(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
EMERGING ASIA
FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1997
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 14 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 18 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 23 THE AUDITORS' OPINION.
ACCOUNTANTS
PROXY VOTING RESULTS 24 SHAREHOLDER PROXY VOTING RESULTS.
DIVIDENDS AND 25 DISTRIBUTIONS, DIVIDEND REINVESTMENT AND
DISTRIBUTIONS CASH PURCHASE PLAN.
OTHER FUND INFORMATION 28 CHANGES AND UPDATES.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets in late October, the
Standard & Poor's 500 Index remained up more than 25% year-to-date,
twice its historical annual average. Meanwhile, bond markets -
primarily influenced by a relatively steady flow of positive news on
the inflation front - continued to post moderate returns through the
first 10 months of 1997.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories 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, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
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
MARKET RECAP
Southeast Asian markets were
extremely volatile with generally
disappointing performance during
the 12 months that ended October 31,
1997. In U.S. dollar terms, the
Indian market performed the
strongest, rising 18.41%. The
Taiwan market was the only other
market to register positive returns,
rising 0.72%. All other markets
saw sharp falls, with the Thai
market performing the worst,
falling -69.52% over the past 12
months. Earlier in the period, both
Hong Kong and Taiwan
performed strongly due to signs of
a recovery in both the economy
and corporate earnings growth,
driven mainly by a rebound in
economic growth in China, which
has become an increasingly
important engine of growth for the
region. In early July, Thailand
gave in after unsuccessfully
fighting currency speculators for
several months, with its currency
depreciating by about 35%.
Currencies in Indonesia, Malaysia
and the Philippines also were
swept up in this turmoil. These
events raised concerns among
investors about possible foreign
exchange losses and the impact
of higher interest rates on
economic and corporate earnings
growth. In October 1997, Taiwan's
currency depreciated by about
8%. This raised concern over the
Hong Kong Dollar. To defend the
currency, Hong Kong's monetary
authorities raised interest rates
dramatically. Although they were
successful, higher interest rates
raised concerns about the impact
on corporate earnings and
economic growth, and brought
about a sharp correction in the
equity market.
An interview with Peter Phillips, Portfolio Manager of Fidelity
Advisor Emerging Asia Fund
Q. HOW DID THE FUND PERFORM, PETER?
A. For the 12 months that ended October 31, 1997, the fund had a total
return of -25.23% based on net asset value. This compares to a total
return of -30.52% for the Morgan Stanley Capital International (MSCI)
All Country Asia ex-Japan Free Index. Since this is a closed-end fund
that trades on the New York Stock Exchange, we also 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
- -27.08%, assuming that dividends and capital gain distributions were
reinvested.
Q. HONG KONG IS STILL THE FUND'S LARGEST COUNTRY WEIGHTING. WHY?
A. I continue to be most positive about the Hong Kong market.
Valuations have become more attractive following the recent sell-off,
and many stocks are now trading at the lower end of their historical
ranges. At the same time, the management of Hong Kong companies are
generally of a very high quality, with a clear objective to maximize
profits. As a result, corporate profit growth in Hong Kong is by far
the highest and the most predictable in Southeast Asia. However, the
market has not been immune from events in the rest of Southeast Asia,
and investors should expect to see continued market volatility.
Q. WHAT CHANGES HAVE YOU MADE TO THE FUND OVER THE PAST YEAR?
A. The portfolio continued to have a strong bias toward Hong Kong,
focusing on companies that are expected to see stronger earnings
growth in 1997 and 1998 as the local economy recovers. Within Hong
Kong, I increased exposure to the utility sector, where stocks were
more attractively valued compared to the rest of the market. These
included holdings in China Light & Power and Hong Kong
Telecommunications. Across the region, I also increased the fund's
exposure to the technology sector, since it looked more attractive
following an inventory adjustment during the past two years. Large
holdings in this sector include Acer and Asustek Computer in Taiwan
and Samsung Electronics in Korea.
Q. WHAT ABOUT THE OTHER MARKETS?
A. Relative to the index, I kept a low exposure to Thailand, Malaysia,
Indonesia and the Philippines. However, I was able to find some
attractive companies that are considered to be more defensive in
nature, offering healthy earnings growth and strong cash flow. In
Malaysia, these include Rothmans, a cigarette manufacturer; Petronas
Gas, the national oil company; and Carlsberg, a brewery. In Indonesia,
some examples include PT Telkom, the domestic telephone company and PT
Gudang Garam, the largest machine-rolled cigarette manufacturer.
