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Seeking Dividends from Asia’s Growth
Robert Horrocks, PhD Chief Investment Officer December 2012
The views and information discussed in this presentation are subject to change and may not reflect the presenter’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Please see important disclosures at the end of this presentation. Performance results and valuations presented are in U.S. dollars. Performance quoted represents past performance and is no guarantee of future results. Individual account performance will vary.
Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
©2012 Matthews International Capital Management, LLC GL_PT010
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© 2012 Matthews International Capital Management, LLC GL_PT010
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© 2012 Matthews International Capital Management, LLC GL_PT010
A Stock for Its Dividends
“Even so spoke the old farmer to his son: A cow for her milk, a hen for her
eggs, and a stock, by heck, for her dividends.”
John Burr Williams The Theory of Investment Value (1938)
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© 2012 Matthews International Capital Management, LLC GL_PT010
Asia Offers Rare Combination of Income and Growth
Dividends serve as a means of realizing tangible value from a long-term investment
Dividend-paying companies tend to exhibit lower volatility
Dividends help cut out short-term noise and focus on long-term sustainable growth
Dividends provide a signal that the interests of minority shareholders are valued by management
Benefits of dividend-focused investing
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© 2012 Matthews International Capital Management, LLC GL_PT010
Dividends—How Asia Compares to the U.S.
$43
$254 $243
Size of Dividend Pool (US$B)*
3.3%
3.0%
2.1%
Dividend Yield (as of 09/30/2012)**
16% 16%
7%
Dividend Growth (2002-2011)***
*Index members as of December 2010; Size of dividend pool as of December 2011 **Dividend yield as of 9/30/2012, calculated by JP Morgan using I/B/E/S estimates for current Index constituents ***Dividend growth for MSCI China is derived using index members as of 12/31/05 for improved index representation; for reference S&P 500 and MSCI Asia Pacific Index members grew dividends at 4% CAGR and 10% CAGR, respectively, from 2005-2011. Sources: Factset, MSCI, I/B/E/S, JPMorgan, S&P, Bloomberg All performance quoted represents past performance and is no guarantee of future results. Past yields are no guarantee of future yields. It is not possible to invest directly in an index.
China (MSCI China Index)
Asia (MSCI AC Asia Pacific Index)
U.S. (S&P 500 Index)
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© 2012 Matthews International Capital Management, LLC GL_PT010
Dividend Yield—Focused Strategies Historical Performance Total return of strategies based on dividend yield and earnings
0
200
400
600
800
1000
05/01/96 05/01/01 05/01/06 05/01/11
Lowest Dividend Yield Quintile Highest Dividend Yield Quintile
Second Highest EPS Growth Quintile Highest EPS Growth Quintile
For periods 5/1/96 – 5/1/11.The universe used is the S&P Broad Market Index for Asia Pacific ex Japan. For Dividend Yield and EPS growth factors, companies are ranked monthly by percentile and divided into quintiles. All performance quoted represents past performance and is no guarantee of future results. Past yields are no guarantee of future yields. It is not possible to invest directly in an index.
Source: Citi
ABSOLUTE RETURN (INDEXED)
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© 2012 Matthews International Capital Management, LLC GL_PT010
Why Dividends Matter The impact of dividends on long-term returns
In US$. For periods 12/31/87–9/30/12. Past performance is not indicative of future results. The MSCI All Country Asia Pacific Index is a free float-adjusted, market capitalization-weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. It is not possible to invest directly in an index.
Sources: MICM, MSCI
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
DIVIDENDS REINVESTED
PRICE INDEX
GROWTH OF $10,000 FOR THE MSCI ALL COUNTRY ASIA PACIFIC INDEX
12
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© 2012 Matthews International Capital Management, LLC GL_PT010
Dampening Downside Volatility
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management, LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews Asia Dividend Fund, which commenced operations on April 30, 2010. For performance information for the Matthews Asia Dividend Fund, please refer to slide 18 or visit matthewsasia.com. Performance results, statistics, portfolio characteristics, and holdings information for the Matthews Asia Dividend Fund may vary from representative account for the strategy. Source: Zephyr
DRAWDOWN November 2006 – September 2012
Matthews Asia Dividend Strategy Universe Composite MAPIX Peer Universe S&P 500 MSCI AC Asia Pacific Bloomberg US EQ Income Index
DrawdownNov ember 2006 - September 2012
-60%
-50%
-40%
-30%
-20%
-10%
0%
Oct 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Sep 2012
Matthews Asia DividendUniverse Composite: MAPIX Peer UniverseBloomberg US EQ Income IndexS&P 500MSCI AC ASIA PACIFIC
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© 2012 Matthews International Capital Management, LLC GL_PT010
Focus on What Matters: Signal vs. Noise
To be included, MSCI AC Asia Pacific Index member companies (as of 12/30/11) must have had (i) an average operating income during the previous three fiscal years of a minimum of US$50 million and (ii) a full 16-year financial history.
