68,385,492)


CASH AND OTHER ASSETS, LESS LIABILITIES: 5.0%				3,613,686


NET ASSETS: 100.0%				$72,993,137

a	Certain securities were fair valued under the valuation policies approved by the Board of Trustees (Note2-A).

c	The securities may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

d	Non-income producing security.

e	Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

ADR	American Depositary Receipt

See accompanying notes to financial statements.


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Index Definitions

TheMarkit iBoxx Asian Local Bond Index (ALBI)tracks the total return performance of a bond portfolio consisting of local currency denominated, high quality and liquid bonds in Asia ex Japan. The ALBI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

TheJ.P. Morgan Asia Credit Index (JACI)tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a marketcapitalization-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.

TheMSCI All Country Asia ex Japan Indexis a free float-adjusted market capitalization-weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.

TheMSCI All Country Asia Pacific Indexis a free float-adjusted market capitalization-weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.

TheMSCI China Indexis a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).

TheMSCI Emerging Markets (EM)Asia Index is a free float-adjusted market capitalization-weighted index of the stock

markets of China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Taiwan and Thailand.

TheMSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red Chips (issued by entities owned by national or local governments in China), P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong, Shanghai, Shenzhen and outside of China.

TheS&P Bombay Stock Exchange (BSE)100 Index is a free float-adjusted market capitalization-weighted index of the 100 stocks listed on the Bombay Stock Exchange.

TheMSCI Japan Indexis a free float-adjusted market capitalization-weighted index of Japanese equities listed in Japan.

TheKorea Composite Stock Price Index (KOSPI)is a market capitalization-weighted index of all common stocks listed on the Korea Stock Exchange.

TheMSCI All Country Asia ex Japan Small Cap Indexis a free float-adjusted market capitalization-weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.

TheMSCI China Small Cap Indexis a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, and Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).


88		MATTHEWS ASIA FUNDS

Disclosures

Fund Holdings:The Fund holdings shown in this report are as of June 30, 2019. Holdings are subject to change at any time, so holdings shown in this report may not reflect current Fund holdings. The Funds file complete schedules of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on FormN-PORT. The Funds’ FormsN-PORT are available on the SEC’s website at www.sec.gov. Complete schedules of investments are also available without charge, upon request, from the Funds by calling us at 800.789.ASIA (2742).

Proxy Voting Record:The Funds’ Statement of Additional Information containing a description of the policies and procedures that the Funds have used to vote proxies relating to portfolio securities, along with each Fund’s proxy voting record relating

to portfolio securities held during the most recent12-month period ended June 30, is available upon request, at no charge, at the Funds’ website at matthewsasia.com or by calling 800.789.ASIA (2742), or on the SEC’s website at www.sec.gov.

Shareholder Reports and Prospectuses:To reduce the Funds’ expenses, we try to identify related shareholders in a household and send only one copy of the Funds’ prospectus and financial reports to that address. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. At any time you may view the Funds’ current prospectus, summary prospectus and financial reports on our website. If you prefer to receive individual copies of the Funds’ prospectus or financial reports, please call us at 800.789.ASIA (2742).


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Disclosure of Fund Expenses(unaudited)

We believe it is important for you to understand the impact of fees regarding your investment. All mutual funds have operating expenses. As a shareholder of a mutual fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund. A fund’s operating expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing fees (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

This table illustrates your fund’s costs in two ways:

Actual Fund Return:This section helps you to estimate the actual operating expenses, after any applicable fee waivers, that you paid over the period. The “Ending Account Value” shown is derived from the fund’s actual return for the past six month period, the “Expense Ratio” column shows the period’s annualized expense ratio, and the “Operating Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund at the beginning of the period. You may use the information here, together with your account value, to estimate the expenses that you paid over the period. To do so, simply divide your account

value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund in the first line under the heading entitled “Operating Expenses Paid During Period.”

Hypothetical 5% Return:This section is intended to help you compare your fund’s costs with those of other mutual funds. It assumes that the fund had an annual return of 5% before operating expenses, but that the expense ratio is unchanged. In this case, because the return used is not the fund’s actual return, the results do not apply to your investment. This example is useful in making comparisons to other mutual funds because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on an assumed 5% annual return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Please note that the operating expenses shown in the table are meant to highlight and help you compare your ongoing costs only and do not reflect any transactional costs such as sales charges (loads), redemption fees, or exchange fees.

Matthews Asia Funds does not charge any sales loads, exchange fees, or12b-1 fees, but these may be present in other funds to which you compare this data. Therefore, the hypothetical portions of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.


90		MATTHEWS ASIA FUNDS

June 30, 2019

Disclosure of Fund Expenses(unaudited) (continued)


	INVESTOR CLASS								INSTITUTIONAL CLASS
	Beginning Account Value 1/1/19		Ending Account Value 6/30/19		Expense Ratio¹		Operating Expenses Paid During Period 1/1/19– 6/30/19²		Beginning Account Value 1/1/19		Ending Account Value 6/30/19		Expense Ratio¹		Operating Expenses Paid During Period 1/1/19– 6/30/19²
ASIA FIXED INCOME STRATEGIES
Matthews Asia Strategic Income Fund
Actual Fund Return		$1,000.00		$1,083.90		1.15%		$5.94		$1,000.00		$1,086.30		0.90%		$4.66
Hypothetical 5% Returns		$1,000.00		$1,030.50		1.15%		$5.79		$1,000.00		$1,029.26		0.90%		$4.53
Matthews Asia Credit Opportunities Fund
Actual Fund Return		$1,000.00		$1,093.90		1.15%		$5.97		$1,000.00		$1,096.30		0.90%		$4.68
Hypothetical 5% Returns		$1,000.00		$1,030.50		1.15%		$5.79		$1,000.00		$1,029.26		0.90%		$4.53

ASIA GROWTH AND INCOME STRATEGIES
Matthews Asian Growth and Income Fund
Actual Fund Return		$1,000.00		$1,129.20		1.10%		$5.81		$1,000.00		$1,130.20		0.96%		$5.07
Hypothetical 5% Returns		$1,000.00		$1,030.25		1.10%		$5.54		$1,000.00		$1,029.56		0.96%		$4.83
Matthews Asia Dividend Fund
Actual Fund Return		$1,000.00		$1,058.20		1.02%		$5.21		$1,000.00		$1,058.80		0.92%		$4.70
Hypothetical 5% Returns		$1,000.00		$1,029.85		1.02%		$5.13		$1,000.00		$1,029.36		0.92%		$4.63
Matthews China Dividend Fund
Actual Fund Return		$1,000.00		$1,155.10		1.12%		$5.98		$1,000.00		$1,155.80		1.00%		$5.35
Hypothetical 5% Returns		$1,000.00		$1,030.35		1.12%		$5.64		$1,000.00		$1,029.75		1.00%		$5.03

ASIA VALUE STRATEGY
Matthews Asia Value Fund
Actual Fund Return		$1,000.00		$1,070.00		1.50%		$7.70		$1,000.00		$1,071.40		1.25%		$6.42
Hypothetical 5% Returns		$1,000.00		$1,032.23		1.50%		$7.56		$1,000.00		$1,030.99		1.25%		$6.29

ASIA GROWTH STRATEGIES
Matthews Asia Growth Fund
Actual Fund Return		$1,000.00		$1,157.80		1.09%		$5.83		$1,000.00		$1,158.90		0.93%		$4.98
Hypothetical 5% Returns		$1,000.00		$1,030.20		1.09%		$5.49		$1,000.00		$1,029.41		0.93%		$4.68
Matthews Pacific Tiger Fund
Actual Fund Return		$1,000.00		$1,076.30		1.05%		$5.41		$1,000.00		$1,077.20		0.90%		$4.64
Hypothetical 5% Returns		$1,000.00		$1,030.00		1.05%		$5.28		$1,000.00		$1,029.26		0.90%		$4.53
Matthews Asia ESG Fund
Actual Fund Return		$1,000.00		$1,096.20		1.50%		$7.80		$1,000.00		$1,097.40		1.25%		$6.50
Hypothetical 5% Returns		$1,000.00		$1,032.23		1.50%		$7.56		$1,000.00		$1,030.99		1.25%		$6.29
Matthews Emerging Asia Fund
Actual Fund Return		$1,000.00		$983.20		1.50%		$7.38		$1,000.00		$984.80		1.25%		$6.15
Hypothetical 5% Returns		$1,000.00		$1,032.23		1.50%		$7.56		$1,000.00		$1,030.99		1.25%		$6.29
Matthews Asia Innovators Fund
Actual Fund Return		$1,000.00		$1,190.90		1.20%		$6.52		$1,000.00		$1,191.70		1.05%		$5.71
Hypothetical 5% Returns		$1,000.00		$1,030.75		1.20%		$6.04		$1,000.00		$1,030.00		1.05%		$5.28
Matthews China Fund
Actual Fund Return		$1,000.00		$1,222.70		1.10%		$6.06		$1,000.00		$1,224.70		0.92%		$5.07
Hypothetical 5% Returns		$1,000.00		$1,030.25		1.10%		$5.54		$1,000.00		$1,029.36		0.92%		$4.63
Matthews India Fund
Actual Fund Return		$1,000.00		$1,022.80		1.11%		$5.57		$1,000.00		$1,023.40		0.93%		$4.67
Hypothetical 5% Returns		$1,000.00		$1,030.30		1.11%		$5.59		$1,000.00		$1,029.41		0.93%		$4.68
Matthews Japan Fund
Actual Fund Return		$1,000.00		$1,137.60		0.93%		$4.93		$1,000.00		$1,137.30		0.87%		$4.61
Hypothetical 5% Returns		$1,000.00		$1,029.41		0.93%		$4.68		$1,000.00		$1,029.11		0.87%		$4.38
Matthews Korea Fund
Actual Fund Return		$1,000.00		$991.30		1.18%		$5.83		$1,000.00		$993.50		1.06%		$5.24
Hypothetical 5% Returns		$1,000.00		$1,030.65		1.18%		$5.94		$1,000.00		$1,030.05		1.06%		$5.34

1	Annualized, based on the Fund’s most recent fiscal half-year expenses.

2	Operating expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181 days, then divided by 365.


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June 30, 2019

Disclosure of Fund Expenses(unaudited) (continued)


	INVESTOR CLASS								INSTITUTIONAL CLASS
	Beginning Account Value 1/1/19		Ending Account Value 6/30/19		Expense Ratio¹		Operating Expenses Paid During Period 1/1/19– 6/30/19²		Beginning Account Value 1/1/19		Ending Account Value 6/30/19		Expense Ratio¹		Operating Expenses Paid During Period 1/1/19– 6/30/19²
ASIA SMALL COMPANY STRATEGIES
Matthews Asia Small Companies Fund
Actual Fund Return		$1,000.00		$1,126.50		1.50%		$7.91		$1,000.00		$1,127.40		1.25%		$6.59
Hypothetical 5% Returns		$1,000.00		$1,032.23		1.50%		$7.56		$1,000.00		$1,030.99		1.25%		$6.29
Matthews China Small Companies Fund
Actual Fund Return		$1,000.00		$1,186.90		1.50%		$8.13		$1,000.00		$1,188.70		1.25%		$6.78
Hypothetical 5% Returns		$1,000.00		$1,032.23		1.50%		$7.56		$1,000.00		$1,030.99		1.25%		$6.29

1	Annualized, based on the Fund’s most recent fiscal half-year expenses.

2	Operating expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181 days, then divided by 365.


92		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited)		June 30, 2019


	Matthews Asia Strategic Income Fund		Matthews Asia Credit Opportunities Fund		Matthews Asian Growth and Income Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$108,520,408		$54,071,709		$1,393,562,108

Cash		3,126,849		2,348,262		22,375,224

Cash pledged collateral for forward foreign currency exchange contracts		490,000		—		—

Segregated foreign currency at value		20,337		6,962		—

Foreign currency at value (B)		1,087		122		495,639

Dividends, interest and other receivable		2,178,338		1,005,508		5,816,718

Receivable for securities sold		—		1,458,392		—

Receivable for capital shares sold		137,587		21,475		1,041,320

Unrealized appreciation on forward foreign currency exchange contracts		130,886		—		—

Prepaid expenses		17,651		28,649		31,165
TOTAL ASSETS		114,623,143		58,941,079		1,423,322,174

LIABILITIES:

Payable for securities purchased		—		1,357,805		—

Payable for capital shares redeemed		188,825		61,116		1,403,657

Unrealized depreciation on forward foreign currency exchange contracts		556,972		—		—

Unrealized depreciation on swaps		54,169		—		—

Deferred foreign capital gains tax liability (Note2-F)		39,619		—		—

Due to Advisor (Note 5)		44,627		16,794		758,231

Administration and accounting fees payable (Note 5)		1,484		735		18,738

Administration and shareholder servicing fees payable (Note 5)		12,793		6,381		158,572

Custodian fees payable		5,381		151		112,565

Intermediary service fees payable (Note 5)		39,814		8,459		315,413

Professional fees payable		36,996		34,821		32,631

Transfer agent fees payable		741		171		9,301

Accrued other expenses payable		13,233		9,574		111,879
TOTAL LIABILITIES		994,654		1,496,007		2,920,987

NET ASSETS		$113,628,489		$57,445,072		$1,420,401,187

NET ASSETS:

Investor Class		$39,139,951		$11,264,207		$825,573,651

Institutional Class		74,488,538		46,180,865		594,827,536
TOTAL		$113,628,489		$57,445,072		$1,420,401,187

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Strategic Income Fund		Matthews Asia Credit Opportunities Fund		Matthews Asian Growth and Income Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		3,582,846		1,075,705		53,121,661

Institutional Class		6,817,991		4,410,655		38,341,071
TOTAL		10,400,837		5,486,360		91,462,732

NET ASSET VALUE:
Investor Class, offering price and redemption price		$10.92		$10.47		$15.54
Institutional Class, offering price and redemption price		$10.93		$10.47		$15.51

NET ASSETS CONSISTS OF:

Capitalpaid-in		$113,404,380		$56,220,540		$1,251,198,066

Total distributable earnings/(accumulated loss)		224,109		1,224,532		169,203,121
NET ASSETS		$113,628,489		$57,445,072		$1,420,401,187

(A) Investments at cost:

Unaffiliated Issuers		$104,936,223		$53,081,339		$1,240,128,162

(B) Foreign Currency at Cost		$1,086		$124		$495,430

See accompanying notes to financial statements.


94		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Dividend Fund		Matthews China Dividend Fund		Matthews Asia Value Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$4,837,354,766		$366,967,714		$23,050,094

Affiliated issuers		1,110,828,937		—		—

Cash		95,765,571		13,400,130		1,840,241

Segregated foreign currency at value		163,639		15,156		—

Foreign currency at value (B)		24,687,806		410,370		81,186

Dividends, interest and other receivable		14,017,046		829,261		54,458

Receivable for securities sold		33,043,851		7,895		—

Receivable for capital shares sold		6,816,791		827,243		26,152

Prepaid expenses		63,467		31,421		18,727
TOTAL ASSETS		6,122,741,874		382,489,190		25,070,858

LIABILITIES:

Payable for securities purchased		30,634,434		3,096,729		—

Payable for capital shares redeemed		15,304,381		351,144		15,846

Deferred foreign capital gains tax liability (Note2-F)		4,942,899		—		8,014

Due to Advisor (Note 5)		3,217,908		198,041		3,283

Administration and accounting fees payable (Note 5)		80,519		4,899		356

Administration and shareholder servicing fees payable (Note 5)		651,131		41,440		2,859

Custodian fees payable		295,708		14,445		3,018

Intermediary service fees payable (Note 5)		855,888		40,156		14,052

Professional fees payable		25,525		31,894		27,950

Transfer agent fees payable		19,932		1,900		337

Accrued other expenses payable		184,584		38,621		23,794
TOTAL LIABILITIES		56,212,909		3,819,269		99,509

NET ASSETS		$6,066,528,965		$378,669,921		$24,971,349

NET ASSETS:

Investor Class		$2,710,989,835		$276,272,043		$18,897,260

Institutional Class		3,355,539,130		102,397,878		6,074,089
TOTAL		$6,066,528,965		$378,669,921		$24,971,349

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Dividend Fund		Matthews China Dividend Fund		Matthews Asia Value Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		161,112,601		16,963,208		1,626,144

Institutional Class		199,467,818		6,286,822		526,022
TOTAL		360,580,419		23,250,030		2,152,166

NET ASSET VALUE:
Investor Class, offering price and redemption price		$16.83		$16.29		$11.62
Institutional Class, offering price and redemption price		$16.82		$16.29		$11.55

NET ASSETS CONSISTS OF:

Capitalpaid-in		$5,354,547,295		$358,716,357		$26,336,308

Total distributable earnings/(accumulated loss)		711,981,670		19,953,564		(1,364,959	)
NET ASSETS		$6,066,528,965		$378,669,921		$24,971,349

(A) Investments at cost:

Unaffiliated Issuers		$4,149,256,869		$340,329,075		$23,335,244

Affiliated Issuers		904,078,249		—		—

(B) Foreign Currency at Cost		$24,804,300		$410,336		$81,189

See accompanying notes to financial statements.


96		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Growth Fund		Matthews Pacific Tiger Fund		Matthews Asia ESG Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$1,079,745,164		$7,829,615,622		$45,361,438

Affiliated issuers		17,276,809		1,149,704,669		—

Cash		29,269,038		201,381,558		533,846

Segregated foreign currency at value		—		170,946		701

Foreign currency at value (B)		238,444		22,066,580		116,252

Dividends, interest and other receivable		866,406		28,214,920		129,917

Receivable for securities sold		—		9,419,119		—

Receivable for capital shares sold		1,295,098		8,227,345		27,939

Prepaid expenses		34,811		131,637		23,899
TOTAL ASSETS		1,128,725,770		9,248,932,396		46,193,992

LIABILITIES:

Payable for securities purchased		5,453,829		102,095		403,895

Payable for capital shares redeemed		863,539		15,813,464		2,447

Deferred foreign capital gains tax liability (Note2-F)		1,534,737		32,766,180		183,303

Due to Advisor (Note 5)		597,623		4,809,514		17,230

Administration and accounting fees payable (Note 5)		14,752		120,510		589

Administration and shareholder servicing fees payable (Note 5)		125,047		938,674		5,044

Custodian fees payable		68,303		549,209		17,204

Intermediary service fees payable (Note 5)		163,086		774,889		10,152

Professional fees payable		32,948		39,148		32,301

Transfer agent fees payable		4,693		18,695		178

Accrued other expenses payable		39,148		33,334		26,832
TOTAL LIABILITIES		8,897,705		55,965,712		699,175

NET ASSETS		$1,119,828,065		$9,192,966,684		$45,494,817

NET ASSETS:

Investor Class		$528,787,329		$2,811,333,085		$15,825,173

Institutional Class		591,040,736		6,381,633,599		29,669,644
TOTAL		$1,119,828,065		$9,192,966,684		$45,494,817

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Growth Fund		Matthews Pacific Tiger Fund		Matthews Asia ESG Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		20,306,353		97,253,645		1,447,162

Institutional Class		22,520,119		220,846,251		2,715,628
TOTAL		42,826,472		318,099,896		4,162,790

NET ASSET VALUE:
Investor Class, offering price and redemption price		$26.04		$28.91		$10.94
Institutional Class, offering price and redemption price		$26.25		$28.90		$10.93

NET ASSETS CONSISTS OF:

Capitalpaid-in		$896,187,007		$6,260,486,153		$42,456,879

Total distributable earnings/(accumulated loss)		223,641,058		2,932,480,531		3,037,938
NET ASSETS		$1,119,828,065		$9,192,966,684		$45,494,817

(A) Investments at cost:

Unaffiliated Issuers		$849,144,789		$4,932,460,673		$41,943,005

Affiliated Issuers		28,844,084		1,365,908,453		—

(B) Foreign Currency at Cost		$238,602		$22,039,122		$116,958

See accompanying notes to financial statements.


98		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Emerging Asia Fund		Matthews Asia Innovators Fund		Matthews China Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$382,994,895		$279,460,047		$819,313,238

Affiliated issuers		24,724,628		—		—

Cash		20,185,571		10,467,743		48,885,352

Segregated foreign currency at value		—		2,894		34,943

Foreign currency at value (B)		1,197,697		3,189,056		469,573

Dividends, interest and other receivable		1,187,940		423,216		6,059,499

Receivable for securities sold		1,890,179		322,239		720,279

Receivable for capital shares sold		1,598,036		132,160		1,242,598

Prepaid expenses		32,819		28,171		21,318
TOTAL ASSETS		433,811,765		294,025,526		876,746,800

LIABILITIES:

Payable for securities purchased		553,727		299,502		11,337,862

Payable for capital shares redeemed		1,091,741		351,337		997,881

Deferred foreign capital gains tax liability (Note2-F)		2,752,846		733,210		—

Due to Advisor (Note 5)		279,201		152,478		445,190

Administration and accounting fees payable (Note 5)		5,763		3,759		11,066

Administration and shareholder servicing fees payable (Note 5)		48,877		31,909		93,086

Custodian fees payable		180,704		28,781		22,509

Foreign capital gains tax payable (Note2-F)		263,784		—		—

Intermediary service fees payable (Note 5)		72,401		38,278		105,570

Professional fees payable		26,901		30,821		28,585

Transfer agent fees payable		1,898		2,956		11,564

Accrued other expenses payable		46,698		33,508		241,172
TOTAL LIABILITIES		5,324,541		1,706,539		13,294,485

NET ASSETS		$428,487,224		$292,318,987		$863,452,315

NET ASSETS:

Investor Class		$108,416,138		$174,601,920		$709,970,242

Institutional Class		320,071,086		117,717,067		153,482,073
TOTAL		$428,487,224		$292,318,987		$863,452,315

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Emerging Asia Fund			Matthews Asia Innovators Fund		Matthews China Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		8,818,240			13,018,861		40,403,281

Institutional Class		25,923,473			8,728,827		8,745,387
TOTAL		34,741,713			21,747,688		49,148,668

NET ASSET VALUE:
Investor Class, offering price and redemption price		$12.29			$13.41		$17.57
Institutional Class, offering price and redemption price		$12.35			$13.49		$17.55

NET ASSETS CONSISTS OF:

Capitalpaid-in		$464,607,097			$247,953,183		$855,407,490

Total distributable earnings/(accumulated loss)		(36,119,873	)		44,365,804		8,044,825
NET ASSETS		$428,487,224			$292,318,987		$863,452,315

(A) Investments at cost:

Unaffiliated Issuers		$408,343,262			$232,613,842		$797,202,659

Affiliated Issuers		37,470,156			—		—

(B) Foreign Currency at Cost		$1,199,486			$3,231,348		$469,480

See accompanying notes to financial statements.