Following the market correction, many of these companies looked
attractively valued.
Q. WHAT WAS THE BIGGEST DISAPPOINTMENT DURING THE REVIEW PERIOD?
A. Some of the fund's investments in South Korea didn't perform as
well as I had hoped. In the Korean market, foreign investors are
limited to owning no more than 23% (raised to 26% as of November 3,
1997) of any one stock. Once that limit is reached, foreign investors
have to pay a premium to buy the stock from another foreign investor.
Recently, foreign investors have become more negative on the prospects
for the Korean market, given an increasing number of bankruptcies. As
a result, the foreign premiums for many of the stocks contracted,
hurting the performance of the fund. For example, Samsung Electronics
went from trading at a 40% premium to trading at no premium in a very
short time.
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Southeast Asian stock markets are likely to fluctuate in the near
term, with investors re-evaluating the risk of investing in the
region. Within Hong Kong, earnings downgrades may occur, given the
sharp rise in interest rates. However, I've still been able to find
solid companies in Hong Kong that offer relatively better earnings
quality, management quality and future prospects than many in the rest
of the region. Looking at the region as a whole, over the longer term
the prospects for investment in Southeast Asia remain attractive. One
should not forget that economies in the region are still growing more
rapidly than in most developed economies. Nevertheless, the current
economic environment does represent a big challenge to the corporate
sector. Some companies will fail the test. However, those that are
quick to adjust to the more competitive environment will emerge
stronger.
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.
PETER PHILLIPS ON THE IMPACT OF
CURRENCY DEPRECIATION IN
ASIA:
"The sharp depreciation of the
currencies, combined with higher
local interest rates, is likely to
have a negative impact on
corporate earnings growth. Those
companies that have borrowed in
foreign currencies will see their
debt burdens rise. In addition,
those companies with large levels
of local borrowing will also see
costs rise as a result of higher
interest rates. Domestic economic
growth will probably also weaken
as a result of higher interest rates,
which does not bode well for
demand for the products of local
companies. Finally, weaker
currencies have increased the cost
of imports. As our analysts have
learned from their company visits,
it is difficult for companies to pass
these costs onto their customers,
and therefore profit margins could
be squeezed. Although the weaker
currencies should help the export
sector, it is not clear when these
benefits would filter through."
FUND FACTS
GOAL: to achieve long-term
capital appreciation through
investments in equity and debt
securities of Asian emerging
market issuers
FUND NUMBER: 627
TRADING SYMBOL: FAE
START DATE: March 25, 1994
SIZE: as of October 31,
1997, more than $88 million
MANAGER: Peter Phillips, since
1994; joined Fidelity in 1987
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF OCTOBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
HUTCHISON WHAMPOA LTD. ORD. 5.1 3.4
HONG KONG TELECOMMUNICATIONS LTD. 4.8 3.2
CHEUNG KONG HOLDINGS LTD. 4.6 4.0
HANG SENG BANK LTD. 4.0 3.4
CHINA LIGHT & POWER CO. LTD. 3.5 2.0
SUN HUNG KAI PROPERTIES LTD. 3.3 3.5
HONG KONG & CHINA GAS CO. LTD. 2.8 2.5
PT TELKOM 2.0 2.3
HINDUSTAN LEVER LTD. 1.8 1.1
NEW WORLD DEVELOPMENT CO. LTD. 1.6 1.9
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
UTILITIES 21.5 19.3
FINANCE 18.4 24.7
CONSTRUCTION & REAL ESTATE 12.9 16.2
TECHNOLOGY 8.9 5.3
INDUSTRIAL MACHINERY & EQUIPMENT 5.4 4.8
