(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
EMERGING ASIA
FUND, INC.
SEMIANNUAL REPORT
APRIL 30, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
FUND TALK 4 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 7 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 8 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 19 Notes to the financial statements.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY
ACT OF 1940 THAT FROM TIME TO TIME THE FUND MAY PURCHASE AT MARKET PRICES
SHARES OF
ITS COMMON STOCK IN THE OPEN MARKET.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. IT IS NOT A PROSPECTUS,
CIRCULAR OR
REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE
FUND OR OF ANY
SECURITIES MENTIONED
IN THE REPORT.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first four
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Peter Phillips, Portfolio Manager of Fidelity Advisor
Emerging Asia Fund, Inc.
Q. HOW DID THE FUND PERFORM, PETER?
A. For the six and 12 months ended April 30, 1996, the fund had a total
return of 19.13% and 20.78%, respectively, based on net asset value. This
compares to a total return of 19.31% and 20.16% for the customized Morgan
Stanley Capital International Combined Asia ex-Japan (Free) including
Taiwan Index during the same time period. Since this is a closed-end fund
that trades on the New York Stock Exchange, we need to look at the fund's
market value return, which reflects gains or losses in the fund's share
price over the period. The market value return was 21.54% for the six
months ended April 30, 1996. This reflects the effect of changes in the
fund's market value and assumes dividends and capital gain distributions,
if any, were reinvested.
Q. HONG KONG IS STILL THE FUND'S LARGEST COUNTRY WEIGHTING. WHAT'S BEEN
HAPPENING IN HONG KONG DURING THE PAST SIX MONTHS?
A. Hong Kong's economy continues to be weak. However, it remains the fund's
largest geographic weighting because the stock market there has
strengthened in anticipation of an economic recovery and lower interest
rates. Interestingly, the change in sovereignty that will occur in July
1997 has created some uncertainty - but I think it has generally been
factored into the market already. What will drive the market after that
change takes place is how the economy will behave.
Q. SPECIFICALLY, WHERE ELSE DID YOU FIND OPPORTUNITIES IN HONG KONG?
A. At the end of the period, the fund had a large position in the real
estate sector, which was attractive both in terms of earnings and
valuations. Previously, the property market was down nearly 25%, but it
seems to have bottomed out in the past few months, and ended the period on
a slight uptick. Lower than usual property prices, combined with the
reduction in interest rates, an increase in income and less restrictive
bank lending practices, have led to more affordable residential property
prices in Hong Kong. The fund continues to maintain a large holding in Sun
Hung Kai Properties. The fund also holds Swire Pacific LTD and Hutchison
Whampoa, two large Hong Kong real estate companies where I thought that
both earnings and valuations were attractive. During the next six months, I
will be watching interest rates very closely as they should be an indicator
of how this sector will behave going forward.
Q. WHAT ABOUT TAIWAN . . .
A. From a valuation standpoint, Taiwan is one of the most attractive places
to invest in Southeast Asia. Tensions between Taiwan and China appear to
have faded, and I think business between the two economies could begin to
strengthen gradually. The fund's investments in Hong Kong and Taiwan are an
indirect way to capitalize on the growth in China. Next year, Hong Kong
will become part of China in the political sense, but it has been
developing as the financial capital of China for the past several years.
Q. THOUGH THE FUND IS MANAGED ON A "BOTTOM-UP" BASIS, THERE IS A LARGE
HOLDING IN THE FINANCIAL SECTOR ACROSS THE REGION. WHAT IS YOUR STRATEGY?
A. After the volatile 1980s in which many banks lost money, many financial
institutions throughout Southeast Asia are now very conservatively managed.
Many are well capitalized with low levels of non-performing assets. They
are also attractive because there are high barriers to entry in the
financial marketplaces of Asia. For example, in some countries, banks need
to get approval to open new branches, and their locations have to be
approved by local authorities. At the same time, the financial industry is
growing in countries like India and the Philippines where the mortgage
industry is just beginning to develop. At the end of the period, the fund
had large holdings in China Development Corp. and Hang Seng Bank.
