risk than an investment in a fund that
does not concentrate its investments in a single or small number of countries because
these securities may be more sensitive to adverse social, political, economic or
regulatory developments affecting that country or countries. As a result, events affecting a single or small number of countries may have a significant and potentially adverse impact on the Fund’s investments, and
the Fund’s performance may be more volatile than that of funds that invest globally. The Fund has concentrated or may concentrate its investments in China, Taiwan and India.
Risks Associated with China and Hong Kong: The Chinese government exercises significant control over China’s economy through its industrial policies,
monetary policy, management of currency exchange rates, and management of the payment of
foreign currency-denominated obligations. Changes in these policies could adversely
impact affected industries or companies in China. As its consumer class continues to grow, China’s domestically oriented industries may be especially sensitive to changes in government policy and
investment cycles. The Chinese government has been accused of state-sponsored
cyberattacks against foreign governments and companies, and responses to such activity,
including sanctions, tariffs or cyberattacks on the Chinese government or Chinese companies, may negatively
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 India:
Government actions, bureaucratic obstacles and inconsistent economic reform within the
Indian government have had a significant effect on the Indian economy and could adversely
affect market conditions, economic growth and the profitability of private enterprises in India. Global factors and foreign actions may inhibit the flow of foreign capital on which India is dependent to sustain its
growth. Large portions of many Indian companies remain in the hands of their founders
(including members of their families). Corporate governance standards of
family-controlled companies may be weaker and less transparent, which increases the potential for loss and unequal treatment of investors. India experiences many of the risks associated with developing economies,
including relatively low levels of liquidity, which may result in extreme volatility in the
prices of Indian securities.
Religious, cultural and military disputes persist in India and between India and Pakistan (as well as
sectarian groups within each country). Both India and Pakistan have tested nuclear arms,
and the threat of deployment of such weapons could hinder development of the Indian
economy, and escalating tensions could impact the broader region, including China.
Indian securities may be subject to a
capital gains tax in India on gains realized upon disposition of securities. The Fund accrues for this potential expense, which reduces its net asset values. For further information regarding this
tax, please see page 110.
Risks Associated with Taiwan. The political reunification of China and Taiwan, over which China continues to claim sovereignty, is a highly complex issue and is
unlikely to be settled in the near future. Although the relationship between China and
Taiwan has been improving, there is the potential for future political or economic
disturbances that may have an adverse impact on the values of investments in either China or Taiwan, or make investments in China and Taiwan impractical or impossible. Any escalation of hostility between
China and Taiwan would have a significant adverse impact on the value of investments in both countries and the region, which could negatively affect the value and liquidity of the Fund’s
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.
—Information Technology Sector Risk: As of December 31, 2025, 39% of the Fund’s assets were invested in the information technology sector. Information
technology companies may be significantly affected by aggressive pricing as a result of
intense competition and by rapid product obsolescence due to rapid development of
technological innovations and frequent new product introduction. Other factors, such as
short product cycle, possible loss or impairment of intellectual property rights, and
changes in government regulations, may also adversely impact information technology
companies.
—Consumer Discretionary
Sector Risk: As of December 31, 2025, 20% 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
economies, interest rates, competition and consumer confidence. Success of companies in
the consumer discretionary sector depends heavily on disposable household income and
consumer spending. Changes in demographics and consumer tastes can also affect the demand
for, and success of, consumer products and services in the marketplace.
Non-Diversification Risk:
The Fund may be more susceptible to any single economic, political or regulatory event
than a diversified fund because a higher percentage of the Fund’s assets may be
invested in the securities of a limited number of issuers.
Cybersecurity Risk: With the increased use of technologies such as the internet to conduct business, the Fund is
susceptible to operational, information security, and related risks. Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its NAV, impediments to
trading, the inability of shareholders to
