FIDELITY ADVISOR KOREA FUND INC, N-2/A, 1994-10-24

FIDELITY ADVISOR KOREA FUND INC
N-2/A, 1994-10-24

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<PAGE> 1

AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1994

SECURITIES ACT FILE NO. 33-81186
INVESTMENT COMPANY ACT FILE NO. 811-8608
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-2
(check appropriate box or boxes)
/X/ REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

/X/ PRE-EFFECTIVE AMENDMENT NO. 3

/ / POST-EFFECTIVE AMENDMENT NO.
AND/OR
/X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

/X/ AMENDMENT NO. 3

------------------------
FIDELITY ADVISOR KOREA FUND, INC.
(Exact Name of Registrant as Specified in Charter)
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
(Address of Principal Executive Offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 426-5523
------------------------
ARTHUR S. LORING, SECRETARY
FIDELITY ADVISOR KOREA FUND, INC.
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
------------------------
With copies to:

<TABLE>
<S> <C>
LAURENCE E. CRANCH, ESQ. SARAH E. COGAN, ESQ.
LEONARD B. MACKEY, JR., ESQ. SIMPSON THACHER & BARTLETT
ROGERS & WELLS 425 Lexington Avenue
200 Park Avenue New York, New York 10017-3909
New York, New York 10166 (212) 455-2000
(212) 878-8000
</TABLE>

------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. / /

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

<CAPTION>
PROPOSED PROPOSED
MAXIMUM OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER SHARE(2) OFFERING PRICE(2) FEE(3)(4)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 Par Value... 6,037,500 Shares(1) $15.00 $90,562,500 $32,229
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------

(1) Includes 787,500 shares subject to the U.S. Underwriters' over-allotment
option. The amount of the shares of Common Stock being registered includes
any shares initially offered or sold outside the United States and Canada
that are thereafter sold or resold in the United States or Canada. Offers
and sales of shares outside the United States and Canada are not covered by
this Registration Statement.

(2) Estimated solely for purposes of calculating the registration fee.

(3) Includes $24,794 previously paid.

(4) Includes $1,000 registration fee under the Investment Company Act of 1940.
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2

CROSS REFERENCE SHEET

PARTS A AND B OF PROSPECTUS*

<TABLE>
<CAPTION>
ITEMS IN PARTS A AND B OF FORM N-2 LOCATION IN PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
1. Outside Front Cover....................... Front Cover Page
2. Inside Front and Outside Back Cover
Page.................................... Front Cover Page; Inside Front Cover Page;
Outside Back Cover Page
3. Fee Table and Synopsis.................... Summary; Summary of Expenses
4. Financial Highlights...................... Not Applicable
5. Plan of Distribution...................... Cover Page; Summary; Underwriting
6. Selling Shareholders...................... Not Applicable
7. Use of Proceeds........................... Use of Proceeds
8. General Description of the Registrant..... Cover Page; Summary; The Fund; Investment
Objective and Policies; Investment
Restrictions; Risk Factors and Special
Considerations; Description of Capital
Stock
9. Management................................ Management of the Fund; Portfolio
Transactions; Description of Capital
Stock; Custodians, Transfer Agent,
Dividend Paying Agent and Registrar
10. Capital Stock, Long-Term Debt and Other
Securities.............................. Summary; Dividends and Distributions;
Dividend Reinvestment and Cash Purchase
Plan; Taxation; Description of Capital
Stock; Underwriting
11. Defaults and Arrears on Senior
Securities.............................. Not Applicable
12. Legal Proceedings......................... Not Applicable
13. Table of Contents of the Statement of
Additional Information.................. Not Applicable
14. Cover Page................................ Not Applicable
15. Table of Contents......................... Not Applicable
16. General Information and History........... The Fund
17. Investment Objective and Policies......... Investment Objective and Policies;
Investment Restrictions
18. Management................................ Management of the Fund
19. Control Persons and Principal Holders of
Securities.............................. Not Applicable
20. Investment Advisory and Other Services.... Management of the Fund; Custodian,
Transfer Agent, Dividend Paying Agent and
Registrar; Experts
21. Brokerage Allocation and Other
Practices............................... Portfolio Transactions
22. Tax Status................................ Taxation
23. Financial Statements...................... Report of Independent Accountants;
Statement of Assets and Liabilities
</TABLE>

- ------------------------

* Pursuant to the General Instructions to Form N-2, all information required to
be set forth in Part B: Statement of Additional Information has been included
in Part A: The Prospectus.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 24, 1994

PROSPECTUS

OCTOBER , 1994

[LOGO OF PYRAMID] 5,250,000 SHARES

FIDELITY ADVISOR
KOREA FUND, INC.

COMMON STOCK

Fidelity Advisor Korea Fund, Inc. (the "Fund") is a newly organized,
non-diversified, closed-end management investment company. The Fund's investment
objective is long-term capital appreciation. The Fund seeks to achieve its
objective by investing primarily in equity and debt securities of Korean Issuers
(as defined in this Prospectus). Under normal market conditions, the Fund will
invest at least 65% of its total assets in such securities. The Fund's
investment manager and investment adviser currently anticipate that, once fully
invested, at least 80% of the Fund's net assets will be invested in equity
securities of Korean Issuers. There can be no assurance that the Fund's
investment objective will be achieved. Up to 35% of the Fund's total assets may
be invested in equity and debt securities of Asian Issuers (as defined in the
Prospectus) other than Korean Issuers. Due to the risks inherent in
international investments generally, the Fund should be considered as a vehicle
for investing a portion of an investor's assets in foreign securities markets
and not as a complete investment program. INVESTMENT IN KOREAN SECURITIES
INVOLVES RISKS THAT ARE NOT NORMALLY INVOLVED IN INVESTMENTS IN SECURITIES OF
U.S. COMPANIES. IN ADDITION, ALTHOUGH THE FUND CURRENTLY INTENDS TO INVEST
PRINCIPALLY IN EQUITY SECURITIES, IT MAY INVEST WITHOUT LIMITATION IN HIGH RISK,
HIGH YIELD DEBT INSTRUMENTS THAT ARE LOW RATED OR UNRATED AND ARE PREDOMINANTLY
SPECULATIVE. INVESTMENT IN THE FUND SHOULD BE CONSIDERED SPECULATIVE. SEE
"INVESTMENT OBJECTIVE AND POLICIES" AND "RISK FACTORS AND SPECIAL
CONSIDERATIONS."

PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE SHARES (AS
DEFINED IN THIS PROSPECTUS). THE FUND'S COMMON STOCK HAS BEEN APPROVED FOR
LISTING ON THE NEW YORK STOCK EXCHANGE UPON NOTICE OF ISSUANCE UNDER THE SYMBOL
"FAK." SHARES OF CLOSED-END INVESTMENT COMPANIES HAVE IN THE PAST FREQUENTLY
TRADED AT DISCOUNTS FROM THEIR NET ASSET VALUES. THE RISK OF LOSS ASSOCIATED
WITH THIS CHARACTERISTIC OF CLOSED-END INVESTMENT COMPANIES MAY BE GREATER FOR
INVESTORS PURCHASING SHARES IN THE OFFERING AND EXPECTING TO SELL THE SHARES
SOON AFTER THE COMPLETION THEREOF. THERE IS NO RESTRICTION ON THE NUMBER OF
SHARES THAT MAY BE PURCHASED SUBJECT TO THE TRANSFER RESTRICTION DESCRIBED IN
THE FOOTNOTES TO THE TABLE BELOW, EXCEPT THAT THE UNDERWRITERS HAVE UNDERTAKEN
TO COMPLY, WITH RESPECT TO NON-RESTRICTED SHARES, WITH THE DISTRIBUTION
REQUIREMENTS OF THE NEW YORK STOCK EXCHANGE. SEE "UNDERWRITING." TO THE EXTENT
INVESTORS WHO ARE SUBJECT TO THE TRANSFER RESTRICTION SELL THEIR SHARES ONCE THE
TRANSFER RESTRICTION IS NO LONGER APPLICABLE, THE MARKET PRICE OF THE FUND'S
COMMON STOCK COULD BE ADVERSELY AFFECTED. IN ADDITION, THE TRANSFER RESTRICTION
WILL REDUCE THE NUMBER OF SHARES AVAILABLE FOR SALE IN THE SECONDARY MARKET
DURING THE 90-DAY RESTRICTION PERIOD.