Sources: Factset, MICM
0
50
100
150
200
250
300
350
400
450
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
TOTAL EARNINGS
TOTAL DIVIDENDS
EARNINGS AND DIVIDENDS OF COMPANIES IN ASIA PACIFIC*
US$B
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© 2012 Matthews International Capital Management, LLC GL_PT010
The Value of the Pitstop Why dividends are so important
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© 2012 Matthews International Capital Management, LLC GL_PT010
Dividends—Signal of Better Corporate Governance
Important tool to overcome asymmetry in information
Help align minority with majority shareholders
Often signal of better financial reporting
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© 2012 Matthews International Capital Management, LLC GL_PT010
Higher Payout Companies are Generally Better Stewards of Shareholder Capital
Return on invested capital—MSCI All Country Asia Pacific Index
Note: Based on constituents of the MSCI AC Asia Pacific Index; Index constituents are updated each year. Quartiles adjust each year based on dividend payout ratio; All metrics are trailing 3 year; Outliers beyond 4 standard deviations of the mean are excluded.
Source: FactSet Research Systems
%
2%
4%
6%
8%
10%
12%
14%
16%
2004 2005 2006 2007 2008 2009 2010 2011
Dividend Payout Quartile 1 (highest payout ratio) Dividend Payout Quartile 4 (lowest payout ratio)
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© 2012 Matthews International Capital Management, LLC GL_PT010
Matthews Asia Dividend Balances Dividend Yield and Growth
Dividend yield and dividend growth data depicted are for all securities held in the Matthews Asia Dividend Fund. Each point represents a plotting of the portfolio company’s trailing dividend yield as of 09/30/12 and its estimated 3-year annual dividend growth rate. The 3-year annual dividend growth rate estimates were calculated as of 09/30/12 using MICM estimates and are forward looking. Color depiction represents a portfolio company’s dividend payout ratio based on company dividend policy, if available. Otherwise 5-year average payout ratio is utilized (or longest available for companies with less than 5-year history) adjusted to exclude extraordinary or temporary distributions. Estimated 3-year dividend growth was calculated as of 09/30/12 using data from FactSet and Bloomberg. There is no guarantee that future dividend growth will be achieved. There is no guarantee that the composition of the portfolio will remain unchanged or that the companies in the portfolio will achieve their forecasted dividend growth rate, maintain or grow their dividend pay-out ratio, or pay dividends. Past yields are no guarantee of future yields. Sources: FactSet Research Systems, Bloomberg, MICM.
Bubble sizes are in proportion to the portfolio weight of individual positions as of 09/30/12.
DIVIDEND YIELD VS. DIVIDEND GROWTH
Dividend Yield
3 Y
r D
ivid
end
Gro
wth
-10%
-5%
0%
5%
10%
15%
20%
25%
0% 2% 4% 6% 8% 10% 12%
PAYOUT RATIO
Red 80+%
Amber 50-80%
Blue 30-50%
Green 0-30%
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© 2012 Matthews International Capital Management, LLC GL_PT010
FUND FACTS
Inception Date Fund April 30, 2010 Strategy October 31, 2006
Cap Range All Cap
Number of Holdings 50 to 80
Turnover Range 20% to 50%
Benchmark MSCI All Country Asia Pacific Index
Assets (as of September 30, 2012) Fund $133.9 million Strategy $3.2 billion
Investment Objective
Total return with an emphasis on providing current income.
Strategy
Seeks to provide a level of income that is higher than the yield generally available in Asia equity markets over the long term. Invests primarily in companies that are paying high dividends relative to their current share price, or are well positioned to do so in the future.
Fund Profile | Asia Dividend
Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund.
JESPER MADSEN, CFA YU ZHANG, CFA
Co-Manager Lead Manager
Ratings
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© 2012 Matthews International Capital Management, LLC GL_PT010
Portfolio Characteristics | Asia Dividend Fund As of September 30, 2012
Benchmark: MSCI AC Asia Pacific Index
The information contained in this presentation does not, in any way, constitute investment advice. Portfolio characteristics for the Fund may vary from time to time from what is shown.