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1997 AS OF APRIL 30, 1997
ROW: 1, COL: 1, VALUE: 7.1
ROW: 1, COL: 2, VALUE: 44.9
ROW: 1, COL: 3, VALUE: 50.0
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 48.3
ROW: 1, COL: 3, VALUE: 50.0
STOCKS 94.9%
SHORT-TERM
INVESTMENTS 5.1%
STOCKS 98.3%
SHORT-TERM
INVESTMENTS 1.7%
INVESTMENTS OCTOBER 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 94.9%
SHARES VALUE (NOTE 1)
HONG KONG - 37.6%
Cheung Kong Holdings Ltd. 574,000 $ 3,991,268
China Light & Power Co. Ltd. 574,000 3,022,225
China Telecom Ltd. (a) 160,000 255,627
China Resources Enterprise Ltd. 190,000 521,087
Citic Pacific Ltd. Ord. 104,000 497,801
Dairy Farm International Holdings Ltd. (SG) 360,000 284,400
Dah Sing Financial Holdings Ltd. 139,600 350,354
Great Eagle Holdings Ltd. 119,695 182,717
Hang Seng Bank Ltd. 402,700 3,503,438
Hong Kong & China Gas Co. Ltd. 1,287,714 2,432,164
Hong Kong Telecommunications Ltd. 2,163,772 4,151,738
Hutchison Whampoa Ltd. Ord. 644,000 4,457,180
JCG Holdings Ltd. 1,220,000 540,556
Jardine Matheson Holdings Ltd. Ord. 131,000 838,400
National Mutual Asia Ltd. 752,000 680,983
New World Development Co. Ltd. 390,609 1,374,459
Sime Darby Hongkong Ltd. 128,000 91,074
Smartone Telecommunications Holdings Ltd. 76,000 167,141
Sun Hung Kai Properties Ltd. 390,000 2,875,809
Swire Pacific Ltd. Class A 231,000 1,234,191
Television Broadcast Ltd. Ord. 155,000 431,113
Wing Hang Bank Ltd. 203,400 523,630
Yue Yuen Industrial Holdings Ltd. 66,000 144,295
32,551,650
INDIA - 10.4%
Bharat Petroleum Corp. Ltd. 36,000 431,802
Bajaj Auto Ltd. 12,825 204,194
Digital Equipment Ltd. (a) 63,000 306,768
East India Hotels Ltd. (a) 24,300 261,384
Hindustan Lever Ltd. 44,605 1,537,567
Hindustan Petroleum Corp. Ltd. 33,300 437,435
Housing Development Finance Corp. Ltd. 8,098 682,705
ITC Ltd. 63,000 974,030
Industrial Credit & Investments Corp. Ltd. 142,470 345,887
Mahindra & Mahindra Ltd. (a) 45,000 447,524
Mahanagar Telephone Nigam Ltd. 151,400 1,054,802
Procter & Gamble India Ltd. (a) 9,000 194,608
Reliance Industries Ltd. 58,500 303,363
Reliance Industries Ltd. (New) 58,500 298,133
State Bank of India 100,755 728,984
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - CONTINUED
Tata Engineering & Locomotive Ltd. 48,900 $ 428,464
Videsh Sanchar Nigam Ltd. 15,000 371,389
9,009,039
INDONESIA - 4.3%
Astra International PT 205,000 152,327
Gulf Indonesia Resources Ltd. 12,200 256,200
Intikeramik Alamasri Industries TBK PT (a) 650,000 162,500
Lippo Securities PT (a) 1,752,000 182,500
London Sumatra PT 168,000 180,833
PT Bank PAN Indonesia (For. Reg.) 418,000 92,889
PT Daya Guma Samudera TBK 114,500 147,896
PT Indosat Class B 115,500 260,677
PT Gudang Garam 186,000 527,000
PT Telkom 1,869,000 1,739,210
3,702,032
KOREA (SOUTH) - 3.1%
Korea Electric Power Corp. 54,300 770,891
Lg Electronics, Inc. 11,000 148,186
Lg Semicon Co. Ltd. (a) 4,000 65,907
Medison Co. Ltd. 4,030 248,064
Pohang Iron & Steel Co. Ltd. 3,860 169,200
SK Telecom Ltd. 401 123,832
Samsung Electronics Co. Ltd. (vtg.) 12,848 504,600
S1 Corp. 1,027 122,389
Shin Sung Engineering Co. 4,302 187,237
Shinhan Bank 19,884 152,478
Samsung Fire & Marine Insurance 810 214,041
2,706,825
MALAYSIA - 10.3%
Amway Holding BHD 88,000 173,373
Berjaya Sports Toto BHD 202,000 548,716
Carlsberg Brewery BHD 55,500 198,806
EON (Edaran Otomobil Nasional) BHD 130,000 407,463
Kuala Lumpur Kepong BHD Ord. 220,000 525,373
Magnum Corp. BHD 60,000 46,746
Malaysia International Shipping BHD (For. Reg.) (a) 309,000 516,537
Malakoff BHD 97,000 231,642
Malaysian Pacific Industries Ord. 160,000 496,716
Malayan Banking BHD 141,000 542,955
Puncak Niaga Holdings BHD (a) 300,000 352,836
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Petronas Dagangan BHD (a) 81,000 $ 112,675
Petronas Gas BHD 200,000 537,313