100		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews India Fund		Matthews Japan Fund		Matthews Korea Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$1,377,184,363		$2,640,945,752		$144,757,565

Affiliated issuers		83,452,790		—		—

Cash		5,427,436		30,001,250		6,073,206

Foreign currency at value (B)		7,919,711		3,607,360		—

Dividends, interest and other receivable		3,139,681		1,740,175		345,940

Receivable for securities sold		31,212,643		—		397

Receivable for capital shares sold		5,957,603		1,510,526		219,785

Prepaid expenses		26,655		40,920		22,551
TOTAL ASSETS		1,514,320,882		2,677,845,983		151,419,444

LIABILITIES:

Payable for securities purchased		5,575,485		3,762		716,951

Payable for capital shares redeemed		13,367,623		5,915,792		123,657

Deferred foreign capital gains tax liability (Note2-F)		24,571,282		—		—

Due to Advisor (Note 5)		827,594		1,457,111		79,338

Administration and accounting fees payable (Note 5)		20,511		36,536		1,945

Administration and shareholder servicing fees payable (Note 5)		173,203		304,792		16,597

Custodian fees payable		157,923		75,846		9,878

Foreign capital gains tax payable (Note2-F)		555,845		—		—

Intermediary service fees payable (Note 5)		240,509		366,010		34,162

Professional fees payable		36,354		29,649		27,775

Transfer agent fees payable		12,499		19,618		3,382

Accrued other expenses payable		86,362		114,151		27,765
TOTAL LIABILITIES		45,625,190		8,323,267		1,041,450

NET ASSETS		$1,468,695,692		$2,669,522,716		$150,377,994

NET ASSETS:

Investor Class		$1,095,537,667		$1,631,127,451		$120,885,724

Institutional Class		373,158,025		1,038,395,265		29,492,270
TOTAL		$1,468,695,692		$2,669,522,716		$150,377,994

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews India Fund		Matthews Japan Fund		Matthews Korea Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		40,703,603		77,377,316		26,617,592

Institutional Class		13,728,646		49,157,682		6,445,493
TOTAL		54,432,249		126,534,998		33,063,085

NET ASSET VALUE:
Investor Class, offering price and redemption price		$26.92		$21.08		$4.54
Institutional Class, offering price and redemption price		$27.18		$21.12		$4.58

NET ASSETS CONSISTS OF:

Capitalpaid-in		$1,177,782,270		$2,318,641,451		$134,926,558

Total distributable earnings/(accumulated loss)		290,913,422		350,881,265		15,451,436
NET ASSETS		$1,468,695,692		$2,669,522,716		$150,377,994

(A) Investments at cost:

Unaffiliated Issuers		$1,244,940,143		$2,393,915,292		$136,642,249

Affiliated Issuers		46,513,178		—		—

(B) Foreign Currency at Cost		$7,917,876		$3,612,611		$—

See accompanying notes to financial statements.


102		MATTHEWS ASIA FUNDS


Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Small Companies Fund		Matthews China Small Companies Fund

ASSETS:

Investments at value (A) (Note2-A and 7):

Unaffiliated issuers		$172,751,614		$69,379,451

Affiliated issuers		2,232,892		—

Cash		12,307,081		2,173,190

Segregated foreign currency at value		—		3,898

Foreign currency at value (B)		3,809,499		714,207

Dividends, interest and other receivable		563,090		389,157

Receivable for securities sold		1,256,629		504,601

Receivable for capital shares sold		602,345		41,250

Prepaid expenses		19,957		23,947
TOTAL ASSETS		193,543,107		73,229,701

LIABILITIES:

Payable for securities purchased		485,267		30

Payable for capital shares redeemed		221,276		82,741

Deferred foreign capital gains tax liability (Note2-F)		861,696		—

Due to Advisor (Note 5)		137,949		43,471

Administration and accounting fees payable (Note 5)		2,516		957

Administration and shareholder servicing fees payable (Note 5)		21,296		7,972

Custodian fees payable		85,518		5,523

Foreign capital gains tax payable (Note2-F)		30,517		—

Intermediary service fees payable (Note 5)		71,053		32,877

Professional fees payable		27,480		31,815

Transfer agent fees payable		2,534		983

Accrued other expenses payable		41,940		30,195
TOTAL LIABILITIES		1,989,042		236,564

NET ASSETS		$191,554,065		$72,993,137

NET ASSETS:

Investor Class		$116,482,216		$48,468,883

Institutional Class		75,071,849		24,524,254
TOTAL		$191,554,065		$72,993,137

See accompanying notes to financial statements.


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Statements of Assets and Liabilities(unaudited) (continued)		June 30, 2019


	Matthews Asia Small Companies Fund			Matthews China Small Companies Fund
SHARES OUTSTANDING:

(shares of beneficial interest issued and outstanding, respectively, unlimited number of shares authorized with a $0.001 par value)

Investor Class		6,673,023			4,262,223

Institutional Class		4,306,420			2,151,440
TOTAL		10,979,443			6,413,663

NET ASSET VALUE:
Investor Class, offering price and redemption price		$17.46			$11.37
Institutional Class, offering price and redemption price		$17.43			$11.40

NET ASSETS CONSISTS OF:

Capitalpaid-in		$199,624,096			$72,148,839

Total distributable earnings/(accumulated loss)		(8,070,031	)		844,298
NET ASSETS		$191,554,065			$72,993,137

(A) Investments at cost:

Unaffiliated Issuers		$174,386,822			$68,385,492

Affiliated Issuers		2,226,132			—

(B) Foreign Currency at Cost		$3,809,000			$710,372

See accompanying notes to financial statements.


104		MATTHEWS ASIA FUNDS


Statements of Operations(unaudited)		Six-Month Period Ended June 30, 2019


	Matthews Asia Strategic Income Fund			Matthews Asia Credit Opportunities Fund			Matthews Asian Growth and Income Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$16,004			$15,866			$20,848,768

Interest		2,967,019			1,326,711			966,053

Foreign withholding tax		(49,574	)		(8,621	)		(1,376,374	)
TOTAL INVESTMENT INCOME		2,933,449			1,333,956			20,438,447

EXPENSES:

Investment advisory fees (Note 5)		293,987			134,281			4,770,829

Administration and accounting fees (Note 5)		4,276			1,953			57,599

Administration and shareholder servicing fees (Note 5)		73,781			33,691			993,622

Accountingout-of-pocket fees		11,729			11,072			24,870

Custodian fees		19,691			9,104			239,523

Printing fees		18,537			15,313			86,122

Intermediary service fees (Note 5)		69,605			21,181			1,125,967

Professional fees		32,542			31,133			40,393

Registration fees		20,998			20,559			29,791

Transfer agent fees		2,694			637			32,252

Trustees fees		2,465			1,026			38,580

Other expenses		5,777			2,851			32,488
TOTAL EXPENSES		556,082			282,801			7,472,036

Advisory fees waived and expenses waived or reimbursed (Note 5)		(25,859	)		(50,460	)		—
NET EXPENSES		530,223			232,341			7,472,036

NET INVESTMENT INCOME (LOSS)		2,403,226			1,101,615			12,966,411

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, FOREIGN CURRENCY RELATED TRANSACTIONS, SWAPS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		1,056,344			873,350			27,640,015

Net realized gain (loss) on forward foreign currency exchange contracts		803,516			728			—

Net realized gain (loss) on swaps		85,613			—			—

Net realized foreign capital gains tax		(13,103	)		—			—

Net realized gain (loss) on foreign currency related transactions		(366,194	)		270			122,451

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		5,989,522			2,415,195			135,477,089

Net change in unrealized appreciation/depreciation on forward foreign currency exchange contracts		(1,119,966	)		(728	)		—

Net change in unrealized appreciation/depreciation on swaps		(54,169	)		—			—

Net change in deferred foreign capital gains taxes on unrealized appreciation		(39,522	)		—			243,880

Net change in unrealized appreciation/depreciation on foreign currency related translations		2,430			(8	)		(37,585	)
Net realized and unrealized gain (loss) on investments, forward foreign currency exchange contracts, foreign currency related transactions, and foreign capital gains taxes		6,344,471			3,288,807			163,445,850

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		$8,747,697			$4,390,422			$176,412,261

See accompanying notes to financial statements.


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Statements of Operations(unaudited) (continued)		Six-Month Period Ended June 30, 2019


	Matthews Asia Dividend Fund			Matthews China Dividend Fund			Matthews Asia Value Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$73,302,942			$7,120,768			$460,950

Dividends—Affiliated Issuers (Note 7)		16,638,091			—			—

Foreign withholding tax		(7,356,831	)		(366,103	)		(34,362	)
TOTAL INVESTMENT INCOME		82,584,202			6,754,665			426,588

EXPENSES:

Investment advisory fees (Note 5)		20,275,181			1,123,589			89,587

Administration and accounting fees (Note 5)		244,786			13,566			1,082

Administration and shareholder servicing fees (Note 5)		4,222,455			233,920			18,649

Accountingout-of-pocket fees		25,249			21,948			19,226

Custodian fees		890,983			80,930			20,847

Printing fees		166,982			28,245			13,492

Intermediary service fees (Note 5)		3,504,758			275,394			25,275

Professional fees		88,490			27,319			33,358

Registration fees		90,027			22,128			19,364

Transfer agent fees		67,807			7,071			1,358

Trustees fees		148,771			7,368			619

Other expenses		133,327			7,696			8,059
TOTAL EXPENSES		29,858,816			1,849,174			250,916

Advisory fees waived and expenses waived or reimbursed (Note 5)		(190,457	)		—			(58,374	)

Administration fees waived (Note 5)		(190,457	)		—			—
NET EXPENSES		29,477,902			1,849,174			192,542

NET INVESTMENT INCOME (LOSS)		53,106,300			4,905,491			234,046

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		(125,788,447	)		(2,299,658	)		(65,690	)

Net realized gain (loss) on investments—Affiliated Issuers		20,692,688			—			—

Net realized gain (loss) on foreign currency related transactions		(167,994	)		(242,246	)		(1,159	)

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		348,595,599			41,369,691			1,433,487

Net change in unrealized appreciation/depreciation on investments—Affiliated Issuers		38,894,459			—			—

Net change in deferred foreign capital gains taxes on unrealized appreciation		(132,568	)		—			(3,911	)

Net change in unrealized appreciation/depreciation on foreign currency related translations		(136,234	)		5,514			(273	)
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and foreign capital gains taxes		281,957,503			38,833,301			1,362,454

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		$335,063,803			$43,738,792			$1,596,500

See accompanying notes to financial statements.


106		MATTHEWS ASIA FUNDS


Statements of Operations(unaudited) (continued)		Six-Month Period Ended June 30, 2019


	Matthews Asia Growth Fund			Matthews Pacific Tiger Fund			Matthews Asia ESG Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$6,707,051			$70,342,808			$424,148

Dividends—Affiliated Issuers (Note 7)		395,119			23,641,165			—

Foreign withholding tax		(673,960	)		(6,675,914	)		(44,379	)
TOTAL INVESTMENT INCOME		6,428,210			87,308,059			379,769

EXPENSES:

Investment advisory fees (Note 5)		3,533,896			29,514,343			134,663

Administration and accounting fees (Note 5)		42,666			356,330			1,626

Administration and shareholder servicing fees (Note 5)		735,892			6,146,970			28,034

Accountingout-of-pocket fees		22,539			24,780			24,364

Custodian fees		237,965			1,717,425			46,961

Printing fees		39,895			148,648			12,896

Intermediary service fees (Note 5)		647,029			4,513,760			21,313

Professional fees		34,448			108,914			28,931

Registration fees		29,267			100,664			17,286

Transfer agent fees		17,051			66,222			688

Trustees fees		24,414			207,285			759

Other expenses		20,354			135,129			6,492
TOTAL EXPENSES		5,385,416			43,040,470			324,013

Advisory fees waived and expenses waived or reimbursed (Note 5)		—			(518,018	)		(53,794	)

Administration fees waived (Note 5)		—			(518,018	)		—
NET EXPENSES		5,385,416			42,004,434			270,219

NET INVESTMENT INCOME (LOSS)		1,042,794			45,303,625			109,550

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		7,903,200			105,820,171			24,399

Net realized gain (loss) on investments—Affiliated Issuers		—			21,756,218			—

Net realized foreign capital gains tax		889			(731,798	)		278

Net realized gain (loss) on foreign currency related transactions		(43,455	)		(167,846	)		1,768

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		148,807,806			580,074,958			3,204,154

Net change in unrealized appreciation/depreciation on investments—Affiliated Issuers		(7,382,357	)		(96,492,807	)		—

Net change in deferred foreign capital gains taxes on unrealized appreciation		(776,521	)		(16,846,395	)		(150,045	)

Net change in unrealized appreciation/depreciation on foreign currency related translations		1,545			(55,128	)		869
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and foreign capital gains taxes		148,511,107			593,357,373			3,081,423

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		$149,553,901			$638,660,998			$3,190,973

See accompanying notes to financial statements.


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Statements of Operations(unaudited) (continued)		Six-Month Period Ended June 30, 2019


	Matthews Emerging Asia Fund			Matthews Asia Innovators Fund			Matthews China Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$6,730,077			$2,479,241			$11,351,157

Dividends—Affiliated Issuers (Note 7)		164,272			—			—

Foreign withholding tax		(809,736	)		(164,705	)		(548,270	)
TOTAL INVESTMENT INCOME		6,084,613			2,314,536			10,802,887

EXPENSES:

Investment advisory fees (Note 5)		2,142,828			908,817			2,629,864

Administration and accounting fees (Note 5)		17,143			10,972			31,752

Administration and shareholder servicing fees (Note 5)		295,692			189,241			547,412

Accountingout-of-pocket fees		26,277			18,789			19,702

Custodian fees		484,837			126,653			127,559

Printing fees		27,478			25,697			58,853

Intermediary service fees (Note 5)		249,442			209,176			693,864

Professional fees		34,971			29,811			30,381

Registration fees		33,772			25,690			38,911

Transfer agent fees		6,927			10,987			41,988

Trustees fees		10,244			6,088			18,290

Other expenses		13,933			9,137			17,625
TOTAL EXPENSES		3,343,544			1,571,058			4,256,201

Advisory fees waived and expenses waived or reimbursed (Note 5)		(514,640	)		—			—
NET EXPENSES		2,828,904			1,571,058			4,256,201

NET INVESTMENT INCOME (LOSS)		3,255,709			743,478			6,546,686

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		(965,053	)		(1,615,245	)		(727,345	)

Net realized foreign capital gains tax		(81,486	)		(80,243	)		—

Net realized gain (loss) on foreign currency related transactions		(269,412	)		(36,555	)		(45,537	)

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		(8,312,084	)		47,707,040			138,850,543

Net change in unrealized appreciation/depreciation on investments—Affiliated Issuers		(1,665,381	)		—			—

Net change in deferred foreign capital gains taxes on unrealized appreciation		(181,928	)		(312,183	)		—

Net change in unrealized appreciation/depreciation on foreign currency related translations		(17,637	)		(51,870	)		23,145
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and foreign capital gains taxes		(11,492,981	)		45,610,944			138,100,806

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		($8,237,272	)		$46,354,422			$144,647,492

See accompanying notes to financial statements.


108		MATTHEWS ASIA FUNDS


Statements of Operations(unaudited) (continued)		Six-Month Period Ended June 30, 2019


	Matthews India Fund			Matthews Japan Fund			Matthews Korea Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$6,686,402			$23,296,474			$236,953

Foreign withholding tax		(61,533	)		(2,232,794	)		(36,519	)
TOTAL INVESTMENT INCOME		6,624,869			21,063,680			200,434

EXPENSES:

Investment advisory fees (Note 5)		5,111,917			9,503,572			501,506

Administration and accounting fees (Note 5)		61,716			114,738			6,055

Administration and shareholder servicing fees (Note 5)		1,064,771			1,979,339			104,450

Accountingout-of-pocket fees		21,923			23,725			18,680

Custodian fees		375,096			153,935			30,800

Printing fees		72,024			162,999			17,857

Intermediary service fees (Note 5)		1,225,716			833,016			137,219

Professional fees		58,199			52,841			25,052

Registration fees		45,512			36,870			17,384

Transfer agent fees		44,138			69,650			11,987

Trustees fees		38,828			76,849			3,850

Other expenses		42,034			47,000			3,551
TOTAL EXPENSES		8,161,874			13,054,534			878,391
NET EXPENSES		8,161,874			13,054,534			878,391

NET INVESTMENT INCOME (LOSS)		(1,537,005	)		8,009,146			(677,957	)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		46,110,444			37,166,311			(38,841	)

Net realized foreign capital gains tax		(1,765,783	)		—			—

Net realized gain (loss) on foreign currency related transactions		(642,587	)		562,969			(55,636	)

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		(2,095,923	)		332,581,724			(543,201	)

Net change in unrealized appreciation/depreciation on investments—Affiliated Issuers		7,625,104			—			—

Net change in deferred foreign capital gains taxes on unrealized appreciation		(12,698,523	)		—			—

Net change in unrealized appreciation/depreciation on foreign currency related translations		(9,166	)		620			(23,205	)
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and foreign capital gains taxes		36,523,566			370,311,624			(660,883	)

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		$34,986,561			$378,320,770			($1,338,840	)

See accompanying notes to financial statements.


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Statements of Operations(unaudited) (continued)		Six-Month Period Ended June 30, 2019


	Matthews Asia Small Companies Fund			Matthews China Small Companies Fund

INVESTMENT INCOME:

Dividends—Unaffiliated Issuers		$2,487,313			$1,152,493

Dividends—Affiliated Issuers (Note 7)		63,100			—

Foreign withholding tax		(153,187	)		(17,237	)
TOTAL INVESTMENT INCOME		2,397,226			1,135,256

EXPENSES:

Investment advisory fees (Note 5)		957,806			356,650

Administration and accounting fees (Note 5)		7,663			2,853

Administration and shareholder servicing fees (Note 5)		132,194			49,193

Accountingout-of-pocket fees		26,236			21,243

Custodian fees		166,602			22,643

Printing fees		21,685			15,579

Intermediary service fees (Note 5)		182,460			66,011

Professional fees		40,245			25,199

Registration fees		22,708			22,072

Transfer agent fees		8,613			3,552

Trustees fees		5,744			1,526

Other expenses		11,226			2,640
TOTAL EXPENSES		1,583,182			589,161

Advisory fees waived and expenses waived or reimbursed (Note 5)		(237,652	)		(85,055	)
NET EXPENSES		1,345,530			504,106

NET INVESTMENT INCOME (LOSS)		1,051,696			631,150

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY RELATED TRANSACTIONS, AND FOREIGN CAPITAL GAINS TAXES:

Net realized gain (loss) on investments—Unaffiliated Issuers		(5,438,131	)		(757,142	)

Net realized foreign capital gains tax		(568,550	)		—

Net realized gain (loss) on foreign currency related transactions		(32,719	)		(9,448	)

Net change in unrealized appreciation/depreciation on investments—Unaffiliated Issuers		27,931,130			11,829,985

Net change in unrealized appreciation/depreciation on investments—Affiliated Issuers		11,572			—

Net change in deferred foreign capital gains taxes on unrealized appreciation		135,147			—

Net change in unrealized appreciation/depreciation on foreign currency related translations		(6,459	)		(170	)
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and foreign capital gains taxes		22,031,990			11,063,225

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		$23,083,686			$11,694,375

See accompanying notes to financial statements.


110		MATTHEWS ASIA FUNDS

Statements of Changes in Net Assets


MATTHEWS ASIA STRATEGIC INCOME FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$2,403,226			$4,279,959

Net realized gain (loss) on investments and foreign currency related transactions		1,566,176			(4,697,556	)

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		4,871,986			(4,886,159	)

Net change on foreign capital gains taxes on unrealized appreciation		(39,522	)		72,858

Net change in unrealized appreciation/depreciation on swaps		(54,169	)		—
Net increase (decrease) in net assets resulting from operations		8,747,697			(5,230,898	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		(672,875	)		(1,482,265	)

Institutional Class		(1,305,553	)		(1,402,339	)

Return of Capital

Investor Class		—			(194,306	)

Institutional Class		—			(187,644	)
Net decrease in net assets resulting from distributions		(1,978,428	)		(3,266,554	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		6,144,037			14,620,480
Total increase (decrease) in net assets		12,913,306			6,123,028
NET ASSETS:

Beginning of period		100,715,183			94,592,155
End of period		$113,628,489			$100,715,183

MATTHEWS ASIA CREDIT OPPORTUNITIES FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$1,101,615			$1,530,022

Net realized gain (loss) on investments and foreign currency related transactions		874,348			(807,786	)

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		2,414,459			(1,914,582	)
Net increase (decrease) in net assets resulting from operations		4,390,422			(1,192,346	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		(207,612	)		(346,586	)

Institutional Class		(845,107	)		(1,064,779	)
Net decrease in net assets resulting from distributions		(1,052,719	)		(1,411,365	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		14,354,401			10,664,938
Total increase (decrease) in net assets		17,692,104			8,061,227
NET ASSETS:

Beginning of period		39,752,968			31,691,741
End of period		$57,445,072			$39,752,968

See accompanying notes to financial statements.