Q. WERE THERE ANY OTHER INVESTMENT THEMES YOU PURSUED DURING THE PERIOD?
A. Yes. In the past I've discussed the fund's emphasis on companies with
strong cash flow generation and strong, recurring earnings. That continued
to be a theme, specifically in the media and consumer segments of the
market. Within the consumer non-durable sector, cigarette and brewing
companies have experienced consistent growth. This is sometimes referred to
as the "yuppie" trend in Southeast Asia. To entice these young, affluent
people, advertising spending has increased as the media sector continues to
grow.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD, PETER?
A. Yes. Even though I believe that Taiwan is one of the most attractive
places in Southeast Asia to invest, its returns were slightly below
expectations during the period. The market in Taiwan was adversely affected
by political tensions between Taiwan and mainland China. Stocks with high
price-to-earnings ratios had the greatest returns, but the fund didn't have
much exposure to them during the past six months.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Valuations look fairly reasonable across the region and earnings quality
is good. Though the Chinese economy appears to be weak, trade and
investment within the region remains strong. During the next six months, I
will search for the stocks in Southeast Asia with the greatest growth and
earnings potential.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: to achieve long-term
capital appreciation through
investments in equity and
debt securities of Asian
emerging market issuers
START DATE: March 25, 1994
SIZE: as of April 30, 1996,
more than $139 million
MANAGER: Peter Phillips,
since 1994, joined Fidelity in
1987
(checkmark)
PETER PHILLIPS ON THE MALAYSIAN
TOBACCO INDUSTRY
"Despite the negative
sentiment toward tobacco
companies in the United
States, the business
prospects for Malaysian
tobacco companies seem
bright. What's driving them is
the fact that the excise duties
routinely imposed by the
Malaysian government on
cigarettes have not been
imposed for the past three
years. Historically, companies
would respond to the excise
duty hikes by increasing the
price of cigarettes at retail.
Since Malaysian cigarette
manufacturers are not likely
to face higher excise duties
for the next couple of years,
manufacturers such as
Rothmans may have the
opportunity to raise profits by
raising prices, even if it's only
by a small amount.
"If this scenario develops,
Rothmans has an advantage
over RJR and other
U.S.-based tobacco
companies because its
best-selling brand, the
Dunhill, is the country's most
popular cigarette with a 33%
share of the market, while
RJR's best selling brand only
commands an 11% share."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF APRIL 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Sun Hung Kai Properties Ltd. 3.7 3.5
Swire Pacific Ltd. Class A 3.7 1.9
Cathay Life Insurance Co. Ltd. 3.1 0.6
Hutchison Whampoa Ltd. Ord. 3.1 4.2
Telekom Malaysia BHD 2.4 0.0
Cheung Kong Holdings Ltd. 2.4 0.0
China Development Corp. 2.4 1.2
Hang Seng Bank Ltd. 2.2 0.7
Bangkok Bank Ltd. (For. Reg.) 1.9 2.8