Public Bank BHD (For. Reg.) 45,000 28,075
RJ Reynolds BHD 61,000 93,776
Resorts World BHD 116,000 206,030
Rothmans of Pall Mall Malaysia BHD 137,000 1,093,955
Tenega Nasional BHD 563,000 1,210,030
Telekom Malaysia BHD 482,000 1,244,567
United Engineers BHD 97,000 228,746
YTL Corp BHD, Class A (a) 75,750 80,951
8,877,281
PAKISTAN - 0.0%
Askari Commercial Bank (a) 63 42
DG Kahn Cement Ltd. (a) 110 26
Pak Electron Ltd. (a) 55 8
Sui Southern Gas Pipelines Ltd. (a) 2,018 1,357
1,433
PHILIPPINES - 1.3%
Benpress Holdings Corp. GDR (a) 58,580 212,060
Manila Electric Co. Class B 86,120 263,483
Philippine Long Distance Telephone 27,800 689,093
1,164,636
SINGAPORE - 9.5%
City Developments Ltd. 116,000 486,713
Datacraft Asia Ltd. 306,000 697,680
DBS Land Ltd. 135,000 230,006
Development Bank of Singapore Ltd. (For. Reg.) 57,000 532,676
Keppel Corp. Ltd. 76,250 241,404
Natsteel Ltd. 361,000 585,219
Overseas Chinese Banking Corp. 180,480 1,003,942
Parkway Holdings Ltd. 104,000 263,140
Singapore Telecommunications Ltd. 810,000 1,287,349
Singapore International Airlines Ltd. 178,000 1,335,283
Singapore Press Holdings Ltd. (For. Reg.) 45,000 620,788
United Industrial Corp. Ltd. 309,000 143,401
United Overseas Bank Ltd. (For. Reg.) 143,400 793,121
8,220,722
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TAIWAN - 14.3%
Acer, Inc. (a) 469,362 $ 645,087
Acer Peripherals, Inc. 189,000 321,637
Asia Cement Corp. 263,898 301,109
Asustek Computer, Inc. (a) 51,500 647,715
Bank Sinopac (a) 436,356 318,250
Cathay Life Insurance Co. Ltd. 292,195 1,307,064
Cathay Construction Co. Ltd. 651,494 696,898
China Steel Corp. 553,750 425,409
China Development Corp. (a) 209,506 594,223
China Trust Co. Ltd. (a) 304,750 420,822
Compeq Manufacturing Co. Ltd. (a) 36,000 173,874
Formosa Chemical & Fibre 431,595 398,718
Formosa Plastic 31,144 49,669
Hon Hai Precision Ind. Co. (a) 58,800 249,686
Hotung Investment Holdings Ltd. (a) 1,186,000 284,640
Kindom Construction Co. Ltd. (a) 144,000 190,911
Nan Ya Plastics Corp. (a) 447,500 719,481
Phoenixtec Power Company (a) 293,150 608,156
President Enterprises Corp. (a) 417,840 480,821
Siliconware Precision Industries (a) 171,200 332,966
Taiwan Semiconductor Manufacturing Co. Ltd. (a) 254,000 802,755
Taiwan Secom Co. (a) 186,225 609,683
United World Chinese Commercial Bank 221,980 417,337
Wan Hai Lines Ltd. (a) 115,000 169,611
Yageo Corp. (a) 80,000 168,558
Yue Loong Motor Co. 452,550 712,931
Yue Loong Motor Co. rights 11/15/97 24,003 856
Yung Shin Pharmaceutical Industries Co. Ltd. 170,890 340,672
12,389,539
THAILAND - 3.1%
Bangkok Bank Ltd. (For. Reg.) 115,200 393,126
Bank of Ayudhya PCL (For. Reg.) 138,100 108,561
BEC World PCL (For. Reg.) 23,600 120,804
Bangkok Expressway PCL (For. Reg.) (a) 200,000 146,252
Cogeneration PCL (For. Reg.) 72,100 71,177
Delta Electronics PCL (For Reg.) 24,700 204,704
Eastern Water Resources Development & Management
PCL (For. Reg.) 209,900 209,772
Electricity Generating PCL (For. Reg.) 130,500 213,126
Industrial Finance Corp. of Thailand (For. Reg.) 165,000 136,746
PTT Exploration & Production (For. Reg.) 60,900 608,629
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
Siam Cement PCL (For. Reg.) 20,400 $ 170,062
Thai Farmers Bank PCL 100,000 268,129
2,651,088
UNITED KINGDOM - 0.7%
HSBC Holdings PLC 27,255 638,557
VIETNAM - 0.3%
Vietnam Enterprise Investments Ltd. (a)(c) 250,000 245,000
TOTAL COMMON STOCKS
(Cost $100,108,635) 82,157,802
CASH EQUIVALENTS - 5.1%
Taxable Central Cash Fund (b)
(Cost $4,424,072) 4,424,072 4,424,072
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $104,532,707) $ 86,581,874
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.64%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
3. 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 $245,000 or 0.3%
of net assets.