This Prospectus sets forth concisely information about the Fund that a
prospective investor should know before purchasing Shares. Investors are advised
to read this Prospectus and retain it for future reference.
(Continued on following page)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
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<CAPTION>
PRICE SALES LOAD PROCEEDS
TO PUBLIC(1) (1)(2) TO FUND(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................... $15.00 $ $
- --------------------------------------------------------------------------------------------------
Total(4)..................... $78,750,000 $ $
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------

<FN>
(Footnotes on following page)
</TABLE>

The Shares are offered by the several U.S. Underwriters subject to prior
sale, when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the U.S. Underwriters and certain other
conditions, including the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the share
certificates will be made in New York, New York on or about October 31, 1994.

BARING SECURITIES INC. AND DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
ARE THE GLOBAL COORDINATORS OF THE OFFERING.
------------------------

BARING SECURITIES INC. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

DILLON, READ & CO. INC. COWEN & COMPANY LEGG MASON WOOD WALKER
INCORPORATED

RAUSCHER PIERCE REFSNES, INC. RAYMOND JAMES & ASSOCIATES, INC.
<PAGE> 4

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKETS OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

(Continued from previous page)

Of the 5,250,000 shares of the Fund's Common Stock offered (the "Shares"),
Shares are being offered by the U.S. Underwriters in the United States and
Canada (the "U.S. Offering") and Shares are being offered by the
International Managers to non-U.S. and non-Canadian investors outside the United
States and Canada (the "International Offering" and together with the U.S.
Offering, the "Offering"), subject to transfer between the U.S. Underwriters and
the International Managers (collectively, the "Underwriters"). The initial
public offering price and sales load per Share are the same for both the U.S.
Offering and the International Offering.

Fidelity Management & Research Company will serve as investment manager to
the Fund. Fidelity International Investment Advisors will serve as the Fund's
investment adviser. Pursuant to a Sub-Advisory Agreement, Fidelity International
Investment Advisors has delegated certain of its responsibilities for the day-
to-day management of the Fund to Fidelity Investments Japan Limited, which will
serve as the Fund's sub-adviser and will manage the Fund's portfolio through its
Tokyo office.

The address of the Fund is 82 Devonshire Street, Boston, Massachusetts
02109. The Fund's telephone

number is (800) 426-5523. [LOGO OF PYRAMID] is a registered trademark of FMR
Corp.

------------------------
(Notes from prior page)

(1) The "Price to Public" and "Sales Load" per Share will be reduced to $14.77
for purchases in single transactions (as defined herein under
"Underwriting") of 200,000 or more Shares, subject to the following
sentence. Purchasers who agree to purchase Shares at the reduced price will
be restricted from transferring such Shares for a period of 90 days after
the closing of the offering.

(2) The Fund, the investment manager, the investment adviser and the sub-adviser
have agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

(3) Before deducting expenses payable by the Fund, estimated at $ , which
include up to $200,000 to be paid to the Underwriters in partial
reimbursement of their actual expenses.

(4) The Fund has granted the U.S. Underwriters options, exercisable one or more
times within 30 days after the date of this Prospectus, to purchase up to an
aggregate of 787,500 additional shares of Common Stock at the Price to
Public less Sales Load solely to cover over-allotments, if any. If all of
such shares are purchased, the total Price to Public, Sales Load and
Proceeds to Fund will be $90,562,500, $ and $ , respectively, assuming
no reduction as described in (1) above. See "Underwriting."

------------------------

Unless otherwise specified, references in this Prospectus to "dollars,"
"U.S.$," or "$" are to U.S. dollars and references to "Won" or "W" are to Korean
Won. On September 16, 1994, the market average exchange rate of the Won to the
U.S. dollar, as published by the Korea Financial Telecommunications and
Clearings Institute (the "Market Average Exchange Rate"), was W 812.00 = $1.00.
Unless otherwise indicated, the U.S. dollar equivalent of information in Korean
Won as of a date or for a period is as of such date or for the end of such
period and is based on The Bank of Korea concentration base rate, if pre-March
1990, or the Market Average Exchange Rate, from March 1990. No representation is
made that the Won or U.S. dollar amounts in this Prospectus could have been or
could be converted into Won or U.S. dollars, as the case may be, at any
particular rate or at all. See "Risk Factors -- Exchange Rate Fluctuations" and
"The Republic of Korea -- Foreign Exchange" for additional information on the
historical rate of exchange between the U.S. dollar and Won.

Certain numbers in this Prospectus have been rounded for ease of
presentation, and, as a result, may not total precisely.

2
<PAGE> 5

SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information included herein.

The Fund........................... The Fund is a newly organized,
non-diversified, closed-end management
investment company established for
investors seeking to invest a portion of
their assets in a professionally managed
portfolio composed primarily of
securities of issuers in the Republic of
Korea ("Korea"). Although the Fund
currently intends to invest principally
in equity securities, it also may invest
in debt securities as described below.
Fidelity Management & Research Company
(the "Investment Manager") will serve as
the Fund's investment manager and will
supervise the Fund's investment program.
Fidelity International Investment
Advisors (the "Investment Adviser"), will
be the investment adviser and may in its
sole discretion either have day-to-day
management responsibility or delegate
such responsibility to Fidelity
Investments Japan Limited (the
"Sub-Adviser"). Pursuant to the
Sub-Advisory Agreement, the Investment
Adviser has delegated certain of its
responsibilities for the day-to-day
management of the Fund to the Sub-Adviser
which will manage the Fund's portfolio
through its Tokyo office. The Investment
Adviser will assist the Sub-Adviser and
will provide research and trading
facilities to the Sub-Adviser. See "The
Fund" and "Management of the Fund --
Investment Manager, Investment Adviser
and Sub-Adviser." (The Investment
Manager, Investment Adviser and
Sub-Adviser may be collectively referred
to as "Fidelity").

Investment Strategy................ Fidelity will look for growth
opportunities in Korean blue chip stocks,
either due to increases in permitted
foreign stock ownership or attractive
valuations. Fidelity will also look for
undervalued companies with strong
fundamentals within the large number of
medium-and smaller-sized companies,
including companies traded on the second
trading section of the Korean Stock
Exchange (the "KSE").

Korean law generally restricts foreign
ownership of any issuer to 10%. This has
given rise to an over-the-counter market
in KSE-listed securities, in which
foreign investors trade 10% foreign-owned
stocks, often at a premium to the KSE
price. The Fund may purchase securities
at premium prices when, in Fidelity's
view, the issuer's growth potential
justifies the premium. See "Investment
Strategy."

Investment in Korea................ Fidelity believes that attractive
investment opportunities may be found in
Korea due to its highly diversified
industrial base, large consumer
population and large and well educated
labor force, together with the evolving
process of the liberalization and reform
of the securities markets in Korea.
Korea's significant commitment to

3
<PAGE> 6

research and development generally,
coupled with its position as a leading
exporter in the Asia Pacific region
should contribute significantly to the
potential for growth in the Korean
economy. Continued liberalization of the
securities markets along with an increase
in the number of shares of Korean
companies that are available for
investment by foreign investors would
enable the Fund to participate in Korea's
economic growth potential. There can be
no assurance, however, that such
liberalization or economic growth will
continue to occur or that the Fund will
be able to participate in and benefit
from any future liberalization or
economic growth. See "Investment in
Korea."

