(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
EMERGING ASIA
FUND, INC.
SEMIANNUAL REPORT
APRIL 30, 1998
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.
DIVIDENDS AND DISTRIBUTIONS 23 DIVIDEND REINVESTMENT AND CASH
PURCHASE PLAN.
OTHER FUND INFORMATION 26
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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
The six months that ended April 30,
1998, were characterized by a
high level of market volatility.
During the six months,
performance among stock markets
was mixed. Taiwan rose about 8%,
followed by India, which rose more
than 5%. Among the larger markets
in the region, Hong Kong fell about
8%, Singapore by 12% and South
Korea around 17%. Most markets
in the region fell sharply in late
1997, before rising significantly
in late January and into February.
The recovery in markets coincided
with a series of announcements
from the International Monetary
Fund that financial aid would be
given to South Korea, Thailand
and Indonesia. This helped to
arrest the sharp decline in many
local currencies, which in turn had
a beneficial impact on stock
markets. The rise in the markets
came on the heels of negative
investor sentiment and after
markets had fallen a long way over
a short period. Any unexpected
good news tended to be greeted
positively by investors and
encourage buying. Near the end of
the period, markets began to give
up some of these gains due to profit
taking and investors started to
reappraise the economic outlook
for the region. It became apparent
that the recessions might deepen
amid rising unemployment, higher
inflation and sluggish growth in
exports. Social unrest in Indonesia
and South Korea also had a
negative impact on share prices.
An interview with Peter Phillips, Portfolio Manager of Fidelity
Advisor Emerging Asia Fund
Q. HOW DID THE FUND PERFORM, PETER?
A. During the six months that ended April 30, 1998, the fund returned
- -3.92% based on the change in its net asset value. Although this was
disappointing, the return for the Morgan Stanley Capital International
(MSCI) All Country Asia ex-Japan Free Index was -10.75%. The fund is a
closed-end fund and is traded on the New York Stock Exchange. The
return in terms of its share price performance over the period was
- -1.43%, assuming that dividends and capital gain distributions were
reinvested. This better return reflects the narrowing in the discount
at which the shares traded to the fund's underlying net asset value.
Q. WHY DID THE FUND PERFORM BETTER THAN THE INDEX?
A. It was mainly a case of good stock picking, but the fund also was
helped by holding a relatively low proportion in some of the
worst-performing markets. Markets such as India and Taiwan - which
accounted for over a quarter of the fund's assets on April 30 - were
among the better-performing markets. The Hong Kong market - about 35%
of the fund's assets as of the end of the period - was not as weak as
some of its neighbors. In terms of stock selection, the most value was
added in Taiwan, Hong Kong, South Korea and Singapore. Holdings that
performed well included Singapore Telecommunications, ITC, Phoenixtec
Power and Samsung Electronics.
Q. WERE THERE MANY CHANGES TO THE FUND IN THE SIX-MONTH PERIOD?
A. The fund's technology investments continued to increase and now
represent 13.2% of the fund. Holdings that are more sensitive to
growth in their domestic economies were reduced. The fund has
continued to be biased towards the larger markets in the region, such
as Hong Kong, Taiwan and Singapore. Not only are these countries
fundamentally stronger than some of the smaller economies in the
region, but also many of their companies have relatively strong
finances, are better managed and are therefore better equipped to
weather the economic downturn in the region.
Q. INDIA ALSO REPRESENTS ONE OF THE LARGER MARKETS IN THE PORTFOLIO.
WHY IS THAT?
A. India accounts for about 13% of the index, and as a rule, the
portfolio's market exposure tends not to diverge significantly from
the index. The Indian market also has offered a relatively safe haven
because it has tended not to perform in line with markets in Southeast
Asia. However, the most important factor was being able to find
attractive investments. Two of the top 10 holdings are Indian
companies. One is ITC, a holding company with businesses in tobacco,
hotels, financial services and paper, and the other is Mahanagar
Telephone Nigam.
