<PAGE>
- --------------------------------------------------------------------------------
A Message To Shareholders [ARTWORK APPEARS HERE]
- --------------------------------------------------------------------------------
Dear Fellow Shareholders,
The six-month period ending February 1998 has been an extremely challenging
period for developing Asian economies and financial markets. The "financial
crisis" which has gripped Asia since the July 1997 devaluation of Thailand's
currency has caused markets and currencies to fall across the region. Economic
growth has slowed significantly in most economies and a difficult period of
restructuring and recovery lies ahead. We remain convinced the dynamic societies
of developing Asia will meet the challenges they face and the long-term economic
and investment potential of the region is intact.
In the last twenty years, many of the countries of Asia have made enormous
strides towards adopting the principles of free and open economies that have
long dominated Western economic theory. The adoption of these principles has led
to more open trading relationships both within Asia and with the rest of the
world. Financial markets from Korea to Thailand have significantly opened to
foreign investment. While this progress is commendable, it has not been uniform.
The uneven nature of developing Asia's transition to open economies and
financial markets has been a root cause of the financial crisis. For example,
the maintenance of quasi-fixed exchange rates between Asian currencies and the
US Dollar has been an unnecessary anomaly in the general trend toward open
markets. Similarly, the very gradualist approach to deregulation in the Korean
economy and financial system has, with hindsight, caused short-term distortions
in the market that have hindered Korea's development. The rapid adoption of
additional free market principles is essential to developing Asia's future.
We are encouraged that the response of most Asian leadership to the recent
turmoil has been to accelerate deregulation and adopt bold new agendas to hasten
the movement towards open markets. With the continuance of this trend, the
prospects for the recovery of both economic growth and financial markets are
very bright. Innovative new leadership has taken office in China, Korea and
Thailand. Hong Kong remains a beacon of free market principles not only for Asia
but also for the entire world, despite the return to Chinese sovereignty. We
remain concerned about the leadership of Malaysia and especially Indonesia,
where narrow political interests continue to dominate policy decisions. The next
business cycle in developing Asia should see slower but more lasting and
profitable growth with companies operating in a more open and competitive
environment.
Our four funds, including our new Matthews Dragon Century China Fund, offer
long-term investors unique opportunities to participate in the future of this
vast and dynamic environment. We greatly appreciate your support and welcome
your comments and suggestions.
Sincerely,
/s/ G. Paul Matthews
G. PAUL MATTHEWS - PRESIDENT, [PHOTO OF G. PAUL MATTHEWS APPEARS HERE]
CHIEF INVESTMENT OFFICER
/s/ Mark W. Headley
MARK W. HEADLEY - MANAGING DIRECTOR, [PHOTO OF MARK W. HEADLEY APPEARS HERE]
PORTFOLIO MANAGER
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Managers' Comments
- --------------------------------------------------------------------------------
[ARTWORK APPEARS HERE]
================================================================================
MATTHEWS PACIFIC TIGER FUND G. PAUL MATTHEWS, MARK W. HEADLEY
The Matthews Pacific Tiger Fund maintained its investment mandate as a
fully-invested, diversified portfolio throughout the market turmoil of the last
six months. The Fund does not attempt to time markets, but rather seeks to
identify superior long-term investment opportunities in developing Asia's most
attractive companies. Regular on-site company visits and direct research across
the region, combined with our many years of experience investing and living in
Asia, underlie this investment approach. In industry jargon, our methodology is
best described as bottom-up, growth-at-a-reasonable price investing.
As markets and currencies collapsed over a period of several months, we remained
convinced that the long-term potential of the securities owned by the Fund would
not be diminished. While strategic changes were made, the Fund has not moved
into either cash or highly defensive stocks. The Fund remains concentrated in a
portfolio of approximately 50 companies which we believe offer both significant
growth potential and financial stability. These companies are well diversified
across both countries and industries. The property sector is the only area in
which the Fund has virtually no exposure, as we remain very wary of the high
prices of property found in many areas of the region. We are optimistic that
many of the companies in which the Fund holds positions will be beneficiaries of
the profound changes that are now sweeping through Asia's developing economies.
[ARTWORK APPEARS HERE]
================================================================================
MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND G. PAUL MATTHEWS
The Matthews Asian Convertible Securities fund invests primarily in US Dollar
denominated convertible bonds issued by Asian ex-Japan corporations. The
portfolio is broadly diversified both by country of issue and by industry.
During the six month period ending February 28th these securities were adversely
impacted by the "financial crisis" in Asia but they did not decline as much as
the underlying equity markets. The "hybrid" nature of convertible bonds means
that during such periods of equity market weakness they fall to levels which are
considered attractive to pure bond investors, providing a degree of protection
that is not present in pure equity investments. Furthermore, because the
majority of the convertibles in which the fund invests are denominated in US
Dollars, they have provided some protection against the general weakness in many
Asian currencies that has been a feature of the current fiscal period.
The portfolio has been increasing its exposure to convertible bonds issued by
Mainland Chinese corporations, all of which are convertible into securities
listed on the Hong Kong stock exchange. Such issues now represent approximately
15% of the portfolio.
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Manager's Comments
- --------------------------------------------------------------------------------
[ARTWORK APPEARS HERE]
================================================================================
MATTHEWS KOREA FUND G. PAUL MATTHEWS
The Matthews Korea Fund invests in a broad range of Korean equities listed on
the domestic Korean stock exchanges. The portfolio consists of approximately 50
Korean companies, including some of the largest capitalization blue chips and a
range of smaller companies. The portfolio is generally unhedged, and is
therefore exposed to both the potential movement of the Korean currency and to
fluctuations in the Korean stock market.
The six months ending February 1998 saw an extreme fluctuation in the value of
both the Korean stock market and the exchange rate of the Korean won. During
this period the Korean won fell by 44.7% against the US Dollar and the stock
market declined by 19.6% in local currency terms. The worst of the decline
occurred in the final weeks of 1997. This was due to uncertainties relating to
IMF's involvement in restoring international confidence in Korea's financial
system and to a change in the political leadership causing severe weakness in
Korean financial assets.
Since the beginning of 1998 a more stable currency and an improving trade
account have allowed the Korean market to rally strongly from its lows. As
newly-elect President Kim Dae Jung has acknowledged, this will be a very
difficult year for the Korean economy. However, as Korea continues to deregulate
while maintaining the financial disciplines imposed by the IMF, the prospects
for recovery should be increasingly bright.
[ARTWORK APPEARS HERE]
================================================================================
MATTHEWS DRAGON CENTURY CHINA FUND G. PAUL MATTHEWS, MARK W. HEADLEY
The Matthews Dragon Century China Fund was launched on February 19, 1998 with a
mandate to invest in Chinese companies and those companies based in Hong Kong
with predominately Chinese businesses. The Fund follows the same
growth-at-a-reasonable-price discipline as our more diversified Pacific Tiger
Fund. The companies screened for investment include: the "B" shares available
for foreign investment on both the Shanghai and Shenzhen stock exchanges in
China; the "H" shares of Mainland Chinese companies listed in Hong Kong; and
those Hong Kong companies which are predominately doing business in China,
commonly known as the "Red Chips".
China has demonstrated an ability to reform its economy and open itself to
market forces which few observers thought possible only a few years ago. The
carefully selected securities found in the Fund should benefit over time from
the continued trends of better physical and legal infrastructure, a growing
middle class and strong economic growth.