Thai Military Bank Ltd. (For. Reg.) 1.9 1.9
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 30.7 28.5
Construction & Real Estate 16.6 15.0
Utilities 13.3 10.2
Media & Leisure 8.1 5.2
Transportation 6.0 4.6
ASSET ALLOCATION
AS OF APRIL 30, 1996 AS OF OCTOBER 31, 1995
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 50.0
Row: 1, Col: 1, Value: 2.8
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 45.7
Stocks 100%
Bonds 0.0%
Short-term
investments 0.0%
Stocks 97.7%
Bonds 0.5%
Short-term
investments 1.8%
INVESTMENTS APRIL 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100%
SHARES VALUE (NOTE 1)
BANGLADESH - 0.1%
Advanced Chemical Industries 50,000 $ 136,671
HONG KONG - 27.4%
Cathay Pacific Airways Ltd. 131,000 228,615
Cheung Kong Holdings Ltd. 470,000 3,356,839
China Light & Power Co. Ltd. 168,000 792,688
Dah Sing Financial Holdings Ltd. 194,800 541,412
First Pacific Bancshares Holding Ltd. 998,000 345,108
First Pacific Co. Ltd. 484,330 644,880
Giordano Holdings Ltd. Ord. 382,000 353,077
Great Eagle Holdings Ltd. 159,959 459,052
Hang Seng Bank Ltd. 300,000 3,044,327
Hong Kong & China Gas Co. Ltd. 1,147,262 1,883,505
Hong Kong & China Gas Co. Ltd. (warrants) (a) 95,605 -
Hong Kong & Shanghai Hotels 346,000 597,115
Hong Kong Telecommunications Ltd. 829,200 1,575,480
HSBC Holdings PLC 59,800 886,455
Hutchison Whampoa Ltd. Ord. 686,000 4,256,628
Hysan Development Co. Ltd. 233,000 748,484
Hysan Development Co. Ltd. (warrants) (a) 11,650 -
International Bank of Asia Ltd. 106,000 66,801
Jardine Matheson Holdings Ltd. Ord. 47,000 376,000
JCG Holdings Ltd. 960,000 887,373
Johnson Electric Holdings Ltd. 125,000 282,780
Li & Fung Ltd. 404,000 365,578
Mandarin Oriental International Ltd. 123,000 174,660
Manhattan Card Co. Ltd. 1,216,000 723,089
National Mutual Asia Ltd. 264,000 223,535
New World Development Co. Ltd. 515,945 2,314,373
Sime Darby Hongkong Ltd. 38,000 36,842
Sun Hung Kai Properties Ltd. 536,000 5,110,074
Swire Pacific Ltd. Class A 594,000 5,067,932
Television Broadcast Ltd. Ord. 110,000 440,813
Varitronix International Ltd. 180,000 330,416
Wharf Holdings Ltd. (b) 338,000 1,251,820
Wing Hang Bank Ltd. 188,000 687,772
38,053,523
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - 7.5%
Apollo Hospitals Enterprises Ltd. 100,000 $ 103,896
Bajaj Auto Ltd. 27,500 692,063
Bharat Petroleum Corp. Ltd. 18,000 187,013
Brooke Bond Lipton India Ltd. 20,000 186,953
Crompton Greaves Ltd. 25,000 173,160
Digital Equipment Ltd. (a) 70,000 204,040
East India Hotels Ltd. 24,000 470,404
Essel Packaging Ltd. 50 264
Essel Packaging Ltd. (New) (a) 4,000 21,188
Gujarat Ambuja Cement Ltd. GDR 35,280 396,900
Gujarat Gas Co. Ltd. 30,000 124,675
Himalayan Fund NV ISI (warrants) (a) 12,943 4,918
Hindalco Industries Ltd. 11,500 431,013
Hindustan Lever 30,550 667,783
Housing Development Finance Corp. Ltd. 13,300 1,174,558
India Cements Ltd. 25,000 102,239
India Cements Ltd. (New) (a) 25,000 113,636
Industrial Credit & Investments Corp. Ltd. 158,300 516,147
Industrial Development Bank of India 80,000 277,056
ITC Ltd. 70,000 540,530
Kotak Mahindra Finance Ltd. 500 1,496
Larsen and Toubro Ltd. 10,408 84,724