Q. CAN YOU DESCRIBE THE TYPE OF COMPANIES YOU'VE BEEN LOOKING FOR?
A. In the current environment, it is important that companies have
strong finances. The fund emphasized companies that generate a lot of
cash and are able to service their debt. Resorts World in Malaysia and
Hong Kong and China Gas Company fulfilled this criteria. The fund also
emphasized companies that have fairly stable earnings growth - utility
companies in particular, especially telecom companies. Also emphasized
were companies that have strong positions in their industries. Many of
the technology companies fall into this category. They also are major
exporters and can benefit from a more competitive exchange rate, given
the sharp falls in currencies across the region. Further, some
companies are in a good position to gain market share from their
weaker competitors. This is the case in the banking sector, where
there is likely to be consolidation.
Q. WERE THERE ANY DISAPPOINTMENTS IN THE PERIOD?
A. In Hong Kong, the rise in interest rates caused the share price of
property stocks to decline sharply. This adversely affected the
performance of Sun Hung Kai Properties and New World Development,
which have extensive property investments in Hong Kong. In the Asian
markets, the banking sector was hurt by the sharp rise in bad debts.
Malayan Banking in Malaysia and Bangkok Bank in Thailand were
disappointing performers.
Q. WHAT IS THE OUTLOOK FOR THE NEXT SIX MONTHS?
A. Although there are still many uncertainties, it should be possible
to find markets and companies that are more likely to prosper in the
years ahead. Hong Kong, Singapore and Taiwan are in a relatively
strong position to weather the crisis. There also are concerted
efforts being made in Thailand and to some extent in South Korea to
implement economic and corporate reforms. India has not been greatly
affected by events in Southeast Asia. In this environment, the general
focus is on companies with strong fundamentals - companies whose
profit growth is more predictable and that have low levels of
financial risk and strong cash flow.
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.
NOTE TO SHAREHOLDERS:
ON MAY 15, 1998, IT WAS ANNOUNCED
THAT THE SHAREHOLDERS OF THE FUND
WILL BE ASKED TO APPROVE A PROPOSAL
TO CONVERT THE FUND INTO AN
OPEN-END INVESTMENT COMPANY.
THE VOTE IS SCHEDULED TO TAKE PLACE
AT THE FUND'S ANNUAL MEETING,
WHICH WILL BE HELD LATER THIS YEAR.
WHILE THE EXACT TERMS OF THE
TRANSACTION ARE STILL UNDER
CONSIDERATION, MATERIALS
PROVIDING A DETAILED DESCRIPTION OF
THE PROPOSED CONVERSION AND
VOTING INFORMATION WILL BE SENT TO
SHAREHOLDERS PRIOR TO THE MEETING.
THE CONVERSION OF THE FUND IS BEING
PROPOSED BECAUSE THE FUND'S SHARES
HAVE TRADED AT A PERSISTENT
DISCOUNT TO THEIR NET ASSET VALUE,
DESPITE THE FUND HAVING
REPURCHASED 10% OF ITS OUTSTANDING
SHARES IN EACH OF THE PAST TWO
YEARS.