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Statements of Changes in Net Assets(continued)


MATTHEWS ASIAN GROWTH AND INCOME FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$12,966,411			$45,280,897

Net realized gain (loss) on investments and foreign currency related transactions		27,762,466			108,473,321

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		135,439,504			(403,082,443	)

Net change on foreign capital gains taxes on unrealized appreciation		243,880			(107,296	)
Net increase (decrease) in net assets resulting from operations		176,412,261			(249,435,521	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		(9,207,478	)		(94,856,451	)

Institutional Class		(7,050,399	)		(85,765,453	)
Net decrease in net assets resulting from distributions		(16,257,877	)		(180,621,904	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		(135,444,570	)		(1,020,164,659	)
Total increase (decrease) in net assets		24,709,814			(1,450,222,084	)
NET ASSETS:

Beginning of period		1,395,691,373			2,845,913,457
End of period		$1,420,401,187			$1,395,691,373

MATTHEWS ASIA DIVIDEND FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$53,106,300			$141,577,757

Net realized gain (loss) on investments and foreign currency related transactions		(105,263,753	)		403,086,377

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		387,353,824			(1,469,585,251	)

Net change on foreign capital gains taxes on unrealized appreciation		(132,568	)		(160,170	)
Net increase (decrease) in net assets resulting from operations		335,063,803			(925,081,287	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		(24,781,966	)		(211,389,650	)

Institutional Class		(31,892,163	)		(237,144,125	)
Net decrease in net assets resulting from distributions		(56,674,129	)		(448,533,775	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		20,313,944			144,094,328
Total increase (decrease) in net assets		298,703,618			(1,229,520,734	)
NET ASSETS:

Beginning of period		5,767,825,347			6,997,346,081
End of period		$6,066,528,965			$5,767,825,347

See accompanying notes to financial statements.


112		MATTHEWS ASIA FUNDS

Statements of Changes in Net Assets(continued)


MATTHEWS CHINA DIVIDEND FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$4,905,491			$7,726,552

Net realized gain (loss) on investments and foreign currency related transactions		(2,541,904	)		23,400,629

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		41,375,205			(66,519,586	)
Net increase (decrease) in net assets resulting from operations		43,738,792			(35,392,405	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		(4,030,047	)		(21,468,293	)

Institutional Class		(1,547,682	)		(8,057,266	)
Net decrease in net assets resulting from distributions		(5,577,729	)		(29,525,559	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		70,849,537			19,837,199
Total increase (decrease) in net assets		109,010,600			(45,080,765	)
NET ASSETS:

Beginning of period		269,659,321			314,740,086
End of period		$378,669,921			$269,659,321

MATTHEWS ASIA VALUE FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$234,046			$262,120

Net realized gain (loss) on investments and foreign currency related transactions		(66,849	)		(126,184	)

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		1,433,214			(3,582,664	)

Net change on foreign capital gains taxes on unrealized appreciation		(3,911	)		(4,103	)
Net increase (decrease) in net assets resulting from operations		1,596,500			(3,450,831	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(795,360	)

Institutional Class		—			(257,755	)
Net decrease in net assets resulting from distributions		—			(1,053,115	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		179,840			(3,035,025	)
Total increase (decrease) in net assets		1,776,340			(7,538,971	)
NET ASSETS:

Beginning of period		23,195,009			30,733,980
End of period		$24,971,349			$23,195,009

See accompanying notes to financial statements.


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Statements of Changes in Net Assets(continued)


MATTHEWS ASIA GROWTH FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$1,042,794			$827,153

Net realized gain (loss) on investments and foreign currency related transactions		7,860,634			5,493,132

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		141,426,994			(208,530,498	)

Net change on foreign capital gains taxes on unrealized appreciation		(776,521	)		1,093,836
Net increase (decrease) in net assets resulting from operations		149,553,901			(201,116,377	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(7,253,289	)

Institutional Class		—			(8,131,385	)
Net decrease in net assets resulting from distributions		—			(15,384,674	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		39,940,608			296,272,663
Total increase (decrease) in net assets		189,494,509			79,771,612
NET ASSETS:

Beginning of period		930,333,556			850,561,944
End of period		$1,119,828,065			$930,333,556

MATTHEWS PACIFIC TIGER FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$45,303,625			$82,597,259

Net realized gain (loss) on investments and foreign currency related transactions		126,676,745			314,042,088

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		483,527,023			(1,456,251,388	)

Net change on foreign capital gains taxes on unrealized appreciation		(16,846,395	)		(12,961,619	)
Net increase (decrease) in net assets resulting from operations		638,660,998			(1,072,573,660	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(121,255,981	)

Institutional Class		—			(275,120,994	)
Net decrease in net assets resulting from distributions		—			(396,376,975	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		247,071,483			51,147,953
Total increase (decrease) in net assets		885,732,481			(1,417,802,682	)
NET ASSETS:

Beginning of period		8,307,234,203			9,725,036,885
End of period		$9,192,966,684			$8,307,234,203

See accompanying notes to financial statements.


114		MATTHEWS ASIA FUNDS

Statements of Changes in Net Assets(continued)


MATTHEWS ASIA ESG FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$109,550			$85,056

Net realized gain (loss) on investments and foreign currency related transactions		26,445			614,957

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		3,205,023			(2,813,567	)

Net change on foreign capital gains taxes on unrealized appreciation		(150,045	)		34,007
Net increase (decrease) in net assets resulting from operations		3,190,973			(2,079,547	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(389,328	)

Institutional Class		—			(560,925	)
Net decrease in net assets resulting from distributions		—			(950,253	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		9,772,051			17,507,714
Total increase (decrease) in net assets		12,963,024			14,477,914
NET ASSETS:

Beginning of period		32,531,793			18,053,879
End of period		$45,494,817			$32,531,793

MATTHEWS EMERGING ASIA FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$3,255,709			$4,233,785

Net realized gain (loss) on investments and foreign currency related transactions		(1,315,951	)		11,192,808

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		(9,995,102	)		(112,214,332	)

Net change on foreign capital gains taxes on unrealized appreciation		(181,928	)		1,804,989
Net increase (decrease) in net assets resulting from operations		(8,237,272	)		(94,982,750	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(2,684,365	)

Institutional Class		—			(6,570,784	)
Net decrease in net assets resulting from distributions		—			(9,255,149	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		61,502,783			(15,498,956	)
REDEMPTION FEES		46,952			82,599
Total increase (decrease) in net assets		53,312,463			(119,654,256	)
NET ASSETS:

Beginning of period		375,174,761			494,829,017
End of period		$428,487,224			$375,174,761

See accompanying notes to financial statements.


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Statements of Changes in Net Assets(continued)


MATTHEWS ASIA INNOVATORS FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$743,478			($103,238	)

Net realized gain (loss) on investments and foreign currency related transactions		(1,732,043	)		2,546,956

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		47,655,170			(59,878,788	)

Net change on foreign capital gains taxes on unrealized appreciation		(312,183	)		(5,393	)
Net increase (decrease) in net assets resulting from operations		46,354,422			(57,440,463	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(3,970,300	)

Institutional Class		—			(2,656,060	)
Net decrease in net assets resulting from distributions		—			(6,626,360	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		1,746,710			101,996,223
Total increase (decrease) in net assets		48,101,132			37,929,400
NET ASSETS:

Beginning of period		244,217,855			206,288,455
End of period		$292,318,987			$244,217,855

MATTHEWS CHINA FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$6,546,686			$9,876,601

Net realized gain (loss) on investments and foreign currency related transactions		(772,882	)		111,510,918

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		138,873,688			(335,815,337	)
Net increase (decrease) in net assets resulting from operations		144,647,492			(214,427,818	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(109,557,899	)

Institutional Class		—			(9,475,103	)
Net decrease in net assets resulting from distributions		—			(119,033,002	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		105,692,109			41,090,545
Total increase (decrease) in net assets		250,339,601			(292,370,275	)
NET ASSETS:

Beginning of period		613,112,714			905,482,989
End of period		$863,452,315			$613,112,714

See accompanying notes to financial statements.


116		MATTHEWS ASIA FUNDS

Statements of Changes in Net Assets(continued)


MATTHEWS INDIA FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		($1,537,005	)		($2,070,170	)

Net realized gain (loss) on investments and foreign currency related transactions		43,702,074			331,211,413

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		5,520,015			(567,019,183	)

Net change on foreign capital gains taxes on unrealized appreciation		(12,698,523	)		(2,413,851	)
Net increase (decrease) in net assets resulting from operations		34,986,561			(240,291,791	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(159,591,192	)

Institutional Class		—			(75,460,576	)
Net decrease in net assets resulting from distributions		—			(235,051,768	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		(108,070,892	)		(255,309,634	)
Total increase (decrease) in net assets		(73,084,331	)		(730,653,193	)
NET ASSETS:

Beginning of period		1,541,780,023			2,272,433,216
End of period		$1,468,695,692			$1,541,780,023

MATTHEWS JAPAN FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$8,009,146			$18,472,839

Net realized gain (loss) on investments and foreign currency related transactions		37,729,280			194,213,809

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		332,582,344			(1,069,641,926	)
Net increase (decrease) in net assets resulting from operations		378,320,770			(856,955,278	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(71,970,442	)

Institutional Class		—			(51,381,225	)
Net decrease in net assets resulting from distributions		—			(123,351,667	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		(580,372,373	)		(260,612,861	)
Total increase (decrease) in net assets		(202,051,603	)		(1,240,919,806	)
NET ASSETS:

Beginning of period		2,871,574,319			4,112,494,125
End of period		$2,669,522,716			$2,871,574,319

See accompanying notes to financial statements.


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Statements of Changes in Net Assets(continued)


MATTHEWS KOREA FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		($677,957	)		$1,887,805

Net realized gain (loss) on investments and foreign currency related transactions		(94,477	)		30,298,095

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		(566,406	)		(83,113,064	)
Net increase (decrease) in net assets resulting from operations		(1,338,840	)		(50,927,164	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(19,838,627	)

Institutional Class		—			(2,831,158	)
Net decrease in net assets resulting from distributions		—			(22,669,785	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		5,259,764			(4,964,199	)
Total increase (decrease) in net assets		3,920,924			(78,561,148	)
NET ASSETS:

Beginning of period		146,457,070			225,018,218
End of period		$150,377,994			$146,457,070

MATTHEWS ASIA SMALL COMPANIES FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$1,051,696			$2,416,511

Net realized gain (loss) on investments and foreign currency related transactions		(6,039,400	)		32,060,275

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		27,936,243			(104,112,981	)

Net change on foreign capital gains taxes on unrealized appreciation		135,147			(535,103	)
Net increase (decrease) in net assets resulting from operations		23,083,686			(70,171,298	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(22,501,099	)

Institutional Class		—			(18,262,086	)
Net decrease in net assets resulting from distributions		—			(40,763,185	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		(17,920,041	)		(144,037,484	)
REDEMPTION FEES		—			69,377
Total increase (decrease) in net assets		5,163,645			(254,902,590	)
NET ASSETS:

Beginning of period		186,390,420			441,293,010
End of period		$191,554,065			$186,390,420

See accompanying notes to financial statements.


118		MATTHEWS ASIA FUNDS

Statements of Changes in Net Assets(continued)



MATTHEWS CHINA SMALL COMPANIES FUND	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended December 31, 2018

OPERATIONS:

Net investment income (loss)		$631,150			$464,514

Net realized gain (loss) on investments and foreign currency related transactions		(766,590	)		1,508,682

Net change in unrealized appreciation/depreciation on investments and foreign currency related translations		11,829,815			(17,732,735	)
Net increase (decrease) in net assets resulting from operations		11,694,375			(15,759,539	)

DISTRIBUTIONS TO SHAREHOLDERS:

Investor Class		—			(958,588	)

Institutional Class		—			(327,972	)
Net decrease in net assets resulting from distributions		—			(1,286,560	)
CAPITAL SHARE TRANSACTIONS (net) (Note 4)		(1,180,893	)		43,659,977
REDEMPTION FEES		—			180,654
Total increase (decrease) in net assets		10,513,482			26,794,532
NET ASSETS:

Beginning of period		62,479,655			35,685,123
End of period		$72,993,137			$62,479,655

See accompanying notes to financial statements.


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Financial Highlights

Matthews Asia Strategic Income Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$10.25			$10.98			$10.43			$9.96			$10.31			$10.42
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.23			0.40			0.51			0.50			0.47			0.46
Net realized gain (loss) and unrealized appreciation/depreciation on investments, forward foreign currency exchange contracts, swaps, foreign currency related transactions, and foreign capital gains taxes		0.63			(0.84	)		0.46			0.38			(0.53	)		(0.19	)
Total from investment operations		0.86			(0.44	)		0.97			0.88			(0.06	)		0.27
LESS DISTRIBUTIONS FROM:
Net investment income		(0.19	)		(0.25	)		(0.42	)		(0.41	)		(0.29	)		(0.38	)
Return of Capital		—			(0.04	)		—			—			—			—
Total distributions		(0.19	)		(0.29	)		(0.42	)		(0.41	)		(0.29	)		(0.38	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$10.92			$10.25			$10.98			$10.43			$9.96			$10.31
TOTAL RETURN		8.39%	³		(4.05%	)		9.40%			8.85%			(0.58%	)		2.54%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$39,140			$40,698			$63,437			$55,409			$51,130			$58,594
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.16%	⁴		1.23%			1.29%			1.33%			1.28%			1.27%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.15%	⁴		1.15%			1.15%			1.15%			1.12%			1.13%
Ratio of net investment income (loss) to average net assets		4.32%	⁴		3.76%			4.70%			4.85%			4.57%			4.36%
Portfolio turnover⁵		59.38%	³		82.32%			36.58%			71.50%			50.09%			34.28%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS				2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$10.25			$10.97			$10.42			$9.96			$10.30			$10.42
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.24			0.42			0.53			0.53			0.49			0.48
Net realized gain (loss) and unrealized appreciation/depreciation on investments, forward foreign currency exchange contracts, swaps, foreign currency related transactions, and foreign capital gains taxes		0.64			(0.83	)		0.47			0.36			(0.52	)		(0.20	)
Total from investment operations		0.88			(0.41	)		1.00			0.89			(0.03	)		0.28
LESS DISTRIBUTIONS FROM:
Net investment income		(0.20	)		(0.27	)		(0.45	)		(0.43	)		(0.31	)		(0.40	)
Return of Capital		—			(0.04	)		—			—			—			—
Total distributions		(0.20	)		(0.31	)		(0.45	)		(0.43	)		(0.31	)		(0.40	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$10.93			$10.25			$10.97			$10.42			$9.96			$10.30
TOTAL RETURN		8.63%	³		(3.78%	)		9.67%			9.02%			(0.27%	)		2.64%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$74,489			$60,017			$31,155			$13,398			$11,001			$7,840
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.97%	⁴		1.04%			1.08%			1.12%			1.09%			1.07%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.90%	⁴		0.90%			0.90%			0.90%			0.90%			0.93%
Ratio of net investment income (loss) to average net assets		4.60%	⁴		4.03%			4.93%			5.13%			4.81%			4.55%
Portfolio turnover⁵		59.38%	³		82.32%			36.58%			71.50%			50.09%			34.28%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


120		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Asia Credit Opportunities Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31						Period Ended Dec. 31, 2016¹
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			Period Ended Dec. 31, 2016¹
Net Asset Value, beginning of period		$9.76			$10.39			$10.13			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.22			0.37			0.44			0.29
Net realized gain (loss) and unrealized appreciation/depreciation on investments, swaps, and foreign currency related transactions		0.69			(0.67	)		0.35			0.18
Total from investment operations		0.91			(0.30	)		0.79			0.47
LESS DISTRIBUTIONS FROM:
Net investment income		(0.20	)		(0.33	)		(0.43	)		(0.32	)
Net realized gains on investments		—			—			(0.10	)		(0.02	)
Total distributions		(0.20	)		(0.33	)		(0.53	)		(0.34	)
Net Asset Value, end of period		$10.47			$9.76			$10.39			$10.13
TOTAL RETURN		9.39%	³		(2.88%	)		7.86%			4.66%	³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$11,264			$8,668			$10,201			$10,119
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.32%	⁴		1.44%			1.86%			2.24%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.15%	⁴		1.15%			1.15%			1.15%	⁴
Ratio of net investment income (loss) to average net assets		4.31%	⁴		3.62%			4.17%			4.12%	⁴
Portfolio turnover⁵		70.90%	³		49.06%			27.86%			18.80%	³

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31						Period Ended Dec. 31, 2016¹
INSTITUTIONAL CLASS				2018			2017			Period Ended Dec. 31, 2016¹
Net Asset Value, beginning of period		$9.75			$10.39			$10.13			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.23			0.39			0.46			0.30
Net realized gain (loss) and unrealized appreciation/depreciation on investments, swaps, and foreign currency related transactions		0.70			(0.67	)		0.36			0.18
Total from investment operations		0.93			(0.28	)		0.82			0.48
LESS DISTRIBUTIONS FROM:
Net investment income		(0.21	)		(0.36	)		(0.46	)		(0.33	)
Net realized gains on investments		—			—			(0.10	)		(0.02	)
Total distributions		(0.21	)		(0.36	)		(0.56	)		(0.35	)
Net Asset Value, end of period		$10.47			$9.75			$10.39			$10.13
TOTAL RETURN		9.63%	³		(2.75%	)		8.13%			4.82%	³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$46,181			$31,085			$21,491			$6,205
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.12%	⁴		1.25%			1.62%			1.99%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.90%	⁴		0.90%			0.90%			0.90%	⁴
Ratio of net investment income (loss) to average net assets		4.56%	⁴		3.90%			4.45%			4.28%	⁴
Portfolio turnover⁵		70.90%	³		49.06%			27.86%			18.80%	³

1	Commenced operations on April, 29 2016.

2	Calculated using the average daily shares method.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			121

Financial Highlights(continued)

Matthews Asian Growth And Income Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS				2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$13.92			$17.46			$14.94			$16.03			$18.01			$18.91
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.13			0.32			0.33			0.32			0.39			0.39
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.66			(2.20	)		2.92			(0.06	)		(1.19	)		(0.50	)
Total from investment operations		1.79			(1.88	)		3.25			0.26			(0.80	)		(0.11	)
LESS DISTRIBUTIONS FROM:
Net investment income		(0.17	)		(0.32	)		(0.46	)		(0.48	)		(0.42	)		(0.35	)
Net realized gains on investments		—			(1.34	)		(0.27	)		(0.87	)		(0.76	)		(0.44	)
Total distributions		(0.17	)		(1.66	)		(0.73	)		(1.35	)		(1.18	)		(0.79	)
Paid-in capital from redemption fees (Note 4)		—			—			—	²		—			—	²		—	²
Net Asset Value, end of period		$15.54			$13.92			$17.46			$14.94			$16.03			$18.01
TOTAL RETURN		12.92%	³		(10.96%	)		21.85%			1.34%			(4.50%	)		(0.65%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$825,574			$799,328			$1,535,746			$1,684,987			$2,045,435			$3,052,565
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.10%	⁴		1.08%			1.07%			1.09%			1.09%			1.08%
Ratio of net investment income (loss) to average net assets		1.76%	⁴		1.95%			1.95%			1.90%			2.17%			2.03%
Portfolio turnover⁵		10.26%	³		32.24%			23.23%			15.64%			16.48%			16.79%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS				2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$13.89			$17.43			$14.92			$16.02			$18.00			$18.90
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.14			0.35			0.36			0.34			0.42			0.42
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.66			(2.20	)		2.91			(0.07	)		(1.19	)		(0.50	)
Total from investment operations		1.80			(1.85	)		3.27			0.27			(0.77	)		(0.08	)
LESS DISTRIBUTIONS FROM:
Net investment income		(0.18	)		(0.35	)		(0.49	)		(0.50	)		(0.45	)		(0.38	)
Net realized gains on investments		—			(1.34	)		(0.27	)		(0.87	)		(0.76	)		(0.44	)
Total distributions		(0.18	)		(1.69	)		(0.76	)		(1.37	)		(1.21	)		(0.82	)
Paid-in capital from redemption fees (Note 4)		—			—			—	²		—			—	²		—	²
Net Asset Value, end of period		$15.51			$13.89			$17.43			$14.92			$16.02			$18.00
TOTAL RETURN		13.02%	³		(10.84%	)		22.00%			1.44%			(4.33%	)		(0.48%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$594,828			$596,364			$1,310,168			$809,254			$823,619			$1,182,690
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.96%	⁴		0.93%			0.93%			0.94%			0.92%			0.92%
Ratio of net investment income (loss) to average net assets		1.86%	⁴		2.14%			2.16%			2.06%			2.34%			2.19%
Portfolio turnover⁵		10.26%	³		32.24%			23.23%			15.64%			16.48%			16.79%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