Mahanagar Telephone Nigam Ltd. (a) 88,400 523,344
Mahindra & Mahindra Ltd. 50,000 398,220
Mukand Ltd. 500 2,684
Procter & Gamble India Ltd. 10,000 225,108
State Bank of India 112,000 882,625
Tata Engineering & Locomotive Ltd. 32,000 435,506
Tata Engineering & Locomotive Ltd. GDR 7,500 131,250
Tata Power Co. 50,000 211,620
Tube Investments of India Ltd. GDR 11,667 37,554
TVS Suzuki 18,000 142,857
Unitech Ltd. 35,000 101,010
Videsh Sanchar Nigam Ltd. 15,000 627,706
Zee Telefilms Ltd. 68,000 254,935
10,449,075
INDONESIA - 5.5%
Astra International PT (For. Reg.) 125,000 185,205
Bank Bira 165,000 171,838
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDONESIA - CONTINUED
Bank Dagang Nas Indonesia PT 427,000 $ 426,358
Bank International Indonesia PT (For. Reg.) 247,000 1,217,232
Citra Marga Nusadhala Persada PT 210,000 308,890
Gadjah Tunggal PT (For. Reg.) 113,500 67,023
Gudang Garam PT (For. Reg.) 212,000 1,525,016
Indosat (Indonesia Satellite) sponsored ADR 18,100 631,238
Kabelmetal Indonesia PT (For. Reg.) 120,000 88,898
Mulia Industrindo PT (For. Reg.) 84,000 162,336
Panin Bank PT (For. Reg.) 232,500 237,143
Pt Asahimas Flat Glass Co. Ltd. (For. Reg.) (a) 375,000 458,986
Pt Telkom (For. Reg) 640,000 1,065,063
Semen Cibinong PT (For. Reg.) 53,000 157,054
Semen Gresik (For. Reg.) 167,500 580,873
Tempo-Scan Pacific (For. Reg.) 110,000 281,082
7,564,235
KOREA (SOUTH) - 3.1%
Cho Hung Bank Co. Ltd. 13,800 210,657
Hyundai Motor Co. Ltd. sponsored GDR 7,500 116,250
Hyundai Motor Service Co. Ltd. 2,200 100,919
Korea Electric Power Corp. 38,000 1,815,260
Korea Mobile Telecommunications Corp. 780 1,092,852
Pohang Iron & Steel Co. Ltd. 4,000 385,634
Samsung Electronics Co. Ltd. (a):
(vtg.) 17 2,315
(bonus issued 3/96) 5 665
Samsung Fire & Marine Insurance 300 216,678
Shinhan Bank 11,954 306,465
4,247,695
MALAYSIA - 17.3%
Affin Holdings BHD 216,000 532,745
Arab Malaysian Corp. BHD 100,000 405,053
Berjaya Sports Toto BHD 600,000 1,925,005
EON (Edaran Otomobil Nasional) BHD 202,000 1,725,526
Genting BHD 123,500 1,109,445
Kian Joo Can Factory BHD 271,500 1,567,917
Magnum Corp. BHD 135,000 233,888
Malayan Banking BHD 231,000 2,251,173
Malaysian Airlines Systems BHD 245,000 810,608
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Malaysian Assurance Alliance BHD 54,000 $ 322,679
New Straits Times Press BHD 80,000 429,918
Nylex Malaysia SDN BHD 304,000 1,243,553
Public Bank BHD (For. Reg.) 742,000 2,127,652
Resorts World BHD 171,000 1,035,532
Rothmans of Pall Mall Malaysia BHD 190,000 1,943,052
Star Publications BHD 232,000 683,858
Telekom Malaysia BHD (a) 360,000 3,392,821
Time Engineering BHD 160,000 468,418
United Engineers BHD 145,000 994,385
YTL Corp. BHD 154,500 774,514
23,977,742
PAKISTAN - 0.8%
Askari Commercial Bank (a) 55 47
Askari Leasing Ltd. (a) 143,400 99,079
DG Kahn Cement Ltd. (a) 110 59
Hub Power Co. Ltd. GDR (a) 42,000 1,008,000
National Development Leasing Corp. 12,500 5,023
Pak Electron Ltd. (a) 55 51
Sui Southern Gas Pipelines Ltd. (a) 1,755 1,433
1,113,692
PHILIPPINES - 2.6%
Ayala Land, Inc. Class B 654,000 1,012,887
Benpress Holdings Corp. GDR (a) 38,400 273,792
Benpress Holdings Corp. GDR (a)(b) 6,930 49,411