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 APRIL 30, 1998,
MORE THAN $73 MILLION
MANAGER: PETER PHILLIPS, SINCE
1994; JOINED FIDELITY IN 1987
(CHECKMARK)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
HUTCHISON WHAMPOA LTD. ORD. 4.9 5.1
HONG KONG TELECOMMUNICATIONS LTD. 4.6 4.8
CHEUNG KONG HOLDINGS LTD. 4.3 4.6
HANG SENG BANK LTD. 4.2 4.0
CLP HOLDINGS LTD. 3.4 3.5
SUN HUNG KAI PROPERTIES LTD. 2.8 3.3
HONG KONG & CHINA GAS CO. LTD. 2.4 2.8
ITC LTD. 2.3 1.1
MAHANAGAR TELEPHONE NIGAM LTD. 2.1 1.2
SINGAPORE TELECOMMUNICATIONS LTD. 2.0 1.5
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
UTILITIES 20.8 21.5
FINANCE 20.4 18.4
TECHNOLOGY 13.2 8.9
CONSTRUCTION & REAL ESTATE 12.3 12.9
INDUSTRIAL MACHINERY & EQUIPMENT 5.2 5.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
ROW: 1, COL: 1, VALUE: 97.40000000000001
ROW: 1, COL: 2, VALUE: 2.6
STOCKS 94.9%
SHORT-TERM
INVESTMENTS 5.1%
STOCKS 97.4%
SHORT-TERM
INVESTMENTS 2.6%
ROW: 1, COL: 1, VALUE: 94.90000000000001
ROW: 1, COL: 2, VALUE: 5.1
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 97.3%
SHARES VALUE (NOTE 1)
CHINA - 0.5%
Jiangsu Expressway Co. Ltd. Class H 242,000 $ 69,491
Shenzhen Expressway Co. Ltd. Class H 502,000 137,672
Zhejiang Expressway Co. Class H 692,000 167,005
374,168
HONG KONG - 35.9%
CLP Holdings Ltd. 518,000 2,486,881
Cheung Kong Holdings Ltd. 472,000 3,137,123
China Telecom Ltd. 64,000 123,600
China Resources Enterprise Ltd. 70,000 120,152
Citic Pacific Ltd. Ord. 94,000 288,727
Dairy Farm International Holdings Ltd. 564,000 721,920
Dah Sing Financial Holdings Ltd. 125,600 306,361
First Pacific Co. Ltd. (a) 400,000 192,295
Great Eagle Holdings Ltd. 107,695 144,548
Hang Seng Bank Ltd. 362,700 3,054,291
Hong Kong & China Gas Co. Ltd. 1,275,685 1,736,914
Hong Kong & China Gas Co. Ltd. warrants 9/30/99 (a) 57,985 -
Hong Kong Telecommunications Ltd. 1,766,400 3,411,360
Hutchison Whampoa Ltd. Ord. 580,000 3,585,468
JCG Holdings Ltd. 1,274,000 583,687
Jardine Matheson Holdings Ltd. Ord. 59,000 248,980
Johnson Electric Holdings Ltd. 62,000 210,041
National Mutual Asia Ltd. 676,000 540,905
New World Development Co. Ltd. 368,780 1,049,442
Sime Darby Ltd. 166,000 68,020
Smartone Telecommunications Holdings Ltd. 116,000 304,653
Sun Hung Kai Properties Ltd. 352,000 2,089,695
Swire Pacific Ltd. Class A 209,000 1,043,854
Television Broadcast Ltd. Ord. 139,000 355,191
Wing Hang Bank Ltd. 183,400 515,986
26,320,094
INDIA - 12.7%
Bharat Heavy Electricals Ltd. 35,000 346,343
Bharat Petroleum Corp. Ltd. 32,400 326,228
Bajaj Auto Ltd. 11,525 172,882
Dr. Reddy's Laboratories Ltd. 23,400 269,794
East India Hotels Ltd. 21,900 205,683
Hindustan Lever Ltd. 35,705 1,417,771
Hindustan Petroleum Corp. Ltd. 30,000 304,986
Housing Development Finance Corp. Ltd. 7,298 592,991
ITC Ltd. 83,700 1,658,688
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - CONTINUED
Industrial Credit & Investment Trust (a) 146,470 $ 380,947
Mahanagar Telephone Nigam Ltd. 244,400 1,550,769
Mahindra & Mahindra Ltd. 22,500 163,786
Procter & Gamble India Ltd. (a) 4,500 93,007
Reliance Industries Ltd. 145,800 693,457
State Bank of India 90,755 658,125
Tata Power Co. 61,100 169,385
Videsh Sanchar Nigam Ltd. 17,100 333,690
9,338,532
INDONESIA - 1.5%
Gudang Garam PT Perusahaan 167,000 199,356
Gulf Indonesia Resources Ltd. 21,300 327,488
PT Astra Argo Niaga Lestari TBK (a) 288,000 125,100
PT Indosat 104,000 152,100
PT Telekom 851,000 335,081
1,139,125
KOREA (SOUTH) - 4.1%
Korea Electric Power Corp. 36,000 490,236