122		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Asia Dividend Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS				2018			2017			2016¹			2015¹			2014¹
Net Asset Value, beginning of period		$16.05			$19.74			$15.52			$15.36			$15.26			$15.60
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.14			0.37			0.31			0.28			0.29			0.30
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.79			(2.83	)		5.02			0.37			0.31			(0.34	)
Total from investment operations		0.93			(2.46	)		5.33			0.65			0.60			(0.04	)
LESS DISTRIBUTIONS FROM:
Net investment income		(0.15	)		(0.31	)		(0.69	)		(0.29	)		(0.27	)		(0.23	)
Net realized gains on investments		—			(0.92	)		(0.42	)		(0.11	)		(0.23	)		—
Return of capital		—			—			—			(0.09	)		—			(0.07	)
Total distributions		(0.15	)		(1.23	)		(1.11	)		(0.49	)		(0.50	)		(0.30	)
Paid-in capital from redemption fees (Note 4)		—			—			—	³		—			—	³		—	³
Net Asset Value, end of period		$16.83			$16.05			$19.74			$15.52			$15.36			$15.26
TOTAL RETURN		5.82%	⁴		(12.72%	)		34.69%			4.13%			3.86%			(0.32%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$2,710,990			$2,728,599			$3,713,276			$2,650,611			$2,757,910			$2,918,228
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.03%	⁵		1.02%			1.03%			1.06%			1.06%			1.06%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.02%	⁵		1.01%			1.02%			1.06%			1.05%			1.05%
Ratio of net investment income (loss) to average net assets		1.65%	⁵		1.97%			1.67%			1.79%			1.82%			1.89%
Portfolio turnover⁶		18.67%	⁴		39.75%			28.11%			39.76%			35.98%			20.06%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016¹			2015¹			2014¹
Net Asset Value, beginning of period		$16.04			$19.73			$15.52			$15.35			$15.26			$15.59
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.15			0.39			0.33			0.30			0.32			0.32
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.79			(2.83	)		5.01			0.38			0.29			(0.33	)
Total from investment operations		0.94			(2.44	)		5.34			0.68			0.61			(0.01	)
LESS DISTRIBUTIONS FROM:
Net investment income		(0.16	)		(0.33	)		(0.71	)		(0.31	)		(0.29	)		(0.25	)
Net realized gains on investments		—			(0.92	)		(0.42	)		(0.11	)		(0.23	)		—
Return of capital		—			—			—			(0.09	)		—			(0.07	)
Total distributions		(0.16	)		(1.25	)		(1.13	)		(0.51	)		(0.52	)		(0.32	)
Paid-in capital from redemption fees (Note 4)		—			—			—	³		—			—	³		—	³
Net Asset Value, end of period		$16.82			$16.04			$19.73			$15.52			$15.35			$15.26
TOTAL RETURN		5.88%	⁴		(12.64%	)		34.77%			4.33%			3.93%			(0.18%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$3,355,539			$3,039,226			$3,284,070			$2,034,276			$2,045,713			$2,107,371
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.93%	⁵		0.91%			0.92%			0.94%			0.93%			0.93%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.92%	⁵		0.90%			0.91%			0.93%			0.92%			0.93%
Ratio of net investment income (loss) to average net assets		1.81%	⁵		2.09%			1.81%			1.91%			1.98%			2.02%
Portfolio turnover⁶		18.67%	⁴		39.75%			28.11%			39.76%			35.98%			20.06%

1	Consolidated Financial Highlights. See Note2-C.

2	Calculated using the average daily shares method.

3	Less than $0.01 per share.

4	Not annualized.

5	Annualized.

6	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			123

Financial Highlights(continued)

Matthews China Dividend Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$14.32			$17.61			$14.09			$13.79			$13.37			$13.74
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.22			0.41			0.35			0.31			0.29			0.25
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		1.99			(2.09	)		4.85			0.47			1.01			(0.12	)
Total from investment operations		2.21			(1.68	)		5.20			0.78			1.30			0.13
LESS DISTRIBUTIONS FROM:
Net investment income		(0.24	)		(0.40	)		(0.49	)		(0.28	)		(0.28	)		(0.36	)
Net realized gains on investments		—			(1.21	)		(1.19	)		(0.20	)		(0.60	)		(0.14	)
Total distributions		(0.24	)		(1.61	)		(1.68	)		(0.48	)		(0.88	)		(0.50	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$16.29			$14.32			$17.61			$14.09			$13.79			$13.37
TOTAL RETURN		15.51%	³		(9.98%	)		37.69%			5.70%			9.54%			0.93%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$276,272			$196,626			$260,593			$160,400			$165,514			$116,954
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.12%	⁴		1.15%			1.19%			1.22%			1.19%			1.19%
Ratio of net investment income (loss) to average net assets		2.83%	⁴		2.33%			2.12%			2.28%			1.97%			1.88%
Portfolio turnover⁵		42.80%	³		66.47%			69.14%			72.96%			79.91%			25.43%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$14.32			$17.61			$14.09			$13.79			$13.37			$13.74
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.24			0.42			0.37			0.29			0.28			0.28
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		1.98			(2.07	)		4.85			0.51			1.04			(0.13	)
Total from investment operations		2.22			(1.65	)		5.22			0.80			1.32			0.15
LESS DISTRIBUTIONS FROM:
Net investment income		(0.25	)		(0.43	)		(0.51	)		(0.30	)		(0.30	)		(0.38	)
Net realized gains on investments		—			(1.21	)		(1.19	)		(0.20	)		(0.60	)		(0.14	)
Total distributions		(0.25	)		(1.64	)		(1.70	)		(0.50	)		(0.90	)		(0.52	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$16.29			$14.32			$17.61			$14.09			$13.79			$13.37
TOTAL RETURN		15.58%	³		(9.83%	)		37.88%			5.90%			9.71%			1.11%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$102,398			$73,033			$54,147			$27,758			$15,406			$30,662
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.00%	⁴		1.01%			1.04%			1.06%			1.00%			1.01%
Ratio of net investment income (loss) to average net assets		3.09%	⁴		2.44%			2.25%			2.09%			1.89%			2.06%
Portfolio turnover⁵		42.80%	³		66.47%			69.14%			72.96%			79.91%			25.43%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


124		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Asia Value Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31									Period Ended Dec. 31, 2015¹
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			Period Ended Dec. 31, 2015¹
Net Asset Value, beginning of period		$10.86			$12.83			$9.96			$9.85			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.10			0.10			0.14			0.09			0.02
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.66			(1.49	)		3.45			0.65			(0.16	)
Total from investment operations		0.76			(1.39	)		3.59			0.74			(0.14	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.16	)		(0.29	)		(0.59	)		(0.01	)
Net realized gains on investments		—			(0.42	)		(0.43	)		(0.04	)		—
Total distributions		—			(0.58	)		(0.72	)		(0.63	)		(0.01	)
Net Asset Value, end of period		$11.62			$10.86			$12.83			$9.96			$9.85
TOTAL RETURN		7.00%	³		(10.93%	)		36.12%			7.43%			(1.35%	)³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$18,897			$16,326			$27,346			$2,548			$1,589
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.92%	⁴		1.77%			2.32%			11.48%			36.42%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.50%	⁴		1.50%			1.50%			1.50%			1.50%	⁴
Ratio of net investment income (loss) to average net assets		1.71%	⁴		0.81%			1.10%			0.84%			2.70%	⁴
Portfolio turnover⁵		12.47%	³		48.29%			31.93%			19.60%			10.80%	³

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31									Period Ended Dec. 31, 2015¹
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			Period Ended Dec. 31, 2015¹
Net Asset Value, beginning of period		$10.78			$12.73			$9.85			$9.83			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.10			0.14			0.32			0.10			0.02
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.67			(1.49	)		3.25			0.67			(0.15	)
Total from investment operations		0.77			(1.35	)		3.57			0.77			(0.13	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.18	)		(0.26	)		(0.71	)		(0.04	)
Net realized gains on investments		—			(0.42	)		(0.43	)		(0.04	)		—
Total distributions		—			(0.60	)		(0.69	)		(0.75	)		(0.04	)
Net Asset Value, end of period		$11.55			$10.78			$12.73			$9.85			$9.83
TOTAL RETURN		7.14%	³		(10.65%	)		36.35%			7.72%			(1.30%	)³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$6,074			$6,869			$3,388			$155			$143
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.71%	⁴		1.54%			2.08%			11.26%			36.17%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.25%	⁴		1.25%			1.25%			1.25%			1.25%	⁴
Ratio of net investment income (loss) to average net assets		1.78%	⁴		1.18%			2.59%			1.01%			2.41%	⁴
Portfolio turnover⁵		12.47%	³		48.29%			31.93%			19.60%			10.80%	³

1	Commenced operations on November 30, 2015.

2	Calculated using the average daily shares method.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			125

Financial Highlights(continued)

Matthews Asia Growth Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$22.49			$27.25			$21.05			$21.09			$21.10			$21.17
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.01			—	²		0.04			0.06			0.11			0.12
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		3.54			(4.41	)		8.14			0.13			(0.12	)		0.19
Total from investment operations		3.55			(4.41	)		8.18			0.19			(0.01	)		0.31
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.03	)		(0.16	)		(0.23	)		—			(0.38	)
Net realized gains on investments		—			(0.32	)		(1.82	)		—			—			—
Total distributions		—			(0.35	)		(1.98	)		(0.23	)		—			(0.38	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$26.04			$22.49			$27.25			$21.05			$21.09			$21.10
TOTAL RETURN		15.78%	³		(16.25%	)		39.39%			0.92%			(0.05%	)		1.49%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$528,787			$463,600			$554,309			$419,516			$526,969			$561,922
Ratio of expenses to average net assets		1.09%	⁴		1.10%			1.12%			1.14%			1.11%			1.11%
Ratio of net investment income (loss) to average net assets		0.11%	⁴		—%	⁵		0.16%			0.30%			0.49%			0.55%
Portfolio turnover⁶		12.32%	³		12.12%			23.19%			13.61%			29.51%			22.24%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$22.65			$27.45			$21.19			$21.24			$21.19			$21.26
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.03			0.05			0.09			0.10			0.16			0.16
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		3.57			(4.45	)		8.20			0.13			(0.11	)		0.19
Total from investment operations		3.60			(4.40	)		8.29			0.23			0.05			0.35
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.08	)		(0.21	)		(0.28	)		—			(0.42	)
Net realized gains on investments		—			(0.32	)		(1.82	)		—			—			—
Total distributions		—			(0.40	)		(2.03	)		(0.28	)		—			(0.42	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$26.25			$22.65			$27.45			$21.19			$21.24			$21.19
TOTAL RETURN		15.89%	³		(16.10%	)		39.64%			1.06%			0.24%			1.63%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$591,041			$466,733			$296,253			$195,949			$249,886			$287,262
Ratio of expenses to average net assets		0.93%	⁴		0.93%			0.93%			0.96%			0.91%			0.91%
Ratio of net investment income (loss) to average net assets		0.28%	⁴		0.17%			0.35%			0.47%			0.72%			0.74%
Portfolio turnover⁶		12.32%	³		12.12%			23.19%			13.61%			29.51%			22.24%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	Less than 0.01%.

6	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


126		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Pacific Tiger Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$26.86			$31.66			$22.92			$23.54			$26.57			$24.99
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.13			0.24			0.17			0.11			0.42			0.14
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.92			(3.75	)		8.96			(0.13	)		(0.82	)		2.80
Total from investment operations		2.05			(3.51	)		9.13			(0.02	)		(0.40	)		2.94
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.21	)		(0.17	)		(0.13	)		(0.42	)		(0.13	)
Net realized gains on investments		—			(1.08	)		(0.22	)		(0.47	)		(2.21	)		(1.23	)
Total distributions		—			(1.29	)		(0.39	)		(0.60	)		(2.63	)		(1.36	)
Paid-in capital from redemption fees (Note 4)		—			—			—	²		—			—	²		—	²
Net Asset Value, end of period		$28.91			$26.86			$31.66			$22.92			$23.54			$26.57
TOTAL RETURN		7.63%	³		(11.11%	)		39.96%			(0.16%	)		(1.30%	)		11.79%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$2,811,333			$2,618,155			$3,335,795			$2,445,183			$2,720,869			$3,047,077
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.07%	⁴		1.07%			1.08%			1.09%			1.09%			1.09%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.05%	⁴		1.04%			1.06%			1.08%			1.07%			1.08%
Ratio of net investment income (loss) to average net assets		0.90%	⁴		0.79%			0.63%			0.47%			1.53%			0.52%
Portfolio turnover⁵		8.66%	³		11.48%			9.18%			5.73%			12.56%			11.38%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$26.83			$31.63			$22.90			$23.52			$26.56			$24.97
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.15			0.28			0.22			0.16			0.44			0.18
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.92			(3.74	)		8.95			(0.14	)		(0.80	)		2.82
Total from investment operations		2.07			(3.46	)		9.17			0.02			(0.36	)		3.00
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.26	)		(0.22	)		(0.17	)		(0.47	)		(0.18	)
Net realized gains on investments		—			(1.08	)		(0.22	)		(0.47	)		(2.21	)		(1.23	)
Total distributions		—			(1.34	)		(0.44	)		(0.64	)		(2.68	)		(1.41	)
Paid-in capital from redemption fees (Note 4)		—			—			—	²		—			—	²		—	²
Net Asset Value, end of period		$28.90			$26.83			$31.63			$22.90			$23.52			$26.56
TOTAL RETURN		7.72%	³		(10.94%	)		40.17%			0.03%			(1.15%	)		12.03%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$6,381,634			$5,689,079			$6,389,242			$4,207,508			$3,964,547			$5,049,643
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.92%	⁴		0.90%			0.91%			0.91%			0.91%			0.92%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.90%	⁴		0.88%			0.89%			0.90%			0.89%			0.91%
Ratio of net investment income (loss) to average net assets		1.07%	⁴		0.95%			0.80%			0.65%			1.61%			0.68%
Portfolio turnover⁵		8.66%	³		11.48%			9.18%			5.73%			12.56%			11.38%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			127

Financial Highlights(continued)

Matthews Asia ESG Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31									Period Ended Dec. 31, 2015¹
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			Period Ended Dec. 31, 2015¹
Net Asset Value, beginning of period		$9.98			$11.56			$8.97			$9.23			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.02			0.03			0.05			0.07			0.02
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.94			(1.16	)		2.97			(0.20	)		(0.75	)
Total from investment operations		0.96			(1.13	)		3.02			(0.13	)		(0.73	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.02	)		(0.27	)		(0.13	)		(0.04	)
Net realized gains on investments		—			(0.43	)		(0.16	)		—			—
Total distributions		—			(0.45	)		(0.43	)		(0.13	)		(0.04	)
Net Asset Value, end of period		$10.94			$9.98			$11.56			$8.97			$9.23
TOTAL RETURN		9.62%	³		(9.73%	)		33.79%			(1.40%	)		(7.30%	)³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$15,825			$9,283			$10,695			$5,376			$3,248
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.74%	⁴		2.20%			2.65%			3.54%			9.09%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.50%	⁴		1.50%			1.50%			1.48%			1.44%	⁴
Ratio of net investment income (loss) to average net assets		0.47%	⁴		0.27%			0.45%			0.77%			0.25%	⁴
Portfolio turnover⁵		8.64%	³		22.93%			28.82%			16.10%			21.72%	³

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31									Period Ended Dec. 31, 2015¹
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			Period Ended Dec. 31, 2015¹
Net Asset Value, beginning of period		$9.96			$11.50			$8.92			$9.17			$10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.03			0.06			0.08			0.09			0.05
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.94			(1.16	)		2.95			(0.19	)		(0.77	)
Total from investment operations		0.97			(1.10	)		3.03			(0.10	)		(0.72	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.01	)		(0.29	)		(0.15	)		(0.11	)
Net realized gains on investments		—			(0.43	)		(0.16	)		—			—
Total distributions		—			(0.44	)		(0.45	)		(0.15	)		(0.11	)
Net Asset Value, end of period		$10.93			$9.96			$11.50			$8.92			$9.17
TOTAL RETURN		9.74%	³		(9.52%	)		34.11%			(1.16%	)		(7.14%	)³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$29,670			$23,249			$7,359			$3,382			$1,686
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.53%	⁴		2.01%			2.46%			3.36%			8.90%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.25%	⁴		1.25%			1.25%			1.25%			1.25%	⁴
Ratio of net investment income (loss) to average net assets		0.57%	⁴		0.55%			0.71%			0.97%			0.75%	⁴
Portfolio turnover⁵		8.64%	³		22.93%			28.82%			16.10%			21.72%	³

1	Commenced operations on April 30, 2015.

2	Calculated using the average daily shares method.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


128		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Emerging Asia Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$12.50			$15.51			$13.18			$11.27			$11.60			$9.93
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.08			0.10			0.07			0.15			0.04			0.04
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		(0.29	)		(2.82	)		2.35			2.01			(0.34	)		1.69
Total from investment operations		(0.21	)		(2.72	)		2.42			2.16			(0.30	)		1.73
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.10	)		(0.04	)		(0.13	)		—	²		(0.06	)
Net realized gains on investments		—			(0.19	)		(0.05	)		(0.13	)		(0.03	)		—
Total distributions		—			(0.29	)		(0.09	)		(0.26	)		(0.03	)		(0.06	)
Paid-in capital from redemption fees (Note 4)		—	²		—	²		—	²		0.01			—	²		—	²
Net Asset Value, end of period		$12.29			$12.50			$15.51			$13.18			$11.27			$11.60
TOTAL RETURN		(1.68%	)³		(17.58%	)		18.42%			19.25%			(2.56%	)		17.39%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$108,416			$118,505			$219,596			$145,164			$114,590			$110,363
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.69%	⁴		1.66%			1.70%			1.77%			1.75%			1.78%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.50%	⁴		1.48%			1.48%			1.47%			1.50%			1.58%
Ratio of net investment income (loss) to average net assets		1.28%	⁴		0.72%			0.49%			1.26%			0.33%			0.34%
Portfolio turnover⁵		2.36%	³		26.09%			7.74%			34.90%			12.14%			8.21%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$12.54			$15.57			$13.22			$11.29			$11.60			$9.92
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.10			0.14			0.10			0.21			0.07			0.06
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		(0.29	)		(2.85	)		2.37			1.99			(0.34	)		1.69
Total from investment operations		(0.19	)		(2.71	)		2.47			2.20			(0.27	)		1.75
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.13	)		(0.07	)		(0.15	)		(0.01	)		(0.07	)
Net realized gains on investments		—			(0.19	)		(0.05	)		(0.13	)		(0.03	)		—
Total distributions		—			(0.32	)		(0.12	)		(0.28	)		(0.04	)		(0.07	)
Paid-in capital from redemption fees (Note 4)		—	²		—	²		—	²		0.01			—	²		—	²
Net Asset Value, end of period		$12.35			$12.54			$15.57			$13.22			$11.29			$11.60
TOTAL RETURN		(1.52%	)³		(17.41%	)		18.70%			19.61%			(2.33%	)		17.68%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$320,071			$256,669			$275,233			$95,724			$55,278			$21,350
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.51%	⁴		1.50%			1.52%			1.62%			1.57%			1.59%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.25%	⁴		1.25%			1.25%			1.25%			1.25%			1.33%
Ratio of net investment income (loss) to average net assets		1.61%	⁴		0.97%			0.70%			1.72%			0.65%			0.55%
Portfolio turnover⁵		2.36%	³		26.09%			7.74%			34.90%			12.14%			8.21%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			129

Financial Highlights(continued)

Matthews Asia Innovators Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$11.26			$14.19			$10.10			$12.32			$13.61			$12.59
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.03			(0.01	)		(0.02	)		(0.02	)		(0.05	)		—	²
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		2.12			(2.62	)		5.31			(1.07	)		0.64			1.16
Total from investment operations		2.15			(2.63	)		5.29			(1.09	)		0.59			1.16
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.04	)		(0.24	)		—			—			(0.06	)
Net realized gains on investments		—			(0.26	)		(0.96	)		(1.13	)		(1.88	)		(0.08	)
Total distributions		—			(0.30	)		(1.20	)		(1.13	)		(1.88	)		(0.14	)
Net Asset Value, end of period		$13.41			$11.26			$14.19			$10.10			$12.32			$13.61
TOTAL RETURN		19.09%	³		(18.62%	)		52.88%			(9.10%	)		4.48%			9.24%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$174,602			$152,449			$175,331			$83,926			$129,763			$125,612
Ratio of expenses to average net assets		1.20%	⁴		1.19%			1.24%			1.24%			1.18%			1.16%
Ratio of net investment income (loss) to average net assets		0.46%	⁴		(0.07%	)		(0.18%	)		(0.19%	)		(0.33%	)		(0.02%	)
Portfolio turnover⁵		37.24%	³		85.73%			66.51%			92.25%			72.85%			62.99%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$11.32			$14.26			$10.14			$12.34			$13.61			$12.58
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.04			0.01			0.01			0.01			(0.02	)		0.03
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		2.13			(2.62	)		5.33			(1.08	)		0.63			1.17
Total from investment operations		2.17			(2.61	)		5.34			(1.07	)		0.61			1.20
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.07	)		(0.26	)		—			—			(0.09	)
Net realized gains on investments		—			(0.26	)		(0.96	)		(1.13	)		(1.88	)		(0.08	)
Total distributions		—			(0.33	)		(1.22	)		(1.13	)		(1.88	)		(0.17	)
Net Asset Value, end of period		$13.49			$11.32			$14.26			$10.14			$12.34			$13.61
TOTAL RETURN		19.17%	³		(18.40%	)		53.18%			(8.92%	)		4.63%			9.54%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$117,717			$91,769			$30,957			$16,545			$36,770			$61,088
Ratio of expenses to average net assets		1.05%	⁴		1.02%			1.05%			1.01%			0.97%			0.95%
Ratio of net investment income (loss) to average net assets		0.68%	⁴		0.07%			0.06%			0.06%			(0.16%	)		0.21%
Portfolio turnover⁵		37.24%	³		85.73%			66.51%			92.25%			72.85%			62.99%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