Please review the prospectus carefully before investing as it explains the
inherent risks in global investing, such as currency fluctuation, market
illiquidity, economic and political risks. The Matthews International Funds are
distributed by FPS Broker Services Inc., P.O. Box 61503, King of Prussia,
PA 19403-0903. Must be preceded or accompanied by a prospectus. DFU 5/98
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities as of February 28,
1998
<TABLE>
<CAPTION>
MATTHEWS MATTHEWS
MATTHEWS ASIAN DRAGON
PACIFIC CONVERTIBLE MATTHEWS CENTURY
TIGER SECURITIES KOREA CHINA
FUND FUND FUND FUND
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
EQUITIES
Agricultural Equipment 0.87 % 0.00 % 0.00 % 0.00 %
Airlines 2.70 0.00 0.00 0.00
Automotive 1.39 0.00 1.66 6.14
Automotive Parts 0.00 0.00 1.45 0.00
Banking 7.53 0.00 1.57 0.00
Chemical 0.00 0.00 5.57 0.00
Commercial & Industrial 3.16 0.67 9.32 0.00
Communications 0.00 0.00 1.82 0.00
Conglomerate 8.16 0.00 0.00 17.17
Construction 0.00 0.38 0.00 0.00
Consumer 1.34 0.00 0.00 3.65
Electrical 3.06 0.00 9.77 0.00
Electronics 12.66 0.00 18.64 0.00
Financial 4.18 0.00 4.50 0.00
Food 1.22 0.00 0.00 0.00
Food & Beverages 6.07 0.00 5.33 6.90
Gaming 1.87 0.00 0.00 0.00
Hotels 0.74 0.00 0.00 3.98
Hotels/Leisure 0.99 0.00 0.00 0.00
Hotels/Tourism 0.00 0.00 0.00 2.18
Industrial 0.00 3.18 1.02 5.87
Infrastructure 0.00 0.00 0.00 10.15
Insurance 2.63 0.00 3.08 0.00
Machinery & Equipment 1.74 0.00 0.00 0.00
Manufacturing 4.24 0.00 0.00 10.45
Media 2.32 0.00 0.00 0.00
Networking Products 0.00 0.00 0.53 0.00
Paper Products 0.00 0.00 2.21 0.00
Petro-Chemical 0.00 0.00 4.98 0.00
Pharmaceutical 0.00 0.00 2.70 0.00
Property 0.00 0.00 0.00 1.37
Retail 0.82 0.00 0.00 0.00
Road Construction 0.00 0.08 0.00 0.00
Rubber Manufacturer 0.00 0.00 1.08 0.00
Service 2.28 0.00 2.08 0.00
Shipping 0.54 0.00 0.00 0.00
Shipping & Steel 0.00 0.00 5.92 0.00
Software 4.45 0.00 0.00 5.74
Technology 1.49 0.00 0.00 2.41
Telecommunications 8.98 0.00 0.16 10.78
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARKET SECTOR DIVERSIFICATION (CONTINUED)
As a Percentage of Total Value of Investment in Securities as of February 28,
1998
<TABLE>
<CAPTION>
MATTHEWS MATTHEWS
MATTHEWS ASIAN DRAGON
PACIFIC CONVERTIBLE MATTHEWS CENTURY
TIGER SECURITIES KOREA CHINA
FUND FUND FUND FUND
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
EQUITIES (continued)
Trading 3.42 0.00 0.00 0.00
Transportation 0.00 0.00 2.42 0.72
Utility 10.80 0.00 7.95 12.49
Wholesale 0.00 0.00 1.90 0.00
Wholesale & Retail Trade 0.00 0.00 4.13 0.00
------ ------ ------ ------
Total Equities 99.65 4.31 99.79 100.00
BONDS
Automotive 0.00 3.29 0.00 0.00
Banking 0.35 3.31 0.00 0.00
Basic Industry 0.00 3.92 0.00 0.00
Commercial & Industrial 0.00 9.86 0.00 0.00
Conglomerate 0.00 5.42 0.00 0.00
Department Stores 0.00 0.42 0.00 0.00
Electrical 0.00 9.63 0.00 0.00
Electrical Appliance 0.00 2.23 0.00 0.00
Electronics 0.00 11.10 0.21 0.00
Hotels 0.00 7.96 0.00 0.00
Industrial 0.00 3.22 0.00 0.00
Infrastructure 0.00 5.92 0.00 0.00
Petro-Chemical 0.00 6.54 0.00 0.00
Plastics 0.00 2.22 0.00 0.00
Property 0.00 5.68 0.00 0.00
Retail 0.00 4.14 0.00 0.00
Transportation 0.00 2.77 0.00 0.00
Utility 0.00 8.06 0.00 0.00
------ ------ ------ ------
Total Bonds 0.35 95.69 0.21 0.00
------ ------ ------ ------
TOTAL INVESTMENTS 100.00 % 100.00 % 100.00 % 100.00 %
====== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
MATTHEWS PACIFIC TIGER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
EQUITIES - 95.80%***
HONG KONG - 49.38%
Asia Satellite Telecommunications Holdings, Ltd. ADR 64,000 $ 1,168,000
ASM Pacific Technology, Ltd. 1,030,000 811,497
Cathay Pacific Airways 2,011,000 1,727,243
China Resources Enterprise, Ltd. 868,000 1,894,637
China Telecom (Hong Kong), Ltd.** 896,800 1,627,390
China Travel International Investment Hong Kong, Ltd. 2,154,000 632,917
Citic Pacific, Ltd. 388,000 1,503,393
Dickson Concepts International, Ltd.** 305,000 527,867
Founder Hong Kong, Ltd.** 3,702,954 2,845,673
Guangdong Electric Power Development Co., Ltd. B Shares 1,347,830 814,706
Guangdong Kelon Electric Holding 1,614,000 1,803,181
Guangnan Holdings 2,074,000 1,473,300
Guangzhou Pharmaceutical Co., Ltd.** 5,782,000 836,403
Hong Kong Telecommunications, Ltd. 688,707 1,449,912
HSBC Holdings PLC 92,408 2,673,482
Huaneng Power International, Inc. ADR** 49,000 1,206,625
Li & Fung, Ltd. 1,162,000 1,755,948
Nanjing Posts & Telecommunications Equipment Co., Ltd. B
Shares** 1,500,000 588,958
National Mutual Asia, Ltd. 1,888,000 1,682,561
Peregrine Investments Holdings, Ltd. 1,097,000 0
Qingling Motors Co.** 2,230,000 892,866
Shanghai Industrial Holdings, Ltd. 421,000 1,827,010
Shanghai New Asia Group Co., Ltd. B Shares 1,800,000 475,200
Vitasoy International Holdings, Ltd. 4,804,000 1,752,835
Wuxi Little Swan Co., Ltd. B Shares 752,000 912,989
-----------
TOTAL HONG KONG 32,884,593
-----------
INDONESIA - 0.68%
PT Modern Photo Film Co. 2,554,000 432,880
PT Tempo Scan Pacific 295,000 21,666
-----------
TOTAL INDONESIA 454,546
-----------
MALAYSIA - 4.03%
Berjaya Sports Toto Berhad 426,000 1,193,957
Public Bank Berhad 3 2
Star Publications (Malaysia) 821,000 1,485,616
-----------
TOTAL MALAYSIA 2,679,575
-----------
PHILIPPINES - 6.83%
Manila Electric Co. B Shares 347,980 1,037,833
Philippine Long Distance Telephone Co. 76,900 2,071,863
RFM Corp. 4,950,000 781,577
San Miguel Corp. B Shares 398,000 658,344
-----------
TOTAL PHILIPPINES 4,549,617
-----------
SINGAPORE - 9.13%
Avimo Group, Ltd. 1,096,000 1,629,449
Electronic Resources, Ltd. 857,000 988,634
Osprey Maritime, Ltd. 717,000 347,218
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
Oversea-Chinese Banking Corp., Ltd. 170,000 $ 1,012,021
Sunright, Ltd. 856,000 712,887
Venture Manufacturing (Singapore), Ltd. 363,000 1,388,390
-----------
TOTAL SINGAPORE 6,078,599
-----------
SOUTH KOREA - 15.29%
Dae Duck Electronics Co.** 24,760 1,955,933
Hana Bank 166,700 949,363
Korea Electric Power Corp.** 102,740 1,371,544
LG Cable & Machinery** 105,160 495,855
Mirae Co. 7,060 955,456
S1 Corp.** 9,500 1,460,195
Samsung Electronics Co.** 44,470 2,573,431
SK Telecom Co., Ltd. 1,215 416,794
-----------
TOTAL SOUTH KOREA 10,178,571
-----------
THAILAND - 10.46%
Advanced Info Service Public Co., Ltd. 256,000 1,948,212
Bangkok Bank Public Co., Ltd. 426,000 1,452,946
Bank of Ayudhya Public Co., Ltd. 321,000 201,090
Srithai Superware Public Co., Ltd. 1,503,000 488,213
Thai Engine Manufacturing Public Co., Ltd.** 217,000 553,828
Thai Farmers Bank Public Co., Ltd. 403,000 1,206,194
Tipco Asphalt Public Co., Ltd. 500,000 1,084,686
Tipco Asphalt Public Co., Ltd. Warrants** 30,600 31,949
-----------
TOTAL THAILAND 6,967,118
-----------
TOTAL EQUITIES
(Cost $67,516,015) 63,792,619
-----------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
INTERNATIONAL DOLLAR BONDS
(NOTE 1-A) - 0.34%
Bangkok Bank Public Co., Ltd.