Lg Electronics, Inc. 23,400 278,384
Lg Semicon Co. Ltd. 5,400 63,030
Medison Co. Ltd. 36,300 296,049
Pohang Iron & Steel Co. Ltd. 3,480 187,149
SK Telecom Ltd. 413 251,694
Samsung Electronics Co. Ltd. (vtg.) 14,048 777,817
Samsung Electronics Co. Ltd. rights 6/1/98 (a) 1,006 19,420
S1 Corp. 1,047 148,844
Samsung Display Devices Ltd. 3,600 179,125
Samsung Display Devices Ltd. rights 5/11/98 (a) 521 9,044
Sindo Ricoh Co. 640 22,507
Shin Sung Engineering Co. 664 9,589
Samsung Fire & Marine Insurance 1,066 315,054
3,047,942
MALAYSIA - 10.3%
Amway Holding BHD 145,000 285,532
Berjaya Sports Toto BHD 182,000 431,534
Carlsberg Brewery BHD 50,000 172,806
Commerce Asset Holding BHD 158,000 118,526
EON (Edaran Otomobil Nasional) BHD 123,000 210,904
Kuala Lumpur Kepong BHD Ord. 78,000 180,764
Malaysia International Shipping BHD (For. Reg.) 333,000 579,906
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MALAYSIA - CONTINUED
Malakoff BHD 43,000 $ 112,900
Malaysian Pacific Industries Ord. 30,000 86,001
Malayan Banking BHD 167,000 492,163
Perusahaan Otomobil Nasional BHD 117,000 144,820
Petronas Gas BHD 175,000 421,969
Public Bank BHD (For. Reg.) 435,000 207,448
Puncak Niaga Holdings BHD (a) 270,000 241,608
RJ Reynolds BHD 13,000 20,723
Resorts World BHD 328,000 632,713
Rothmans of Pall Mall Malaysia BHD 83,000 683,791
Tanjong PLC (For. Reg.) 56,000 127,528
Tenega Nasional BHD 507,000 1,011,962
Telekom Malaysia BHD 371,000 1,113,248
YTL Corp. BHD (a) 67,750 105,278
YTL Power International BHD 165,000 149,417
7,531,541
PAKISTAN - 0.0%
Askari Commercial Bank 66 33
Pak Electron Ltd. (a) 55 5
Sui Southern Gas Pipelines Ltd. (a) 2,320 887
925
PHILIPPINES - 2.0%
Benpress Holdings Corp. GDR (a) 52,580 164,050
Manila Electric Co. Class B 77,120 218,427
Philippine Long Distance Telephone 24,800 662,360
QueenBee Resources Corp. warrants 3/25/03 (a) 276,000 125,143
SM Prime Holdings, Inc. 1,879,000 336,119
1,506,099
SINGAPORE - 10.0%
City Developments Ltd. 104,000 449,889
Datacraft Asia Ltd. 225,000 756,000
DBS Land Ltd. 121,000 182,627
Development Bank of Singapore Ltd. (For. Reg.) 51,000 338,175
Development Bank of Singapore Ltd. Class A (For. Reg.) (a) 15,300
99,520
Keppel Corp. Ltd. 68,250 183,609
Overseas Chinese Banking Corp. 226,480 1,194,258
Parkway Holdings Ltd. 47,000 101,509
Singapore International Airlines Ltd. 96,000 624,440
Singapore Press Holdings 109,220 1,207,041
Singapore Telecommunications Ltd. 845,000 1,451,468
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - CONTINUED
United Industrial Corp. Ltd. 278,000 $ 110,603
United Overseas Bank Ltd. (For. Reg.) 129,400 612,883
7,312,022
TAIWAN - 15.5%
Acer, Inc. (a) 152,362 254,133
Acer Peripherals, Inc. 86,000 156,485
Asustek Computer, Inc. (a) 43,500 886,503
Bank Sinopac (a) 673,356 490,092
CTCI Corp. 169,000 240,883
Compal Electronics, Inc. (a) 157,000 683,240
Cathay Life Insurance Co. Ltd. 246,195 985,542
Cathay Construction Co. Ltd. 574,494 533,125
China Development Corp. (a) 252,506 685,356
China Trust Co. Ltd. (a) 373,750 438,646
Compeq Manufacturing Co. Ltd. (a) 43,000 331,226
Formosa Chemical & Fibre 388,595 400,680
Formosa Plastic 28,144 48,223
Hon Hai Precision Ind. Co. (a) 78,800 458,827
Hotung Investment Holdings Ltd. 1,068,000 277,680
Kindom Construction Co. Ltd. (a) 130,000 234,575
Nan Ya Plastics Corp. 212,500 351,218
Phoenixtec Power Co. (a) 291,150 949,177
President Enterprises Corp. (a) 376,840 395,417
Siliconware Precision Industries (a) 212,200 514,822
Standard Foods Taiwan Ltd. (a) 750 1,342