130		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews China Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016¹			2015¹			2014¹
Net Asset Value, beginning of period		$14.37			$22.20			$15.47			$18.42			$21.46			$22.84
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.13			0.21			0.16			0.21			0.20			0.24
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		3.07			(4.84	)		8.86			(1.04	)		0.30			(1.25	)
Total from investment operations		3.20			(4.63	)		9.02			(0.83	)		0.50			(1.01	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.29	)		(0.37	)		(0.26	)		(0.21	)		(0.27	)
Net realized gains on investments		—			(2.91	)		(1.92	)		(1.29	)		(3.33	)		(0.10	)
Return of capital		—			—			—			(0.57	)		—			—
Total distributions		—			(3.20	)		(2.29	)		(2.12	)		(3.54	)		(0.37	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—	³		—	³		—	³
Net Asset Value, end of period		$17.57			$14.37			$22.20			$15.47			$18.42			$21.46
TOTAL RETURN		22.27%	⁴		(21.42%	)		59.37%			(5.18%	)		2.41%			(4.42%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$709,970			$566,456			$843,508			$495,900			$709,767			$947,740
Ratio of expenses to average net assets		1.10%	⁵		1.10%			1.09%			1.18%			1.14%			1.11%
Ratio of net investment income (loss) to average net assets		1.56%	⁵		1.00%			0.78%			1.24%			0.89%			1.09%
Portfolio turnover⁶		31.90%	⁴		96.98%			78.74%			83.82%			66.22%			10.23%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016¹			2015¹			2014¹
Net Asset Value, beginning of period		$14.33			$22.17			$15.44			$18.39			$21.44			$22.81
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)²		0.18			0.33			0.21			0.22			0.25			0.28
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		3.04			(4.93	)		8.84			(1.03	)		0.27			(1.25	)
Total from investment operations		3.22			(4.60	)		9.05			(0.81	)		0.52			(0.97	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.33	)		(0.40	)		(0.28	)		(0.24	)		(0.30	)
Net realized gains on investments		—			(2.91	)		(1.92	)		(1.29	)		(3.33	)		(0.10	)
Return of capital		—			—			—			(0.57	)		—			—
Total distributions		—			(3.24	)		(2.32	)		(2.14	)		(3.57	)		(0.40	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—	³		—	³		—	³
Net Asset Value, end of period		$17.55			$14.33			$22.17			$15.44			$18.39			$21.44
TOTAL RETURN		22.47%	⁴		(21.32%	)		59.71%			(5.06%	)		2.50%			(4.22%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$153,482			$46,657			$61,975			$15,874			$24,276			$52,478
Ratio of expenses to average net assets		0.92%	⁵		0.91%			0.93%			1.03%			0.99%			0.95%
Ratio of net investment income (loss) to average net assets		2.19%	⁵		1.53%			0.99%			1.32%			1.09%			1.27%
Portfolio turnover⁶		31.90%	⁴		96.98%			78.74%			83.82%			66.22%			10.23%

1	Consolidated Financial Highlights. See Note2-C.

2	Calculated using the average daily shares method.

3	Less than $0.01 per share.

4	Not annualized.

5	Annualized.

6	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			131

Financial Highlights(continued)

Matthews India Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$26.32			$34.31			$25.65			$26.43			$26.46			$16.28
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		(0.03	)		(0.05	)		(0.09	)		0.01			(0.05	)		0.07
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.63			(3.60	)		9.24			(0.33	)		0.26			10.29
Total from investment operations		0.60			(3.65	)		9.15			(0.32	)		0.21			10.36
LESS DISTRIBUTIONS FROM:
Net investment income		—			—			—			—			(0.03	)		(0.05	)
Net realized gains on investments		—			(4.34	)		(0.49	)		(0.46	)		(0.23	)		(0.14	)
Total distributions		—			(4.34	)		(0.49	)		(0.46	)		(0.26	)		(0.19	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			0.02			0.01
Net Asset Value, end of period		$26.92			$26.32			$34.31			$25.65			$26.43			$26.46
TOTAL RETURN		2.28%	²		(10.09%	)		35.79%			(1.23%	)		0.90%			63.71%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$1,095,538			$1,077,990			$1,484,045			$967,009			$1,151,948			$974,838
Ratio of expenses to average net assets		1.11%	³		1.09%			1.09%			1.12%			1.11%			1.12%
Ratio of net investment income (loss) to average net assets		(0.25%	)³		(0.16%	)		(0.30%	)		0.02%			(0.17%	)		0.32%
Portfolio turnover⁴		12.53%	²		20.87%			16.81%			15.76%			9.51%			14.86%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$26.56			$34.51			$25.77			$26.49			$26.49			$16.31
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		(0.01	)		0.01			(0.03	)		0.04			0.01			0.09
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		0.63			(3.62	)		9.29			(0.30	)		0.26			10.29
Total from investment operations		0.62			(3.61	)		9.26			(0.26	)		0.27			10.38
LESS DISTRIBUTIONS FROM:
Net investment income		—			—			(0.03	)		—			(0.06	)		(0.08	)
Net realized gains on investments		—			(4.34	)		(0.49	)		(0.46	)		(0.23	)		(0.14	)
Total distributions		—			(4.34	)		(0.52	)		(0.46	)		(0.29	)		(0.22	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			0.02			0.02
Net Asset Value, end of period		$27.18			$26.56			$34.51			$25.77			$26.49			$26.49
TOTAL RETURN		2.34%	²		(9.92%	)		36.05%			(1.00%	)		1.12%			63.80%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$373,158			$463,790			$788,388			$551,202			$353,879			$109,331
Ratio of expenses to average net assets		0.93%	³		0.90%			0.89%			0.91%			0.90%			0.94%
Ratio of net investment income (loss) to average net assets		(0.08%	)³		0.02%			(0.08%	)		0.16%			0.02%			0.38%
Portfolio turnover⁴		12.53%	²		20.87%			16.81%			15.76%			9.51%			14.86%

1	Calculated using the average daily shares method.

2	Not annualized.

3	Annualized.

4	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


132		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Japan Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$18.53			$24.12			$18.83			$18.97			$15.70			$16.20
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.06			0.09			0.09			0.08			0.04			0.05
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		2.49			(4.91	)		6.13			(0.01	)		3.23			(0.48	)
Total from investment operations		2.55			(4.82	)		6.22			0.07			3.27			(0.43	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.06	)		(0.20	)		(0.16	)		—			(0.08	)
Net realized gains on investments		—			(0.71	)		(0.73	)		(0.05	)		—			—
Total distributions		—			(0.77	)		(0.93	)		(0.21	)		—			(0.08	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		0.01
Net Asset Value, end of period		$21.08			$18.53			$24.12			$18.83			$18.97			$15.70
TOTAL RETURN		13.76%	³		(20.18%	)		33.14%			0.40%			20.83%			(2.60%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$1,631,127			$1,704,102			$2,155,280			$1,685,872			$1,330,743			$467,854
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.93%	⁴		0.91%			0.95%			0.98%			0.99%			1.03%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.93%	⁴		0.91%			0.94%			0.98%			0.99%			1.03%
Ratio of net investment income (loss) to average net assets		0.56%	⁴		0.40%			0.40%			0.43%			0.22%			0.32%
Portfolio turnover⁵		11.33%	³		46.11%			44.34%			55.15%			24.19%			42.52%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$18.57			$24.16			$18.86			$19.00			$15.71			$16.20
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.06			0.11			0.10			0.10			0.05			0.09
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		2.49			(4.91	)		6.14			—	²		3.24			(0.50	)
Total from investment operations		2.55			(4.80	)		6.24			0.10			3.29			(0.41	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.08	)		(0.21	)		(0.19	)		—			(0.09	)
Net realized gains on investments		—			(0.71	)		(0.73	)		(0.05	)		—			—
Total distributions		—			(0.79	)		(0.94	)		(0.24	)		—			(0.09	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		0.01
Net Asset Value, end of period		$21.12			$18.57			$24.16			$18.86			$19.00			$15.71
TOTAL RETURN		13.73%	³		(20.08%	)		33.23%			0.51%			20.94%			(2.47%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$1,038,395			$1,167,472			$1,957,214			$1,302,317			$618,583			$154,750
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		0.87%	⁴		0.85%			0.87%			0.88%			0.87%			0.90%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		0.87%	⁴		0.84%			0.86%			0.88%			0.87%			0.90%
Ratio of net investment income (loss) to average net assets		0.56%	⁴		0.46%			0.46%			0.54%			0.28%			0.58%
Portfolio turnover⁵		11.33%	³		46.11%			44.34%			55.15%			24.19%			42.52%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


matthewsasia.com \| 800.789.ASIA			133

Financial Highlights(continued)

Matthews Korea Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$4.58			$6.91			$5.25			$6.15			$5.65			$5.95
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		(0.02	)		0.06			0.06			0.02			0.01			—	²
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		(0.02	)		(1.61	)		2.22			(0.41	)		0.83			(0.05	)
Total from investment operations		(0.04	)		(1.55	)		2.28			(0.39	)		0.84			(0.05	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.13	)		(0.29	)		(0.08	)		(0.01	)		—
Net realized gains on investments		—			(0.65	)		(0.33	)		(0.43	)		(0.33	)		(0.25	)
Total distributions		—			(0.78	)		(0.62	)		(0.51	)		(0.34	)		(0.25	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$4.54			$4.58			$6.91			$5.25			$6.15			$5.65
TOTAL RETURN		(0.87%	)³		(22.21%	)		43.70%			(6.32%	)		15.16%			(0.73%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$120,886			$127,080			$192,431			$142,726			$147,685			$127,774
Ratio of expenses to average net assets		1.18%	⁴		1.14%			1.15%			1.15%			1.10%			1.11%
Ratio of net investment income (loss) to average net assets		(0.93%	)⁴		1.01%			0.90%			0.41%			0.18%			0.04%
Portfolio turnover⁵		12.17%	³		35.60%			25.37%			34.73%			20.36%			17.37%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$4.61			$6.95			$5.27			$6.18			$5.68			$5.96
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		(0.02	)		0.04			0.10			(0.02	)		0.02			0.05
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		(0.01	)		(1.60	)		2.21			(0.37	)		0.83			(0.08	)
Total from investment operations		(0.03	)		(1.56	)		2.31			(0.39	)		0.85			(0.03	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.13	)		(0.30	)		(0.09	)		(0.02	)		—
Net realized gains on investments		—			(0.65	)		(0.33	)		(0.43	)		(0.33	)		(0.25	)
Total distributions		—			(0.78	)		(0.63	)		(0.52	)		(0.35	)		(0.25	)
Paid-in capital from redemption fees (Note 4)		—			—			—			—			—	²		—	²
Net Asset Value, end of period		$4.58			$4.61			$6.95			$5.27			$6.18			$5.68
TOTAL RETURN		(0.65%	)³		(22.15%	)		44.11%			(6.31%	)		15.27%			(0.39%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$29,492			$19,377			$32,587			$7,462			$59,982			$91,431
Ratio of expenses to average net assets		1.06%	⁴		1.02%			1.01%			0.97%			0.93%			0.93%
Ratio of net investment income (loss) to average net assets		(0.74%	)⁴		0.67%			1.51%			(0.31%	)		0.28%			0.87%
Portfolio turnover⁵		12.17%	³		35.60%			25.37%			34.73%			20.36%			17.37%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


134		MATTHEWS ASIA FUNDS

Financial Highlights(continued)

Matthews Asia Small Companies Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$15.50			$22.89			$19.05			$19.41			$21.46			$19.34
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.08			0.12			0.02			0.09			0.02			0.09
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.88			(4.20	)		5.68			(0.37	)		(2.05	)		2.11
Total from investment operations		1.96			(4.08	)		5.70			(0.28	)		(2.03	)		2.20
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.08	)		(0.10	)		(0.08	)		(0.03	)		(0.08	)
Net realized gains on investments		—			(3.23	)		(1.76	)		—			—			—
Total distributions		—			(3.31	)		(1.86	)		(0.08	)		(0.03	)		(0.08	)
Paid-in capital from redemption fees (Note 4)		—			—	²		—	²		—	²		0.01			—	²
Net Asset Value, end of period		$17.46			$15.50			$22.89			$19.05			$19.41			$21.46
TOTAL RETURN		12.65%	³		(18.05%	)		30.59%			(1.44%	)		(9.43%	)		11.39%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$116,482			$111,456			$208,339			$254,226			$387,747			$599,082
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.71%	⁴		1.51%			1.49%			1.49%			1.48%			1.47%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.50%	⁴		1.46%			1.46%			1.47%			1.47%			1.47%
Ratio of net investment income (loss) to average net assets		1.02%	⁴		0.53%			0.09%			0.45%			0.08%			0.44%
Portfolio turnover⁵		26.22%	³		69.79%			67.13%			44.44%			48.29%			21.70%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$15.46			$22.86			$19.03			$19.40			$21.46			$19.33
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.10			0.16			0.07			0.12			0.11			0.15
Net realized gain (loss) and unrealized appreciation/depreciation on investments, foreign currency related transactions and foreign capital gains taxes		1.87			(4.19	)		5.67			(0.36	)		(2.10	)		2.10
Total from investment operations		1.97			(4.03	)		5.74			(0.24	)		(1.99	)		2.25
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.14	)		(0.15	)		(0.13	)		(0.08	)		(0.12	)
Net realized gains on investments		—			(3.23	)		(1.76	)		—			—			—
Total distributions		—			(3.37	)		(1.91	)		(0.13	)		(0.08	)		(0.12	)
Paid-in capital from redemption fees (Note 4)		—			—	²		—	²		—	²		0.01			—	²
Net Asset Value, end of period		$17.43			$15.46			$22.86			$19.03			$19.40			$21.46
TOTAL RETURN		12.74%	³		(17.86%	)		30.85%			(1.24%	)		(9.23%	)		11.65%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$75,072			$74,935			$232,954			$174,962			$222,168			$77,168
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.56%	⁴		1.37%			1.35%			1.34%			1.30%			1.27%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.25%	⁴		1.25%			1.25%			1.25%			1.25%			1.26%
Ratio of net investment income (loss) to average net assets		1.22%	⁴		0.73%			0.34%			0.64%			0.53%			0.70%
Portfolio turnover⁵		26.22%	³		69.79%			67.13%			44.44%			48.29%			21.70%

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

See accompanying notes to financial statements.


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Financial Highlights(continued)

Matthews China Small Companies Fund

The tables below set forth financial data for a share of beneficial interest outstanding throughout each period presented.


INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31
INVESTOR CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			2018			2017			2016			2015			2014
Net Asset Value, beginning of period		$9.58			$11.89			$8.21			$8.79			$9.21			$9.89
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.09			0.09			0.07			0.10			0.08			0.01
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		1.70			(2.23	)		4.27			(0.28	)		0.27			(0.33	)
Total from investment operations		1.79			(2.14	)		4.34			(0.18	)		0.35			(0.32	)
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.05	)		(0.11	)		(0.03	)		(0.06	)		(0.02	)
Net realized gains on investments		—			(0.16	)		(0.56	)		(0.37	)		(0.72	)		—
Return of capital		—			—			—			—			—			(0.34	)
Total distributions		—			(0.21	)		(0.67	)		(0.40	)		(0.78	)		(0.36	)
Paid-in capital from redemption fees (Note 4)		—			0.04			0.01			—	²		0.01			—	²
Net Asset Value, end of period		$11.37			$9.58			$11.89			$8.21			$8.79			$9.21
TOTAL RETURN		18.69%	³		(17.68%	)		53.88%			(2.35%	)		4.07%			(3.33%	)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$48,469			$41,740			$35,209			$16,101			$21,546			$22,068
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.72%	⁴		1.97%			2.34%			2.24%			2.10%			1.90%
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.50%	⁴		1.50%			1.50%			1.50%			1.50%			1.67%
Ratio of net investment income (loss) to average net assets		1.75%	⁴		0.78%			0.66%			1.17%			0.80%			0.14%
Portfolio turnover⁵		28.30%	³		76.67%			67.22%			63.15%			72.49%			32.42%

INSTITUTIONAL CLASS	Six-Month Period Ended June 30, 2019 (unaudited)			Year Ended Dec. 31, 2018			Period Ended Dec. 31, 2017⁶
Net Asset Value, beginning of period		$9.59			$11.87			$11.90
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)¹		0.10			0.11			(0.01	)
Net realized gain (loss) and unrealized appreciation/depreciation on investments and foreign currency related transactions		1.71			(2.21	)		0.67
Total from investment operations		1.81			(2.10	)		0.66
LESS DISTRIBUTIONS FROM:
Net investment income		—			(0.05	)		(0.13	)
Net realized gains on investments		—			(0.16	)		(0.56	)
Total distributions		—			(0.21	)		(0.69	)
Paid-in capital from redemption fees (Note 4)		—			0.03			—
Net Asset Value, end of period		$11.40			$9.59			$11.87
TOTAL RETURN		18.87%	³		(17.48%	)		6.19%	³

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000’s)		$24,524			$20,740			$476
Ratio of expenses to average net assets before any reimbursement, waiver or recapture of expenses by Advisor and Administrator (Note 5)		1.53%	⁴		1.79%			2.09%	⁴
Ratio of expenses to average net assets after any reimbursement, waiver or recapture of expenses by Advisor and Administrator		1.25%	⁴		1.25%			1.25%	⁴
Ratio of net investment income (loss) to average net assets		1.80%	⁴		1.05%			(1.20%	)⁴
Portfolio turnover⁵		28.30%	³		76.67%			67.22%	³

1	Calculated using the average daily shares method.

2	Less than $0.01 per share.

3	Not annualized.

4	Annualized.

5	The portfolio turnover rate is calculated on the Fund as a whole without distinguishing between classes of shares issued.

6	Commenced operations on November 30, 2017.

See accompanying notes to financial statements.


136		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited)

1.	ORGANIZATION

Matthews Asia Funds (the “Trust”) is anopen-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust currently issues seventeen separate series of shares (each a “Fund”, and collectively, the “Funds”): Matthews Asia Strategic Income Fund, Matthews Asia Credit Opportunities Fund, Matthews Asian Growth and Income Fund, Matthews Asia Dividend Fund, Matthews China Dividend Fund, Matthews Asia Value Fund, Matthews Asia Growth Fund, Matthews Pacific Tiger Fund, Matthews Asia ESG Fund, Matthews Emerging Asia Fund, Matthews Asia Innovators Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund, Matthews Korea Fund, Matthews Asia Small Companies Fund, and Matthews China Small Companies Fund. Each Fund currently offers two classes of shares: Investor Class and Institutional Class. Each class of shares has identical voting, dividend, liquidation and other rights and the same terms and conditions, except each class may be subject to different class expenses as outlined in the relevant prospectus and each class has exclusive voting rights with respect to matters solely affecting such class.

2.	SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Funds in preparation of their financial statements.

SECURITY VALUATION: The value of the Trust’s securities is based on market quotations for those securities, or on their fair value determined by the valuation policies approved by the Funds’ Board of Trustees (the “Board”). Market quotations and valuation information are provided by commercial pricing services or securities dealers that are independent of the Funds and Matthews International Capital Management, LLC (“Matthews”), in accordance with procedures established by the Funds’ Board. Foreign exchange-traded securities are valued as of the close of trading on the primary exchange on which they trade. Securities that trade inover-the-counter markets, including most debt securities (bonds), may be valued by other third-party vendors or by using indicative bid quotations from dealers or market makers, or other available market information. Market values for securities are determined based on quotations, market data or other information from the principal (or most advantageous) market on which the security is traded. Market quotations for equity securities used by the Funds include last reported sale prices, or, if such prices are not reported or available, bid and ask prices. Swap agreements are valued utilizing quotes received daily by the Funds’ pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined at the close of business on the New York Stock Exchange (“NYSE”). Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. The Funds may also utilize independent pricing services to assist them in determining a current market value for each security based on sources believed to be reliable.

The Board has delegated to the Board’s Valuation Committee the responsibility for oversight of the fair valuation process under the Trust’s Pricing and Valuation Policy. The Board’s Valuation Committee, in turn, has delegated the determination of fair value prices under Matthews’ Pricing and Valuation Procedures to Matthews’ Valuation Committee (the “Valuation Committee”). The Board’s Valuation Committee will review and approve fair value determinations by Matthews’ Valuation Committee in accordance with the Pricing and Valuation Policy. When fair value pricing is employed, the prices of securities used by a Fund to calculate its Net Asset Value (“NAV”) may differ from any quoted or published prices for the same securities for that day. All fair value determinations are made subject to the Board’s oversight. Events affecting the value of foreign investments may occur between the time at which they are determined and when the Funds calculate their NAV, which is normally the close of trading on the NYSE. If such events render market quotations unreliable, and the impact of such events can be reasonably determined, the investments will be valued at their fair value in accordance with pricing policies. The fair value of a security held by the Funds may be determined using the services of third-party pricing services to assist in this process.

The books and records of the Funds are maintained in U.S. dollars. Transactions, portfolio securities, and assets and liabilities denominated in a foreign currency are translated and recorded in U.S. dollars at the prevailing exchange rate as of the close of trading on the NYSE. Translation gains or losses resulting from changes in the exchange rate during the reporting period and realized gains and losses on the settlement of foreign currency transactions are reported in the results of operations for the current period. The Funds isolate that portion of gains and losses on investments in fixed income securities that is due to changes in foreign exchange rate from that which is due to changes in market prices of securities.

Foreign securities held by the Funds may be traded on days and at times when the NYSE is closed. Accordingly, the value of the Funds may be significantly affected on days when shareholders have no access to the Funds.

FAIR VALUE MEASUREMENTS: In accordance with the guidance on fair value measurements and disclosures under generally accepted accounting principles in the United States (“U.S. GAAP”), the Funds prioritize the determination of the fair value of their investments and derivative financial instruments using a hierarchy based on the inputs used to measure the fair value.

The hierarchy and the inputs utilized are as follows:

Level 1: Quoted prices in active markets for identical securities (foreign securities that are valued based on market quotations).

Level 2: Other significant observable inputs. Certain foreign securities may be fair valued by Matthews using information such as quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and foreign exchange. Additionally, external pricing services are used when the Funds determine that events affecting the value of foreign securities which occur between the time at which they are determined and the close of trading on the NYSE render market quotations unreliable.

Level 3: Significant unobservable inputs. As described in Note2-A, Level 3 securities are valued based on significant unobservable inputs as determined under the direction of the Board. Characterization of such securities as Level 3 securities are not necessarily an indication of their liquidity or the risk associated with investing in these securities. A significant change in the unobservable inputs could result in a significantly lower or higher value in such Level 3 securities and could impact overall Fund performance. Level 3 securities consisted of equities that, as of June 30, 2019, were suspended from trading.


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Notes to Financial Statements(unaudited) (continued)

Levels for Multi-Country Funds (1 of 2):

Summary of inputs used to determine the fair valuation of multi-country Funds’ investments as of June 30, 2019.