Source: FactSet Research Systems, MICM
COUNTRY ALLOCATION (%)
Fund Benchmark Difference
China/Hong Kong 30.2 16.6 13.6
Japan 23.3 36.2 -12.9
Singapore 12.7 3.5 9.2
Australia 7.2 16.1 -8.9
Taiwan 7.2 7.1 0.1
Thailand 5.7 1.4 4.3
South Korea 3.4 9.9 -6.5
Indonesia 3.0 1.7 1.3
Philippines 1.5 0.6 0.9
India 1.2 4.4 -3.2
Malaysia 0.0 2.3 -2.3
New Zealand 0.0 0.2 -0.2
Cash and Other 4.6 0.0 4.6
SECTOR ALLOCATION (%)
Fund Benchmark Difference
Financials 23.3 29.4 -6.1
Consumer Staples 18.3 6.7 11.6
Consumer Discretionary 12.2 11.8 0.4
Industrials 10.9 12.6 -1.7
Telecom Services 8.8 5.3 3.5
Utilities 5.9 3.1 2.8
Health Care 5.3 3.8 1.5
Energy 5.0 5.0 0.0
Information Technology 3.8 12.9 -9.1
Materials 1.9 9.4 -7.5
Cash and Other 4.6 0.0 4.6
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© 2012 Matthews International Capital Management, LLC GL_PT010
Portfolio Characteristics | Asia Dividend Fund As of September 30, 2012
**The Dividend Yield (trailing) for the portfolio is the weighted average sum of the dividend paid per share during the last 12 months divided by the current price. The annualized dividend yield for the Fund is for the equity-only portion of the portfolio. Please note that this is based on gross portfolio holdings and does not reflect the actual yield an investor in the Fund would receive. Past yields are no guarantee of future yields.
MARKET CAP EXPOSURE (%)
Fund Benchmark Difference
Large Cap ($5B+) 54.4 84.5 -30.1
Mid Cap ($1B–$5B) 23.6 15.3 8.3
Small Cap (<$1B) 17.4 0.2 17.2
Cash and Other 4.6 0.0 4.6
PORTFOLIO CHARACTERISTICS
Fund
Weighted Average Market Cap $26.7 billion
P/E using FY1 Estimates* 11.4x
P/E using FY2 Estimates* 10.5x
Dividend Yield** 3.94%
Benchmark: MSCI AC Asia Pacific Index *The price to earnings ratio (P/E) estimates are calculated by dividing the market price per share by the expected earnings per share for a 12 month period (FY1) and 24 month period (FY2). P/E estimates were calculated as of 9/30/12 using data from Factset and are forward looking. There is no guarantee that P/E estimates will be achieved. There is no guarantee that the composition of the portfolio will remain unchanged, or that the companies in the portfolio will achieve their forecasted P/E ratios.
The information contained in this presentation does not, in any way, constitute Investment advice. Portfolio characteristics for the Fund may vary from time to time from what is shown.
Sources: FactSet Research Systems, Bloomberg, MICM
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© 2012 Matthews International Capital Management, LLC GL_PT010
Strategy Performance
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management, LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews Asia Dividend Fund, which commenced operations on April 30, 2010. For performance information for the Matthews Asia Dividend Fund, please refer to slide 18 or visit matthewsasia.com. Performance results, statistics, portfolio characteristics, and holdings information for the Matthews Asia Dividend Fund may vary from representative account for the strategy. Annualized summary statistical data for the Matthews Asia Dividend Fund are not available. Source: Zephyr
PERFORMANCE November 2006 – September 2012 (Single Computation) Manager Performance
November 2006 - September 2012 (Single Computation)
4000
6000
8000
10000
12000
14000
16000
18000
Oct 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Sep 2012
Matthews Asia DividendUniverse Composite: MAPIX Peer UniverseBloomberg US EQ Income IndexS&P 500MSCI AC ASIA PACIFIC
Custom TableNov ember 2006 - September 2012: Summary Statistics
Matthews Asia Dividend
Return
10.26%
Universe Composite: MAPIX Peer Universe 2.51%
Standard
Deviation
17.11%
22.38%
Bloomberg US EQ Income Index 2.06% 16.43%
Excess Return
vs.
Market
8.90%
1.15%
0.71%
Tracking
Error
vs.
Market
7.60%
4.54%
9.93%
Information
Ratio
vs.