Taiwan Semiconductor Manufacturing Co. Ltd. (a) 294,000 1,270,527
Taishin International Bank (a) 590,000 415,109
Yung Shin Pharmaceutical Industries Co. Ltd. 153,890 350,020
11,352,848
THAILAND - 3.5%
Bangkok Bank Ltd. (For. Reg.) 103,700 260,931
Bank of Ayudhya PCL (For. Reg.) 124,300 39,499
Bank of Ayudhya PCL rights 6/10/98 (a) 124,300 7,255
BEC World PCL (For. Reg.) 6,000 31,751
Bangkok Expressway PCL (For. Reg.) (a) 180,000 142,412
Cogeneration PCL (For. Reg.) 144,200 86,034
Delta Electronics PCL (For. Reg.) 15,900 164,156
Delta Electronics Thai PCL subscription offer 5/31/98 (a) 7,950
80,016
Eastern Water Resources Development & Management
PCL (For. Reg.) 190,100 221,907
Electricity Generating PCL (For. Reg.) 117,000 227,626
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
THAILAND - CONTINUED
Industrial Finance Corp. of Thailand (For. Reg.) 148,500 $ 61,634
National Finance & Securities PCL (For. Reg.) 280,000 125,292
Phatra Thanakit PCL (For. Reg.) (a) 69,600 76,732
PTT Exploration & Production (For. Reg.) 30,100 318,568
Siam Cement PCL (For. Reg.) 18,000 254,942
Shinawatra Computer & Communication PCL (For. Reg.) 31,000 194,604
Siam Makro PCL (Loc. Reg.) (a) 45,000 74,125
Thai Farmers Bank PCL 78,500 180,214
2,547,698
UNITED KINGDOM - 1.0%
HSBC Holdings PLC 24,912 732,564
VIETNAM - 0.3%
Vietnam Enterprise Investments Ltd. (a)(c) 250,000 227,500
TOTAL COMMON STOCKS
(Cost $82,457,104) 71,431,058
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
TAIWAN - 0.1%
Taishin International Bank
(Cost $48,629) 91,700 64,253
CASH EQUIVALENTS - 2.6%
Taxable Central Cash Fund (b)
(Cost $1,879,097) 1,879,097 1,879,097
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $84,384,830) $ 73,374,408
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.51%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) 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 $227,500
or 0.3% of net assets.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment
in Securities
Aerospace & Defense 0.2%
Basic Industries 2.3
Construction & Real Estate 12.3
Durables 1.9
Energy 2.3
Finance 20.4
Health 1.4
Holding Companies 3.4
Industrial Machinery & Equipment 5.2
Media & Leisure 4.7
Nondurables 4.4
Retail & Wholesale 1.1
Services 0.2
Technology 13.2
Transportation 3.6
Utilities 20.8
Cash Equivalents 2.6
100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $84,664,825. Net unrealized depreciation
aggregated $11,290,417, of which $7,379,666 related to appreciated
investment securities and $18,670,083 related to depreciated
investment securities.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $84,384,830) - $ 73,374,408
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE IN NEW TAIWAN DOLLARS 519,081
(COST $519,984)
RECEIVABLE FOR INVESTMENTS SOLD 318,505
DIVIDENDS RECEIVABLE 182,620
INTEREST RECEIVABLE 8,034
DEFERRED ORGANIZATION EXPENSES 31,875
TOTAL ASSETS 74,434,523
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 9,550
ACCRUED MANAGEMENT FEE 90,265
OTHER PAYABLES AND ACCRUED EXPENSES 487,363
TOTAL LIABILITIES 587,178
NET ASSETS $ 73,847,345
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 95,725,965
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (481,926)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (10,385,583)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (11,011,111)
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 6,842,146 SHARES OUTSTANDING $ 73,847,345
NET ASSET VALUE ($73,847,345 (DIVIDED BY) 6,842,146 SHARES) $10.79