	Matthews Asia Strategic Income Fund		Matthews Asia Credit Opportunities Fund		Matthews Asian Growth and Income Fund		Matthews Asia Dividend Fund		Matthews Asia Value Fund		Matthews Asia Growth Fund
Assets:

Investments:
Level 1: Quoted Prices
Common Equities:
Bangladesh		$—		$—		$—		$—		$—		$41,397,290
China/Hong Kong		—		—		92,073,971		191,319,879		809,583		159,704,625
Japan		—		—		—		—		832,913		—
Philippines		—		—		—		104,740,511		—		5,657,865
Singapore		—		—		—		90,314,666		878,717		—
South Korea		—		—		18,082,635		230,419,228		434,625		—
Sri Lanka		—		—		—		—		—		6,249,775
Taiwan		—		—		21,448,620		92,532,858		—		—
United States		—		—		48,977,018		—		323,289		6,741,000
Level 2: Other Significant Observable Inputs
Foreign Government Obligations^a		23,933,741		9,511,154		—		—		—		—
Non-Convertible Corporate Bonds^a		78,844,083		43,050,111		—		—		—		—
Convertible Corporate Bonds^a		5,742,584		1,510,444		166,547,497		—		—		—
Common Equities:
Australia		—		—		75,367,662		95,551,702		—		48,853,716
Bangladesh		—		—		—		69,401,008		—		—
China/Hong Kong		—		—		390,887,692		2,409,357,673		8,797,399		183,342,591
France		—		—		44,788,566		—		—		—
India		—		—		45,809,191		139,859,813		199,315		54,694,255
Indonesia		—		—		40,763,408		114,782,547		158,533		91,593,483
Japan		—		—		34,268,015		1,374,699,872		2,328,855		424,713,225
Malaysia		—		—		15,315,738		—		399,556		—
Philippines		—		—		21,082,037		—		—		11,045,979
Singapore		—		—		129,129,337		231,527,808		843,137		—
South Korea		—		—		84,402,469		266,835,115		3,778,348		—
Sri Lanka		—		—		—		—		—		17,276,809
Taiwan		—		—		72,633,080		172,650,763		433,893		11,197,753
Thailand		—		—		20,131,939		116,047,947		—		18,086,447
United Kingdom		—		—		26,805,739		—		—		—
Vietnam		—		—		16,382,838		66,490,887		—		16,467,160
Preferred Equities:
South Korea		—		—		28,664,656		181,651,426		2,831,931		—
Level 3: Significant Unobservable Inputs		—		—		—		—		—		—
Total Market Value of Investments		$108,520,408		$54,071,709		$1,393,562,108		$5,948,183,703		$23,050,094		$1,097,021,973

a	Industry, countries, or security types are disclosed on the Schedule of Investments.


138		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

Levels for Multi-Country Funds (2 of 2):

Summary of inputs used to determine the fair valuation of multi-country Funds’ investments as of June 30, 2019.


	Matthews Pacific Tiger Fund		Matthews Asia ESG Fund		Matthews Emerging Asia Fund		Matthews Asia Innovators Fund		Matthews Asia Small Companies Fund
Assets:

Investments:
Level 1: Quoted Prices
Common Equities:
Bangladesh		$—		$1,771,217		$—		$7,162,992		$—
China/Hong Kong		787,292,987		2,263,905		34,997,299		55,868,283		6,470,997
India		—		2,253,603		952,337		—		4,158,628
Indonesia		50,019,114		775,195		38,206,276		—		4,849,727
Japan		58,925,160		—		—		—		—
Pakistan		—		348,069		42,362,093		—		—
Philippines		—		—		15,041,850		—		2,069,776
Singapore		—		406,430		—		—		2,913,902
South Korea		373,261,630		—		—		—		1,725,817
Sri Lanka		—		—		33,414,222		—		—
Taiwan		—		—		—		—		2,232,892
United States		164,363,931		—		—		—		—
Vietnam		—		—		13,802,545		—		2,658,506
Level 2: Other Significant Observable Inputs
Common Equities:
Australia		—		—		3,721,628		—		2,235,200
Bangladesh		—		570,975		18,382,005		—		—
China/Hong Kong		2,847,795,111		11,501,683		15,027,386		124,416,269		46,521,893
India		1,746,294,109		6,217,598		36,754,159		34,694,555		24,036,796
Indonesia		628,836,878		1,506,777		44,424,466		16,430,245		6,376,983
Japan		—		6,946,356		—		—		2,048,648
Malaysia		192,057,855		—		—		—		4,990,581
Pakistan		—		—		1,511,468		—		—
Philippines		238,274,074		914,815		23,533,865		4,183,646		—
Singapore		—		1,059,826		3,022,157		—		—
South Korea		622,394,936		1,426,915		—		23,143,282		15,939,008
Sri Lanka		—		—		10,807,731		—		—
Switzerland		236,718,475		—		—		—		—
Taiwan		420,869,156		3,646,584		—		—		23,126,101
Thailand		459,036,597		1,052,644		—		—		14,053,968
Vietnam		153,180,278		534,333		71,758,036		6,933,673		8,575,083
Preferred Equities:
South Korea		—		2,164,513		—		6,627,102		—
Level 3: Significant Unobservable Inputs		—		—		—		—		—
Total Market Value of Investments		$8,979,320,291		$45,361,438		$407,719,523		$279,460,047		$174,984,506


matthewsasia.com \| 800.789.ASIA			139

Notes to Financial Statements(unaudited) (continued)

Levels for Single Country Funds:

Summary of inputs used to determine the fair valuation of the single country Funds’ investments as of June 30, 2019.


	Matthews China Dividend Fund		Matthews China Fund		Matthews India Fund		Matthews Japan Fund		Matthews Korea Fund		Matthews China Small Companies Fund
Assets:

Investments:
Level 1: Quoted Prices
Common Equities:
Communication Services		$9,009,540		$43,830,251		$—		$—		$—		$—
Consumer Discretionary		25,059,363		121,212,330		8,254,483		—		2,884,301		5,279,038
Consumer Staples		—		—		—		—		5,274,223		—
Financials		6,441,704		—		94,471,199		—		2,790,821		—
Health Care		2,193,758		—		36,296,801		—		—		3,325,317
Industrials		—		7,127,200		18,513,546		—		3,319,659		—
Information Technology		—		—		53,789,794		—		—		1,674,584
Materials		—		—		1,313,959		—		—		—
Level 2: Other Significant Observable Inputs
Common Equities:
Communication Services		40,128,332		82,394,554		30,103,632		218,342,791		7,097,492		—
Consumer Discretionary		53,222,166		77,373,719		192,936,414		382,733,098		13,291,615		3,537,520
Consumer Staples		53,706,691		56,616,442		182,886,491		244,020,302		10,001,757		5,450,216
Energy		9,372,223		7,663,723		—		—		2,129,196		3,018,034
Financials		28,208,804		264,305,702		467,612,546		168,840,364		18,356,116		—
Health Care		15,171,140		29,713,300		126,682,568		395,331,129		12,370,117		6,968,193
Industrials		30,721,954		—		78,732,198		636,456,978		—		13,550,416
Information Technology		27,852,574		38,991,793		125,916,844		498,071,774		15,219,574		14,443,378
Materials		17,127,660		20,757,845		43,126,678		29,303,120		7,661,188		5,264,847
Real Estate		22,928,704		69,326,379		—		67,846,196		—		6,867,659
Utilities		14,508,854		—		—		—		—		—
Preferred Equities:
Consumer Discretionary		—		—		—		—		7,118,240		—
Consumer Staples		—		—		—		—		9,375,594		—
Energy		—		—		—		—		1,922,683		—
Financials		—		—		—		—		5,923,023		—
Information Technology		—		—		—		—		15,979,054		—
Materials		—		—		—		—		4,042,912		—
Level 3: Significant Unobservable Inputs
Common Equities:
Information Technology		—		—		—		—		—		249
Total Market Value of Investments		$355,653,467		$819,313,238		$1,460,637,153		$2,640,945,752		$144,757,565		$69,379,451

Levels for Derivative Financial Instruments:

Summary of inputs used to determine the fair valuation of the Funds’ derivative financial instruments as of June 30, 2019.


	Matthews Asia Strategic Income Fund
Derivative Financial Instruments¹
Assets
Level 2: Other Significant Observable Inputs

Forward Foreign Currency Exchange Contracts		$130,886


Liabilities
Level 2: Other Significant Observable Inputs

Forward Foreign Currency Exchange Contracts		($556,972)

Interest Rate Swaps		(54,169)

		($611,141)

1	Derivative financial instruments are forward foreign currency exchange contracts and interest rate swaps. Forward foreign currency exchange contracts and interest rate swaps are valued at the unrealized appreciation/depreciation on the instruments.


140		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

Changes in the Balances of Level 3 Securities:

The Funds’ policy is to recognize transfers in and transfers out of Level 3 during the reporting period.


	Matthews China Small Companies Fund
	Common Equities — Information Technology
Balance as of 12/31/18 (market value)		$249

Accrued discounts/premiums		—

Realized gain/(loss)		—

Change in unrealized appreciation/(depreciation)		—

Purchases		—

Sales		—

Transfers in to Level 3*		—

Transfer out of Level 3*		—
Balance as of 6/30/19 (market value)		$249
Net change in unrealized appreciation/depreciation on Level 3 investments held as of 6/30/19**		$—

*	The Funds’ policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

**	Included in the related amounts on the Statements of Operations.

Certain foreign securities, for which market quotations are not readily available, may be fair valued and classified as either Level 2 or Level 3. When the underlying inputs include significant observable inputs obtained from sources independent of the Funds, the securities are classified as Level 2. These inputs include evaluated prices from the Funds’ pricing vendors,day-on-day price changes, primary and ancillary pricing sources, and other available independent market indicators of value. When the underlying inputs include significant unobservable inputs and reflect assumptions of market participants, the securities are classified as Level 3. Certain securities held by the Funds that were suspended from trading and classified as Level 3 on June 30, 2019 subsequently resumed trading and were transferred from Level 3 to Level 1, Level 2 or were sold.

BASIS OF CONSOLIDATION:The accompanying consolidated financial statements of Matthews China Fund and Matthews Asia Dividend Fund (the “Investing Funds”) for the 2014-2016 period include the accounts of the MatthewsCF-U Series and MatthewsADF-U Series (the “U Series Funds”), respectively. The U Series Funds were series of Matthews A Share Selections Fund, LLC, a Delaware limited liability company registered under the 1940 Act. All of the interests offered by U Series Funds were exclusively owned by the Investing Funds. The U Series Funds primarily invested in the stocks of Chinese companies listed on Mainland China Stock Exchanges, and traded and denominated in the currency of China, the Renminbi. To allow U Series Funds to invest in China A Shares Matthews applied for and received a license from the China Securities Regulatory Commission as a Qualified Foreign Institutional Investor (“QFII”) and had been allocated by the State Administration of Foreign Exchange of China an initial quota of $100 million in June 2014, and an additional quota of $440 million in July 2015, representing the equivalent value in Renminbi of China A Shares that the Funds could purchase. Access to the quota was subject to Matthews’ trade allocation procedures and access allocation procedures. The U Series Funds were subject to the same investment policies and restrictions that apply to Investing Funds. Intercompany accounts and transactions, if any, have been eliminated in the consolidation process. The U Series Funds were intended to be disregarded entities for tax purposes. Therefore, no federal tax provision was required. Consolidated financial statements include expenses that are accrued for and paid by the Investing Funds. These includeon-going operational costs as well as costs in connection with the launching of the U Series Funds.

In September 2016, the Board of Directors of the Matthews A Share Selections Fund, LLC adopted resolutions authorizing the termination and liquidation of the Matthews A Share Selections Fund, LLC. Consequently, as of September 30, 2016, the U Series Funds sold their securities and effectively ceased investment operations. The outstanding interests of each U Series Fund were redeemed by its respective Investing Fund. The Matthews A Share Selections Fund, LLC filed an initial application for deregistration as a registered investment company with the U.S. Securities and Exchange Commission in October 2016, which was subsequently granted in February 2017.

RISKS ASSOCIATED WITHNON-U.S. COMPANIES:Investments by the Funds in the securities ofnon-U.S. companies may involve investment risks not typically associated with investments in U.S. issuers. These risks include possible political, economic, social and religious instability, inadequate investor protection; changes in laws or regulations of countries within the Asia Pacific region (including in countries where the Funds may invest, as well as in the broader region); international relations with other nations; natural disasters; corruption; and military activity. Foreign securities may be subject to greater fluctuations in price than securities of domestic corporations or the U.S. government. Foreign investing may also include the risk of expropriation or confiscatory taxation, limitation on the removal of funds or other assets, currency crises and exchange controls, the imposition of foreign withholding tax on the interest income payable on such instruments, the possible seizure or nationalization of foreign deposits or assets, or the adoption of other foreign government restrictions that might adversely affect the foreign securities held by the Funds. Additionally, Asia Pacific countries may utilize formal or informal currency exchange controls or “capital controls” that may limit the ability to repatriate investments or income or adversely affect the value of portfolio investments. The economies of many Asia Pacific countries differ from the economies of more developed countries in many respects, such as their rate of growth, inflation, capital reinvestment, resource self-sufficiency and dependence on other economies, financial system stability, the national balance of payments position and sensitivity to changes in global trade.

Certain Asia Pacific countries are highly dependent upon and may be affected by developments in the economies of other countries.Non-U.S. companies are subject to different accounting, auditing, and financial reporting standards, practices, and requirements than U.S. companies. There is generally less government regulation of stock exchanges, brokers, and listed companies abroad than in the United States, which may result in less transparency with respect to a company’s operations, and make obtaining information about them more difficult (or such information may be unavailable).

Foreign stock markets may not be as developed or efficient as those in the United States, and the absence of negotiated brokerage commissions in certain countries may result in higher brokerage fees. The time between the trade and settlement dates of securities transactions on foreign exchanges


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Notes to Financial Statements(unaudited) (continued)

ranges from one day to four weeks or longer and may result in higher custody charges. Custodial arrangements may be less well developed than in the United States. Foreign securities are generally denominated and pay distributions in foreign currencies, exposing the Funds to changes in foreign currency exchange rates. Investing in any country in the Asia Pacific region will also entail risks specific and unique to that country, and these risks can be significant and change rapidly.

Changes in interest rates in each of the countries in which the Funds may invest, as well as interest rates in more-developed countries, may cause a decline in the market value of an investment. Generally, fixed income securities will decrease in value when interest rates rise and can be expected to rise in value when interest rates decline. As interest rates decline, debt issuers may repay or refinance their loans or obligations earlier than anticipated. The issuers of fixed income securities may, therefore, repay principal in advance. This would force the Funds to reinvest the proceeds from the principal prepayments at lower rates, which reduces the Funds’ income.

DISTRIBUTIONS TO SHAREHOLDERS:It is the policy of Matthews Asian Growth and Income Fund and Matthews China Dividend Fund to distribute net investment income on a semi-annual basis and capital gains, if any, annually. It is the policy of Matthews Asia Dividend Fund, Matthews Asia Strategic Income Fund and Matthews Asia Credit Opportunities Fund to distribute net investment income on a quarterly basis and capital gains, if any, annually. Each of the other Funds distributes a net investment income and capital gains, if any, annually. Distributions to shareholders are recorded on theex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP.

The tax character of distributions paid for the fiscal year ended December 31, 2018 was as follows:


YEAR ENDED DECEMBER 31, 2018	Ordinary Income		Net Long-Term Capital Gains		Total Taxable Distributions		Return of Capital
Matthews Asia Strategic Income Fund		$2,884,604		$—		$2,884,604		$381,950
Matthews Asia Credit Opportunities Fund		1,411,365		—		1,411,365		—
Matthews Asian Growth and Income Fund		46,680,045		180,408,534		227,088,579		—
Matthews Asia Dividend Fund		226,081,829		266,855,532		492,937,361		—
Matthews China Dividend Fund		11,590,471		24,594,264		36,184,735		—
Matthews Asia Value Fund		1,125,780		159,629		1,285,409		—
Matthews Asia Growth Fund		8,510,896		6,873,778		15,384,674		—
Matthews Pacific Tiger Fund		192,063,450		248,646,631		440,710,081		—
Matthews Asia ESG Fund		110,310		861,827		972,137		—
Matthews Emerging Asia Fund		3,675,977		8,952,247		12,628,224		—
Matthews Asia Innovators Fund		1,092,195		8,851,877		9,944,072		—
Matthews China Fund		9,777,889		126,839,507		136,617,396		—
Matthews India Fund		—		279,269,366		279,269,366		—
Matthews Japan Fund		19,888,292		136,613,164		156,501,456		—
Matthews Korea Fund		2,951,789		24,410,239		27,362,028		—
Matthews Asia Small Companies Fund		2,523,811		43,064,299		45,588,110		—
Matthews China Small Companies Fund		368,243		2,204,423		2,572,666		—

INVESTMENT TRANSACTIONS AND INCOME:Securities transactions are accounted for on the date the securities are purchased or sold or on the following business day. Financial statements reflect security transactions on trade date. Gains or losses on the sale of securities are determined on the identified cost basis. Interest income is recorded on the accrual basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis. For convertible securities, premiums attributable to the conversion feature are not amortized. Dividend income is generally recorded on theex-dividend date net of any foreign taxes withheld at the source. Dividend income for certain issuers headquartered in countries which the Funds invest may not be recorded until approved by the shareholders (which may occur after theex-dividend date) if, in the judgment of management, such dividends are not reasonably determined as of theex-dividend date. Income and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which they invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, the Funds record an estimated deferred tax liability in an amount that may be payable if the securities were disposed of on the valuation date.

FUND EXPENSE ALLOCATIONS:The Funds account separately for the assets, liabilities and operations of each Fund. Estimated expenses are accrued daily. Direct expenses of each Fund or class are charged to that Fund or class while general expenses are allocatedpro-rata among the Funds based on net assets or other appropriate methods.

CASH, CASH OVERDRAFTS, AND FOREIGN CURRENCY:QFII accounts (i.e., the accounts through which the QFII quota is accessed) are required by the local market to maintain a cash reserve. The cash reserve is based upon a fixed ratio of the QFII’s approved investment quota, which is defined as the amount remitted into its special Renminbi (RMB) cash account. These amounts, if any, are included in “Segregated foreign currency at value” on the Statements of Assets and Liabilities. The fixed ratio is set at 0.08 percent for the Shanghai and 0.06 percent for the Shenzhen market. When any of the Funds’ cash balances are overdrawn, a Fund is charged an overdraft fee by the custodian of 1.00% above the30-day LIBOR rate on outstanding balances. These amounts, if any, are included in “Other expenses” on the Statements of Operations.

I.	USE OF ESTIMATES:The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

RECENT ACCOUNTING GUIDANCE:In March 2017, the Financial Accounting Standards Board issued amended guidance to shorten the amortization period for certain callable debt securities, held at premium. The guidance is effective for fiscal years and interim periods beginning after December 15, 2018. Adoption will have no effect on the Funds’ net assets. Management is evaluating the impact, if any, of this guidance on the Funds’ results of operations and financial disclosures.


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Notes to Financial Statements(unaudited) (continued)

On August 28, 2018, the FASB issued ASU2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”, which amends the fair value measurement disclosure requirements under U.S. GAAP. The amendments of ASU2018-13 include new, eliminated, and modified disclosure requirements. In addition, the amendments clarify that materiality is an appropriate consideration of entities when evaluating disclosure requirements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. An entity is permitted to early adopt any eliminated or modified disclosures upon issuance of this ASU and delay adoption of the new disclosures until their effective date. As such, each Fund has early adopted the eliminated and modified disclosures, including the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, as permitted by this ASU. Management is currently evaluating the impact that the adoption of the new disclosures will have on the Funds’ financial statements.

3.	DERIVATIVE FINANCIAL INSTRUMENTS

Each of the Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund engages in derivative transactions for a variety of purposes, including managing interest rate, currency and credit exposure. Derivative transactions in which each Fund may engage include financial futures contracts, swaps and/or forward foreign currency exchange contracts.

Certain derivative transactions may result in each Fund’s exposure to a currency to exceed the value of the Fund’s assets and the Fund could be exposed to currency risk whether or not it holds a bond or other instrument denominated in that currency. The gross notional value of derivative financial instruments and transactions could exceed the value of the Fund’s net assets, although the net market value of these instruments and transactions, on amarked-to-market basis, at most times, is expected to be substantially lower.

The primary risks associated with the use of derivative financial instruments are: (i) Matthews may not correctly predict the direction of currency exchange rates, interest rates, security prices, or other economic factors; (ii) Matthews may not correctly predict changes in the value of derivative financial instruments and related underlying instruments or assets, which may result in disproportionately increased losses and/or reduced opportunities for gains; (iii) imperfect correlation between the change in market value of the securities held by a Fund and the price of financial futures contracts and credit default swaps contracts; (iv) the lack of, or a reduction in the liquidity of, any secondary market for the instrument, and the resulting inability to close the position (or exit the position) when desired; (v) losses, which are potentially unlimited, due to unanticipated market movements; (vi) the value of the instrument may change unfavorably due to movements in the value of the referenced foreign currencies; (vii) a Fund may suffer disproportionately heavy losses relative to the amount invested; (viii) changes in the value of the derivatives may not match or fully offset changes in the value of hedged or related portfolio securities, thereby failing to achieve the hedging or investment purpose for the derivative transaction; and (ix) the other party to the instrument may fail to fulfill its obligation.

Forward Foreign Currency Exchange Contracts:The Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund enter into forward foreign currency exchange contracts to gain or reduce exposure to foreign currency exchange rate risk. A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. The contract ismarked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund do not offset financial assets and financial liabilities on forward foreign currency contacts in the Statements of Assets and Liabilities as they are not subject to netting arrangements.

Swaps:The Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund enter into swap contracts to manage exposure to issuers, markets and securities to reduce their risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which they are not otherwise exposed (credit risk). Such contracts are agreements between the Funds and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC Swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statements of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statements of Assets and Liabilities. Payments received or paid are recorded in the Statements of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Funds’ basis in the contract, if any. Generally, the basis of the contract is the amortized premium received or paid.