1.50%, 08/07/06 $ 250,000 226,875
-----------
TOTAL INTERNATIONAL DOLLAR BONDS
(Cost $216,532) 226,875
-----------
TOTAL INVESTMENTS - 96.14%
(Cost $67,732,547*) 64,019,494
-----------
CASH AND OTHER ASSETS, LESS LIABILITIES - 3.86% 2,571,416
-----------
NET ASSETS - 100% $66,590,910
===========
</TABLE>
* Cost for Federal income tax purposes is $67,732,547 and net unrealized
depreciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation................................. $ 7,158,040
Gross unrealized depreciation................................. (10,871,093)
------------
Net unrealized depreciation................................. $ (3,713,053)
============
</TABLE>
** Non-income producing security
*** As a percentage of net assets as of February 28, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------- --------
<S> <C> <C>
EQUITIES - 4.03%***
HONG KONG - 0.00%
Peregrine Investments Holdings, Ltd. 64,000 $ 0
Peregrine Investments Holdings, Ltd. Warrants** 1,400 0
--------
TOTAL HONG KONG 0
--------
MALAYSIA - 0.36%
Renong Berhad Warrants** 40,000 6,313
United Engineers (Malaysia) Berhad 8,624 10,466
--------
TOTAL MALAYSIA 16,779
--------
SINGAPORE - 1.99%
Jardine Strategic Holdings, Ltd. 32,768 93,389
--------
THAILAND - 1.68%
Srithai Superware Public Co., Ltd. 88,000 29,095
Tipco Asphalt Co., Ltd. Warrants** 3,500 3,654
Ton Yi Industrial Corp.** 59,183 45,943
--------
TOTAL THAILAND 78,692
--------
TOTAL EQUITIES
(Cost $551,810) 188,860
--------
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
INTERNATIONAL DOLLAR BONDS
(NOTE 1-A) - 89.56%
HONG KONG - 38.45%
China Travel International Investment Overseas Finance,
Ltd.
4.250%, 11/18/98 $ 150,000 148,500
Goldlion Capital (B.V.I.)
4.875%, 02/01/99 150,000 127,500
Shangri-La Asia Capital, Ltd.
2.875%, 12/16/00 180,000 144,900
Hong Kong & Shanghai Hotels Overseas Finance, Ltd.
5.000%, 01/06/01 150,000 136,500
Paul Y. - ITC Construction Holdings, Ltd.
5.000%, 02/03/01 140,000 93,800
Hong Kong Land Co.
4.000%, 02/23/01 150,000 132,750
New World Infrastructure, Ltd.
5.000%, 07/15/01 150,000 165,750
Qingling Motors, Ltd.(P)
3.500%, 01/22/02 200,000 144,000
First Pacific Capital, Ltd.
2.000%, 03/27/02 250,000 210,000
Zhenhai Refining & Chemical Co., Ltd.
3.000%, 12/19/03 200,000 223,000
Huaneng Power International Public
Co., Ltd.
1.750%, 05/21/04 200,000 206,000
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT VALUE
----------- ----------
<S> <C> <C>
Regal Hotels International Holdings, Ltd.
5.250%, 12/13/08 $ 95,000 $ 67,450
----------
TOTAL HONG KONG 1,800,150
----------
INDONESIA - 6.68%
Asia Pulp & Paper Global
Finance V, Ltd.
2.000%, 07/25/00 150,000 141,000
PT Indocement
2.000%, 02/27/06 260,000 171,600
----------
TOTAL INDONESIA 312,600
----------
PHILIPPINES - 10.24%
Metro Pacific Capital, Ltd.
2.500%, 04/11/03 60,000 45,600
JG Summit (Cayman), Ltd.
3.500%, 12/23/03 80,000 49,400
International Container Terminal Services, Inc.
1.750%, 03/13/04 150,000 121,500
FDC Capital Cayman
2.500%, 05/15/06 90,000 66,600
RFM Capital, Ltd.
2.750%, 05/30/06 60,000 48,900
Philippine Long Distance Telephone Co.
3.500%, 12/31/49 290,000 147,175
----------
TOTAL PHILIPPINES 479,175
----------
SINGAPORE - 3.88%
Dairy Farm International Holdings, Ltd.
6.500%, 05/10/49 200,000 181,500
----------
SOUTH KOREA - 12.27%
SK Corp.
3.000%, 12/31/01 3,400,000 63,750
Samsung Display Devices Co.
0.250%, 03/12/06 100,000 91,500
Samsung Electronics Co.
0.250%, 12/31/06 160,000 164,400
Daewoo Corp.**
0.000%, 12/31/07 100,000 89,000
LG Electronics, Inc.
0.250%, 12/31/07 200,000 166,000
----------
TOTAL SOUTH KOREA 574,650
----------
TAIWAN - 14.55%
Nan Ya Plastics Corp.
1.750%, 07/19/01 80,000 97,200
Yageo Corp.
1.250%, 07/24/03 80,000 154,000
Compal Electronics, Inc.(P)
1.000%, 11/21/03 100,000 222,500
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE AMOUNT VALUE
----------- ----------
<S> <C> <C>
Walsin Lihwa Corp.
3.250%, 06/16/04 $ 120,000 $ 97,500
Acer Peripherals, Inc.
1.250%, 11/27/06 80,000 110,000
----------
TOTAL TAIWAN 681,200
----------
THAILAND - 3.49%
Robinson Department Store Public
Co., Ltd.
4.250%, 04/07/04 50,000 18,250
Bangkok Bank Public Co., Ltd.
1.500%, 08/07/06 160,000 145,200
----------
TOTAL THAILAND 163,450
----------
TOTAL INTERNATIONAL DOLLAR BONDS
(Cost $4,594,339) 4,192,725
----------
TOTAL INVESTMENTS - 93.59%
(Cost $5,146,149*) 4,381,585
----------
CASH AND OTHER ASSETS, LESS LIABILITIES - 6.41% 300,138
----------
NET ASSETS - 100% $4,681,723
==========
</TABLE>
* Cost for Federal income tax purposes is $5,146,149 and net unrealized
depreciation consists of:
<TABLE>
<S> <C>
Gross unrealized appreciation................................... $ 222,604
Gross unrealized depreciation................................... (987,168)
----------
Net unrealized depreciation................................... $ (764,564)
==========
</TABLE>
** Non-income producing security
(P)Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At February 28,
1998, the value of these securities amounted to $366,500 or 7.83% of net
assets.