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT INCOME $ 837,084
DIVIDENDS
INTEREST 74,501
911,585
LESS FOREIGN TAXES WITHHELD (44,677)
TOTAL INCOME 866,908
EXPENSES
MANAGEMENT FEE $ 409,100
BASIC FEE
PERFORMANCE ADJUSTMENT 150,340
TRANSFER AGENT FEES 7,453
ADMINISTRATIVE FEES AND EXPENSES 81,909
DIRECTORS' COMPENSATION 19,383
CUSTODIAN FEES AND EXPENSES 125,172
AUDIT 45,614
LEGAL 37,841
AMORTIZATION OF ORGANIZATION EXPENSES 19,125
MISCELLANEOUS 19,105
TOTAL EXPENSES BEFORE REDUCTIONS 915,042
EXPENSE REDUCTIONS (11,560) 903,482
NET INVESTMENT INCOME (LOSS) (36,574)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (9,778,796)
FOREIGN CURRENCY TRANSACTIONS (122,506) (9,901,302)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 6,940,411
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 2,331 6,942,742
NET GAIN (LOSS) (2,958,560)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (2,995,134)
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ (36,574) $ 43,736
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (9,901,302) 1,779,496
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 6,942,742 (31,390,787)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,995,134) (29,567,555)
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (314,886) (43,736)
FROM NET INVESTMENT INCOME
IN EXCESS OF NET INVESTMENT INCOME (445,352) (40,735)
FROM NET REALIZED GAIN (960,172) (3,463,308)
IN EXCESS OF NET REALIZED GAIN (484,281) -
TOTAL DISTRIBUTIONS (2,204,691) (3,547,779)
SHARE TRANSACTIONS (9,054,476) (13,397,085)
COMMON STOCK REPURCHASED
REPURCHASE OFFER EXPENSES (129,240) (113,869)
REDEMPTION FEES ADDED TO PAID IN CAPITAL 129,240 113,869
COST OF SHARES REPURCHASED (9,054,476) (13,397,085)
TOTAL INCREASE (DECREASE) IN NET ASSETS (14,254,301) (46,512,419)
NET ASSETS
BEGINNING OF PERIOD 88,101,646 134,614,065
END OF PERIOD (INCLUDING UNDER (OVER) DISTRIBUTION OF NET $ 73,847,345 $ 88,101,646
INVESTMENT INCOME OF $(481,926) AND $314,886,
RESPECTIVELY)
OTHER INFORMATION (760,238) (844,709)
SHARES REDEEMED
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.59 $ 15.94 $ 13.94 $ 16.01 $ 14.10
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D .00 .01 .01 .01 .03
NET REALIZED AND UNREALIZED (.51) (3.94) 2.05 (1.83) 1.97
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS (.51) (3.93) 2.06 (1.82) 2.00
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.04) (.01) (.01) (.04) -
IN EXCESS OF NET INVESTMENT INCOME (.06) - (.05) (.09) -
FROM NET REALIZED GAIN (.13) (.41) - (.10) -
IN EXCESS OF NET REALIZED GAIN (.06) - - (.02) -
TOTAL DISTRIBUTIONS (.29) (.42) (.06) (.25) -
ANTIDILUTION RESULTING FROM - - - - .02
ADDITIONAL OFFERING OF SHARES
OFFERING EXPENSES - - - - (.11)
NET ASSET VALUE, END OF PERIOD $ 10.79 N $ 11.59 K $ 15.94 $ 13.94 $ 16.01
MARKET VALUE, END OF PERIOD $ 9.310 $ 9.750 $ 13.750 $ 11.875 $ 15.125
TOTAL RETURN B (1.43)% (27.08)% 16.26% (19.94)% L .83% H
MARKET VALUE I
NET ASSET VALUE C, M (3.92)% (25.23)% 14.81% (11.21)% L 13.39% J
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 73,847 $ 88,102 $ 134,614 $ 117,754 $ 135,273
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 2.26% A 1.72% 1.63% 1.68% 1.70% A
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET 2.23% A, F 1.71% 1.63% 1.68% 1.70% A
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME (.09)% A .03% .09% .08% .29% A
(LOSS) TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 40% A 55% 63% 69% 70% A