The Funds may enter into interest rate swaps to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate (interest rate risk).

Interest rate swaps are agreements to exchange cash flows based on the difference between specified interest rates applied to a notional principal amount for a specified period of time. Risks related to the use of interest rate swaps include the potential for unanticipated movements in interest or currency rates, the possible failure of a counterparty to perform in accordance with the terms of the swap agreements and potential government regulation that could adversely affect the Funds’ swap investments.

Counterparty Credit Risk:A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

A Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by such Fund.

With exchange traded futures and centrally cleared swaps, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

In order to better define its contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, a Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between each Fund and a counterparty that governs OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA


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Notes to Financial Statements(unaudited) (continued)

Master Agreement, each Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event a Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Collateral requirements:For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by a Fund and the counterparty. Cash collateral that has been pledged to cover obligations of a Fund, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral.Non-cash collateral pledged by a Fund, if any, is noted in the Schedules of Investments.

For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.

The Funds have implemented the disclosure requirements pursuant to FASB Accounting Standards updateNo. 2011-11, Disclosures about Offsetting Assets and Liabilities, that requires disclosures to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards. Under this guidance the Funds disclose in the Statements of Assets and Liabilities both gross and net information about instruments and transactions eligible for offset such as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the Funds disclose collateral received and posted in connection with master netting agreements or similar arrangements.

As of June 30, 2019, the Matthews Asia Strategic Income Fund had $54,169 in gross/net liabilities in the Statements of Assets and Liabilities for OTC derivatives with Bank of America, N.A. There was no collateral pledged or received by the Fund with this counterparty.

Derivative Financial Instruments Categorized by Risk Exposure:

As of June 30, 2019, the fair values of derivative financial instruments were as follows:


	Statements of Assets and Liabilities Location	Matthews Asia Strategic Income Fund
	Asset Derivatives
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign
	currency exchange contracts		$130,886


	Liability Derivatives
	Unrealized depreciation on forward foreign
	currency exchange contracts		($556,972	)
OTC interest rate contracts	Unrealized depreciation on interest rate contracts		(54,169	)

	Total		($611,141	)

For thesix-month period ended June 30, 2019, the effects of derivative financial instruments on the Statements of Operations were as follows:


Derivative type	Statements of Operations Location	Matthews Asia Strategic Income Fund			Matthews Asia Credit Opportunities Fund
Net Realized Gain (Loss)
Foreign currency contracts:

Forward foreign currency exchange contracts	Net realized gain (loss) on forward foreign
	currency exchange contracts		$803,516			$728
OTC interest rate swaps:

Interest rate contracts	Net realized gain (loss) on swaps		85,613			—

	Total		$889,129			$728


Net Change In Unrealized Appreciation (Depreciation)
Foreign currency contracts:

Forward foreign currency exchange contracts	Net change in unrealized appreciation/
	depreciation on forward foreign currency
	exchange contracts		($1,119,966	)		($728	)
OTC interest rate swaps:

Interest rate contracts	Net change in unrealized appreciation/
	depreciation on swaps		(54,169	)		—

	Total		($1,174,135	)		($728	)

Forward foreign currency exchange contracts entered into by the Matthews Asia Strategic Income Fund, the average notional ending quarterly amounts purchased in USD were $6,149,210 and the average notional ending quarterly amounts sold in USD were $28,000,000. The Matthews Asia Strategic Income Fund held an Interest Rate Swap with a notional amount of 330,000,000 INR for the period 1/16/19 - 4/4/19. The notional amounts disclosed on the Matthews Asia Strategic Income Fund’s Schedule of Investments is indicative of the activity for the period June 18, 2019 - June 30, 2019 for Interest Rate Swaps.


144		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

4.	CAPITAL SHARE TRANSACTIONS


	Six-Month Period Ended June 30, 2019 (Unaudited)						Year Ended December 31, 2018
	Shares			Amount			Shares			Amount
MATTHEWS ASIA STRATEGIC INCOME FUND

Investor Class

Shares sold		270,021			$2,891,100			2,673,655			$29,287,179

Shares issued through reinvestment of distributions		62,343			668,496			155,200			1,663,927

Shares redeemed		(719,071	)		(7,655,617	)		(4,636,979	)		(49,347,994	)
Net (decrease)		(386,707	)		($4,096,021	)		(1,808,124	)		($18,396,888	)
Institutional Class

Shares sold		1,391,419			$14,760,614			4,881,483			$52,321,637

Shares issued through reinvestment of distributions		104,681			1,122,650			114,737			1,209,687

Shares redeemed		(531,454	)		(5,643,206	)		(1,981,621	)		(20,513,956	)
Net increase		964,646			$10,240,058			3,014,599			$33,017,368
MATTHEWS ASIA CREDIT OPPORTUNITIES FUND

Investor Class

Shares sold		321,588			$3,260,019			621,546			$6,369,451

Shares issued through reinvestment of distributions		20,248			207,612			34,462			346,195

Shares redeemed		(154,523	)		(1,562,723	)		(749,130	)		(7,545,536	)
Net increase (decrease)		187,313			$1,904,908			(93,122	)		($829,890	)
Institutional Class

Shares sold		1,495,991			$15,205,043			1,955,614			$19,773,740

Shares issued through reinvestment of distributions		61,014			626,006			70,100			697,699

Shares redeemed		(333,140	)		(3,381,556	)		(907,590	)		(8,976,611	)
Net increase		1,223,865			$12,449,493			1,118,124			$11,494,828
MATTHEWS ASIAN GROWTH AND INCOME FUND

Investor Class

Shares sold		3,404,065			$50,165,861			7,692,701			$124,999,548

Shares issued through reinvestment of distributions		576,457			8,727,555			6,291,585			90,673,150

Shares redeemed		(8,290,850	)		(124,294,136	)		(44,530,783	)		(727,925,822	)
Net (decrease)		(4,310,328	)		($65,400,720	)		(30,546,497	)		($512,253,124	)
Institutional Class

Shares sold		10,361,550			$153,536,916			19,468,288			$325,288,280

Shares issued through reinvestment of distributions		450,370			6,809,588			5,846,765			84,477,052

Shares redeemed		(15,393,708	)		(230,390,354	)		(57,543,636	)		(917,676,867	)
Net (decrease)		(4,581,788	)		($70,043,850	)		(32,228,583	)		($507,911,535	)
MATTHEWS ASIA DIVIDEND FUND

Investor Class

Shares sold		17,009,977			$284,885,655			41,217,543			$788,692,238

Shares issued through reinvestment of distributions		1,400,669			23,198,086			11,593,833			197,404,775

Shares redeemed		(27,345,283	)		(458,152,335	)		(70,902,063	)		(1,313,499,842	)
Net (decrease)		(8,934,637	)		($150,068,594	)		(18,090,687	)		($327,402,829	)
Institutional Class

Shares sold		30,152,201			$507,569,029			60,848,321			$1,153,786,170

Shares issued through reinvestment of distributions		1,749,772			28,989,308			13,060,327			222,009,324

Shares redeemed		(21,885,579	)		(366,175,799	)		(50,882,787	)		(904,298,337	)
Net increase		10,016,394			$170,382,538			23,025,861			$471,497,157


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Notes to Financial Statements(unaudited) (continued)


	Six-Month Period Ended June 30, 2019 (Unaudited)						Year Ended December 31, 2018
	Shares			Amount			Shares			Amount
MATTHEWS CHINA DIVIDEND FUND

Investor Class

Shares sold		5,670,155			$90,307,189			5,966,861			$103,895,668

Shares issued through reinvestment of distributions		248,376			3,899,398			1,359,166			20,830,044

Shares redeemed		(2,690,161	)		(42,650,838	)		(8,392,276	)		(143,578,333	)
Net increase (decrease)		3,228,370			$51,555,749			(1,066,249	)		($18,852,621	)
Institutional Class

Shares sold		1,659,939			$26,849,887			3,759,608			$67,020,667

Shares issued through reinvestment of distributions		98,335			1,543,858			525,095			8,055,027

Shares redeemed		(572,769	)		(9,099,957	)		(2,258,122	)		(36,385,874	)
Net increase		1,185,505			$19,293,788			2,026,581			$38,689,820
MATTHEWS ASIA VALUE FUND

Investor Class

Shares sold		404,493			$4,652,557			1,051,874			$13,252,147

Shares issued through reinvestment of distributions		—			—			72,411			795,079

Shares redeemed		(280,999	)		(3,217,495	)		(1,753,683	)		(21,328,776	)
Net increase (decrease)		123,494			$1,435,062			(629,398	)		($7,281,550	)
Institutional Class

Shares sold		314,802			$3,598,877			466,954			$5,447,710

Shares issued through reinvestment of distributions		—			—			18,592			202,462

Shares redeemed		(425,733	)		(4,854,099	)		(114,752	)		(1,403,647	)
Net increase (decrease)		(110,931	)		($1,255,222	)		370,794			$4,246,525
MATTHEWS ASIA GROWTH FUND

Investor Class

Shares sold		3,129,174			$77,878,648			10,786,092			$298,040,265

Shares issued through reinvestment of distributions		—			—			261,406			6,250,221

Shares redeemed		(3,433,953	)		(85,358,800	)		(10,780,916	)		(285,324,564	)
Net increase (decrease)		(304,779	)		($7,480,152	)		266,582			$18,965,922
Institutional Class

Shares sold		3,981,112			$99,471,589			13,280,478			$366,402,524

Shares issued through reinvestment of distributions		—			—			254,228			6,121,801

Shares redeemed		(2,066,577	)		(52,050,829	)		(3,723,336	)		(95,217,584	)
Net increase		1,914,535			$47,420,760			9,811,370			$277,306,741
MATTHEWS PACIFIC TIGER FUND

Investor Class

Shares sold		10,257,728			$289,488,897			23,880,091			$723,000,071

Shares issued through reinvestment of distributions		—			—			4,100,739			110,309,880

Shares redeemed		(10,469,220	)		(294,929,075	)		(35,883,150	)		(1,069,368,504	)
Net (decrease)		(211,492	)		($5,440,178	)		(7,902,320	)		($236,058,553	)
Institutional Class

Shares sold		34,205,193			$964,963,393			73,569,231			$2,205,765,648

Shares issued through reinvestment of distributions		—			—			8,621,801			231,581,567

Shares redeemed		(25,382,096	)		(712,451,732	)		(72,136,270	)		(2,150,140,709	)
Net increase		8,823,097			$252,511,661			10,054,762			$287,206,506
MATTHEWS ASIA ESG FUND

Investor Class

Shares sold		737,901			$8,006,774			518,131			$5,764,694

Shares issued through reinvestment of distributions		—			—			39,314			388,821

Shares redeemed		(220,876	)		(2,292,955	)		(552,444	)		(5,766,903	)
Net increase		517,025			$5,713,819			5,001			$386,612
Institutional Class

Shares sold		500,669			$5,328,084			1,862,932			$18,844,975

Shares issued through reinvestment of distributions		—			—			56,216			554,851

Shares redeemed		(119,489	)		(1,269,852	)		(224,650	)		(2,278,724	)
Net increase		381,180			$4,058,232			1,694,498			$17,121,102


146		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)


	Six-Month Period Ended June 30, 2019 (Unaudited)						Year Ended December 31, 2018
	Shares			Amount			Shares			Amount
MATTHEWS EMERGING ASIA FUND

Investor Class

Shares sold		1,400,015			$18,035,883			4,620,696			$65,897,785

Shares issued through reinvestment of distributions		—			—			212,377			2,658,966

Shares redeemed		(2,062,747	)		(26,406,315	)		(9,507,354	)		(133,149,866	)
Net (decrease)		(662,732	)		($8,370,432	)		(4,674,281	)		($64,593,115	)
Institutional Class

Shares sold		7,773,539			$99,853,546			13,299,754			$190,322,581

Shares issued through reinvestment of distributions		—			—			477,196			5,993,576

Shares redeemed		(2,324,042	)		(29,980,331	)		(10,983,928	)		(147,221,998	)
Net increase		5,449,497			$69,873,215			2,793,022			$49,094,159
MATTHEWS ASIA INNOVATORS FUND

Investor Class

Shares sold		2,533,698			$32,271,743			10,925,559			$155,176,262

Shares issued through reinvestment of distributions		—			—			334,533			3,867,195

Shares redeemed		(3,052,075	)		(39,162,445	)		(10,079,828	)		(140,682,243	)
Net increase (decrease)		(518,377	)		($6,890,702	)		1,180,264			$18,361,214
Institutional Class

Shares sold		1,658,583			$21,824,445			8,564,706			$117,389,330

Shares issued through reinvestment of distributions		—			—			219,506			2,550,665

Shares redeemed		(1,040,027	)		(13,187,033	)		(2,844,442	)		(36,304,986	)
Net increase		618,556			$8,637,412			5,939,770			$83,635,009
MATTHEWS CHINA FUND

Investor Class

Shares sold		6,364,385			$107,768,354			15,121,019			$340,339,102

Shares issued through reinvestment of distributions		—			—			7,011,755			104,895,844

Shares redeemed		(5,392,610	)		(90,437,893	)		(20,695,099	)		(427,936,552	)
Net increase		971,775			$17,330,461			1,437,675			$17,298,394
Institutional Class

Shares sold		6,103,539			$98,934,581			6,614,792			$150,104,126

Shares issued through reinvestment of distributions		—			—			588,948			8,792,993

Shares redeemed		(614,714	)		(10,572,933	)		(6,742,777	)		(135,104,968	)
Net increase		5,488,825			$88,361,648			460,963			$23,792,151
MATTHEWS INDIA FUND

Investor Class

Shares sold		5,798,714			$152,254,183			10,324,568			$334,912,011

Shares issued through reinvestment of distributions		—			—			5,722,656			144,439,816

Shares redeemed		(6,045,925	)		(159,562,486	)		(18,347,443	)		(565,381,775	)
Net (decrease)		(247,211	)		($7,308,303	)		(2,300,219	)		($86,029,948	)
Institutional Class

Shares sold		2,214,392			$58,789,099			6,465,401			$215,871,605

Shares issued through reinvestment of distributions		—			—			1,158,242			29,500,413

Shares redeemed		(5,946,833	)		(159,551,688	)		(13,006,329	)		(414,651,704	)
Net (decrease)		(3,732,441	)		($100,762,589	)		(5,382,686	)		($169,279,686	)
MATTHEWS JAPAN FUND

Investor Class

Shares sold		11,055,072			$217,173,581			35,434,821			$838,074,072

Shares issued through reinvestment of distributions		—			—			3,537,698			69,727,510

Shares redeemed		(25,630,711	)		(526,089,605	)		(36,383,495	)		(791,989,983	)
Net increase (decrease)		(14,575,639	)		($308,916,024	)		2,589,024			$115,811,599
Institutional Class

Shares sold		8,701,605			$179,373,556			28,126,973			$681,080,915

Shares issued through reinvestment of distributions		—			—			788,439			15,563,790

Shares redeemed		(22,428,614	)		(450,829,905	)		(47,031,577	)		(1,073,069,165	)
Net (decrease)		(13,727,009	)		($271,456,349	)		(18,116,165	)		($376,424,460	)


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Notes to Financial Statements(unaudited) (continued)


	Six-Month Period Ended June 30, 2019 (Unaudited)						Year Ended December 31, 2018
	Shares			Amount			Shares			Amount
MATTHEWS KOREA FUND

Investor Class

Shares sold		950,334			$4,414,943			4,808,867			$28,840,215

Shares issued through reinvestment of distributions		—			—			4,259,343			19,124,478

Shares redeemed		(2,065,797	)		(9,547,199	)		(9,178,750	)		(52,897,760	)
Net (decrease)		(1,115,463	)		($5,132,256	)		(110,540	)		($4,933,067	)
Institutional Class

Shares sold		2,752,961			$12,709,569			4,291,986			$26,760,451

Shares issued through reinvestment of distributions		—			—			605,040			2,734,781

Shares redeemed		(507,031	)		(2,317,549	)		(5,384,782	)		(29,526,364	)
Net increase (decrease)		2,245,930			$10,392,020			(487,756	)		($31,132	)
MATTHEWS ASIA SMALL COMPANIES FUND

Investor Class

Shares sold		744,408			$12,246,014			1,341,878			$28,839,901

Shares issued through reinvestment of distributions		—			—			1,344,976			21,129,567

Shares redeemed		(1,260,791	)		(21,181,782	)		(4,600,698	)		(92,122,082	)
Net (decrease)		(516,383	)		($8,935,768	)		(1,913,844	)		($42,152,614	)
Institutional Class

Shares sold		1,272,599			$21,124,747			2,031,529			$42,209,221

Shares issued through reinvestment of distributions		—			—			1,164,500			18,247,712

Shares redeemed		(1,812,311	)		(30,109,020	)		(8,539,680	)		(162,341,803	)
Net (decrease)		(539,712	)		($8,984,273	)		(5,343,651	)		($101,884,870	)
MATTHEWS CHINA SMALL COMPANIES FUND

Investor Class

Shares sold		1,044,531			$11,471,292			4,586,645			$55,688,924

Shares issued through reinvestment of distributions		—			—			95,152			942,955

Shares redeemed		(1,140,562	)		(12,154,305	)		(3,284,316	)		(36,655,946	)
Net increase (decrease)		(96,031	)		($683,013	)		1,397,481			$19,975,933
Institutional Class

Shares sold		659,146			$6,987,941			2,620,573			$28,921,075

Shares issued through reinvestment of distributions		—			—			32,751			324,895

Shares redeemed		(670,842	)		(7,485,821	)		(530,287	)		(5,561,926	)
Net increase (decrease)		(11,696	)		($497,880	)		2,123,037			$23,684,044

Through June 30, 2019, a 2.00% redemption fee was assessed on the sale or exchange of shares of the Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund and Matthews China Small Companies Fund (collectively, the “Covered Funds”) within 90 days after the date an investor purchases shares of the Covered Funds. This fee is payable directly to the Covered Funds.

To determine whether the redemption fee applies, the Covered Funds do not count the day that shares were purchased, and first redeem the shares that have been held the longest.

The redemption fees returned to the assets of the Funds are stated in the Statements of Changes in Net Assets.

5.	INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Matthews, a registered investment advisor under the 1940 Act, provides the Funds with investment management services. Pursuant to the prior Investment Advisory Agreement dated August 13, 2004, as amended (the “Prior Advisory Agreement”) and the current Investment Advisory Agreement dated February 1, 2016, as amended (the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreement”), the Funds pay Matthews (i) for management and advisory services; and (ii) for certain administrative services, an annual fee as a percentage of average daily net assets. Under the Advisory Agreement each of the Funds, other than Matthews Asia Strategic Income Fund, Matthews Asia Credit Opportunities Fund, Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund, and Matthews China Small Companies Fund (the “Family-Priced Funds”), pays Matthews 0.75% of their aggregate average daily net assets up to $2 billion, 0.6834% of their aggregate average daily net assets over $2 billion up to $5 billion, 0.65% of their aggregate average daily net assets over $5 billion up to $25 billion, 0.64% of their aggregate average daily net assets over $25 billion up to $30 billion, 0.63% of their aggregate average daily net assets over $30 billion up to $35 billion, 0.62% of their aggregate average daily net assets over $35 billion up to $40 billion, 0.61% of their aggregate average daily net assets over $40 billion up to $45 billion, and 0.60% of their aggregate average daily net assets over $45 billion. Each of the Matthews Asia Strategic Income Fund and Matthews Asia Credit Opportunities Fund pays Matthews an annual fee of 0.55% of such Fund’s annual average daily net assets pursuant to the Advisory Agreement. Each of the Matthews Emerging Asia Fund, Matthews Asia Small Companies Fund, and the Matthews China Small Companies Fund pays Matthews an annual fee of 1.00% of the average daily net assets of such Fund up to $1 billion and 0.95% of the average daily net assets of such Fund over $1 billion pursuant to the Advisory Agreement. Each Fund pays Matthews a monthly fee at the annual rate using the applicable management fee calculated based on the actual number of days of that month and based on the Fund’s average daily net asset value for the month.


148		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

Pursuant to a fee waiver letter agreement, effective as of September 1, 2014, between the Trust, on behalf of the Family-Priced Funds, and Matthews (as amended from time to time, the “Fee Waiver Agreement”), for each Family-Priced Fund, Matthews has agreed to waive a portion of the fee payable under the Advisory Agreement and a portion of the fee payable under the Administration and Shareholder Services Agreement, if any Family-Priced Fund’s average daily net assets are over $3 billion, as follows: for every $2.5 billion average daily net assets of a Family-Priced Fund that are over $3 billion, the fee rates that otherwise would be applied for calculating fees payable under the Advisory Agreement and the Administration and Shareholder Services Agreement for such Family-Priced 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%.