*** As a percentage of net assets as of February 28, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
MATTHEWS KOREA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- ------------
<S> <C> <C>
EQUITIES - SOUTH KOREA - 98.56%***
Comtec System Company, Ltd.** 20,300 $ 537,024
Dae Duck Electronics Co.** 20,900 1,651,010
Daeduck Industries** 39,000 2,149,417
Daesung Industrial Co.** 115,670 1,912,486
Daewoo Heavy Industries 450,000 2,347,825
Dongwon Securities Co. 231,640 1,204,301
Han Kuk Carbon Co., Ltd.** 45,356 2,085,867
Han Kuk Paper Manufacturing Co.** 160,290 1,452,720
Handsome Co., Ltd.** 11,170 230,514
Hanjin Heavy Industry** 550,910 3,016,003
Hankook Tire Manufacturing Co. 44,890 1,083,077
Hanmi Pharmaceutical Industrial Co.** 54,024 1,253,833
Hansol Paper Co.** 70,000 414,084
Housing & Commercial Bank, Korea 232,290 1,578,946
Hyosung T & C Co., Ltd.** 188,980 1,724,312
Hyundai Electronics Industries Co.** 90,240 1,530,709
Hyundai Elevator Co.** 20,000 1,028,781
Hyundai Merchant Marine** 385,100 2,546,894
Hyundai Mipo Dockyard Co.** 27,370 395,549
Hyundai Motor Co., Ltd.** 90,170 1,667,565
Keum Kang, Ltd.** 90,150 1,457,415
Kolon Chemical Co.** 62,060 950,091
Kookmin Bank** 360,300 2,294,623
Korea Electric Power Corp.** 450,100 6,008,681
Korea Electric Terminal Co.** 20,960 1,090,998
Korean Air** 427,220 2,438,266
Kyung Nam Bank** 405,910 1,031,553
LG Cable & Machinery** 480,610 2,266,195
LG Chemical, Ltd.** 240,000 2,072,259
LG Electronics, Inc.** 400,100 6,027,224
LG Information & Communication, Ltd.** 56,295 1,833,982
Lotte Chilsung Beverage Co.** 17,240 801,295
Lotte Confectionery Co.** 40,010 3,381,125
Medison Co., Ltd.** 59,010 3,830,409
Mirae Co. 20,000 2,706,674
Nong Shim Co., Ltd. 32,990 1,177,781
Oriental Fire & Marine Insurance 250,640 1,341,453
Pacific Chemical Co.** 177,130 1,974,136
Pohang Iron & Steel Co., Ltd.** 19,480 926,880
S1 Corp.** 13,599 2,090,262
Samsung Display Devices Co.** 65,100 3,787,200
Samsung Electronics Co.** 120,470 6,971,470
Samsung Fire & Marine Insurance 6,500 1,751,377
Seoul City Gas Co., Ltd.** 77,060 1,986,666
Shinhung Co.** 41,270 429,632
Shinsegae Department Store Co. 149,710 2,200,269
Sindo Ricoh Co. 65,250 2,657,148
SK Corp.** 345,190 3,065,066
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
SK Corp. GDR** 250,000 $ 468,750
SK Telecom Co., Ltd. 464 158,947
Suheung Capsule 16,200 1,031,720
Young Poong Paper Manufacturing Co. 42,110 350,702
------------
TOTAL EQUITIES
(Cost $85,360,491) 100,371,166
------------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
INTERNATIONAL DOLLAR BONDS
(NOTE 1-A) - 0.21%
Samsung Electronics Co.
0.25%, 12/31/06 $210,000 215,775
------------
TOTAL INTERNATIONAL DOLLAR BONDS
(Cost $198,221) 215,775
------------
TOTAL INVESTMENTS - 98.77%
(Cost $85,558,712*) 100,586,941
------------
CASH AND OTHER ASSETS, LESS LIABILITIES - 1.23% 1,255,568
------------
NET ASSETS - 100% $101,842,509
============
* Cost for Federal income tax purposes is $85,558,712 and net unrealized
appreciation consists of:
Gross unrealized appreciation...................... $ 19,062,653
Gross unrealized depreciation...................... (4,034,424)
------------
Net unrealized appreciation...................... $ 15,028,229
============
</TABLE>
** Non-income producing security
*** As a percentage of net assets as of February 28, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - SCHEDULE OF INVESTMENTS FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
MATTHEWS DRAGON CENTURY CHINA FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
EQUITIES - HONG KONG - 84.50%***
Beijing Datang Power Generation Co., Ltd. 144,000 $ 73,465
Beijing Enterprises Holdings, Ltd.** 26,000 74,382
Catic Shenzhen Holdings, Ltd.** 452,000 70,055
Cheung Kong Infrastructure Holdings 50,000 154,020
China Resources Enterprise, Ltd. 70,000 152,793
China Telecom (Hong Kong), Ltd.** 80,000 145,173
China Vanke Co., Ltd. B Shares 74,284 42,023
Citic Pacific, Ltd. 18,000 69,745
Eastern Communications Co., Ltd. B Shares 68,000 70,720
First Tractor Co., Ltd.** 190,000 109,203
Founder Hong Kong, Ltd.** 230,000 176,752
Guangdong Electric Power Development Co., Ltd. B Shares 234,920 141,999
Guangdong Kelon Electric Holding 134,000 149,707
Guangnan Holdings 198,000 140,653
Guangzhou Pharmaceutical Co., Ltd.** 778,000 112,543
Huaneng Power International, Inc. ADR** 2,700 66,488
Huangshan Tourism Development Co., Ltd. B Shares 84,000 67,200
Legend Holdings, Ltd.** 228,000 74,356
Nanjing Posts & Telecommunications Equipment Co., Ltd. B
Shares** 296,000 116,221
New World Infrastructure, Ltd.** 60,000 158,864
Ng Fung Hong, Ltd. 68,000 72,018
Qingling Motors Co. 200,000 80,078
Shanghai Industrial Holdings, Ltd. 37,000 160,569
Shanghai New Asia Group Co., Ltd.
B Shares 464,600 122,654
Shenzhen Chiwan Wharf Holdings, Ltd.