INCOME TAX INFORMATION
At October 31, 1997, the aggregate cost of investment securities for
income tax purposes was $104,998,154. Net unrealized depreciation
aggregated $18,416,280, of which $6,987,948 related to appreciated
investment securities and $25,404,228 related to depreciated
investment securities.
The fund hereby designates approximately $1,484,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
MARKET SECTOR DIVERSIFICATION
(UNAUDITED)
As a Percentage of Total Value of Investment
in Securities
Aerospace & Defense 0.3%
Basic Industries 4.4
Cash Equivalents 5.1
Construction & Real Estate 12.9
Durables 3.0
Energy 2.6
Finance 18.4
Health 0.9
Holding Companies 4.0
Industrial Machinery &
Equipment 5.4
Media & Leisure 3.3
Nondurables 4.3
Retail & Wholesale 0.3
Services 0.9
Technology 8.9
Transportation 3.8
Utilities 21.5
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $104,532,707) - $ 86,581,874
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE NEW TAIWAN DOLLARS 104,094
(COST $104,158)
RECEIVABLE FOR INVESTMENTS SOLD 1,877,919
DIVIDENDS RECEIVABLE 78,407
INTEREST RECEIVABLE 30,885
DEFERRED ORGANIZATIONAL EXPENSES 51,000
TOTAL ASSETS 88,724,179
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 212,093
ACCRUED MANAGEMENT FEE 108,872
OTHER PAYABLES AND ACCRUED EXPENSES 301,568
TOTAL LIABILITIES 622,533
NET ASSETS $ 88,101,646
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 104,780,441
UNDISTRIBUTED NET INVESTMENT INCOME 314,886
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 960,172
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (17,953,853)
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 7,602,384 SHARES OUTSTANDING $ 88,101,646
NET ASSET VALUE ($88,101,646 (DIVIDED BY) 7,602,384 SHARES) $11.59
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME $ 2,478,119
DIVIDENDS
INTEREST 266,519
2,744,638
LESS FOREIGN TAXES WITHHELD (464,541)
TOTAL INCOME 2,280,097
EXPENSES
MANAGEMENT FEE $ 1,307,602
BASIC FEE
PERFORMANCE ADJUSTMENT 201,280
TRANSFER AGENT FEES 14,766
ADMINISTRATIVE FEES AND EXPENSES 261,284
DIRECTORS' COMPENSATION 67,685
CUSTODIAN FEES AND EXPENSES 268,980
AUDIT 69,026
LEGAL 9,750
AMORTIZATION OF ORGANIZATION EXPENSES 38,250
MISCELLANEOUS 9,856
TOTAL EXPENSES BEFORE REDUCTIONS 2,248,479
EXPENSE REDUCTIONS (12,118) 2,236,361
NET INVESTMENT INCOME 43,736
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 1,932,157
FOREIGN CURRENCY TRANSACTIONS (152,661) 1,779,496
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (31,388,648)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (2,139) (31,390,787)
NET GAIN (LOSS) (29,611,291)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (29,567,555)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 43,736 $ 112,027
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 1,779,496 5,845,507
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (31,390,787) 11,409,848
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (29,567,555) 17,367,382
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (43,736) (112,027)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (40,735) (394,799)
FROM NET REALIZED GAIN (3,463,308) -
TOTAL DISTRIBUTIONS (3,547,779) (506,826)
SHARE TRANSACTIONS: (13,397,085) -
COMMON STOCK REPURCHASED
REPURCHASE OFFER EXPENSES (113,869) -
REDEMPTION FEES ADDED TO PAID IN CAPITAL 113,869 -
COST OF SHARES REPURCHASED (13,397,085) -
TOTAL INCREASE (DECREASE) IN NET ASSETS (46,512,419) 16,860,556
NET ASSETS
BEGINNING OF PERIOD 134,614,065 117,753,509
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET $ 88,101,646 $ 134,614,065
INVESTMENT INCOME OF $314,886 AND
$(404,110), RESPECTIVELY)
OTHER INFORMATION (844,709) -
SHARES REPURCHASED
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.94 $ 13.94 $ 16.01 $ 14.10
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .01 .01 .01 .03
NET REALIZED AND UNREALIZED GAIN (LOSS) (3.94) 2.05 (1.83) 1.97
TOTAL FROM INVESTMENT OPERATIONS (3.93) 2.06 (1.82) 2.00
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01) (.01) (.04) -
IN EXCESS OF NET INVESTMENT INCOME - (.05) (.09) -