Investment Objective and
Policies........................... The Fund's investment objective is
long-term capital appreciation. The Fund
will seek to achieve its objective by
investing primarily in equity and debt
securities of Korean Issuers (as defined
below). As a matter of fundamental policy
and under normal market conditions, at
least 65% of the Fund's total assets will
be invested in equity and debt securities
of Korean Issuers. Fidelity currently
anticipates that, once the Fund is fully
invested, at least 80% of its net assets
will be invested in equity securities of
Korean Issuers. No assurance can be given
that the Fund's investment objective will
be achieved. See "Investment Objective
and Policies" and "Risk Factors and
Special Considerations."

As used herein, Korean Issuers are
entities that, as determined by Fidelity,
(i) are organized under the laws of
Korea, (ii) regardless of where
organized, derive at least 50% of their
revenues or profits from goods produced
or sold, investments made or services
performed or have at least 50% of their
assets located in Korea, (iii) have the
primary trading market for their
securities in Korea or (iv) are the
government, or its agencies or
instrumentalities or other political
subdivisions, of Korea.

Equity securities in which the Fund may
invest include common and preferred
stock, American, global or other types of
depositary receipts, convertible bonds,
notes and debentures, equity interests in
trusts, partnerships, joint ventures and
common stock purchase warrants and
rights. Korean law currently permits
foreign investors, such as the Fund, to
invest in the following equity
securities: (i) common and preferred
stock listed on the KSE; (ii) non-
guaranteed convertible bonds of small and
medium-sized companies, shares of which
are listed on the KSE; (iii) global or
other types of depositary receipts
representing rights in shares of a Korean
company, which are issued outside Korea;
(iv) convertible bonds denominated in
non-Won currency and issued outside
Korea; and (v) equity warrants issued
together with bonds denominated in
non-Won currency outside Korea.

4
<PAGE> 7

The Fund may invest in debt securities.
Debt securities of Korean Issuers will be
treated as securities of Korean Issuers
for purposes of the Fund's policy of
investing at least 65% of its total
assets in securities of Korean Issuers
under normal market conditions. The
Fund's assets may be invested in debt
securities when Fidelity believes that
such securities offer opportunities for
long-term capital appreciation. The
Fund's investments in debt securities may
include bonds, notes, bills or other
fixed income or floating rate debt
obligations, including participations in
and assignments of portions of loans.
These debt securities may be unrated or
rated below investment grade. Korean law
does not currently permit foreign
investors such as the Fund to acquire
debt securities denominated in Won,
except for certain low interest rate
government or public bonds to be
designated by the Securities and Exchange
Commission of Korea (the "KSEC") from
time to time in the primary market
subject to certain foreign holding limits
and procedural requirements.

Certain investment practices in which the
Fund is authorized to engage, such as
investing in Korean government debt,
certain currency hedging techniques, the
lending of portfolio securities, forward
commitments, standby commitment
agreements and the purchase or sale of
put and call options are not currently
permitted, with certain limited
exceptions, under Korean laws or
regulations. The Fund may engage in these
investment practices to the extent the
practices become permissible under Korean
law in the future. See "Investment
Objective and Policies -- Other
Investments."

Most of the securities purchased by the
Fund are expected to be traded on the KSE
or other foreign stock exchanges or in a
foreign over-the-counter market. Compared
to securities traded in the United
States, generally all securities of
Korean Issuers may be considered to be
thinly traded. In addition, the Fund may
invest up to 35% of its total assets in
securities that are illiquid, that is,
securities for which there is no readily
available market, or no market at all.
See "Investment Objective and Policies."

The Fund may invest up to 35% of its
total assets in equity and debt
securities of Asian Issuers, if
warranted, in Fidelity's judgment, by
economic, political or regulatory
conditions in Korea or valuations in the
Korean securities markets relative to
such conditions. Asian Issuers are
issuers (other than issuers meeting the
definition of Korean Issuers), that, as
determined by Fidelity, (i) are organized
under the laws of Hong Kong, Japan or
Taiwan, (ii) regardless of where
organized, derive at least 50% of their
revenues or profits from goods produced
or sold, investments made, or services
performed in Hong Kong, Japan or Taiwan,
(iii) have the primary trading market for
their securities in Hong Kong, Japan or
Taiwan or (iv) are

5
<PAGE> 8

governments, or their agencies,
instrumentalities or other political
sub-divisions, of Hong Kong, Japan or
Taiwan. See "Risk Factors and Special
Considerations -- Investments in Asian
Issuers."

During the Fund's initial investment
period, the Fund may invest without
limitation in Temporary Investments (as
defined below). See "Investment Objective
and Policies -- Temporary Investments."

After the Fund's initial investment
period, for temporary defensive purposes,
the Fund may vary from its investment
policies by investing, without
limitation, in Temporary Investments and
investment grade debt instruments,
including unrated securities of
equivalent quality as determined by the
Investment Adviser or the Sub-Adviser,
short-term indebtedness or cash
equivalents denominated in U.S. dollars
or, if it becomes permissible for the
Fund to so invest, denominated in Won. No
assurance can be given that the Fund's
investment objective will be achieved.
See "Investment Objective and Policies"
and "Risk Factors and Special
Considerations."

The Offering....................... The Fund is offering 5,250,000 shares of
Common Stock, $0.001 par value (the
"Shares"), for sale in concurrent
offerings. Of the 5,250,000 Shares being
offered, Shares (the "U.S.
Shares") are being offered in the United
States and Canada by a group of U.S.
Underwriters (the "U.S. Underwriters")
led by Baring Securities, Inc. and
Donaldson, Lufkin & Jenrette Securities
Corporation and Shares (the
"International Shares") are being offered
to non-U.S. investors and non-Canadian
investors outside the United States and
Canada by a group of underwriters (the
"International Managers") led by Baring
Brothers & Co., Limited and Donaldson,
Lufkin & Jenrette Securities Corporation.
Baring Securities Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation
are the Global Coordinators of the
Offering (the "Global Coordinators"). The
initial public offering price of the
Shares is $15.00 per share, which will be
reduced to $14.77 for purchases in single
transactions (as defined herein under
"Underwriting") of 200,000 or more
Shares, subject to the following
sentence. Purchasers who agree to
purchase Shares at a reduced price will
be restricted from transferring such
Shares for a period of 90 days after the
closing of the Offering. There is no
restriction on the number of Shares that
may be purchased subject to the transfer
restriction described above, except that
the Underwriters have undertaken to
comply, with respect to non-restricted
Shares, with the distribution
requirements of the New York Stock
Exchange (the "NYSE"). The U.S.
Underwriters have also been granted
options to purchase an aggregate of
787,500 additional shares of the Fund's
Common Stock to cover over-allotments.
The number of shares of Common Stock
being

6
<PAGE> 9

offered is subject to reallocation
between the U.S. Offering and the
International Offering as may be mutually
agreed by the U. S. Underwriters and the
International Managers. See
"Underwriting."

The closing of each offering is a
condition to the closing of the other
offering. The relative sizes of the U.S.
Offering and the International Offering
will be determined by negotiations
between the Fund and the Underwriters and
will depend on a number of factors,
including the final number of Shares to
be offered in the Offerings. It is
expected that the Shares may be sold
substantially outside the United States,
except that the Underwriters have
undertaken to distribute the shares of
Common Stock in a manner that complies
with the distribution requirements of the
NYSE. The Fund cannot predict what effect
if any, the relative sizes of the U.S.
Offering and the International Offering
will have on the secondary market in the
United States or on the market price of
the Shares.

Listing............................ The Fund's Common Stock has been approved
for listing on the NYSE upon notice of
issuance.