B Shares 75,300 22,174
Tianjin Development Holdings, Ltd.** 74,000 71,682
Wuxi Little Swan Co., Ltd. B Shares 142,000 172,399
Zhejiang Southeast Electric Power Co., Ltd. B Shares** 281,000 102,846
Zhenhai Refining & Chemical Co., Ltd. 304,000 110,920
---------
TOTAL EQUITIES
(Cost $2,876,104) 3,081,702
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
TOTAL INVESTMENTS - 84.50%
(Cost $2,876,104*) $3,081,702
----------
CASH AND OTHER ASSETS, LESS LIABILITIES - 15.50% 565,417
----------
NET ASSETS - 100% $3,647,119
==========
* Cost for Federal income tax purposes is $2,876,104 and net unrealized
appreciation consists of:
Gross unrealized appreciation............................. $ 210,099
Gross unrealized depreciation............................. (4,501)
----------
Net unrealized appreciation............................. $ 205,598
==========
</TABLE>
** Non-income producing security
*** As a percentage of net assets as of February 28, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATTHEWS
ASIAN MATTHEWS
MATTHEWS CONVERTIBLE DRAGON
PACIFIC SECURITIES MATTHEWS CENTURY
TIGER FUND FUND KOREA FUND CHINA FUND
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost
$67,732,547, $5,146,149,
$85,558,712 and $2,876,104,
respectively).............. $64,019,494 $4,381,585 $100,586,941 $3,081,702
Cash........................ 2,204,469 170,063 2,129,863 1,665,447
Dividends and interest
receivable................. 26,034 33,336 33,661 2,654
Receivable for securities
sold....................... 0 0 308,448 0
Receivable for capital
shares sold................ 2,148,681 113,119 1,397,862 43,085
Deferred organization
costs...................... 10,352 10,352 6,092 11,947
Due from Advisor............ 0 3,487 0 0
Other assets................ 20,171 1,116 44,385 24,385
----------- ---------- ------------ ----------
Total assets................ 68,429,201 4,713,058 104,507,252 4,829,220
----------- ---------- ------------ ----------
LIABILITIES
Payable for securities
purchased.................. 251,557 0 770,343 1,145,903
Payable for capital shares
redeemed................... 1,484,148 22,314 1,713,348 0
Due to Advisor.............. 79,827 0 179,632 35,271
Accrued expenses............ 22,709 9,021 0 927
Accrued distribution
expense.................... 50 0 1,420 0
----------- ---------- ------------ ----------
Total liabilities........... 1,838,291 31,335 2,664,743 1,182,101
----------- ---------- ------------ ----------
NET ASSETS................... $66,590,910 $4,681,723 $101,842,509 $3,647,119
=========== ========== ============ ==========
CLASS I SHARES:
Net assets (Applicable to
8,649,966, 547,277,
31,132,867 and 343,860
shares of beneficial
interest issued and
outstanding, respectively,
unlimited number of shares
authorized with a $0.001
par value)................. $66,295,120 $4,681,723 $ 94,044,921 $3,647,119
=========== ========== ============ ==========
Net asset value, offering
price and redemption price
per Class I share.......... $ 7.66 $ 8.55 $ 3.02 $ 10.61
=========== ========== ============ ==========
CLASS A SHARES:*
Net assets (Applicable to
38,600, 2,582,677, and 0
shares of beneficial
interest issued and
outstanding, respectively,
unlimited number of shares
authorized with a $0.001
par value)................. $ 295,790 N/A $ 7,797,588 $ 0
=========== ========== ============ ==========
Net asset value and
redemption price per Class
A share.................... $ 7.66 N/A $ 3.02 NA
=========== ========== ============ ==========
Offering price per Class A
share (Net asset value /
0.9505).................... $ 8.06 N/A $ 3.18 NA
=========== ========== ============ ==========
NET ASSETS CONSIST OF:
Capital paid-in............. $77,318,114 $5,929,180 $ 97,484,230 $3,440,935
Accumulated undistributed
net investment income
(loss)..................... (219,267) (1,003) (997,019) 677
Accumulated net realized
loss on investments........ (6,793,044) (481,890) (9,673,196) 0
Net unrealized appreciation
(depreciation) on
investments and foreign
currency related
transactions............... (3,714,893) (764,564) 15,028,494 205,507
----------- ---------- ------------ ----------
$66,590,910 $4,681,723 $101,842,509 $3,647,119
=========== ========== ============ ==========
</TABLE>
* At February 28, 1998, the Matthews Asian Convertible Securities Fund did not
offer Class A shares.
N/A Not Applicable
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - STATEMENT OF OPERATIONS FOR THE PERIOD ENDED
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATTHEWS MATTHEWS
MATTHEWS ASIAN DRAGON
PACIFIC CONVERTIBLE MATTHEWS CENTURY
TIGER SECURITIES KOREA CHINA
FUND FUND FUND FUND
------------ ----------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
tax withheld of
$23,497, $0, $4,719 and
$0, respectively) ......... $ 280,694 $ 21,629 $ 24,547 $ 0
Interest.................... 50,381 27,730 48,531 2,654
------------ ----------- ----------- --------
Total investment income... 331,075 49,359 73,078 2,654
------------ ----------- ----------- --------
EXPENSES:
Investment advisory fees.... 203,625 24,982 179,737 743
Recovery of reimbursed
expenses................... 18,717 0 161,389 0
Distribution expenses....... 72 0 1,861 0
Transfer agent fees......... 24,740 9,839 22,359 500
Administration fees......... 9,803 9,246 10,289 694
Accounting fees............. 17,859 10,000 10,565 694
Professional fees........... 16,332 2,084 9,634 312
Custodian fees.............. 57,160 7,453 29,664 175
Directors fees.............. 2,480 2,480 2,480 104
Insurance expense........... 4,894 596 1,367 0
Amortization of
organization costs......... 3,339 3,339 1,549 53
Printing expense............ 7,266 744 6,019 63
Registration expenses....... 19,031 7,128 16,784 1,148
Other expenses.............. 2,480 199 496 10
------------ ----------- ----------- --------
Total expenses............ 387,798 78,090 454,193 4,496
Expenses reimbursed and
waived..................... (833) (30,624) (3,415) (3,011)
------------ ----------- ----------- --------
Net expenses.............. 386,965 47,466 450,778 1,485
------------ ----------- ----------- --------
NET INVESTMENT INCOME
(LOSS)...................... (55,890) 1,893 (377,700) 1,169
------------ ----------- ----------- --------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED
TRANSACTIONS:
Net realized loss on
investments................ (7,170,182) (533,395) (9,027,844) 0
Net realized loss on
foreign currency related
transactions............... (272,772) (2,896) (619,319) (492)
Net change in unrealized
appreciation
(depreciation) on
investments and foreign
currency related
transactions............... (2,555,333) (976,770) 15,742,724 205,507
------------ ----------- ----------- --------
Net realized loss and
unrealized appreciation
(depreciation) on
investments and foreign
currency related
transactions............... (9,998,287) (1,513,061) 6,095,561 205,015
------------ ----------- ----------- --------
NET INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS
............................ $(10,054,177) $(1,511,168) $ 5,717,861 $206,184
============ =========== =========== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATTHEWS PACIFIC MATTHEWS ASIAN CONVERTIBLE
TIGER FUND SECURITIES FUND
------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 28, ENDED FEBRUARY 28, ENDED
1998 AUGUST 31, 1998 AUGUST 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ----------- -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (55,890) $ 109,773 $ 1,893 $ 44,739
Net realized gain
(loss) on investments
and foreign currency
related transactions.. (7,442,954) 376,659 (536,291) 308,176
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currency
related transactions.. (2,555,333) (1,348,057) (976,770) 221,863
------------ ----------- ------------- ------------
Net increase (decrease)
in net assets from
operations............ (10,054,177) (861,625) (1,511,168) 574,778
------------ ----------- ------------- ------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Class I................ 0 (19,824) 0 (44,739)
Class A................ 0 0 N/A N/A
Realized gains on
investments:
Class I................ 0 (69,727) (252,306) (86,133)
Class A................ 0 0 N/A N/A
------------ ----------- ------------- ------------
Net decrease in net
assets resulting from
distributions ........ 0 (89,551) (252,306) (130,872)
------------ ----------- ------------- ------------
CAPITAL SHARE
TRANSACTIONS (NET):
Class I................ 32,733,497 27,450,272 279,205 2,449,726
Class A................ 264,437 0 0 0
------------ ----------- ------------- ------------
Increase in net assets
derived from capital
share transactions.... 32,997,934 27,450,272 279,205 2,449,726
------------ ----------- ------------- ------------
Total increase
(decrease) in net
assets................ 22,943,757 26,499,096 (1,484,269) 2,893,632
NET ASSETS:
Beginning of period.... 43,647,153 17,148,057 6,165,992 3,272,360
------------ ----------- ------------- ------------
End of period
(including
undistributed net
investment income
(loss) of ($219,267),
$109,395, ($1,003),
$0, respectively)..... $ 66,590,910 $43,647,153 $ 4,681,723 $ 6,165,992
============ =========== ============= ============
</TABLE>
* The Fund commenced operations on February 19, 1998.