FROM NET REALIZED GAIN (.41) - (.10) -
IN EXCESS OF NET REALIZED GAIN - - (.02) -
TOTAL DISTRIBUTIONS (.42) (.06) (.25) -
ANTIDILUTION RESULTING FROM ADDITIONAL - - - .02
OFFERING OF SHARES
OFFERING EXPENSES - - - (.11)
NET ASSET VALUE, END OF PERIOD $ 11.59 K $ 15.94 $ 13.94 $ 16.01
MARKET VALUE, END OF PERIOD $ 9.750 $ 13.750 $ 11.875 $ 15.125
TOTAL RETURN B (27.08)% 16.26% (19.94)% .83%
MARKET VALUE I L H
NET ASSET VALUE C, M (25.23)% 14.81% (11.21)% 13.39% J
L
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 88,102 $ 134,614 $ 117,754 $ 135,273
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.72% 1.63% 1.68% 1.70%
A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.71% 1.63% 1.68% 1.70%
EXPENSE REDUCTIONS F A
RATIO OF NET INVESTMENT INCOME TO AVERAGE .03% .09% .08% .29%
NET ASSETS A
PORTFOLIO TURNOVER RATE 55% 63% 69% 70%
A
AVERAGE COMMISSION RATE G $ .0091 $ .0134
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL NET ASSET VALUE RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD MARCH 25, 1994 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1994.
F 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).
G 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.
H TOTAL MARKET VALUE RETURN INCLUDES ONE TIME SALES LOAD OF 6% PAID IN
CONNECTION WITH THE INITIAL PUBLIC OFFERING.
I 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.
J TOTAL NET ASSET VALUE RETURN DOES NOT INCLUDE THE EFFECT OF
ANTIDILUTION OR SALES LOADS.
K THE FUND INCURRED EXPENSES OF $.01 PER SHARE IN CONNECTION WITH ITS
REPURCHASE OFFER WHICH WERE OFFSET BY REDEMPTION FEES COLLECTED AS
PART OF THE REPURCHASE OFFER.
L THE TOTAL RETURNS INCLUDE THE EFFECT OF A CORRECTION TO DIVIDEND
REINVESTMENT METHODOLOGY.
M TOTAL NET ASSET VALUE RETURNS REFLECTS THE EFFECT OF CHANGES IN THE
FUND'S NET ASSET VALUE AND ASSUMES DIVIDENDS AND CAPITAL GAINS
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1997
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. During the first calendar quarter of each year, the Board
of Directors of the fund may, under certain circumstances, conduct a
repurchase or tender offer to repurchase a maximum of 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.
In April 1997, the fund completed a repurchase offer for ten percent
of the fund's outstanding shares. The repurchase offer resulted in the
repurchase of 844,709 shares of the fund's common stock at a net asset
value of $15.86 per share. Such shares are included as authorized but
unissued shares of the fund.
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. If events which are expected to
materially affect the value of securities occur after the close of a
principal market in which those securities are traded, then those
securities are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of
the Board of Trustees ("fair value"). 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 Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate
foreign ownership may trade at a premium to the local share price. If
the broker-quoted premium is not readily available as a result of
limited share activity, the securities are valued at the last sale
price of the local share in the principal market in which such
securities are normally traded.
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. Income
receipts
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION -
CONTINUED
and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
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 and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
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.
In addition, the fund incurred expenses in connection with its
repurchase offer of approximately $114,000 which were paid by the fund
and charged to paid in capital. All of these expenses were offset by
redemption fees collected as a part of the repurchase offer and were
accounted for as an addition to paid in capital.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable
as ordinary income and, therefore, increase (decrease) taxable
ordinary income available for distribution.