Stock Symbol....................... "FAK"

Investment Manager, Investment
Adviser and Sub-Adviser............ Fidelity Management & Research Company, a
leading international investment manager,
will act as Investment Manager of the
Fund and will supervise the Fund's
investment program. The Fidelity
organization has more than 20 years
experience investing in Asia. Fidelity
International Investment Advisors ("FIIA"
or the "Investment Adviser"), the Fund's
Investment Adviser and an affiliate of
the Investment Manager, is responsible
for the day-to-day management of the
Fund's investments. Pursuant to the
Sub-Advisory Agreement, the Investment
Adviser has delegated certain of its
responsibilities for the day-to-day
management of the Fund to Fidelity
Investments Japan Limited (the
"Sub-Adviser"), which will manage the
Fund's portfolio through its Tokyo
office. As of August 31, 1994, the
Investment Manager, the Investment
Adviser, the Sub-Adviser and their
affiliates had over $270 billion under
management of which more than $50 billion
was invested in non-U.S. securities
(including over $15 billion in Asian
securities, over $550 million in
securities of Korean Issuers and over $7
billion managed from Asian offices).

The Investment Manager, together with the
Investment Adviser, the Sub-Adviser and
its other affiliates (sometimes
collectively referred to herein as
"Fidelity"), has extensive research
capabilities both worldwide, with over
300 investment professionals, as of
August 31, 1994, and within the Asian
region, and maintains offices in Hong
Kong, Singapore, Taiwan and Tokyo, which,
as of August 31, 1994, were staffed by 35
investment professionals.

7
<PAGE> 10

The Sub-Adviser, through its Tokyo
office, routinely researches and screens
for investment potential in Korean
companies. The Sub-Adviser seeks to
identify investments through management
contacts and on-site visits to companies
within Korea. In 1993, Fidelity conducted
over 170 company visits in Korea.

Edward S.J. Bang, who has served as a
Korean analyst for various Fidelity funds
since September 1993, will serve as the
Fund's principal portfolio manager. See
"Management of the Fund -- Investment
Manager, Investment Adviser and
Sub-Adviser."

Advisory Fees and Expenses......... The Fund will pay the Investment Manager
a monthly basic fee at an annual rate of
1.00% of the Fund's average daily net
assets for its services. The Investment
Manager will pay the Investment Adviser
60% of the fees paid by the Fund to the
Investment Manager. The Investment
Adviser will pay the Sub-Adviser a fee
equal to 50% of the fee paid to the
Investment Adviser with respect to any
Fund assets managed by the Sub-Adviser on
a discretionary basis, and 30% of the fee
paid to the Investment Adviser with
respect to any Fund assets managed by the
Sub-Adviser on a non-discretionary basis.
See "Management of the Fund --
Compensation and Expenses." The advisory
fee paid by the Fund is higher than those
paid by most U.S. investment companies
investing exclusively in the securities
of U.S. issuers, primarily because of the
additional time and expense required of
the Investment Manager, the Investment
Adviser and the Sub-Adviser in pursuing
the Fund's policy of investing in Korean
securities, including illiquid Korean
securities. In addition, the operating
expense ratio of the Fund can be expected
to be higher than that of a fund
investing primarily in securities of U.S.
issuers. It is expected, however, that
the Fund's investment advisory fee, as
well as its overall expense ratio, will
be comparable to those of many closed-end
management investment companies of
comparable size that invest primarily in
securities of issuers in a single foreign
country.

Administration..................... Fidelity Service Co. ("Service"), a
division of FMR Corp., the parent company
of the Investment Manager, will serve as
the Fund's administrator pursuant to the
terms of an Administration Agreement. The
Fund will pay to Service a monthly fee at
an annual rate of .20% of the Fund's
average daily net assets for its
services. See "Management of the Fund --
Administration."

Dividends and Distributions........ The Fund intends to distribute annually
to holders of Common Stock substantially
all of its net investment income, and to
distribute any net realized capital gains
at least annually.

Under the Fund's Dividend Reinvestment
and Cash Purchase Plan (the "Plan"), a
shareholder may elect to

8
<PAGE> 11

have all dividends and distributions
automatically reinvested in additional
shares of Common Stock of the Fund.
Participants also have the option of
making additional cash payments,
annually, to be used to acquire
additional shares of Common Stock of the
Fund in the open market. Shareholders
whose shares are held in the name of a
broker or nominee should contact such
broker or nominee to confirm that they
may participate in the Fund's Plan. See
"Dividends and Distributions; Dividend
Reinvestment and Cash Purchase Plan."

Annual Tender Offers and Share
Repurchases...................... Shares of common stock of closed-end
investment companies frequently trade at
a discount from net asset value but may
trade at a premium. The Fund cannot
predict whether shares of its Common
Stock will trade at, below or above net
asset value. In recognition of the
possibility that the Fund's Common Stock
may trade at a discount from net asset
value, the Board of Directors of the Fund
has determined that annual tender offers
for shares of its Common Stock may help
reduce any market discount from net asset
value that may develop. In this
connection, during the first calendar
quarter of each calendar year commencing
in 1998, the Board of Directors of the
Fund has committed to conduct a tender
offer for shares of its Common Stock on
an annual basis under the circumstances
described below. During the fourth
quarter of the previous calendar year,
the Board of Directors will fix in
advance a period of 12 consecutive
calendar weeks beginning during such
fourth calendar quarter and ending in the
immediately following first quarter for
the purpose of calculating the average
trading price of the Fund's Common Stock.
In the event that the average of the
closing prices of the Common Stock of the
Fund on the last trading day in each week
during such 12 week period, on the
principal securities exchange where
listed, is below the initial offering
price of $15.00 per share and represents
a discount of 10% or more from the
average net asset value of the Fund as
determined on the same days in the same
period, a tender offer for up to 10% of
the then outstanding shares of Common
Stock of the Fund will be conducted
during such first calendar quarter. In
addition, the Board of Directors may
consider open market repurchases of its
Common Stock or converting the Fund into
an open-end investment company. No
assurance can be given that annual tender
offers or repurchases of shares of Common
Stock will reduce or eliminate any market
discount from net asset value of the
Fund's Common Stock. There are certain
risks associated with tender offers and
repurchases. See "Annual Tender Offers
and Share Repurchases," "Risk Factors and
Special Considerations" and "Taxation --
U.S. Federal Income Taxes."

9
<PAGE> 12

Custodian, Transfer Agent, Dividend
Paying Agent and Registrar......... The Chase Manhattan Bank, N.A. ("Chase")
will act as custodian for the Fund's
assets. Chase or the Fund will designate
foreign sub-custodians approved by the
Fund's Board of Directors in accordance
with the regulations of the Securities
and Exchange Commission (the "Commission"
or the "SEC"). The Hong Kong and Shanghai
Banking Corporation Limited, Seoul Branch
will serve as the Fund's sub-custodian
for its assets held in Korea. Chase or
the Fund may designate additional
sub-custodians. State Street Bank and
Trust Company will act as transfer agent,
dividend paying agent and registrar for
the Fund's Common Stock. See "Custodian,
Transfer Agent, Dividend Paying Agent and
Registrar."