N/A Not Applicable
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATTHEWS
MATTHEWS KOREA DRAGON CENTURY
FUND CHINA FUND
------------------------- --------------
SIX MONTHS PERIOD
ENDED YEAR ENDED
FEBRUARY 28, ENDED FEBRUARY 28,
1998 AUGUST 31, 1998 *
(UNAUDITED) 1997 (UNAUDITED)
------------ ----------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........ $ (377,700) $ (106,541) $ 1,169
Net realized gain (loss) on
investments and foreign currency
related transactions............... (9,647,163) (449,242) (492)
Net change in unrealized
appreciation (depreciation) on
investments and foreign currency
related transactions............... 15,742,724 (175,375) 205,507
------------ ----------- ----------
Net increase (decrease) in net
assets from operations............. 5,717,861 (731,158) 206,184
------------ ----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Class I............................. 0 0 0
Class A............................. 0 0 0
Realized gains on investments:
Class I............................. 0 0 0
Class A............................. 0 0 0
------------ ----------- ----------
Net decrease in net assets resulting
from distributions................. 0 0 0
------------ ----------- ----------
CAPITAL SHARE TRANSACTIONS (NET):
Class I............................. 69,777,414 17,365,849 3,440,935
Class A............................. 6,991,213 0 0
------------ ----------- ----------
Increase in net assets derived from
capital share transactions......... 76,768,627 17,365,849 3,440,935
------------ ----------- ----------
Total increase (decrease) in net
assets............................. 82,486,488 16,634,691 3,647,119
NET ASSETS:
Beginning of period................. 19,356,021 2,721,330 0
------------ ----------- ----------
End of period (including
undistributed net investment income
(loss) of ($997,019), $0 and $677,
respectively)...................... $101,842,509 $19,356,021 $3,647,119
============ =========== ==========
</TABLE>
* The Fund commenced operations on February 19, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
MATTHEWS PACIFIC
TIGER FUND
------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED ENDED YEAR YEAR PERIOD
FEBRUARY 28, FEBRUARY 28, ENDED ENDED ENDED
1998 /5/ 1998 AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1997 1996 1995 /4/
------------------------------- ---------- ---------- ----------
CLASS A CLASS I CLASS I CLASS I CLASS I
------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 10.84 $ 11.30 $ 10.81 $ 9.77 $ 10.00
-------- -------- ------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. (0.05) (0.05) 0.02 0.01 0.02
Net realized gain
(loss) and unrealized
appreciation
(depreciation) on
investments and
foreign currency...... (3.13) (3.59) 0.50 1.03 (0.23)
-------- -------- ------- -------- -------
Total from investment
operations.......... (3.18) (3.64) 0.52 1.04 (0.21)
-------- -------- ------- -------- -------
LESS DISTRIBUTIONS
FROM:
Net investment income.. 0.00 0.00 (0.01) 0.00 (0.02)
Net realized gains on
investments........... 0.00 0.00 (0.02) 0.00 0.00
-------- -------- ------- -------- -------
Total distributions.. 0.00 0.00 (0.03) 0.00 (0.02)
-------- -------- ------- -------- -------
Net Asset Value, end of
period................. $ 7.66 $ 7.66 $ 11.30 $ 10.81 $ 9.77
======== ======== ======= ======== =======
TOTAL RETURN............ (29.34%)/1/,/3/ (32.21%)/2/ 4.75% 10.64% (2.07%)/2/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $ 296 $ 66,295 $43,647 $ 17,148 $ 1,082
Ratio of expenses to
average net assets
before reimbursement
and waiver of expenses
by Advisor and
Administrator......... 2.09%/1/ 1.90%/1/ 1.97% 4.35% 25.95%/1/
Ratio of expenses to
average net assets
after reimbursement
and waiver of expenses
by Advisor and
Administrator (Note
2).................... 2.09%/1/ 1.90%/1/ 1.90% 1.90% 2.17%/1/
Ratio of net investment
income (loss) to
average net assets
before reimbursement
and waiver of expenses
by Advisor and
Administrator......... (0.47%)/1/ (0.28%)/1/ 0.20% (2.13%) (23.41%)/1/
Ratio of net investment
income (loss) to
average net assets
after reimbursement
and waiver of expenses
by Advisor and
Administrator......... (0.47%)/1/ (0.28%)/1/ 0.27% 0.32% 0.36%/1/
Portfolio turnover..... 34.44%/2/ 34.44%/2/ 70.73% 124.69% 92.53%/2/
Average commission rate
paid.................. $ 0.0033 $ 0.0033 $0.0065 $ 0.0064 N/A
</TABLE>
/1/Annualized
/2/Not annualized
/3/Total return calculation does not reflect sales load.
/4/Class I commenced operations on September 13, 1994.
/5/Class A commenced operations on October 9, 1997.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
MATTHEWS ASIAN CONVERTIBLE
SECURITIES FUND
-------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR PERIOD
FEBRUARY 28, ENDED ENDED ENDED
1998 AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1997 1996 1995 /3/
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, beginning
of period................ $ 11.71 $ 10.53 $ 9.88 $ 10.00
--------- ------- ------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.... 0.00 0.10 0.25 0.23
Net realized gain (loss)
and unrealized
appreciation
(depreciation) on
investments and foreign
currency................ (2.68) 1.42 0.75 (0.14)
--------- ------- ------- -----------
Total from investment
operations............ (2.68) 1.52 1.00 0.09
--------- ------- ------- -----------
LESS DISTRIBUTIONS FROM:
Net investment income.... 0.00 (0.10) (0.26) (0.21)
Net realized gains on
investments............. (0.48) (0.24) (0.09) 0.00
--------- ------- ------- -----------
Total distributions.... (0.48) (0.34) (0.35) (0.21)
--------- ------- ------- -----------
Net Asset Value, end of
period................... $ 8.55 $ 11.71 $ 10.53 $ 9.88
========= ======= ======= ===========
TOTAL RETURN.............. (22.59%)/2/ 14.67% 10.24% 0.89%/2/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's).............. $ 4,682 $ 6,166 $ 3,272 $ 863
Ratio of expenses to
average net assets
before reimbursement and
waiver of expenses by
Advisor and
Administrator........... 3.13%/1/ 4.45% 8.73% 23.11%/1/
Ratio of expenses to
average net assets after
reimbursement and waiver
of expenses by Advisor
and Administrator (Note
2)...................... 1.90%/1/ 1.90% 1.85% 2.26%/1/
Ratio of net investment
loss to average net
assets before
reimbursement and waiver
of expenses by Advisor
and Administrator....... (1.15%)/1/ (1.55%) (4.13%) (18.68%)/1/
Ratio of net investment
income (loss) to average
net assets after
reimbursement and waiver
of expenses by Advisor
and Administrator....... 0.08%/1/ 1.00% 2.75% 2.17%/1/
Portfolio turnover....... 30.62%/2/ 50.20% 88.16% 121.63%/2/
Average commission rate
paid.................... $ 0.0050 $0.0077 $0.0020 N/A
</TABLE>
/1/ Annualized
/2/ Not annualized
/3/ The Fund commenced operations on September 13, 1994.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
MATTHEWS DRAGON
MATTHEWS KOREA CENTURY CHINA
FUND FUND
--------------------------------------------------------------------- ---------------
PERIOD SIX MONTHS PERIOD
ENDED ENDED YEAR YEAR PERIOD ENDED
FEBRUARY 28, FEBRUARY 28, ENDED ENDED ENDED FEBRUARY 28,
1998 /6/ 1998 AUGUST 31, AUGUST 31, AUGUST 31, 1998 /7/
(UNAUDITED) 1997 1996 1995 /5/ (UNAUDITED)
------------------------------- ---------- ---------- ---------- ---------------
CLASS A CLASS I CLASS I CLASS I CLASS I CLASS I
------------ ------------ ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 5.32 $ 6.19 $ 7.23 $ 9.13 $ 10.00 $ 10.00
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss)................ (0.03) (0.03) (0.04)/4/ (0.07) 0.08 0.00
Net realized gain
(loss) and unrealized
appreciation
(depreciation) on
investments and
foreign currency...... (2.27) (3.14) (1.00)/4/ (1.75) (0.95) 0.61
-------- -------- -------- -------- -------- -------
Total from investment
operations.......... (2.30) (3.17) (1.04) (1.82) (0.87) 0.61
-------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS
FROM:
Net investment income.. 0.00 0.00 0.00 0.00 0.00 0.00
Net realized gains on
investments........... 0.00 0.00 0.00 (0.08) 0.00 0.00
-------- -------- -------- -------- -------- -------
Total distributions.. 0.00 0.00 0.00 (0.08) 0.00 0.00
-------- -------- -------- -------- -------- -------
Net Asset Value, end of
period................. $ 3.02 $ 3.02 $ 6.19 $ 7.23 $ 9.13 $ 10.61
======== ======== ======== ======== ======== =======
TOTAL RETURN............ (43.23%)/1/,/3/ (51.21%)/2/ (14.38%) (20.11%) (8.70%)/2/ 6.10%/2/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $ 7,798 $ 94,045 $ 19,356 $ 2,721 $ 504 $ 3,647
Ratio of expenses to
average net assets
before reimbursement
and waiver of expenses
by Advisor and
Administrator......... 2.71% /1/ 2.52% /1/ 2.90% 11.36% 42.87% /1/ 6.05% /1/
Ratio of expenses to
average net assets
after reimbursement
and waiver of expenses
by Advisor and
Administrator (Note
2).................... 2.69% /1/ 2.50% /1/ 2.50% 2.23% 0.24% /1/ 2.00% /1/
Ratio of net investment
loss to average net
assets before
reimbursement and
waiver of expenses by
Advisor and
Administrator......... (2.31%)/1/ (2.12%)/1/ (1.81%) (10.44%) (41.79%)/1/ (2.48%)/1/
Ratio of net investment
income (loss) to
average net assets
after reimbursement
and waiver of expenses
by Advisor and
Administrator......... (2.29%)/1/ (2.10%)/1/ (1.41%) (1.31%) 0.84% /1/ 1.57% /1/
Portfolio turnover..... 36.19% /2/ 36.19%/2/ 112.68% 139.71% 42.16% /2/ 0.00% /2/
Average commission rate
paid.................. $ 0.0491 $ 0.0491 $ 0.0911 $ 0.1397 N/A $0.0022
</TABLE>
/1/Annualized.