Megaworld Properties & Holdings, Inc. (a) 290,000 207,935
Meralco Class B 141,000 1,315,641
Pilipino Telephone Corp. (a) 353,000 519,713
Republic Glass Holdings Corp. (a) 650,000 260,994
3,640,373
SINGAPORE - 8.2%
City Developments Ltd. 157,000 1,373,471
Datacraft Asia Ltd. 220,000 246,400
DBS Land Ltd. 150,000 608,108
Development Bank of Singapore Ltd. (For. Reg.) 88,000 1,114,082
Hong Leong Finance Ltd. (For. Reg.) 240,000 981,508
Keppel Corp. Ltd. 87,000 785,846
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - CONTINUED
Singapore Finance Ltd. 92,000 $ 184,523
Singapore Finance Ltd. (warrants) (a) 11,000 10,014
Singapore International Airlines Ltd. 124,000 1,252,347
Singapore Land Ltd. 43,000 305,832
Singapore Press Holdings Ltd. (For. Reg.) 126,000 2,383,784
Singapore Telecommunications Ltd. 400,000 984,353
United Overseas Bank Ltd. (For. Reg.) 112,400 1,095,220
11,325,488
TAIWAN (FREE CHINA) - 17.5%
Acer, Inc. 398,636 865,516
Asia Cement Corp. 605,000 1,075,348
Cathay Construction Co. Ltd. 649,000 1,122,507
Cathay Life Insurance Co. Ltd. 682,000 4,340,409
China Development Corp. 1,003,471 3,341,949
China Motor Co. Ltd. 320,000 551,115
China Steel Corp. 1,810,000 1,698,499
Compeq Manufacturing Co. Ltd. 199,000 479,668
Evergreen Marine 495,000 919,905
First International Computer (a) 8,472 13,157
Formosa Plastic 285,730 478,425
ICBC (International Commerce Bank of China) (a) 690,000 2,297,969
Kinpo Electronics, Inc. (a) 47 57
Mosel Vitelic, Inc. Co. Ltd. (a) 20,207 52,797
Nan Ya Plastics Corp. 277,952 459,264
Phoenixtec Power Co. (a) 225,000 480,238
Standard Foods Taiwan Ltd. (a) 411,600 855,796
Taiwan Glass 407,025 861,262
Taiwan Secom Co. (a) 292,500 877,263
Taiwan Semiconductor Manufacturing Co. Ltd. (a) 207,000 784,610
Tatung Co. (a) 1,130,000 2,224,737
Yung Shin Pharmaceutical Industries Co. Ltd. 236,687 557,443
24,337,934
THAILAND - 9.8%
Advanced Information Services (For. Reg.) 49,700 842,156
Bangkok Bank Ltd. (For. Reg) 183,600 2,660,396
Bangkok Expressway PCL (For. Reg.) (a) 110,000 180,731
Dynamic Eastern Finance Thailand
1991 Co. Ltd. (For. Reg.) 175,000 294,455
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
Electricity Generating PCL (For. Reg.) 130,900 $ 513,059
Finance One PCL (For. Reg.) 59,300 415,547
First Bangkok City Bank PCL (For. Reg.) 239,250 473,603
General Finance & Securities PCL (For. Reg.) 30,000 128,274
Industrial Finance Corp. (For. Reg.) 48,000 193,836
Krung Thai Bank Ltd. (For. Reg.) 382,000 1,875,329
Matichon Newspaper Group 26,900 208,738
National Finance & Securities PCL (For. Reg.) 62,000 365,738
PTT Exploration & Production (For. Reg) 65,300 910,014
Siam Commercial Bank PCL (For. Reg.) 30,000 441,831
Siam Marko (For. Reg.) 43,000 207,692
Thai Farmers Bank PCL 66,000 757,765
Thai Military Bank Ltd. (For. Reg.) 543,200 2,623,687
Total Access Communication PCL (a) 40,000 352,000
Total Access Communication PCL (For. Reg.) (a) 20,000 183,701
13,628,552
VIETNAM - 0.2%
Vietnam Enterprise Investments Ltd. (a)(b) 250,000 252,500
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $115,508,119) $ 138,727,480
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,553,731 or 1.1% of net
assets.