Pursuant to the fund's Dividend Reinvestment and Cash Purchase Plan
(the Plan), shareholders may elect to have all distributions
automatically reinvested in
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
fund shares. Shareholders who do not participate in the Plan will
receive all distributions in cash paid by check in U.S. 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 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 the 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.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed 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
offering. 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.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. 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 foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements for
U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, Inc., an affiliate of FMR. The Cash
Fund is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current income
by investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $68,711,005 and $87,892,090, 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% of the fund's average net assets over
the performance period) 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 annual rate of
1.16% of average net assets after the performance adjustment.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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, 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.
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 $11,692 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the fund's custodian fees were reduced by $426 under this
arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Fidelity Advisor
Emerging Asia Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Emerging Asia Fund, Inc. at October 31, 1997, the
results of its operations for the year then ended, and the changes in
its net assets and the financial highlights for the periods indicated,
in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity
Advisor Emerging Asia Fund, Inc.'s management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997 by correspondence with
the custodian and the application of alternative auditing procedures
where securities purchased were not yet received by the custodian,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 8, 1997
PROXY VOTING RESULTS
The annual meeting of the fund's shareholders was held on June 19,
1997. The results of votes taken among shareholders on proposals are
listed below.
PROPOSAL 1
To elect two Class III Directors (Messrs. van den Hoven and Malone) to
serve for a term expiring on the date on which the annual meeting of
shareholders is held in 2000, or until their successors are duly
elected and qualified.
# OF % OF
SHARES VOTED SHARES VOTED
HELMERT FRANS VAN DEN HOVEN (CLASS III DIRECTOR)
AFFIRMATIVE 4,949,751.099 96.18
WITHHELD 196,792.000 3.82
TOTAL 5,146,543.099 100.000
EDWARD H. MALONE (CLASS III DIRECTOR)
AFFIRMATIVE 4,950,658.099 96.19
WITHHELD 195,885.000 3.81
TOTAL 5,146,543.099 100.000
PROPOSAL 2
To ratify the selection of Price Waterhouse LLP as independent
accountants of the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 5,005,412.099 97.26
AGAINST 93,331.000 1.81
ABSTAIN 47,800.000 0.93
TOTAL 5,146,543.099 100.000
DIVIDENDS AND DISTRIBUTIONS
DISTRIBUTIONS
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are $.06 and $.05, respectively, for the dividend paid
January 13, 1997.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The fund intends to distribute annually to shareholders substantially
all of its net investment income from dividends and interest earnings
and expects to distribute any net realized capital gains at least
annually. Pursuant to the Dividend Reinvestment and Cash Purchase Plan
(the "Plan"), adopted by the fund, shareholders may elect to have all
distributions automatically reinvested by State Street Bank and Trust
Company (the "Plan Agent") in fund shares, pursuant to the Plan.
Shareholders who do not elect to participate in the Plan will receive
all distributions in cash paid by check in U.S. dollars mailed
directly to the shareholder by the Plan Agent. Shareholders who would
like additional information regarding the Plan or wish to have
distributions automatically reinvested should notify the fund, c/o the
Plan Agent for Fidelity Advisor Emerging Asia Fund, Inc., at Two
Heritage Drive, North Quincy, Massachusetts 02171.
The Plan Agent will serve as agent for the shareholders in
administering the Plan. If the Directors of the fund declare an income
dividend or a capital gains distribution payable either in the fund's
Common Stock or in cash, as shareholders may have elected,
non-participants in the Plan will receive cash and participants in the
Plan will receive Common Stock, to be issued by the fund or purchased
by the Plan Agent in the open market, as provided below. 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 or, if the net asset value is less
than 95% of the market price on the valuation date, then new 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 day, then the next preceding trading
day. If net asset value exceeds the market price of fund shares at
such time, or if the fund should declare a dividend or capital gains
distribution payable only in cash, the Plan Agent will, as agent for
the participants, buy fund shares in the open market on the New York
Stock Exchange or elsewhere, with the cash in respect of such dividend
or distribution, for the participant's account on, or shortly after,
the payment date.