/2/Not annualized.
/3/Total return calculation does not reflect sales load.
/4/Calculated using the average shares method.
/5/The Korea Fund Class I commenced operations on January 3, 1995.
/6/The Korea Fund Class A commenced operations on October 9, 1997.
/7/The Dragon Century China Fund Class I commenced operations on February
19, 1998.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Matthews International Funds (the "Company") is an open-end investment
management company registered under the Investment Company Act of 1940, as
amended, as a series company. The Company currently consists of four separate
investment series (each a "Fund" and collectively, the "Funds"): Matthews
Pacific Tiger Fund, Matthews Asian Convertible Securities Fund, Matthews Korea
Fund and Matthews Dragon Century China Fund. The Matthews Pacific Tiger Fund,
Matthews Korea Fund and Matthews Dragon Century China Fund currently offer two
classes of shares: Class I shares and Class A shares. The classes offered have
different sales charges and other expenses which may affect performance. At
February 28, 1998, the Matthews Dragon Century China Fund Class A shares had no
assets. The Matthews Pacific Tiger Fund, Matthews Korea Fund and Matthews
Dragon Century China Fund seek to maximize capital appreciation by investing,
under normal circumstances, at least 65% of their total assets in equity
securities of Pacific Tiger economies, South Korean companies and Chinese
companies, respectively. Pacific Tiger economies include Hong Kong, Singapore,
South Korea, Taiwan, Indonesia, Malaysia, the Philippines, Thailand and China.
The Matthews Asian Convertible Securities Fund seeks capital appreciation and
current income by investing, under normal circumstances, at least 65% of its
total assets in convertible securities of Asian economies. Asian economies
include Hong Kong, Japan, Singapore, South Korea, Taiwan, Indonesia, Malaysia,
the Philippines, Thailand, China and India. The following is a summary of
significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
A. SECURITY VALUATION: Securities listed on any national securities exchange
are valued at their last sale price on the exchange where the securities are
principally traded or, if there has been no sale on that date, at the mean
between the last reported bid and asked prices. Securities traded over-the-
counter are priced at the mean of the last bid and asked prices. All other
securities are valued through valuations obtained from a commercial pricing
service or at the most recent mean of the bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees.
The books and records of the Funds are maintained in U.S. dollars.
Transactions denominated in foreign currencies are recorded at the current
prevailing exchange rates. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollars at the current exchange rate.
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 do not isolate that portion of gains and
losses on investments in equity securities which is due to changes in the
foreign exchange rate from that which is due to changes in market prices of
equity securities. International dollar bonds are issued offshore, pay
interest and principal in U.S. dollars, and are denominated in U.S. dollars.
Portfolio securities traded on a foreign exchange are generally valued at the
respective current prevailing exchange rates. The securities' values are
translated into U.S. dollars using these rates. If subsequent to the time a
rate has been established and it has been determined to have materially
changed, the fair value of those securities, (considering the changing
conditions) will be determined by (or under the direction of) the Funds'
Board of Trustees.
B. RISKS ASSOCIATED WITH FOREIGN SECURITIES: Investments by the Funds in the
securities of foreign issuers may involve investment risks different from
those of U.S. issuers including possible political or economic instability of
the country of the issuer, the difficulty of predicting international trade
patterns, the possibility of currency exchange controls, the possible
imposition of foreign withholding tax on the interest income payable on such
instruments, the possible establishment of foreign controls, 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. Foreign securities may also be subject to
greater fluctuations in price than securities of domestic corporations or the
U.S. Government.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. FEDERAL INCOME TAXES: It is the policy of the Funds to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to
regulated investment companies and to distribute substantially all of its
taxable income to its shareholders. The Funds have met the requirements of
the Code applicable to regulated investment companies for the period ended
February 28, 1998. Therefore, no Federal income tax provision is required.
D. DETERMINATION OF GAINS OR LOSSES ON SALES OF SECURITIES: Gains or losses
on the sale of securities are determined on the identified cost basis.
E. ORGANIZATION COSTS: Organization costs are being amortized on a straight-
line basis over five years from each Fund's respective commencement of
operations. In the event that any of the initial shares are redeemed during
the period of amortization of the Funds' organization costs, the redemption
proceeds will be reduced by any such unamortized organization costs in the
same proportion as the number of initial shares being redeemed bears to the
number of those shares outstanding at the time of redemption.
F. DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of Matthews Asian
Convertible Securities Fund to distribute net investment income on a semi-
annual basis and capital gains, if any, annually. Matthews Pacific Tiger
Fund, Matthews Korea Fund and Matthews Dragon Century China Fund distribute
net investment income and capital gains, if any, annually. Distributions to
shareholders are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Net investment
losses may not be utilized to offset net investment income in future periods
for tax purposes.
G. USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles 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.
H. OTHER: Securities transactions are accounted for on the date the
securities are purchased or sold. Interest income is recorded on the accrual
basis and dividend income on the ex-dividend date.
