• The anticipated 2022 capital gains distributions for the Matthews Asia Funds are now available. For certain Funds, the distributions may be larger than prior years. 

• The capital gains distributions for some Funds this year are impacted by the inclusion of “spill back” distributions whereby ordinary income and/or capital gains from 2021 have distributed in 2022 as opposed to in 2021.
  • In order to qualify as a regulated investment company under the Internal Revenue Code (IRC), mutual funds must distribute substantially all realized capital gains through October 31st each year (to avoid the imposition of a Federal [income and] excise tax[es]). As a result, funds with a fiscal year ending December 31st that have realized capital gains from November 1st – December 31st may pay out this additional capital gain as additional or “spillback” distributions the following year

• Spillback distributions are common practice for mutual funds to mitigate against potential unfavorable tax implications if required distribution levels of a fund are not met and are permissible under the IRC

• Please note that spillback distributions and all other fund distributions (ordinary income and capital gain) are included in the total return experienced by a fund regardless of whether the distribution is reinvested or paid in cash

• Contributing factors to the capital gains distributions this year for the Funds include the recent periods of market volatility, particularly in 2021 where a Fund’s portfolio manager may have chosen to reposition the portfolio to take advantage of attractive valuations in some companies

• Additionally, to meet shareholder redemptions during the year, some Funds sold securities that had been in their portfolios for a long period of time. The sale of such securities that appreciated significantly over time resulted in the Funds having to realize taxable gains.

• The vast majority of the gains passed through this year were long term in nature, and thus are taxed at lower marginal rates, as opposed to short-term rates.

• As you may know, the Funds are designed for investors with long-term horizons, and seek to invest in companies that will benefit from the long-term evolution of Asia. The Funds are not managed for tax efficiency on an individual investor basis.

Do you take tax considerations into account?

• The Funds are not managed for tax However, the portfolio managers do consider a variety of factors, including potential tax implications when making decisions, but each Fund’s primary decision‐making construct is to meet its investment objective [as stated in the relevant prospectus of each Fund].

Portfolio Turnover – how can it potentially impact capital gains?

• Generally speaking, a Fund that has less turnover may experience less capital gains while a Fund with higher portfolio turnover may experience higher capital gains.

Important Information

This material is provided for informational purposes only and should not be considered tax, accounting, or legal advice. Please consult your tax or legal adviser for guidance where needed.

You should carefully consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds before making an investment decision. A prospectus or summary prospectus with this and other information about the Funds may be obtained by visiting matthewsasia.com. Please read the prospectus carefully before investing as it explains the risks associated with investing in international and emerging markets.

Past performance is no guarantee of future results. The value of an investment in the Fund can go down as well as up. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.

Matthews International Capital Management, LLC is the advisor to the Matthews Asia Funds.

Matthews Asia is the brand for Matthews International Capital Management, LLC and its direct and indirect subsidiaries.

Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC

Matthews Asia Funds are distributed in Latin America by Picton S.A.