Letter to Shareholders

August 5, 2008

Dear Valued Shareholders,

As investors in Asia since 1991, Matthews has participated in the long-term development of the region’s economies and experienced the short-term volatility of its capital markets. Current market conditions are challenging, however our long-term outlook for Asia remains unchanged. Meanwhile, the decline in markets has created a more favorable environment for long-term investment. It is in this setting that we are pleased to announce the re-opening of the Matthews Asian Growth and Income Fund and Matthews Pacific Tiger Fund to new investors on September 2, 2008.

The Funds were closed to most new investors on November 28, 2003 and June 7, 2006, respectively, in response to rapid increases in inflows combined with market constraints. With the subsequent deepening of Asia’s capital markets, we are now presented with new opportunities for investment, particularly as valuations have declined despite an environment of ongoing growth. By re-opening the Funds, we can better balance subscription and redemption activity, and pursue new opportunities while maintaining existing ones that remain attractive.

Both Funds were launched in 1994, and seek to benefit from the economic evolution we have watched unfold. We believe the best opportunities for wealth creation arise when deregulation, enhanced competition and rising household incomes combine to spur new and growing markets. In our view, this is an ongoing trend in Asia. The Matthews Asian Growth and Income Fund is intended to offer investors a relatively stable means to participate in this secular growth, while providing some downside protection. The Matthews Pacific Tiger Fund is a diversified, all-cap strategy that seeks long-term capital appreciation by investing in companies capable of sustained, long-term growth.

For more information about our Funds, please visit our website, matthewsfunds.com. Should you have any questions, please contact your financial advisor or call us at 800-789-ASIA. Thank you for your continued investment in the Matthews Asia Funds. We appreciate the opportunity to serve you.

Best Regards,

Andrew T. Foster Acting Chief Investment Officer Portfolio Manager

Richard Gao Portfolio Manager

Sharat Shroff Portfolio Manager

Investing in international markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific industry, sector or geographic location.

You should carefully consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds before making an investment decision. A prospectus with this and other information about the Funds may be obtained by calling 800-789-ASIA or visiting matthewsfunds.com. Please read the prospectus carefully before investing as it explains the risks associated with investing in international markets.