AVERAGE COMMISSION RATE G $ .0063 $ .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 (LOSS) 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 RETURN 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 SHAREHOLDER'S 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. N THE FUND INCURRED
EXPENSES OF $.02 PER SHARE IN CONNECTION WITH ITS REPURCHASE OFFER
WHICH WERE OFFSET BY REDEMPTION FEES COLLECTED AS PART OF THE
REPURCHASE OFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1998 (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. 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 1998 and April 1997, the fund completed repurchase offers for
ten percent of the fund's outstanding shares. The repurchase offers
resulted in the repurchase of 760,238 and 844,709 shares of the fund's
common stock at a net asset value of $11.91 and $15.86 per share, for
each of the periods respectively. 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 trading or events occurring in other markets
after the close of the principal market in which securities are traded
is expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
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 foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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 offers of $129,240 and $113,869 during the periods ending
April 30, 1998 and October 31, 1997, respectively, 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.
Pursuant to the fund's Dividend Reinvestment and Cash Purchase Plan
(the Plan), shareholders may elect to have all distributions
automatically reinvested in fund
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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, certain foreign taxes,
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.
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
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 Fidelity Investments Money Management, Inc.,
(formerly 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 earned
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 $15,396,091 and $23,220,196, 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
1.38% 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ADVISER FEE - CONTINUED
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 $11,279 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 $281
under this arrangement.
6. PROPOSED CONVERSION.
On May 7, 1998, the Board of Directors of the fund approved a
proposal to convert the fund into an open-end investment company.
Consummation of the proposed conversion is subject to the approval of
a majority of the outstanding voting securities of the fund.
Shareholders will be asked to vote on the proposed conversion at the
fund's annual meeting, which will be held later this year. While the
exact terms of the transaction are still under consideration,
materials providing a detailed description of the proposed conversion
and voting information will be sent to shareholders prior to the
meeting.
DIVIDENDS AND DISTRIBUTIONS
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.
BORROWING RESTRICTION. The Fund has deleted its non-fundamental policy
restricting the purchase of portfolio securities while borrowings
representing more than 5% of its total assets are outstanding.
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
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stuart E. Fross, Assistant Secretary
John H. Costello, Assistant Treasurer
Leonard M. Rush, 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)