INCOME TAX INFORMATION
At April 30, 1996, the aggregate cost of investment securities for income
tax purposes was $115,513,011. Net unrealized appreciation aggregated
$23,214,469, of which $26,063,071 related to appreciated investment
securities and $2,848,602 related to depreciated investment securities.
At October 31,1995, the fund had a capital loss carryforward of
approximately $2,183,000 all of which will expire on October 31, 2003.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment
in Securities
Aerospace & Defense 0.6%
Basic Industries 4.0
Construction & Real Estate 16.6
Durables 3.5
Energy 0.8
Finance 30.7
Health 0.8
Holding Companies 1.3
Industrial Machinery &
Equipment 4.2
Media & Leisure 8.1
Nondurables 4.5
Retail & Wholesale 0.7
Services 1.6
Technology 3.3
Transportation 6.0
Utilities 13.3
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $115,508,119) - $ 138,727,480
See accompanying schedule
Foreign currency held at value 547,808
New Taiwan dollars (cost $546,127)
Receivable for investments sold 1,527,915
Dividends receivable 283,669
Deferred organization expenses 108,375
TOTAL ASSETS 141,195,247
LIABILITIES
Payable to custodian bank $ 114,818
Payable for investments purchased 1,025,199
Accrued management fee 132,681
Other payables and accrued expenses 195,439
TOTAL LIABILITIES 1,468,137
NET ASSETS $ 139,727,110
Net Assets consist of:
Paid in capital $ 118,177,524
Distributions in excess of net investment income (769,759)
Accumulated undistributed net realized gain (loss) on (898,266)
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 23,217,611
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 8,447,093 shares outstanding $ 139,727,110
NET ASSET VALUE ($139,727,110 (divided by) 8,447,093 shares) $16.54
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME $ 972,573
Dividends
Interest 108,541
1,081,114
Less foreign taxes withheld (69,583)
TOTAL INCOME 1,011,531
EXPENSES
Management fee $ 633,748
Basic fee
Performance adjustment 28,267
Transfer agent fees 4,830
Administrative fees and expenses 126,793
Directors' compensation 10,098
Custodian fees and expenses 115,739
Registration fees 125
Audit 40,094
Legal 4,860
Taiwan stock dividend tax 27,505
Amortization of organization expenses 19,125
Reports to shareholders 6,657
Miscellaneous 16,406
Total expenses before reductions 1,034,247
Expense reductions (2,500) 1,031,747
NET INVESTMENT INCOME (LOSS) (20,216)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,633,656
Foreign currency transactions (323,538) 1,310,118
Change in net unrealized appreciation (depreciation) on:
Investment securities 20,997,429
Assets and liabilities in foreign currencies 193,096 21,190,525
NET GAIN (LOSS) 22,500,643
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 22,480,427
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL OCTOBER 31,
30,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ (20,216) $ 96,949
Net investment income (loss)
Net realized gain (loss) 1,310,118 (1,511,123)
Change in net unrealized appreciation (depreciation) 21,190,525 (13,993,331)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 22,480,427 (15,407,505)
FROM OPERATIONS
Distributions to shareholders - (315,333)
From net investment income
In excess of net investment income (506,826) (746,725)
From net realized gain - (856,462)
In excess of net realized gain - (193,253)
TOTAL DISTRIBUTIONS (506,826) (2,111,773)
TOTAL INCREASE (DECREASE) IN NET ASSETS 21,973,601 (17,519,278)
NET ASSETS
Beginning of period 117,753,509 135,272,787
End of period (including distributions in excess $ 139,727,110 $ 117,753,509
of net investment income of $769,759 and
$242,717, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED MARCH 25, 1994
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1996 1995 OF
(UNAUDITED) OPERATIONS) TO
OCTOBER 31, 1994
SELECTED PER-SHARE DATA K $ 13.94 $ 16.01 $ 14.10
Net asset value, beginning of period
Income from Investment Operations
Net investment income .00 .01 .03
Net realized and unrealized gain (loss) 2.66 (1.83) 1.97
Total from investment operations 2.66 (1.82) 2.00