Market
1.17
0.25
0.07
R-Squared
vs.
Market
88.40%
96.08%
78.62%
S&P 500 2.96% 17.89% 1.60% 10.47% 0.15 75.08%
MSCI AC ASIA PACIFIC 1.36% 20.97% 0.00% 0.00% 0.00 100.00%
Return (%)
Std. Deviation (%)
Excess Return vs. Market (%)
Tracking Error vs. Market (%)
Information Ratio vs. Market
R-Squared vs. Market (%)
Matthews Asia Dividend Strategy 10.26 17.11 8.90 7.60 1.17 88.40
Universe Composite MAPIX Peer Universe 2.51 22.38 1.15 4.54 0.25 96.08
Bloomberg US EQ Income Index 2.06 16.43 0.71 9.93 0.07 78.62
S&P 500 2.96 17.89 1.60 10.47 0.15 75.08
MSCI AC ASIA PACIFIC 1.36 20.97 0.00 0.00 0.00 100.00
RISK/RETURN TABLE November 2006 – September 2012: Summary Statistics
Matthews Asia Dividend Strategy Universe Composite MAPIX Peer Universe Bloomberg US EQ Income Index S&P 500 MSCI AC ASIA PACIFIC
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© 2012 Matthews International Capital Management, LLC GL_PT010
AVERAGE ANNUAL TOTAL RETURNS
Investment Returns | Asia Dividend Fund As of September 30, 2012
7.91%
17.78%
6.29% 5.67%
11.59%
1.90%
3 Months 1 Year Since Inception (04/30/10)
Asia Dividend Fund (I Acc, USD) MSCI AC Asia Pacific Index
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 the original cost. Current performance may be lower or higher than performance shown. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal. Performance details provided are based on a NAV to NAV basis, and are net of management fees and other expenses.
Sources: JP Morgan, Bloomberg, MICM
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© 2012 Matthews International Capital Management, LLC GL_PT010
AVERAGE ANNUAL TOTAL RETURNS
Investment Returns | Asia Dividend Strategy As of September 30, 2012
6.51%
17.88%
11.25%
7.21%
10.26%
5.67%
11.59%
4.09%
-2.98%
1.36%
3 Months 1 Year 3 Years 5 Years Since Inception
(10/31/06)
Asia Dividend Strategy MSCI AC Asia Pacific Index
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews Asia Dividend Fund, which commenced operations on April 30, 2010. For performance information for the Matthews Asia Dividend Fund, please see the previous slide or visit matthewsasia.com. Performance results, portfolio characteristics, and holdings information for the Matthews Asia Dividend Fund may vary from the representative account for the strategy.
Sources: BNY Mellon Investment Servicing, Bloomberg, MICM
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© 2012 Matthews International Capital Management, LLC GL_PT010
Contact Us
Jonathan Schuman James Campion
Executive Vice President Senior Vice President
Head of Global Business Development Head of Asia Business Development
+1-415-984-5366 +852-3901-0888
[email protected] [email protected]
To learn more about Matthews or how the Matthews Asia Funds can complement globally diversified portfolios, please visit matthewsasia.com or contact us directly
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© 2012 Matthews International Capital Management, LLC GL_PT010
Appendix
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© 2012 Matthews International Capital Management, LLC GL_PT010
Matthews Overview
About Matthews
Largest dedicated Asia investment specialist in the United States
Investing in Asia since 1991 through a variety of market environments
Independent, privately owned firm with significant employee ownership
Range of Asia investment strategies across the risk-reward spectrum
Offering a unique investment perspective from a strategic location in San Francisco
KEY FACTS As of September 30, 2012
Total assets under management $19.0 billion
Regional strategies $16.1 billion
Single-country strategies $2.9 billion
Investment team members* 34
Matthews International Capital Management, Inc. (“Matthews”) is the advisor to the Matthews Asia Funds
*As of Oct. 8, 2012
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© 2012 Matthews International Capital Management, LLC GL_PT010
1991 G. Paul Matthews founds Matthews International Capital Management
1994 Matthews Asia introduces Asia ex-Japan and Asian Growth & Income
1998 China inception
1998 Japan inception
2003 Asia Growth
inception 2008 Asia Small
Companies inception
2010 Matthews Asia
introduces off-shore funds for non-U.S. investors
2005 India inception
2006 Asia Dividend inception
1999 Asia Science and Technology inception
1995 Korea inception
1992 Firm launches an investment vehicle for the Asia ex-Japan region
2009 China Dividend
inception 2011
China Small Companies inception
2011 Asia Strategic Income
inception
Matthews History Matthews has chosen to launch new strategies when there are compelling investment opportunities
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Philosophy and Approach The foundation of Matthews’ investment philosophy is our belief in the long-term economic growth and development of the countries in Asia
Active management
We believe many of the region’s widely used indices are backward looking and are not representative of the industries and companies that will be successful in the future. With respect to the region’s debt indices, we believe they are representative of the most indebted countries as opposed to the most creditworthy.