Investment advisory fees charged, waived fees and reimbursed additional expenses for thesix-month period ended June 30, 2019, were as follows:


	Gross Advisory Fees		Advisory Fees Waived and Reimbursed in Excess of the Expense Limitation			Net Advisory Fee/ Reimbursement
Matthews Asia Strategic Income Fund		$293,987		($25,859	)		$268,128
Matthews Asia Credit Opportunities Fund		134,281		(50,460	)		83,821
Matthews Asian Growth and Income Fund		4,770,829		—			4,770,829
Matthews Asia Dividend Fund		20,275,181		(190,457	)		20,084,724
Matthews China Dividend Fund		1,123,589		—			1,123,589
Matthews Asia Value Fund		89,587		(58,374	)		31,213
Matthews Asia Growth Fund		3,533,896		—			3,533,896
Matthews Pacific Tiger Fund		29,514,343		(518,018	)		28,996,325
Matthews Asia ESG Fund		134,663		(53,794	)		80,869
Matthews Emerging Asia Fund		2,142,828		(514,640	)		1,628,188
Matthews Asia Innovators Fund		908,817		—			908,817
Matthews China Fund		2,629,864		—			2,629,864
Matthews India Fund		5,111,917		—			5,111,917
Matthews Japan Fund		9,503,572		—			9,503,572
Matthews Korea Fund		501,506		—			501,506
Matthews Asia Small Companies Fund		957,806		(237,652	)		720,154
Matthews China Small Companies Fund		356,650		(85,055	)		271,595

Under a written agreement between the Funds and Matthews (the “Operating Expense Agreement”), Matthews agrees to waive fees and reimburse expenses to a Fund if its expense ratio exceeds a certain percentage level. Effective November 30, 2017 for all Funds, except Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund, this level is 1.25% for the Institutional Class. Matthews agrees to reduce the expense ratio by waiving an equal amount ofnon-class specific expenses for the Investor Class. Because certain expenses of the Investor Class may be higher than those of the Institutional Class and because class specific expenses may be waived solely for the Institutional Class, total annual Fund expenses for the Investor Class may exceed 1.25%. For Matthews Asia Strategic Income Fund and Matthews Asia Credit Opportunities Fund this level is 0.90% for the Institutional Class. Matthews agrees to reduce the expense ratio by waiving an equal amount ofnon-class specific expenses for the Investor Class. Because certain expenses of the Investor Class may be higher than those of the Institutional Class and because class specific expenses may be waived solely for the Institutional Class, total annual Fund expenses for the Investor Class may exceed 0.90%. In turn, if the expenses of a Fund, other than the Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund, fall below the level noted within three years after Matthews has made such a reimbursement, the Fund may reimburse Matthews up to an amount of the recoupment available not 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. For the Matthews Asia Strategic Income Fund and the Matthews Asia Credit Opportunities Fund, any amount waived is not subject to recoupment. This agreement will continue through April 30, 2020, may be extended for additional periods not exceeding one year, 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.

Waived Fees Subject to Possible Future Recoupment

On June 30, 2019, the amounts subject to possible future recoupment under the expense limitation agreement are as follows:


	Expiring December 31,
	2019		2020		2021		2022
Matthews Asia Value Fund		$211,035		$119,683		$81,767		$58,374
Matthews Asia ESG Fund		163,853		156,429		156,459		53,794
Matthews Emerging Asia Fund		553,167		878,171		1,073,964		514,640
Matthews Asia Small Companies Fund		252,008		272,597		308,001		237,652
Matthews China Small Companies Fund		142,295		184,162		275,220		85,055

Matthews Asian Growth and Income Fund, Matthews Asia Dividend Fund, Matthews China Dividend Fund, Matthews Asia Growth Fund, Matthews Pacific Tiger Fund, Matthews Asia Innovators Fund, Matthews China Fund, Matthews India Fund, Matthews Japan Fund and Matthews Korea Fund had no amounts available for recoupment and no amounts recouped during thesix-month period ended June 30, 2019.

The Funds have an Administration and Shareholder Services Agreement dated August 13, 2004, as amended (the “Shareholder Services Agreement” or “Services Agreement”), in which the Funds pay an annual administration and shareholder servicing fee to Matthews, as a percentage of the average daily net assets of each Fund in aggregate, computed and prorated on a daily basis. Under the Shareholder Services Agreement, the Funds in the aggregate pay Matthews 0.25% of their aggregate average daily net assets up to $2 billion, 0.1834% of their aggregate average daily net assets over $2 billion up to $5 billion, 0.15% of their aggregate average daily net assets over $5 billion up to $7.5 billion, 0.125% of their aggregate average daily


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Notes to Financial Statements(unaudited) (continued)

net assets over $7.5 billion up to $15 billion, 0.11% of their aggregate average daily net assets over $15 billion up to $22.5 billion, 0.10% of their aggregate average daily net assets over $22.5 billion up to $25 billion, 0.09% of their aggregate average daily net assets over $25 billion up to $30 billion, 0.08% of their aggregate average daily net assets over $30 billion up to $35 billion, 0.07% of their aggregate average daily net assets over $35 billion up to $40 billion, 0.06% of their aggregate average daily net assets over $40 billion up to $45 billion, and 0.05% of their aggregate average daily net assets over $45 billion.

Administration and shareholder servicing fees charged, for thesix-month period ended June 30, 2019, were as follows:


	Gross Administration and Shareholder Servicing Fees		Administration and Shareholder Servicing Fees Waived in Excess of Expense Limitation			Net Administration and Shareholder Servicing Fees
Matthews Asia Strategic Income Fund		$73,781		$—			$73,781
Matthews Asia Credit Opportunities Fund		33,691		—			33,691
Matthews Asian Growth and Income Fund		993,622		—			993,622
Matthews Asia Dividend Fund		4,222,455		(190,457	)		4,031,998
Matthews China Dividend Fund		233,920		—			233,920
Matthews Asia Value Fund		18,649		—			18,649
Matthews Asia Growth Fund		735,892		—			735,892
Matthews Pacific Tiger Fund		6,146,970		(518,018	)		5,628,952
Matthews Asia ESG Fund		28,034		—			28,034
Matthews Emerging Asia Fund		295,692		—			295,692
Matthews Asia Innovators Fund		189,241		—			189,241
Matthews China Fund		547,412		—			547,412
Matthews India Fund		1,064,771		—			1,064,771
Matthews Japan Fund		1,979,339		—			1,979,339
Matthews Korea Fund		104,450		—			104,450
Matthews Asia Small Companies Fund		132,194		—			132,194
Matthews China Small Companies Fund		49,193		—			49,193

In addition to the fees paid to the Funds’ transfer agent, the Funds bear the cost of fees paid to certain service providers or intermediaries, including supermarkets, which provide transfer agency, record-keeping and shareholder servicing to certain shareholders. These fees are referred to as intermediary service fees on the Statements of Assets and Liabilities as well as the Statements of Operations. Additional information concerning these services and fees is contained in the Funds’ prospectuses.

BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), an indirect wholly owned subsidiary of The Bank of New York Mellon Corporation, serves as the Funds’ administrator, and in that capacity, performs various administrative and accounting services for each Fund. BNY Mellon also serves as the Funds’ transfer agent, dividend disbursing agent and registrar. An officer of BNY Mellon serves as Assistant Treasurer to the Funds. Total fees accrued by the Funds for administration and accounting services for thesix-month period ended June 30, 2019 were as follows:


	Administration and Accounting fees
Matthews Asia Strategic Income Fund		$4,276
Matthews Asia Credit Opportunities Fund		1,953
Matthews Asian Growth and Income Fund		57,599
Matthews Asia Dividend Fund		244,786
Matthews China Dividend Fund		13,566
Matthews Asia Value Fund		1,082
Matthews Asia Growth Fund		42,666
Matthews Pacific Tiger Fund		356,330
Matthews Asia ESG Fund		1,626
Matthews Emerging Asia Fund		17,143
Matthews Asia Innovators Fund		10,972
Matthews China Fund		31,752
Matthews India Fund		61,716
Matthews Japan Fund		114,738
Matthews Korea Fund		6,055
Matthews Asia Small Companies Fund		7,663
Matthews China Small Companies Fund		2,853

Brown Brothers Harriman & Co. serves as the Funds’ custodian. Foreside Funds Distributors LLC, serves as the Funds’ distributor in the United States pursuant to an Underwriting Agreement. Matthews Asia Funds are distributed in Latin America by HMC Partners.


150		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

As of June 30, 2019, Matthews and its affiliates held significant shares in the Funds as follows:


	Shares held by Matthews and its Affiliates		Percentage of Outstanding Shares
Matthews Asia Strategic Income Fund		989,046		10	%
Matthews Asia Credit Opportunities Fund		1,121,239		20	%
Matthews Asia ESG Fund		1,042,250		25	%

Certain officers and Trustees of the Funds are also officers and directors of Matthews. All officers serve without compensation from the Funds. The Funds paid the Independent Trustees $832,305 in aggregate for regular compensation during thesix-month period ended June 30, 2019.

6.	INVESTMENTS

The value of investment transactions made for affiliated and unaffiliated holdings for thesix-month period ended June 30, 2019 were as follows:


	Affiliated Purchases		Proceeds from Affiliated Sales		Unaffiliated Purchases		Proceeds from Unaffiliated Sales
Matthews Asia Strategic Income Fund		$—		$—		$68,735,472		$62,009,166
Matthews Asia Credit Opportunities Fund		—		—		45,450,494		32,920,577
Matthews Asian Growth and Income Fund		—		—		145,808,694		318,158,299
Matthews Asia Dividend Fund		81,890,814		85,881,048		1,046,022,189		1,126,348,346
Matthews China Dividend Fund		—		—		200,978,549		139,429,274
Matthews Asia Value Fund		—		—		6,408,562		2,797,945
Matthews Asia Growth Fund		3,939,095		—		171,629,389		125,205,648
Matthews Pacific Tiger Fund		180,731,838		34,891,829		692,888,793		723,789,520
Matthews Asia ESG Fund		—		—		17,667,695		3,477,094
Matthews Emerging Asia Fund		4,968,018		—		49,971,079		9,822,495
Matthews Asia Innovators Fund		—		—		100,079,352		107,012,935
Matthews China Fund		—		—		314,237,278		245,116,406
Matthews India Fund		—		—		194,157,492		334,813,463
Matthews Japan Fund		—		—		313,453,459		885,145,203
Matthews Korea Fund		—		—		24,222,793		17,846,396
Matthews Asia Small Companies Fund		1,385,644		—		45,793,973		88,125,755
Matthews China Small Companies Fund		—		—		22,326,255		18,828,569

7.	HOLDINGS OF 5% VOTING SHARES OF PORTFOLIO COMPANIES

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting shares. During thesix-month period ended June 30, 2019, the Funds below held 5% or more of the outstanding voting shares of the noted portfolio companies. During this period, other Funds in the Trust may also have held voting shares of the issuers at levels below 5%.

Investments in affiliates:

A summary of transactions in securities of issuers affiliated with a Fund for thesix-month period ended June 30, 2019 is as follows:


	Shares Held at Dec. 31, 2018		Shares Purchsed		Shares Sold		Shares Held at June 30, 2019		Value at June 30, 2019		Dividend Income Jan. 1, 2019– June 30, 2019		Net Realized Gain (Loss) Jan. 1, 2019– June 30, 2019			Change in Unrealized Appreciation (Depreciation)

MATTHEWS ASIA DIVIDEND FUND

Name of Issuer:

Anritsu Corp.		9,384,700		—		578,200		8,806,500		$153,562,339		$967,572		$5,118,961			$30,110,001
Ascendas India Trust		57,863,800		—		—		57,863,800		58,163,169		1,585,252		—			12,311,961
Beijing Capital International Airport Co., Ltd.†		94,084,000		4,772,000		10,536,000		88,320,000		—		—		—			—
BELLSYSTEM24 Holdings, Inc.		5,597,000		165,500		—		5,762,500		79,845,707		840,748		—			12,288,517
BGF Retail Co., Ltd.		961,660		—		95,734		865,926		158,238,761		1,926,153		2,832,547			(4,205,136	)
Breville Group, Ltd.		12,185,538		—		3,876,984		8,308,554		95,551,702		1,511,211		20,395,009			31,252,196
CapitaLand Retail China Trust, REIT†		49,800,000		—		—		49,800,000		—		—		—			—
China Steel Chemical Corp.		15,589,000		—		—		15,589,000		67,558,380		—		—			(2,385,590	)
Eiken Chemical Co., Ltd.		3,493,200		258,300		—		3,751,500		59,526,577		483,564		—			(21,540,543	)
HKBN, Ltd.†		56,401,123		—		—		56,401,123		—		—		—			—
KATITAS Co., Ltd.		—		2,134,900		—		2,134,900		79,538,069		408,413		—			10,640,899
Minda Industries, Ltd.		13,962,765		698,017		—		14,660,782		67,586,347		91,792		—			184,920
Minth Group, Ltd.		68,147,000		1,164,000		—		69,311,000		186,928,707		5,847,089		—			(36,588,651	)
Shanghai Jin Jiang International Hotels Group Co., Ltd.		173,612,000		—		51,510,000		122,102,000		24,839,724		—		(7,653,829	)		1,171,138
Yuexiu Transport Infrastructure, Ltd.		97,328,000		—		—		97,328,000		79,489,455		2,976,297		—			5,654,747

Total Affiliates										$1,110,828,937		$16,638,091		$20,692,688			$38,894,459


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Notes to Financial Statements(unaudited) (continued)


	Shares Held at Dec. 31, 2018		Shares Purchsed			Shares Sold		Shares Held at June 30, 2019		Value at June 30, 2019		Dividend Income Jan. 1, 2019– June 30, 2019		Net Realized Gain (Loss) Jan. 1, 2019– June 30, 2019		Change in Unrealized Appreciation (Depreciation)

MATTHEWS ASIA GROWTH FUND

Name of Issuer:

Sampath Bank PLC		16,126,387		5,772,829	††		—		21,899,216		$17,276,809		$395,119		$—		($7,382,357	)

MATTHEWS PACIFIC TIGER FUND

Name of Issuer:

Cheil Worldwide, Inc.		7,315,882		—			1,463,156		5,852,726		$149,023,639		$4,210,094		$21,493,517		$12,143,322
DB Insurance Co., Ltd.		3,570,463		—			—		3,570,463		183,370,247		5,336,898		—		(41,495,436	)
DKSH Holding AG		2,861,150		1,178,719			—		4,039,869		236,718,475		4,182,133		—		(30,773,338	)
Fuyao Glass Industry Group Co., Ltd.		34,726,400		8,152,800			—		42,879,200		133,152,824		3,779,933		—		(4,563,034	)
Guotai Junan Securities Co., Ltd.		43,100,000		39,204,600			—		82,304,600		146,600,437		—		—		(24,865,898	)
Just Dial, Ltd.		3,557,718		—			249,878		3,307,840		36,462,147		—		262,701		13,471,029
Orion Holdings Corp.		5,656,566		—			—		5,656,566		84,072,589		2,747,898		—		(2,450,014	)
Tata Power Co., Ltd.		180,316,487		—			—		180,316,487		180,304,311		3,384,209		—		(17,959,438	)

Total Affiliates											$1,149,704,669		$23,641,165		$21,756,218		($96,492,807	)


MATTHEWS EMERGING ASIA FUND

Name of Issuer:

PAK Suzuki Motor Co., Ltd.		3,287,600		2,538,400			—		5,826,000		$8,350,053		$91,438		$—		($742,624	)
Shifa International Hospitals, Ltd.		2,783,351		—			—		2,783,351		3,829,612		—		—		(309,720	)
Taisun International Holding Corp.		2,127,000		—			—		2,127,000		8,296,034		—		—		(490,895	)
Vietnam National Seed Group JSC		1,126,522		—			—		1,126,522		4,248,929		72,834		—		(122,142	)

Total Affiliates											$24,724,628		$164,272		$—		($1,665,381	)


MATTHEWS INDIA FUND

Name of Issuer:

Caplin Point Laboratories, Ltd.		3,870,311		—			—		3,870,311		$25,303,651		$—		$—		$4,145,801
eClerx Services, Ltd.†		2,390,594		—			604,076		1,786,518		—		—		—		—
VST Industries, Ltd.		1,167,175		—			—		1,167,175		58,149,139		—		—		3,479,303

Total Affiliates											$83,452,790		$—		$—		$7,625,104


MATTHEWS ASIA SMALL COMPANIES FUND

Name of Issuer:

Kuobrothers Corp.		517,000		804,000			—		1,321,000		$2,232,892		$63,100		$—		$11,572

†	Issuer was not an affiliated company as of June 30, 2019.

††	Includes stock dividend during the period.

8.	INCOME TAX INFORMATION

It is the policy of the Funds to comply with all requirements of the Internal Revenue Code of 1986, as amended (“the Code”), applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. The Funds have met the requirements of the Code applicable to regulated investment companies for thesix-month period ended June 30, 2019. Therefore, no federal income tax provision is required.

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (current and prior three tax years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.


152		MATTHEWS ASIA FUNDS

Notes to Financial Statements(unaudited) (continued)

Under current tax law, the Funds have elected to defer certain qualified late-year losses and recognize such losses in the year ending December 31, 2018:


	Late Year Losses*
Matthews Asia Strategic Income Fund		(109,716	)
Matthews Asia Credit Opportunities Fund		(4,708	)
Matthews Asian Growth and Income Fund		(9,108,081	)
Matthews Asia Dividend Fund		(41,320,881	)
Matthews China Dividend Fund		(1,209,434	)
Matthews Asia Value Fund		(841,114	)
Matthews Asia Growth Fund		(1,448,783	)
Matthews Asia ESG Fund		(73,756	)
Matthews Emerging Asia Fund		(1,133,192	)
Matthews Asia Innovators Fund		(42,130	)
Matthews India Fund		(2,591,650	)
Matthews Korea Fund		(272,844	)
Matthews China Small Companies Fund		(47,359	)

*	As permitted by the Internal Revenue Service, the Funds have elected to defer certain qualified late-year losses and recognize such losses in the next fiscal year.

As of December 31, 2018, the Funds have capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:


	Amount With No Expiration
	Short-term Losses		Long-term Losses		Total
Matthews Asia Strategic Income Fund		$4,165,505		$146,893		$4,312,398
Matthews Asia Credit Opportunities Fund		520,152		163,234		683,386

Under the Regulated Investment Company Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred inpre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

As of June 30, 2019, the tax cost of investments, including derivatives, and the related net unrealized appreciation and depreciation were as follows:


	Tax Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Matthews Asia Strategic Income Fund		$104,936,223		$3,915,135		($330,950	)		$3,584,185
Matthews Asia Credit Opportunities Fund		53,081,339		1,211,515		(221,145	)		990,370
Matthews Asian Growth and Income Fund		1,241,343,180		236,322,059		(84,103,131	)		152,218,928
Matthews Asia Dividend Fund		5,055,658,793		1,266,003,286		(373,478,376	)		892,524,910
Matthews China Dividend Fund		340,613,087		49,535,670		(23,181,043	)		26,354,627
Matthews Asia Value Fund		23,506,322		1,743,981		(2,200,209	)		(456,228	)
Matthews Asia Growth Fund		881,491,512		312,806,948		(97,276,487	)		215,530,461
Matthews Pacific Tiger Fund		6,299,257,935		3,268,256,820		(588,194,464	)		2,680,062,356
Matthews Asia ESG Fund		42,097,085		5,410,223		(2,145,870	)		3,264,353
Matthews Emerging Asia Fund		450,179,317		60,982,440		(103,442,234	)		(42,459,794	)
Matthews Asia Innovators Fund		233,823,091		51,124,680		(5,487,724	)		45,636,956
Matthews China Fund		809,790,950		69,090,979		(59,568,691	)		9,522,288
Matthews India Fund		1,291,453,321		309,637,374		(140,453,542	)		169,183,832
Matthews Japan Fund		2,399,092,383		421,727,097		(179,873,728	)		241,853,369
Matthews Korea Fund		137,319,364		18,841,063		(11,402,862	)		7,438,201
Matthews Asia Small Companies Fund		177,057,500		23,463,497		(25,536,491	)		(2,072,994	)
Matthews China Small Companies Fund		68,389,126		9,428,788		(8,438,463	)		990,325

9.	SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued, and has determined that there were no subsequent events that require recognition or disclosure in the financial statements.


matthewsasia.com \| 800.789.ASIA			153


Matthews Asia Funds

INVESTMENT ADVISOR Matthews International Capital Management, LLC Four Embarcadero Center, Suite 550 San Francisco, CA 94111 800.789.ASIA CUSTODIAN Brown Brothers Harriman & Co. 50 Post Office Square Boston, MA 02110		ACCOUNT SERVICES Matthews Asia Funds P.O. Box 9791 Providence, RI 02940 800.789.ASIA LEGAL COUNSEL Paul Hastings LLP 101 California Street, 48th Floor San Francisco, CA 94111

LOGO

P.O. Box 9791 | Providence, RI 02940 | matthewsasia.com | 800.789.ASIA (2742)

Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC, Berwyn, Pennsylvania

Matthews Asia Funds are distributed in Latin America by HMC Partners

LOGO

SAR-0619

154

Item 2.

Code of Ethics.

Not applicable.

Item 3.

Audit Committee Financial Expert.

Not applicable.

Item 4.

Principal Accountant Fees and Services.

Not applicable.

Item 5.

Audit Committee of Listed Registrants.

Not applicable.

Item 6.

Investments.

(a)	Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

(b)	Not applicable.

Item 7.

Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies.

Not applicable.

Item 8.

Portfolio Managers ofClosed-End Management Investment Companies.

Not applicable.

Item 9.

Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10.

Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of RegulationS-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR240.14a-101)), or this Item.

Item 11.

Controls and Procedures.

(a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule30a-3(b) under the 1940 Act (17 CFR270.30a-3(b)) and Rules13a-15(b) or15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR240.13a-15(b) or240.15d-15(b)).

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule30a-3(d) under the 1940 Act (17 CFR270.30a-3(d))) that occurred during the period covered by this reportthat has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12.

Disclosure of Securities Lending Activities forClosed-End Management Investment Companies.

Not applicable.

Item 13.

Exhibits.


		(a)(1)		Not applicable.

		(a)(2)		Certifications pursuant to Rule30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

		(a)(3)		Not applicable.

		(a)(4)		Not applicable.

		(b)		Certifications pursuant to Rule30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)		Matthews International Funds

By (Signature and Title)*		/s/ William J. Hackett
		William J. Hackett, President
		(principal executive officer)

Date		September 5, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)*		/s/ William J. Hackett
		William J. Hackett, President
		(principal executive officer)

Date		September 5, 2019

By (Signature and Title)*		/s/ Shai Malka
		Shai Malka, Treasurer
		(principal financial officer)

Date		September 5, 2019

^*	Print the name and title of each signing officer under his or her signature.

Matthews Asia Growth Fund (MPACX) N-CSRSCertified semi-annual shareholder report (management investment company)