Less Distributions - (.04) H -
From net investment income
In excess of net investment income (.06) (.09) -
From net realized gain - (.10) H -
In excess of net realized gain - (.02) -
Total distributions (.06) (.25) -
Antidilution resulting from additional - - .02
offering of shares
Offering expenses - - (.11)
Net asset value, end of period $ 16.54 $ 13.94 $ 16.01
Market value, end of period $ 14.375 $ 11.875 $ 15.125
TOTAL RETURN B, C 21.54% (19.82) .83% D
Market value E %
Net asset value F 19.13% (11.08) 14.27% G
%
RATIOS AND SUPPLEMENTAL DATA $ 139,727 $ 117,754 $ 135,273
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets 1.66% A 1.79% 1.78% A
Ratio of expenses to average net assets 1.65% A, 1.79% 1.78% A
after expense reductions I
Ratio of net investment income (loss) to (.03)% .08% .29% A
average net assets A
Portfolio turnover rate 66% A 69% 70% A
Average commission rate J $ .0137
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
D TOTAL MARKET VALUE RETURN INCLUDES THE ONE TIME SALES LOAD OF 6% PAID IN
CONNECTION WITH THE INITIAL PUBLIC OFFERING.
E TOTAL MARKET VALUE RETURN REFLECTS THE EFFECT OF CHANGES IN THE FUND'S
MARKET VALUE AND ASSUMES DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS, IF ANY,
WERE REINVESTED.
F TOTAL NET ASSET VALUE RETURN REFLECTS THE EFFECTS OF CHANGES IN NET ASSET
VALUE, AND ASSUMES DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, WERE
REINVESTED. THIS PERCENTAGE IS NOT AN INDICATION OF THE PERFORMANCE OF A
SHAREHOLDERS' INVESTMENT IN THE FUND BASED ON MARKET VALUE DUE TO
DIFFERENCES BETWEEN THE MARKET PRICE OF THE STOCK AND THE NET ASSET VALUE
OF THE FUND.
G TOTAL NET ASSET VALUE RETURN DOES NOT INCLUDE THE EFFECT OF ANTIDILUTION,
OFFERING EXPENSES AND THE ONE TIME SALES LOAD.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
J FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Emerging Asia Fund, Inc. (the fund), a Maryland
corporation, is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as a non-diversified closed-end management
investment company.
There are 100,000,000 shares of $.001 par value common stock authorized.
Commencing in the first calender quarter of 1997, and on each calendar
quarter thereafter, the Board of Directors of the fund may, under certain
circumstances, conduct a tender offer to repurchase ten percent of the
fund's outstanding shares of common stock at a price equal to the net asset
value per share at the time of repurchase.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which quotations are readily available
are valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations or
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Directors.
Short-term securities maturing within sixty days of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
At April 30, 1996, the fund owned an aggregate of $2,985,172 in securities
which were either awaiting registration or were due from companies and/or
brokers for various capital changes. Such securities are valued in
accordance with the fund's security valuation policy described above, but
may not be saleable at the value shown in the portfolio as of April 30,
1996. The fund has no intention of selling such securities until they are
transferred in the name of the fund.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
foreign currency exchange rates on investments in securities are included
with the net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to U.S. federal
income taxes to the extent that it distributes substantially all of its
taxable income for its fiscal year. The fund may be subject to foreign
taxes on income, gains on investments or currency repatriation. The fund
accrues such taxes as applicable, based upon its current interpretation of
the tax rules and regulations that exist in markets in which it invests.
The schedule of investments includes information regarding income taxes
under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. In addition, stock
dividends received on most Taiwanese stocks are taxable at 20% of the par
value of the stock received.