Participants in the Plan have the option of making additional payments
to the Plan Agent, annually, in any amount from $100 to $3,000 for
investment in the fund's Common Stock. The Plan Agent will use all
such funds received from participants to purchase fund shares in the
open market on or about February 15 of each year. Any voluntary cash
payments received more than thirty days prior to such date will be
returned by the Plan Agent, and interest will not be paid on any
uninvested cash payments. To avoid unnecessary cash accumulations, and
also to allow ample time for receipt and processing by the Plan Agent,
it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before an
applicable purchase date as specified above. A participant may
withdraw a voluntary cash payment by written notice if the notice is
received by the Plan Agent not less than forty-eight hours before such
payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and
furnishes written confirmations of all transactions in the account,
including information needed by shareholders for personal and tax
records. Shares in the account of each Plan participant will be held
by the Plan Agent in non-certificated form in the name of the
participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan. In the case of shareholders such as
banks, brokers or nominees, which hold shares for others who are the
beneficial owners, the Plan Agent will administer the Plan on the
basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the
shareholder's name and held for the account of beneficial owners who
are participating in the Plan.
There is no charge to participants for reinvesting dividends or
capital gains distributions. The Plan Agent's fees for the handling of
the reinvestment of dividends and distributions and voluntary cash
payments will be paid by the fund. There will be no brokerage charges
with respect to shares issued directly by the fund as a result of
dividends or capital gains distributions payable either in stock or in
cash. However, each participant's account will be charged a prorata
share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of
dividends or capital gains distributions and voluntary cash payments
made by the participant. Brokerage charges for purchasing small
amounts of stock for individual accounts through the Plan are expected
to be less than the usual brokerage charges for such transactions,
because the Plan Agent will be purchasing stock for all participants
in blocks and prorating the lower commission thus attainable.
The reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable on such dividends
and distributions.
If your shares are held in your own name and you wish to receive all
dividends and capital gain distributions in cash rather than in
shares, you may withdraw from the Plan without penalty at any time by
contacting the Plan Agent. If your shares are held in nominee name,
you should be able to withdraw from the Plan without penalty at any
time by sending written notice to your nominee. If you withdraw, you
will receive a share certificate for all full shares or, if you wish,
the Plan Agent will sell your shares and send you the proceeds, after
the deduction of brokerage commissions. The Plan Agent will convert
any fractional shares to cash at the then-current market price and
send you a check for the proceeds. Please note that, if you
participate in the Plan through a brokerage account, you may not be
able to continue as a participant if you transfer those shares to
another broker. Contact your broker or nominee or the Plan Agent to
see what is the best arrangement for you to participate in the Plan.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the fund reserves the right to amend or terminate the
Plan as applied to any voluntary cash payment made and any dividend or
distribution paid subsequent to notice of the change sent to members
of the Plan at least 30 days before the record date for such dividend
or distribution. The Plan also may be amended by the fund or Plan
Agent by at least 30 days' written notice to all participants in the
Plan. All correspondence concerning the Plan should be directed c/o
the Plan Agent for Fidelity Advisor Emerging Asia Fund, Inc., at Two
Heritage Drive, North Quincy, Massachusetts 02171.
OTHER FUND INFORMATION
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the Investment Company Act of 1940 (1940 Act), control of a company is
presumed where one individual or group of individuals owns more than
25% of the voting stock of that company. Therefore, through their
ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the 1940 Act, to form a controlling group with respect
to FMR Corp.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109, is custodian of the assets of the fund. The
custodian is responsible for the safekeeping of the fund's assets and
the appointment of the subcustodian banks and clearing agencies. The
custodian takes no part in determining the investment policies of the
fund or in deciding which securities are purchased or sold by the
fund. However, the fund may invest in obligations of the custodian and
may purchase securities from or sell securities to the custodian. The
Bank of New York and The Chase Manhattan Bank, each headquartered in
New York, also may serve as a special purpose custodian of certain
assets of the fund in connection with pooled repurchase agreement
transactions.
DIVERSIFICATION OF INVESTMENTS. The Fund will invest primarily in
equity securities. The Fund will diversify its investments across
different regions and countries as appropriate, and FMR will consider
the size of each market when allocating the Fund's investments. The
Fund will no longer necessarily invest in as few as three Asian
Emerging Market Countries.
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
Robert C. Pozen, Director and
Senior Vice President
Helmert Frans van den Hoven, Director
Edward H. Malone, Director
Bertram H. Witham, Jr., Director
David L. Yunich, Director
Robert H. Auld, Vice President
Peter F. Phillips, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Stuart E. Fross, Assistant Secretary
John H. Costello, Assistant Treasurer
Pradip Darooka, 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)