Risk Factors and Special
Considerations..................... Because the Fund currently intends to
invest primarily in equity securities of
Korean Issuers, an investor in the Fund
should be aware of certain risks relating
to Korea, the Korean securities markets
and international investments generally
which are not typically associated with
U.S. domestic investments. Consistent
with its investment objective and
policies, the Fund may also invest in
part in Asian Issuers (Japan, Hong Kong
and Taiwan). The risk factors identified
below generally also apply to investments
the Fund may make in Asian Issuers,
although the specific nature of such
risks may vary according to the country
in which investments are made. See "Risk
Factors and Special Considerations --
Investments in Asian Issuers." In
particular, considerations and risks not
typically associated with investing in
securities of U.S. domestic companies
include (i) certain restrictions on
foreign investment in the Korean
securities markets which will preclude
investment in certain securities by the
Fund and limit investment opportunities
for the Fund; (ii) currency devaluations
and fluctuations in the rate of exchange
between the U.S. dollar and the Won with
the resultant fluctuations in the net
asset value of the Fund (which is
expressed in U.S. dollars); (iii)
substantial government involvement in,
and influence on, the economy and the
private sector; (iv) political, economic
and social uncertainty and instability,
including the potential for increasing
militarization in North Korea; (v) the
substantially smaller size and lower
trading volume of the securities markets
for Korean equity securities compared to
the U.S. securities markets, resulting in
a potential lack of liquidity and
increased price volatility; (vi) the risk
that the sale of portfolio securities by
the Korea Securities Market Stabilization
Fund (the "Stabilization Fund"), a fund
established in order to stabilize the
Korean securities markets, or other large
Korean institutional investors may
adversely impact the market value of
securities in the Fund's portfolio; (vii)
the risk that less information with
respect to Korean companies may be
available due to the fact that

10
<PAGE> 13

Korean accounting, auditing and financial
reporting standards are not equivalent to
those applicable to U.S. companies;
(viii) heavy concentration of market
capitalization and trading volume in a
small number of issuers, which result in
potentially fewer investment
opportunities for the Fund; (ix)
fluctuations in the prices and premium
valuations of securities held by the Fund
that are traded over the counter among
foreign investors; (x) controls on
foreign investment and limitations on
repatriation of invested capital and on
the Fund's ability to exchange Won for
U.S. dollars; (xi) the risk of
nationalization or expropriation of
assets or confiscatory taxation; (xii)
higher rates of inflation; (xiii) less
government supervision and regulation of
Korean securities markets and
participants in those markets; (xiv)
settlement delays; (xv) the risk that
dividends will be withheld at the source;
(xvi) unavailability of currency hedging
techniques in the Korean markets; (xvii)
the fact that companies in Korea may be
smaller, less seasoned and newly
organized; (xviii) the risk that it may
be more difficult to obtain and/or
enforce a judgment in a court in Korea
and outside the United States generally;
and (xix) the risk of taxation of the
Fund, its investments and its income by
Korea. See "Risk Factors and Special
Considerations."

Investments in Asian Issuers. In
addition, securities of Korean Issuers
and other Asian Issuers may be subject to
a greater degree of economic, political
and social instability than is the case
in the United States and Western European
countries. Such instability may result
from, among other things, the following:
(i) authoritarian governments or military
involvement in political and economic
decision-making, including changes in
government through extra-constitutional
means; (ii) popular unrest associated
with demands for improved political,
economic and social conditions; (iii)
internal insurgencies; (iv) hostile
relations with neighboring countries; and
(v) ethnic, religious and racial
disaffection. Such social, political and
economic instability could disrupt the
principal financial markets in which the
Fund invests and cause losses to the
Fund. See "Risk Factors and Special
Considerations."

Investment Restrictions and Foreign
Exchange Controls. Investment in
securities of Korean companies by foreign
investors is subject to significant
restrictions and controls. As a result,
the Fund may be limited in its
investments or precluded from investing
in certain Korean companies, which may
adversely affect the performance of the
Fund. Under the current regulations,
foreign investors are allowed to invest
in almost all shares listed on the KSE,
subject to certain ceilings on foreign
shareholdings and procedural
requirements. The percentage of each
class of a company's outstanding equity
shares that may be held by a particular
foreign investor, and by all foreign
investors

11
<PAGE> 14

as a group is generally limited to 3% and
10%, respectively. The 3% and 10%
limitations are reduced to 1% and 8%,
respectively, for certain
government-designated public
corporations, shares of which are listed
on the KSE. Further, the 10% limitation
may be increased in certain cases, as
determined by the KSEC. As of December
31, 1993, 165 companies listed on the KSE
had reached or exceeded the aggregate
foreign ownership limit (23.8% of all
companies listed on the KSE) and an
additional 159 companies were within 0.5%
of the limit. In addition as of June 30,
1994, of the 30 largest KSE-listed
companies (as measured by market
capitalization), which accounted for
approximately 51.5% of the aggregate
market capitalization of the KSE, nearly
all had reached the applicable maximum
aggregate foreign ownership limit.
Foreign investors are, however, generally
allowed to effect transactions with other
foreign investors through a securities
company in Korea but off the KSE
("foreign OTC transactions") in the
shares of companies that have reached or
exceeded the maximum aggregate foreign
ownership limit (or such limit less
odd-lot shares). Such transactions may,
and often do, occur at a premium over
prices on the KSE. There can be no
assurance that the Fund, if it purchases
such shares at a premium, will be able to
realize such premium on the sale of such
shares or that such premium will not be
adversely affected by changes in
regulations (including relaxation of the
limitations on foreign ownership) or
otherwise. See "Risk Factors and Special
Considerations -- Investment Restrictions
and Foreign Exchange Controls." In
determining the Fund's net asset value,
shares listed on the KSE which are traded
by foreign investors in foreign OTC
transactions may be valued at prices
above those at which they are trading on
the KSE at which it is expected such
securities may be sold by way of foreign
OTC transactions, as determined by or
under direction of a committee appointed
by the Board of Directors. See "Net Asset
Value."

The heavy concentration of market
capitalization and trading volume in a
relatively small number of issuers,
combined with U.S. regulatory
requirements, result in potentially fewer
investment opportunities for the Fund. As
of June 30, 1994, the 30 largest
companies by market capitalization
accounted for approximately 51.5% of the
aggregate market capitalization and from
January 1, 1994 through June 30, 1994
accounted for 38.9% of the average daily
trading volume of the KSE.

Exchange Rate Fluctuations. Because the
Fund will invest in equity securities of
Korean companies and, to the extent
permitted by applicable laws and
regulations, it may invest in
Won-denominated fixed income securities
(the market value of each of which is
determined in Won and the income from
which will likely be received in

12
<PAGE> 15

Won) and since the Fund's net asset value
will be reported and distributions from
the Fund will be made in U.S. dollars,
the value of the Fund's assets will be
adversely affected by a decline in the
value of the Won relative to the U.S.
dollar. The Fund is authorized to engage
in foreign currency hedging transactions,
which may involve special risks, although
such transactions, with certain
exceptions, are not currently permitted
under Korean law or regulations. Given
the restrictions, limitations and risks
associated with Won - U.S. dollar hedging
transactions, there can be no assurance
that the Fund will be able to effectively
hedge currency exchange rate risk. See
"Risk Factors and Special Considerations
-- Exchange Rate Fluctuations" and
"Appendix A -- General Characteristics
and Risks of Derivatives."

Substantial Government Influence on the
Private Sector. The Korean government
has historically exercised and continues
to exercise substantial influence over
many aspects of the private sector. The
Korean government from time to time has
informally influenced the payment of
dividends and the prices of certain
products, encouraged companies to invest
or to concentrate in particular
industries, induced mergers between
companies in industries suffering from
excess capacity and induced private
companies to publicly offer their
securities. The government has sought to
minimize excessive price volatility on
the KSE through various steps, including
the imposition of limitations on daily
price movements of securities.

Political and Economic Factors. The
value of the Fund's assets may be
adversely affected by political, economic
or social instability in Korea, and by
changes in Korean law or regulations. In
addition, the economy of Korea may differ
favorably or unfavorably from the U.S.
economy in such respects as the rate of
growth of gross domestic product, the
rate of inflation, capital investment,
resource self-sufficiency and balance of
payments position, among others.