DEFERRED ORGANIZATION EXPENSES. The fund incurred organization expenses in
connection with its initial issuance of shares. The organization expenses
of $191,250 are being amortized on a straight-
line basis for a five-year period beginning at the commencement of
operations of the fund.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Pursuant to the fund's Dividend Reinvestment and Cash Purchase Plan (the
Plan), shareholders may elect to have all distributions automatically
reinvested in fund shares. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in dollars. If the
market price per share on the valuation date equals or exceeds net asset
value per share on that date, the fund will issue new shares to
participants at net asset value. If the net asset value is less than 95% of
the market price on the valuation date, then shares will be issued at 95%
of the market price. The valuation date will be the dividend or
distribution payment date or, if that date is not a New York Stock Exchange
trading date, the next preceding trading date. If the net asset value
exceeds the market price of fund shares at such time, the Plan Agent will
purchase shares of stock valued at market price on the valuation date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC) and
losses deferred due to wash sales.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign currency
transactions may include temporary book and tax basis differences that will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
The fund invests in new securities offered by some foreign companies by
making applications in the public offerings. Either all, or a portion of
the issue price, is paid at the time of the application and recorded as
application money for new issues. Upon allotment, this amount, plus the
remaining amount of issue price, is recorded as cost of investments.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of FMR, may transfer uninvested cash balances into one or more
joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
responsible for determining that the value of the underlying securities
remains in accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $47,104,665 and $40,175,404, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment manager, FMR receives a fee that
is computed daily at an annual rate of 1.00% of the fund's average net
assets. The fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .25%) based on the fund's investment performance as compared
to the appropriate index over a specified period of time. For the period,
the management fee was equivalent to an annualized rate of 1.06% of average
net assets after the performance adjustment.
ADVISER FEE. FMR and the fund entered into an investment advisory agreement
with Fidelity International Investment Advisors (FIIA), an affiliate of
FMR, pursuant to which FIIA is responsible for the management of the fund's
portfolio in accordance with the fund's investment
policies and for making decisions to buy or sell securities. FMR pays FIIA
a portion of its management fee, including any performance adjustment.
SUB-ADVISER FEE. FIIA, on behalf of the fund, has entered into a
sub-advisory agreement with Fidelity Investments Japan Limited (FIJ), an
affiliate of FMR, to provide advisory services concerning fund assets
invested in Japanese and other securities. FIIA pays FIJ a portion of its
fee based on the assets managed by FIJ.
ADMINISTRATIVE FEE. Fidelity International Limited (FIL), an affiliate of
FMR Corp., has entered into a Fund Management Agreement with the fund to
provide, or arrange to provide, administrative services to the fund
including maintaining the fund's accounting records. As the fund's
administrative manager, FIL receives a monthly fee at an annual rate of
.20% of the fund's average net assets. FIL has contracted all of these
services to Fidelity Service Co., a division of FMR Corp.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$2,419 under this arrangement.
In addition, the fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of the fund's expenses. During the period, the fund's custodian
fees were reduced by $81 under this arrangement.
6. TAIWAN REPATRIATION RESTRICTIONS.
Taiwan imposes a waiting period on the repatriation of both investment
income and capital. Amounts paid to Taiwan may be remitted out of Taiwan
after a waiting period, and realized capital gains and income on
investments may be remitted out of Taiwan only at the conclusion of the
fund's fiscal year.
ADDRESS
Fidelity Advisor Emerging
Asia Fund, Inc.
82 Devonshire Street
Boston, MA
1-800-426-5523
INVESTMENT MANAGER
Fidelity Management &
Research Company
Boston, MA
INVESTMENT ADVISER
Fidelity International
Investment Advisors
Pembroke, Bermuda
SUB-ADVISER
Fidelity Investments Japan Limited
Tokyo, Japan
DIRECTORS AND OFFICERS
Edward C. Johnson 3d, Director and President
J. Gary Burkhead, Director and
Senior Vice President
Helmert Frans van den Hoven, Director
Bertram H. Witham, Jr., Director
David L. Yunich, Director
William Ebsworth, Vice President
Peter F. Phillips, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Stuart E. Fross, Assistant Secretary
John H. Costello, Assistant Treasurer
TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
State Street Bank and Trust Company
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
LEGAL COUNSEL
Rogers & Wells
New York, NY
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Boston, MA
(registered trademark)