Long-term focus on Asia
We believe a long-term approach is the most effective way to capitalize on Asia’s evolution. Matthews has been investing in Asia since 1991 and we draw on our experience to identify investment opportunities that stand to benefit from the growth and development of markets throughout the region.
Bottom-up research
We employ a fundamental, bottom-up investment process. For equities, we seek to identify companies with sustainable long-term growth prospects, strong business models, quality management teams and reasonable valuations. For debt securities, we look for issuers that demonstrate strength in credit, currencies and interest rates. This research process involves more than 2,000 company visits each year.
Defining Asia’s investment strategies
We strive to provide investors a range of Asia strategies across the risk-reward spectrum and launch new strategies when there are compelling investment opportunities in the region.
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© 2012 Matthews International Capital Management, LLC GL_PT010
Matthews Asia Funds
Asia Dividend
Pacific Tiger
China
India
The following Matthews Asia Funds are currently available as Luxembourg-domiciled SICAVs
An investment in Matthews Asia Funds may be subject to risks, such as social instability, market illiquidity, exchange rate fluctuations, a high level of volatility and limited regulation. Please see the Prospectus/Offering Document for a Fund for additional information about the risks of investing in a Fund.
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© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | Pacific Tiger Fund As of September 30, 2012
AVERAGE ANNUAL TOTAL RETURNS
9.17%
17.88%
6.59%
9.42%
19.92%
4.66%
3 Months 1 Year Since Inception (04/30/2010)
Pacific Tiger Fund (I Acc, USD) MSCI AC Asia ex Japan Index
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 the original cost. Current performance may be lower or higher than performance shown. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal. Performance details provided are based on a NAV to NAV basis, and are net of management fees and other expenses.
Sources: JP Morgan, Bloomberg, MICM
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© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | Pacific Tiger Strategy As of September 30, 2012
AVERAGE ANNUAL TOTAL RETURNS
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews Pacific Tiger Fund, which commenced operations on April 30, 2010. For performance information for the Matthews Pacific Tiger Fund, please see the previous slide or visit matthewsasia.com. Performance results, portfolio characteristics, and holdings information for the Matthews Pacific Tiger Fund may vary from the representative account for the strategy.
Index since inception value calculated from 8/31/94
Sources: BNY Mellon Investment Servicing, Bloomberg, MICM
8.11%
19.52%
10.38%
4.31%
17.91%
9.03% 9.42%
19.92%
7.16%
-0.82%
14.76%
3.89%
3 Months 1 Year 3 Years 5 Years 10 Years Since Inception
(9/12/94)
Pacific Tiger Strategy MSCI AC Asia ex Japan Index
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© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | China Fund As of September 30, 2012
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 the original cost. Current performance may be lower or higher than performance shown. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal. Performance details provided are based on a NAV to NAV basis, and are net of management fees and other expenses.
Sources: JP Morgan, Bloomberg, MICM
AVERAGE ANNUAL TOTAL RETURNS
2.04%
9.42%
-0.04%
4.73%
17.90%
0.04%
3 Months 1 Year Since Inception (02/26/2010)
China Fund (I ACC, USD) MSCI China Index
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© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | China Strategy As of September 30, 2012
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews China Fund, which commenced operations on February 26, 2010. For performance information for the Matthews China Fund, please see the previous slide or visit matthewsasia.com. Performance results, portfolio characteristics, and holdings information for the Matthews China Fund may vary from the representative account for the strategy.
Index since inception value calculated from 2/28/98 Sources: BNY Mellon Investment Servicing, Bloomberg, MICM
AVERAGE ANNUAL TOTAL RETURNS
0.68%
9.13%
2.57%
-2.78%
16.68%
10.58%
4.73%
17.90%
0.80%
-6.35%
18.02%
2.87%
3 Months 1 Year 3 Years 5 Years 10 Years Since Inception
(2/19/98)
China Strategy MSCI China Index
30 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | India Fund As of September 30, 2012
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 the original cost. Current performance may be lower or higher than performance shown. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal. Performance details provided are based on a NAV to NAV basis, and are net of management fees and other expenses.