Political, economic and social
uncertainty and instability, including
the possibility of increased
militarization in North Korea, may also
adversely affect the value of the Fund's
assets. The United States maintains a
military force in Korea to help deter the
ongoing military threat from North Korean
forces. The situation remains a source of
tension, although negotiations to ease
tensions and resolve the political
division of the Korean peninsula have
been carried on from time to time. There
also have been efforts from time to time
to increase economic, cultural and
humanitarian contacts between North Korea
and Korea. There can be no assurance that
such negotiations or efforts will
continue to occur or will result in an
easing of tensions between North Korea
and Korea.

13
<PAGE> 16

Market Characteristics. The Korean
securities markets are smaller than the
securities markets of the United States.
As of June 30, 1994, the aggregate market
capitalization of equity securities
listed on the KSE totaled approximately
W 128.4 trillion ($159.4 billion), as
compared to approximately $4.4 trillion
on the NYSE on such date.

In 1990, the Stabilization Fund, a fund
operated by its contributors which
include substantially all of the KSE-
listed companies, Korean securities
companies and certain institutional
investors, was established by the
securities industry with government
co-operation in order to stabilize the
Korean securities markets primarily
through the purchase and sale of
securities. The size of the Stabilization
Fund is not officially reported. However,
as of January 1994, the Stabilization
Fund was reported by the financial press
to constitute approximately 5% of the
total listed equity market capitalization
of the KSE. The purchase or sale of
portfolio securities by the Stabilization
Fund could exert significant pressure on
the market prices of KSE-listed equity
securities in which the Fund may invest.

Thinly Traded Markets and Illiquid
Investments. To the extent permitted by
applicable law and regulations, the Fund
may invest up to 35% of its total assets
in illiquid equity or debt securities,
that is securities for which there is no
readily available market or no market at
all. Korean law does not currently permit
foreign investors such as the Fund to
acquire debt securities denominated in
Won or equity securities of companies
organized under the laws of Korea that
are not listed on the KSE, except for
purchases of non-guaranteed convertible
bonds listed on the KSE which are issued
by small and medium-sized companies, the
shares of which are listed on the KSE,
and participation in new issues of
certain low interest rate government and
public bonds each of which are subject to
certain investment ceilings and
procedural requirements. Investments in
securities for which there is no readily
available market may involve a high
degree of business and financial risk
that can result in substantial or total
loss of the Fund's investment in such
securities. Because of the absence of any
trading market for these investments, the
Fund may take longer to dispose of these
positions than it would for listed
securities. In addition to financial and
business risks, issuers whose securities
are not listed are not subject to the
same disclosure requirements applicable
to issuers whose securities are listed.
See "Risk Factors and Special
Considerations -- Thinly Traded Markets
and Illiquid Investments."

Settlement Procedures and
Delays. Settlement procedures in Korea
are somewhat less developed and reliable
than those in the United States and in
other developed securities markets, and
the Fund may experience settle-

14
<PAGE> 17

ment delays or other material
difficulties. Accordingly, the Fund may
be subject to significant delays or
limitations on the volume of trading
during any particular period as a result
of these factors. The foregoing factors
could impede the ability of the Fund to
effect portfolio transactions on a timely
basis and could have an adverse impact on
the net asset value of the shares of the
Fund's Common Stock and the price at
which the shares trade.

Debt Securities. The value of any debt
securities held by the Fund, and thus to
some degree the net asset value of the
Fund's Common Stock, generally will
fluctuate with (i) changes in the
perceived creditworthiness of the issuers
of those securities (ii) movements in
interest rates, and (iii) changes in
currency exchange rates. The extent of
the fluctuation will depend on various
other factors, including the maturity of
the Fund's investments, the extent to
which the Fund holds instruments
denominated in currencies other than the
U.S. dollar and the extent to which the
Fund hedges its interest rate and
currency exchange rate risks. The
Investment Adviser or the Sub-Adviser
will make independent evaluations as to
the creditworthiness of issuers of debt
securities that may differ from those of
internationally recognized credit rating
agency organizations, such as Moody's
Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Group ("S&P").
The Fund's success in attaining its
investment objective with respect to
investments in debt securities will
depend largely on the Investment
Adviser's and the Sub-Adviser's
evaluation of the current and future
creditworthiness of issuers, and of
interest rate trends.

Debt Securities -- High Yield, High Risk
Securities. There is no limit on the
percentage of the Fund's debt securities
investments that may be low rated or
unrated. The Fund's investments in Korean
debt securities may have credit quality
below investment grade as determined by
internationally recognized credit rating
agency organizations. Debt securities
rated below investment grade (commonly
referred to as "junk bonds") are
considered to be speculative. Investment
in low rated securities typically
involves risks not associated with higher
rated securities, including, among
others, overall greater risk of failure
to pay interest and principal,
potentially greater sensitivity to
general economic conditions, greater
market price volatility and less liquid
secondary market trading. Certain of the
Fund's investments may be considered to
have extremely poor prospects of ever
attaining any real investment standing,
to have a current vulnerability to
default, to be unlikely to have the
capacity to pay interest and repay
principal when due in the event of
adverse business, financial or economic
conditions, or to be in default or not
current in the payment of interest or
principal. See "Risk Factors and Special
Considerations -- Debt Securities --

15
<PAGE> 18

High Yield, High Risk Securities" and
"Appendix B -- Debt Ratings."

Investment Practices. The Fund's
investment policies permit it to engage
in various investment practices that are
not presently available in Korea. To the
extent that they become available within
Korea or are available presently or in
the future outside Korea, the Fund may
use various investment practices that
involve special considerations, including
purchasing and selling options on
securities, financial futures, fixed
income and stock indices, currencies and
other financial instruments, entering
into financial futures contracts,
entering into interest rate transactions,
entering into currency transactions,
entering into equity swaps and related
transactions, entering into securities
transactions on a when-issued or delayed
delivery basis, entering into repurchase
agreements and lending portfolio
securities. See "Additional Investment
Activities," "Investment Objective and
Policies -- Other Investments," "Risk
Factors and Special Considerations --
Investment Practices" and "Appendix A --
General Characteristics and Risks of
Derivatives."

Non-Diversification. The Fund is
classified as a "non-diversified"
investment company under the Investment
Company Act of 1940, as amended (the
"1940 Act"), which means that the Fund is
not limited by the 1940 Act in the
proportion of its assets that may be
invested in the securities of a single
issuer. However, the Fund intends to
comply with the diversification
requirements imposed by the Internal
Revenue Code of 1986, as amended (the
"Code"), for qualification as a regulated
investment company. As a non-diversified
investment company, the Fund may invest a
greater proportion of its assets in the
securities of a smaller number of issuers
and, as a result, will be subject to
greater risk of loss with respect to its
portfolio securities. Moreover, because
the Fund is non-diversified and will
invest primarily in securities of Korean
Issuers, the Fund may be more susceptible
than a more widely-diversified fund to
any single economic, political or
regulatory occurrence. An investment in
the Fund is not a balanced investment
program by itself, and is intended to
provide diversification as part of a more
complete investment program.

Borrowings. The Fund may borrow for
temporary or emergency purposes and to
finance tender offers and share
repurchases. Borrowings by the Fund
create an opportunity for greater total
return but, at the same time increase
exposure to capital risk. In addition,
borrowed funds are subject to interest
costs which may offset or exceed the
return earned on investment of such
funds, and which, if the borrowed funds
are used to pay dividends or finance
share repurchases or tender offers, will
reduce the Fund's net income. Although
the Fund is permitted to borrow, as

16
<PAGE> 19

indicated above, the Fund has no present
intention of engaging in leveraging by
borrowing.