I. CAPITAL SHARE TRANSACTIONS: Each Fund is authorized to issue an unlimited
number of shares of beneficial interest with a par value of $0.001 per share.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
MATTHEWS
PACIFIC TIGER FUND
----------------------------------------------------------------------
CLASS I CLASS A
-------------------------------------------------- ------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 FEBRUARY 28, 1998
------------------------ ------------------------ ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 8,287,690 $ 61,975,194 3,849,789 $ 46,641,829 38,600 $ 264,437
Shares issued through
reinvestment of divi-
dends.................. 0 0 6,471 82,965 0 0
Shares redeemed......... (3,498,729) (29,241,697) (1,581,884) (19,274,522) (0) (0)
---------- ------------ ---------- ------------ ------- ---------
Net increase............ 4,788,961 $ 32,733,497 2,274,376 $ 27,450,272 38,600 $ 264,437
========== ============ ========== ============ ======= =========
<CAPTION>
MATTHEWS
ASIAN CONVERTIBLE
SECURITIES FUND
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 322,241 $ 2,924,611 348,345 $ 3,949,981
Shares issued through
reinvestment of divi-
dends.................. 25,588 204,964 8,922 99,805
Shares redeemed......... (327,003) (2,850,370) (141,726) (1,600,060)
---------- ------------ ---------- ------------
Net increase............ 20,826 $ 279,205 215,541 $ 2,449,726
========== ============ ========== ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATTHEWS
KOREA FUND
---------------------------------------------------------------------------
CLASS I CLASS A
--------------------------------------------------- ----------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 FEBRUARY 28, 1998
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. 47,423,642 $126,867,275 4,805,699 $ 30,420,501 2,942,757 $ 8,009,591
Shares issued through
reinvestment of divi-
dends.................. 0 0 0 0 0 0
Shares redeemed......... (19,416,430) (57,089,861) (2,056,201) (13,054,652) (360,080) (1,018,378)
----------- ------------ ---------- ------------ --------- -----------
Net increase............ 28,007,212 $ 69,777,414 2,749,498 $ 17,365,849 2,582,677 $ 6,991,213
=========== ============ ========== ============ ========= ===========
<CAPTION>
MATTHEWS
DRAGON CENTURY
CHINA FUND
---------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 347,987 $ 3,482,167 0 $ 0
Shares issued through
reinvestment of divi-
dends.................. 0 0 0 0
Shares redeemed......... (4,127) (41,232) (0) (0)
----------- ------------ ---------- ------------
Net increase............ 343,860 $ 3,440,935 0 $ 0
=========== ============ ========== ============
</TABLE>
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Matthews International Capital Management (the "Advisor"), a registered
investment advisor, provides the Funds with investment management services. As
compensation for these services, the Advisor charges the Funds a monthly fee of
1/12 of 1% on each Fund's respective average daily net assets. Certain officers
and trustees of the Funds are also officers and directors of the Advisor. All
officers serve without direct compensation from the Funds. Investment advisory
fees and other transactions with affiliates, for the period ended February 28,
1998, are as follows:
<TABLE>
<CAPTION>
EXPENSES
INVESTMENT VOLUNTARY WAIVED AND
ADVISORY EXPENSE ADVISORY REIMBURSED DUE FROM DAEWOO
FEE RATE LIMITATION* FEES BY ADVISOR ADVISOR SECURITIES
---------- ----------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Matthews Pacific Tiger
Fund................... 1.00% 1.90% $203,625 $ 833 $ 0 --
Matthews Asian Convert-
ible Securities Fund... 1.00 1.90 24,982 30,624 3,487 --
Matthews Korea Fund..... 1.00 2.50 179,737 3,415 0 $81,604+
Matthews Dragon Century
China Fund............. 1.00 2.00 743 3,011 0 --
</TABLE>
+ Daewoo Securities is the affiliated broker for the Fund. This amount is the
affiliated brokerage commissions paid.
* For Funds offering Class A shares, the voluntary expense limitation would
include an additional 0.25% for Class A Distributor fees.
The investment advisory agreements provide that any reductions made by the
Advisor in its fees are subject to reimbursement by the Funds within the
following three years provided that Funds are able to effect such reimbursement
and remain in compliance with applicable expense limitations.
<PAGE>
- --------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL FUNDS - NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. DISTRIBUTOR FEES AND CLASS SPECIFIC EXPENSES
FPS Broker Services, Inc. (the "Underwriter") serves as the Funds' Distributor
pursuant to an Underwriting Agreement. Pursuant to Rule 12b-1 adopted by the
Securities and Exchange Commission under the Act, the Pacific Tiger Fund Class
A, the Korea Fund Class A and the Dragon Century China Fund Class A, have
adopted a Plan of Distribution (the "Plan"). The Plan permits the participating
Funds to pay certain expenses associated with the distribution of their shares.
Under the Plan, each Fund offering Class A shares may pay actual expenses not
exceeding, on an annual basis, 0.25% of each participating Fund's Class A
average daily net assets. The Pacific Tiger Fund Class I, the Asian Convertible
Securities Fund, the Korea Fund Class I and the Dragon Century China Fund Class
I do not have a distribution plan.
For the period ended February 28, 1998, the class specific expenses were as
follows:
<TABLE>
<CAPTION>
MATTHEWS
MATTHEWS PACIFIC MATTHEWS DRAGON CENTURY
TIGER FUND KOREA FUND CHINA FUND
----------------- --------------- ---------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Transfer Agent fees.......... $ 22,677 $ 2,063 $20,110 $2,249 $500 $ 0
Registration expenses........ N/A N/A 14,786 1,998 N/A N/A
Printing expenses............ 5,456 1,810 2,380 3,639 63 0
</TABLE>
4. INVESTMENT TRANSACTIONS
Investment transactions for the period ended February 28, 1998, excluding
temporary short-term investments, were as follows:
<TABLE>
<CAPTION>
PURCHASES PROCEEDS FROM SALES
----------- -------------------
<S> <C> <C>
Matthews Pacific Tiger Fund.................... $47,109,856 $14,163,050
Matthews Asian Convertible Securities Fund..... 1,465,947 1,766,620
Matthews Korea Fund............................ 88,771,203 14,159,874
Matthews Dragon Century China Fund............. 2,876,104 0
</TABLE>
The Funds invest excess cash in interest bearing deposits at The Bank of New
York.
5. CAPITAL LOSS CARRYOVER
At August 31, 1997, the Matthews Korea Fund had a capital loss carryover of
$78,721, which expires in 2004, to offset possible future capital gains of the
Fund.
<PAGE>
- --------------------------------------------------------------------------------
Directors and Officers [ARTWORK APPEARS HERE]
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
G. Paul Matthews
John H. Dracott
Richard K. Lyons
Robert K. Connolly
Dong Wook Park
David FitzWilliam-Lay
Norman J. Berryessa
OFFICERS
G. Paul Matthews
John H. Dracott
Brian B. Stableford
INVESTMENT ADVISOR
Matthews International Capital Management, LLC
655 Montgomery Street, Suite 1438
San Francisco, CA 94111
(800) 789-ASIA
KOREAN ADVISOR
Daewoo Capital Management Co., Ltd.
34-3, Yoido-dong, Yungdungpo-gu
Seoul, 150-010 Korea
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406
(800) 892-0382
SHAREHOLDER SERVICES
First Data Investor Services Group, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
(800) 892-0382
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
AUDITORS
Ernst & Young LLP
555 California Street, Suite 1700
San Francisco, CA 94104
For Additional Information about the
Matthews International Funds call:
(800) 789.ASIA
This report is submitted for general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
<PAGE>
[ARTWORK APPEARS HERE]
<PAGE>
MATTHEWS
INTERNATIONAL FUNDS
INVESTING IN THE DRAGON CENTURY...
MATTHEWS PACIFIC TIGER FUND
Seeking long-term growth through a diversified portfolio of Asian Tiger
companies. With an emphasis on research intensive, "bottom-up" stock
selection, the portfolio focuses on quality companies with superior earnings
growth and below-average market valuations.
MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND
Introducing a new asset class, the Fund seeks to participate in the Tiger
equity markets with the reduced volatility historically found in convertible
bonds.
MATTHEWS KOREA FUND
A unique, open-ended, single-country fund allowing focused participation in
the world's 11th largest economy.
MATTHEWS DRAGON CENTURY CHINA FUND
This single-country fund allows investors to participate in one of the
fastest growing economies in the world. The fund seeks to identify quality
companies that are well-positioned to participate in China's emergence into
the global marketplace.
[GRAPHIC OF DRAGON APPEARS HERE]
MATTHEWS PACIFIC TIGER FUND
MATTHEWS ASIAN CONVERTIBLE SECURITIES FUND
MATTHEWS KOREA FUND
MATTHEWS DRAGON CENTURY CHINA FUND
MATTHEWS INTERNATIONAL FUNDS
655 Montgomery Street, Suite 1438
San Francisco, CA 94111
1.800.789.ASIA (2742)
www.micfunds.com
e-mail: [email protected]
Distributed by FPS Broker Services, Inc.,
3200 Horizon Drive, King of Prussia, Pennsylvania 19406
SEMI-ANNUAL REPORT