Sources: JP Morgan, Bloomberg, MICM
AVERAGE ANNUAL TOTAL RETURNS
14.90%
7.72%
-9.79%
14.03%
7.94%
-10.50%
3 Months 1 Year Since Inception (06/30/11)
India Fund (I Acc, USD) Bombay Stock Exchange (BSE) 100 Index
31 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Returns | India Strategy As of September 30, 2012
Performance results are of the largest account in the noted strategy managed by Matthews International Capital Management LLC. The performance results are net of advisory and other fees. Matthews’ advisory fees may vary depending on the size and nature of the assets and account. All performance is in US$ and includes all dividends and interest, accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary. Performance quoted represents past performance and is no guarantee of future results. This performance information does not, and it is not intended to, represent performance of the Matthews India Fund, which commenced operations on June 30, 2011. For performance information for the Matthews India Fund, please see the previous slide or visit matthewsasia.com. Performance results, portfolio characteristics, and holdings information for the Matthews India Fund may vary from the representative account for the strategy.
Sources: BNY Mellon Investment Servicing, Bloomberg, MICM
AVERAGE ANNUAL TOTAL RETURNS
14.37%
8.33% 6.85%
0.02%
11.11%
14.03%
7.94%
2.29%
-1.70%
13.12%
3 Months 1 Year 3 Years 5 Years Since Inception
(10/31/05)
India Strategy Bombay Stock Exchange (BSE) 100 Index
32 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Investment Team Bios Portfolio Managers
ROBERT J. HORROCKS, PhD Chief Investment Officer, Portfolio Manager
Robert Horrocks is Chief Investment Officer at Matthews International Capital Management, LLC and a Portfolio Manager. He manages the firm’s Asian Growth and Income strategy and co-manages the Asia Strategic Income strategy. As Chief Investment Officer, Robert oversees the firm’s investment process and investment professionals and sets the research agenda for the investment team. Before joining Matthews in 2008, Robert was Head of Research at Mirae Asset Management in Hong Kong. From 2003 to 2006, Robert served as Chief Investment Officer for Everbright Pramerica in China, establishing its quantitative investment process. He started his career as a Research Analyst with WI Carr Securities in Hong Kong before moving on to spend eight years working in several different Asian jurisdictions for Schroders, including stints as Country General Manager in Taiwan, Deputy Chief Investment Officer in Korea and Designated Chief Investment Officer in Shanghai. Robert earned his PhD in Chinese Economic History from Leeds University in the United Kingdom, and is fluent in Mandarin.
RICHARD GAO Portfolio Manager
Richard Gao is a Portfolio Manager at Matthews International Capital Management, LLC. He manages the firm’s China, Pacific Tiger and China Small Companies strategies. Richard joined Matthews in 1997 as a China Analyst. He began his career at the Bank of China in 1989, first as a loan officer, then as a FOREX Trader in the Treasury Department. In 1993, he became Assistant Manager at the Bank of China, where he was in charge of FOREX trading for import/export companies. Richard received a B.A. in Literature from Guangdong University of Foreign Studies and an M.B.A. in International Business from the Dominican University of California. He is fluent in Mandarin, Cantonese and Shanghainese.
JESPER MADSEN, CFA Portfolio Manager
Jesper Madsen is a Portfolio Manager at Matthews International Capital Management, LLC, and manages the firm’s Asia Dividend and China Dividend strategies. Prior to joining Matthews in 2004 as a Research Analyst, Jesper was an Analyst at Charter Equity Research and also worked with the Fixed Income group at Barclays Global Investors. He has traveled extensively, including living and working in China. Jesper received a B.A. in Politics, Philosophy and Economics from the University of York in the United Kingdom.
SHARAT SHROFF, CFA Portfolio Manager
Sharat Shroff is a Portfolio Manager at Matthews International Capital Management, LLC. He manages the firm’s Pacific Tiger and India strategies and co-manages the Asia Growth strategy. Prior to joining Matthews in 2005 as a Research Analyst, Sharat worked in the San Francisco and Hong Kong offices of Morgan Stanley as an Equity Research Associate. Sharat received a Bachelor of Technology from the Institute of Technology in Varanasi, India and an M.B.A. from the Indian Institute of Management, in Calcutta, India. He is fluent in Hindi and Bengali.