Withholding and Other Taxes. Income and
capital gains on securities held by the
Fund may be subject to withholding or
other taxes imposed by Korean or other
foreign governments, which would reduce
the return to the Fund on those
securities. The Fund does not intend to
engage in activities that will create a
permanent establishment in Korea within
the meaning of the Korea-U.S. Tax Treaty.
Therefore, the Fund generally will not be
subject to any Korean income taxes other
than Korean withholding taxes. These
taxes may be exempt or reduced if the
Korea-U.S. Tax Treaty applies to the
Fund. If the treaty provisions are not,
or cease to be, applicable to the Fund,
significant additional withholding taxes
would apply. Korean counsel to the Fund,
Shin & Kim, have given their opinion that
the treaty presently does apply to the
Fund if and so long as the Fund operates
as described herein. In addition, the
Fund has received written confirmation
from the Ministry of Finance of Korea
that, so long as all of the issued shares
of the Fund are listed on one or more
stock exchanges in the United States only
and they are traded on such exchanges by
the general public, the Fund will be
entitled to the benefits of the
Korea-U.S. Tax Treaty. See "Taxation --
Korean Taxes." The imposition of such
taxes and the rates imposed are subject
to change. The Fund may elect, when
eligible, to "pass-through" to the Fund's
shareholders, as a deduction or credit,
the amount of foreign taxes paid by the
Fund. The taxes passed through to
shareholders will be included in each
shareholder's income. Certain
shareholders, including some non-U.S.
shareholders, will not be entitled to the
benefit of a deduction or credit with
respect to foreign taxes paid by the
Fund. If a shareholder is eligible and
elects to credit foreign taxes, such
credit is subject to limitations. Other
foreign taxes, such as transfer taxes,
may be imposed on the Fund, but would not
give rise to a credit, or be eligible to
be passed through to shareholders. See
"Taxation."

Certain Provisions of the Articles of
Incorporation. The Fund's Articles of
Incorporation contain certain anti-
takeover provisions that may have the
effect of: (i) inhibiting the Fund's
possible conversion to open-end status by
requiring a 75% shareholder vote to make
such a conversion or to enter into a
business combination that would result in
such a conversion and (ii) limiting the
ability of other entities or persons to
acquire control of the Fund or to change
the composition of its Board of
Directors. Such provisions could have the
effect of depriving shareholders of an
opportunity to sell their shares of
Common Stock at a premium over prevailing
market prices by discouraging a third
party from seeking to obtain control of
the Fund. The

17
<PAGE> 20

Fund's Board of Directors has determined
that these provisions are in the best
interests of shareholders generally. See
"Risk Factors and Special Considerations"
and "Description of Capital Stock --
Special Voting Provisions."

Secondary Market and Net Asset Value
Discount. Prior to the Offering, there
has been no public market for the Fund's
Common Stock. There can be no assurance
that an active trading market will
develop or be sustained. The Fund cannot
predict what effect, if any, the relative
sizes of the U.S. Offering and the
International Offering will have on the
secondary market for the Shares of Common
Stock in the United States or on the
market price of the Shares. In addition,
shares of closed-end investment companies
frequently trade at a discount from net
asset value. This characteristic is a
risk separate and distinct from the risk
that the Fund's net asset value will
decrease as a result of its investment
activities and may be greater for
investors expecting to sell their shares
in a relatively short period following
completion of the Offering. It should be
noted that shares of some closed-end
funds have sold at a premium to net asset
value. The Fund cannot predict whether
its Shares will trade at, above or below
net asset value. The Fund is intended
primarily for long-term investors and
should not be considered as a vehicle for
short-term trading purposes. See "Risk
Factors and Special Considerations."

Transfer Restrictions. Investors who
purchase Shares at a reduced price will
be restricted from transferring such
Shares for a period of 90 days after the
closing of the Offering. There is no
restriction on the number of Shares that
may be purchased subject to the transfer
restriction described above, except that
the Underwriters have undertaken to
comply, with respect to non-restricted
Shares, with the distribution
requirements of the NYSE. See
"Underwriting." To the extent these
investors sell their Shares once the
transfer restriction is no longer
applicable, the market price of the
Fund's Common Stock could be adversely
affected. In addition, the transfer
restriction will reduce the number of
Shares of Common Stock available for sale
in the secondary market during the 90-day
restriction period.

Investors should carefully consider their
ability to assume the foregoing risks
before making an investment in the Fund.
An investment in shares of Common Stock
of the Fund may not be appropriate for
all investors and should not be
considered as a complete investment
program. See "Risk Factors and Special
Considerations."

18
<PAGE> 21
<TABLE>
SUMMARY OF EXPENSES

<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price)........................... %(1)
ANNUAL EXPENSES (as a percentage of net assets attributable to common shares)
Management Fees.......................................................... 1.00%
Other Expenses (estimated)............................................... %
Administration Fees................................................. .20%
Other Operating Expenses (estimated)................................ %
Total Annual Expenses (estimated)........................................ %
<FN>
- ---------------
(1) The sales load is reduced for certain transactions. See "Underwriting."
</TABLE>

THE PURPOSE OF THIS TABLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT AN INVESTOR IN THE FUND WILL BEAR DIRECTLY OR
INDIRECTLY.

As of the date hereof, the Fund had not commenced investment operations.
The amount set forth in "Other Expenses" is, therefore, based on estimated
amounts for its first fiscal year, assuming no exercise of the over-allotment
options granted to the U.S. Underwriters. "Other Operating Expenses" will
include custodial and transfer agency fees, legal and accounting fees, printing
costs and listing fees. A portion of the Fund's expenses may be reduced as a
result of certain brokerage arrangements. For additional information with
respect to the expenses identified in the table above, see "Management of the
Fund."

EXAMPLE

The following example demonstrates the projected U.S. dollar amount of
total cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in the Fund. These amounts are based upon
payment by an investor of a % sales load and payment by the Fund of operating
expenses at the levels set forth in the table above.

<TABLE>
An investor would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) reinvestment of all dividends and
distributions at net asset value:

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$ $ $ $
</TABLE>

THIS EXAMPLE AS WELL AS THE INFORMATION SET FORTH IN THE TABLE ABOVE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF THE FUTURE EXPENSES OF THE FUND, AND
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while the
example assumes a 5% annual return, the Fund's performance will vary and may
result in a return greater or less than 5%. In addition, while the example
assumes reinvestment of all dividends and distributions at net asset value, this
may not be the case for participants in the Plan. See "Dividends and
Distributions; Dividend Reinvestment and Cash Purchase Plan."

19
<PAGE> 22

THE FUND

The Fund, incorporated in Maryland on May 25, 1994, is a non-diversified,
closed-end management investment company registered under the 1940 Act. The
Fund's investment objective is long-term capital appreciation. The Fund seeks to
achieve its objective by investing primarily in equity and debt securities of
Korean Issuers.

The address of the Fund is 82 Devonshire Street, Boston, Massachusetts
02109. The Fund's telephone number is (800) 426-5523.

INVESTMENT STRATEGY

Fidelity believes that the investment environment in Korea offers growth
potential for investors who can identify undervalued companies with strong
growth fundamentals. In order to identify the most attractive investment
opportunities, Fidelity undertakes extensive research through a "bottom-up"
method. The bottom-up method focuses on individual companies rather than sector
or general market trends. As part of its research, Fidelity visited over 170
Korean companies during 1993 to assess their growth potential. Fidelity believes
that the use of the bottom-up method will enable it to find fundamentally sound,
undervalued investments in Korea that offer long-term growth potential for
investors.

Fidelity will look for growth opportunities in blue chip stocks, either due
to increases in permitted foreign stock ownership or attractive valuations.
Fidelity will also look for undervalued companies with strong fundamentals
within the large number of medium-and smaller-sized companies, including
companies traded on the second trading section of the KSE. The weighting of the
Fund's portfolio of investments among blue chip, medium-and smaller-sized
companies will therefore depend on Fidelity's judgment of each company's
long-term growth potential.

