affect China’s economy and
Chinese securities issuers. In addition, the current political climate has intensified concerns about trade tariffs or trade disputes
with China’s major trading partners, including a potential trade war between the U.S. and China. These consequences may trigger a significant reduction in international trade, shortages or
oversupply of certain manufactured goods, substantial price increases or decreases of goods, inflationary pressures, and possible failure of individual companies and/or large segments of the
foreign export industry in China with a potentially negative impact on the
Fund’s investments. As demonstrated by Hong Kong protests in recent years over political, economic, and legal freedoms,
and the Chinese government’s response to them, considerable political uncertainty
continues to exist within Hong Kong. Due to the interconnected nature of the Hong Kong and Chinese economies, this instability in Hong Kong may cause uncertainty in the Hong Kong and Chinese markets. If China
were to exert its authority so as to alter the economic, political or legal structures or the existing social policy of Hong Kong, investor and business confidence in Hong Kong could be negatively
affected and have an adverse effect on the Fund’s investments.
Risks Associated with Variable Interest Entities: The Fund may invest in certain operating companies in China through legal structures known as variable interest
entities (“VIEs”). In China, ownership of companies in certain sectors by foreign individuals and entities (including U.S. persons and entities such as the Funds) is prohibited. In order to
facilitate foreign investment in these businesses, many Chinese companies have created VIEs, through which foreign investors hold stock in a shell company that has entered into service and other
contracts with the China-based operating company, allowing U.S. investors to obtain
economic exposure to the China-based company through contractual means rather than
through formal equity ownership. VIEs are a longstanding industry practice and well known to officials and regulators in China; however, VIEs are not formally recognized under Chinese law.
Recently, the government of China placed restrictions on China-based companies raising
capital offshore, including through VIE structures. Investors face uncertainty about
future actions by the government of China that could significantly affect an operating company’s financial performance and the enforceability of the shell company’s contractual arrangements. Under
extreme circumstances, China might prohibit the existence of VIEs, or sever their ability to transmit economic and governance rights to foreign investors; if so, the market value of the
Fund’s associated portfolio holdings would likely decline significantly, which could result in substantial investment losses.
U.S. Trade Policy Risk: The Trump administration recently enacted and proposed to enact significant new tariffs on imports
from certain countries. Additionally, President Trump has directed various federal
agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There
continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the
perception that any of them could occur, may have a material adverse effect on global
economic conditions and the stability of global financial markets, and may significantly
reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict a portfolio
company’s access to suppliers or customers and have a material adverse effect on its business, financial condition or operations, which in turn could negatively
impact the Fund.
Growth Stock Risk: Growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company’s
growth potential. Growth stocks may go in and out of favor over time and may perform
differently than the market as a whole.
Equity Securities Risk: Equity securities may include common stock, preferred stock or other securities representing an
ownership interest or the right to acquire an ownership interest in an issuer. Equity
risk is the risk that stocks and other equity securities generally fluctuate in value more than bonds and may decline in value over short or extended periods. The value of stocks and other equity securities may
be affected by changes in an issuer’s financial condition, factors that affect a particular industry or industries, or as a result of changes in overall market, economic and political conditions
that are not specifically related to a company or industry.
Preferred Stock Risk: Preferred stock normally pays dividends at a specified rate and has precedence over common stock in
the event the issuer is liquidated or declares bankruptcy. However, in the event a
company is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock. If interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of such stocks to decline.
Depositary Receipts Risk:
Although depositary receipts have risks similar to the securities that they represent,
they may also involve higher expenses and may trade at a discount (or premium) to the
underlying security. In addition, depositary receipts may not pass through voting and
other shareholder rights, and may be less liquid than the underlying securities listed on an exchange.
Volatility Risk: The smaller size and lower levels of liquidity in emerging markets, as well as other factors, may result in changes in the prices of Asian securities
that are more volatile than those of companies in more developed regions. This volatility can cause the price of the Fund’s shares to go up or down dramatically. Because of this volatility, this
Fund is better suited for long-term investors. If the value of the Fund’s investments declines, the net asset value of the Fund will decline and investors may lose some or all of the value of their
investments.
Active Management Risk: The Fund is actively managed by Matthews. There is the risk that Matthews may select securities that underperform the relevant stock
market(s), the Fund’s benchmark index or other funds with similar investment
objectives and investment strategies.
Sector Concentration Risk: To the extent that the Fund emphasizes, from time to time, investments in a particular sector, the Fund will be subject to a greater degree to the risks particular to that sector, including the
sector(s) described below. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single sector. By focusing its investments in a particular
sector, the Fund may face more risks than if it were diversified broadly over numerous
sectors.
—Consumer Discretionary Sector Risk: As of December 31, 2024, 28% of the Fund’s assets were invested in the consumer discretionary sector. The success of
consumer product manufacturers and retailers is tied closely to the performance of the
overall local and international