33 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Client Services Team Bios
JONATHAN D. SCHUMAN Executive Vice President, Head of Global Business Development
Jonathan Schuman joined Matthews International Capital Management, LLC in 2010 as an Executive Vice President. He is responsible for leading the firm’s international business development strategy, developing relationships with key distribution partners and directing the firm’s global sales efforts. Prior to joining the firm, Jonathan was a Managing Director at PineBridge Investments (formerly AIG Investments) in Tokyo, responsible for institutional sales and client relations, product development, marketing and RFP functions for AIG’s third-party investment management business in Japan. He also served as Assistant General Counsel for Legal and Government Affairs for AIG Companies, Japan and Korea. Jonathan earned a J.D. from Harvard Law School, a M.A.L.D from The Fletcher School of Law and Diplomacy and a B.A. in Asian Studies from Williams College. He has served as Co-Chair of the Financial Services Committee at the American Chamber of Commerce in Japan, and is fluent in Japanese.
JAMES E. CAMPION Senior Vice President, Head of Asia Business Development
James Campion joined Matthews International Capital Management, LLC in 2010 as a Senior Vice President and leads the firm’s business development efforts in Asia. Most recently, James was Head of Asia Distribution for Threadneedle Portfolio Services in Hong Kong, responsible for setting up its Hong Kong office and developing the firm’s Asia distribution strategy. Prior to this, he served as Allianz Global Investor’s Head of Mutual Funds for the Asia Pacific region and was a Managing Director for New Star International. From 1998 to 2004, James also held several positions with Schroder Investment Management (Hong Kong) Limited, including Regional Head of Mutual Funds, Asia ex Japan.
KATE HITCHINGS Global Client Relationship Manager
Kate Hitchings joined Matthews International Capital Management, LLC in 2011 as Global Client Relationship Manager. She manages relationships with Matthews’ clients in Europe and Latin America. Prior to joining Matthews, Kate was a Business Development Executive with AllianceBernstein in London, where she was responsible for business development opportunities and client management, primarily within the U.K. Institutional market. She began her tenure with AllianceBernstein in 2005, initially working with private clients, endowments and foundations out of its Boston-based wealth management office. Kate received a B.A. in English with a minor in Psychology from Dartmouth College, and is a proficient Spanish speaker.
34 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Disclosure These materials are provided solely for use in a private meeting and are intended for informational and discussion purposes only. To the extent that these materials are circulated, it is intended that they be circulated only to persons to whom they may lawfully be distributed and any recipient of these materials should inform themselves about and observe any applicable legal requirements. Persons who do not fall within such descriptions may not act upon the information contained in these materials. This document is not a Prospectus/Offering Document and does not constitute an offer to the public. No public offering or advertising of investment services or securities is intended to have taken effect through the provision of these materials. Nothing in these materials is or shall be considered to be an offer of advisory or investment services to any recipient. The information presented in these materials is believed to be materially correct 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. Nothing set out in these materials is or shall be relied as a promise or representation as to the future. The manager referred to in these materials means a U.S.-based investment adviser registered with the U.S. Securities and Exchange Commission who has not represented and will not represent that it is otherwise registered with any other regulator or regulatory body. Investors should ascertain from their professional advisers the consequences of investing with Matthews under the relevant laws of the jurisdictions to which they are subject including the tax consequences and any exchange control requirement. Investors should carefully consider the investment objectives, risks, charges and expenses of any strategy before making an investment decision. An investment in Matthews Asia Funds may be subject to risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific 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 large companies. Please see the Prospectus/Offering Document for a Fund for additional information about the risks of investing in a Fund. This discussion of the risks associated with investing in Matthews Asia Funds is not exhaustive and prospective investors should consult a Fund’s Prospectus/Offering Document before making an investment decision. The Board of Directors of the Matthews Asia Funds may, at its discretion, pay dividends out of the capital in respect of the distribution shares of its relevant sub-funds. The Board of Directors of the Fund may amend the dividend policy, subject to the Hong Kong Securities and Futures Commission’s prior approval and by giving not less than one month prior notice to the shareholders of the Fund. Dividends paid out of capital amount to a return or withdrawal of part of an investor’s original investment, or from any capital gains attributable to that original investment. Such dividends may result in an immediate decrease of the net asset value per share of the relevant sub-funds. The compositions of dividends (i.e. the relative amounts paid out of income and capital) (if any) paid on the distribution shares for the preceding 12 months (or if a sub-fund was launched less than 12 months ago since its inception) are available from Matthews Asia Funds upon request as well as on its website at hk.matthewsasia.com. The shares described in each Fund’s Prospectus/Offering Document and the related documents have not been registered or qualified under the laws of, and may not be offered or sold, directly or indirectly, to the public in Austria, Bahrain, Chile, Colombia, Denmark, Egypt, Finland, Iceland, Israel, Italy, Kuwait, Netherlands, Norway, Peru, Portugal, Qatar, Saudi Arabia, Spain, Sweden, or United Arab Emirates. The Fund’s Prospectus/Offering Document and other related materials and documents have not been filed with or approved by the regulatory authorities of Austria, Bahrain, Chile, Colombia, Denmark, Egypt, Finland, Iceland, Israel, Italy, Kuwait, Netherlands, Norway, Peru, Portugal, Qatar, Saudi Arabia, Spain, Sweden, or United Arab Emirates and are not intended to constitute a public offering in such countries and should not be construed as such. In particular, these materials shall not constitute an offer to sell or a solicitation of an offer to buy the shares described in each Fund’s Prospectus/Offering Document and in the related materials and documents and no steps may be taken that would constitute or result in a public offering or distribution of the shares in Austria, Bahrain, Chile, Colombia, Denmark, Egypt, Finland, Iceland, Israel, Italy, Kuwait, Netherlands, Norway, Peru, Portugal, Qatar, Saudi Arabia, Spain, Sweden, or United Arab Emirates, including by use of any public advertisement of similar public communication. The shares of the Funds are only available for certain non-U.S. Persons in select transactions outside of the United States, or in limited circumstances, otherwise in transactions which are exempt from the registration requirements of the United States Securities Act of 1933, as amended.
35 Do not give, show or quote to any other person. This document is not for public distribution and is for institutional/professional use only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.
© 2012 Matthews International Capital Management, LLC GL_PT010
Disclosure This document does not constitute investment advice or an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. This document is directed at and intended for institutional investors (as such term is defined in the various jurisdictions). This document is provided on a confidential basis for informational purposes only and may not be reproduced in any form or transmitted to any person without authorization from Matthews International Capital Management, LLC. It is the responsibility of any persons wishing to subscribe for shares to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions. Prospective investors should inform themselves as to the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares, and any foreign exchange restrictions that may be relevant thereto. This presentation has not been reviewed by the Hong Kong Securities and Futures Commission.
Morningstar Analyst Rating as of 22 March 2012. ©2012 Morningstar. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of Morningstar, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. Morningstar shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Morningstar Analyst Rating™ is subjective in nature and reflects Morningstar’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, Morningstar does not guarantee that a fund will perform in line with its Morningstar Analyst Rating. Likewise, the Morningstar Analyst Rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. Standard & Poor’s Fund Management Ratings are based on a frequently-updated evaluations of quantitative (historic performance, volatility, and portfolio construction) and qualitative (management, corporate status and investment process) factors that contribute to long-term performance. Only funds with a track record of at least two years can apply for a rating, and only 20% of the funds’ analysed achieve one of the following Fund Management Ratings: Platinum, Gold, Silver or Bronze. An S&P Capital IQ fund grading represents an opinion only and should not be relied on when making an investment decision. Past performance is not indicative of future results. Currency exchange rates may affect the value of investments. Copyright © 2012 by McGraw-Hill international (UK) Limited (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. For Fund ratings reports and additional details on Fund ratings definitions, please go to matthewsasia.com. The MSCI All Country Asia Pacific Index is a free float-adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. The Asia Dividend Strategy invests in countries that are not included in the MSCI All Country Asia Pacific Index. It is not possible to invest directly in an index. The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand. The Pacific Tiger Strategy may invest in countries that are not included in the MSCI All Country Asia ex Japan Index. It is not possible to invest directly in an index. The MSCI China Index is a free float–adjusted market capitalization–weighted index of Chinese equities that include China-affiliated corporations and H shares listed on the Hong Kong exchange, and B shares listed on the Shanghai and Shenzhen exchanges. It is not possible to invest directly in an index. The Bombay Stock Exchange 100 (BSE 100) Index is a free float-adjusted market capitalization-weighted index of the 100 leading stocks listed on the Bombay Stock Exchange. It is not possible to invest directly in an index. The S&P 500 Index is a broad market-weighted index dominated by blue-chip stocks in the U.S. It is not possible to invest directly in an index. This presentation is issued by Matthews Global Investors (Hong Kong) Ltd.