Korean law generally restricts foreign ownership of any issuer to 10%. This
has given rise to an over-the-counter market in KSE-listed securities, in which
foreign investors trade 10% foreign-owned stocks, often at a premium to the KSE
price. The Fund may purchase securities at premium prices when, in Fidelity's
view, the issuer's growth potential justifies the premium.

INVESTMENT IN KOREA

Fidelity believes that attractive investment opportunities may be found in
Korea due to its highly diversified industrial base, large consumer population
and large and well educated labor force, together with the evolving process of
the liberalization and reform of the securities markets in Korea. Korea's
significant commitment to research and development generally, coupled with its
position as a leading exporter in the Asia Pacific region should contribute
significantly to the potential for growth in the Korean economy. Continued
liberalization of the securities markets along with an increase in the number of
shares of Korean companies that are available for investment by foreign
investors would enable the Fund to participate in Korea's economic growth
potential. There can be no assurance, however, that such liberalization or
economic growth will continue to occur or that the Fund will be able to
participate in and benefit from any future liberalization or economic growth.

It should be noted that there are significant risks accompanying the
potential for economic growth in Korea and the securities markets in Korea
present the possibility of substantial losses as well as the potential for
gains. The Korean market is especially susceptible to sudden price volatility in
addition to other risks generally associated with investing in foreign
countries. Korea's economy tends to be dominated by conglomerates, disclosure by
companies tends to be limited and wage rates are becoming relatively expensive.
The Korean government has, from time to time, undertaken various measures
alternatively to cool or support the market. Cooling measures include
restrictions on foreign stock ownership, requirements that investors make
entrustment deposits before investing, as well as other forms of intervention.
Fidelity believes that although interventions will continue they will not
preclude long-term growth. Moreover, Fidelity believes that if restrictions on
foreign ownership are liberalized, the Fund may be presented with favorable
investment opportunities. In addition, there have been reports of increased
militarization in North Korea, accompanied by

20
<PAGE> 23

a general economic decline in that country. Military action or the risk of
military action or the economic collapse of North Korea could have a material
adverse effect on Korea, and consequently, on the ability of the Fund to achieve
its investment objective. See "Risk Factors and Special Considerations."

USE OF PROCEEDS

The net proceeds of the Offering will be approximately $ (or
approximately $ if the U.S. Underwriters (as defined below) exercise
the over-allotment options in full) after payment of the sales load and
organizational and offering expenses.

The net proceeds of the Offering will be invested in accordance with the
Fund's investment objective and policies. The Fund anticipates that, under
current market conditions, the net proceeds of this Offering will be fully
invested in accordance with the Fund's investment objective and policies within
three months from the date hereof, and in any event, no later than six months
from the date hereof. However, depending on market conditions, it may not be in
the best interests of the shareholders of the Fund for such investments to be
made within the six-month time period because of the limitations on investment
imposed on the Fund as a foreign investor by Korean laws and the relatively
small market capitalization (approximately $159.4 billion as of June 30, 1994)
and low trading volume (approximately 34.7 million shares traded per day on
average during the first six months of 1994) of the Korean equity securities
markets. See "The Securities Markets of Korea." It may be necessary to make such
investments over a longer period of time in order to avoid disruption of Korean
securities markets and to minimize the Fund's impact on the prices and trading
of securities of Korean Issuers. Under such circumstances, the Fund will attempt
to invest at least 65% of its total assets in securities of Korean Issuers
within a one-year time period. Pending such investment, it is anticipated that
the proceeds will be invested in Temporary Investments (as defined below). See
"Investment Objective and Policies -- Temporary Investments." Offering expenses
estimated at $ will be paid from the proceeds of the Offering and will
be charged to capital. Organizational costs of the Fund estimated at $
will be amortized on a straight-line basis for a five-year period beginning at
the commencement of operations of the Fund.

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is long-term capital appreciation. The Fund
will seek to achieve its objective through investment primarily in equity and
debt securities of Korean Issuers. As a matter of fundamental policy and under
normal market conditions, the Fund will invest at least 65% of its total assets
in equity and debt securities of Korean Issuers. Fidelity currently anticipates
that, once the Fund is fully invested, at least 80% of its net assets will be
invested in equity securities of Korean Issuers. As used herein, Korean Issuers
are entities that, as determined by Fidelity, (i) are organized under the laws
of Korea, (ii) regardless of where organized derive at least 50% of their
revenues or profits from goods produced or sold, investments made or services
performed or have at least 50% of their assets located in Korea, (iii) have the
primary trading market for their securities in Korea or (iv) are the government,
or its agencies or instrumentalities or other political subdivisions, of Korea.
The Fund will invest in companies that, in the opinion of Fidelity possess the
potential for growth. The Fund will not consider dividend income as a primary
factor in choosing securities, unless the Investment Adviser or the Sub-Adviser
believes the income will contribute to or is an indicator of the securities'
growth potential. Currently, foreign investors, including the Fund, are
permitted to invest in the following equity securities: (i) common and preferred
stock listed on the KSE; (ii) non-guaranteed convertible bonds listed on the KSE
of small and medium-sized companies, shares of which are listed on the KSE, with
foreign investors in the aggregate and a single foreign investor being allowed
to invest in up to 30% and 5%, respectively, of the listed value of each class
of such bonds; (iii) global or other types of depositary receipts representing
rights in shares of a Korean Issuer which are issued outside Korea; (iv)
convertible bonds denominated in non-Won currency and issued outside Korea; and
(v) equity warrants issued together with bonds denominated in non-Won currency
outside Korea. Although the Fund is authorized to engage in various strategies
to hedge its portfolio against adverse changes in the relationship between the
U.S. dollar and the Won, it is not currently permitted to do so in Korea under
Korean laws or

21
<PAGE> 24

regulations, except as described below, and there can be no assurance that such
strategies will become permissible and available in Korea in the future.
Currently, under Korean law, the Fund may enter into forward transactions
between the Won and foreign currency with a foreign exchange bank in Korea up to
the amount of Won which the Fund holds in connection with its investment in
Korean shares plus the value of Korean shares which it has purchased and holds
in its portfolio. The Fund does not presently intend to engage in these
strategies outside of Korea but reserves the right to do so in the future.

The Fund's investment objective and policy of investing at least 65% of its
total assets in equity and debt securities of Korean Issuers is fundamental and
cannot be changed without the approval of a majority of the Fund's outstanding
voting securities, which, as used herein, means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the outstanding shares
are present in person or represented by proxy or (ii) more than 50% of the
outstanding shares. The Fund's investment policies that are not designated
fundamental policies may be changed by the Fund without shareholder approval.
The Fund is designed primarily for long-term investment, and investors should
not consider it a short-term trading vehicle. As with all investment companies,
there can be no assurance that the Fund's investment objective will be achieved.

Equity securities include common stocks, preferred stocks, American, global
or other types of depositary receipts, rights or warrants to purchase common or
preferred stock, equity interests in trusts, partnerships, joint ventures or
similar enterprises and debt securities convertible into common or preferred
stock.

Korean law currently permits foreign investors such as the Fund to acquire
debt securities denominated in Won to a very limited extent. As of July 1, 1994
foreign investors are allowed to participate in new issues of certain low
interest rate government or public bonds to be designated from time to time and
up to the limit determined from time to time by the KSEC, each denominated in
Won and in each case subject to certain procedural requirements. At the present
time, however, foreign investors are permitted to invest in debt securities
issued by Korean companies outside of Korea and denominated in currencies other
than the Won (including, for example, bonds (which may have attached warrants),
convertible bonds, floating rate notes and commercial paper). If, in the future,
additional Won-denominated debt securities become permissible investments for
foreign investors, the Fund may invest in such securities.

Debt securities may be unrated or be rated below instrument grade. The
Investment Adviser or the Sub-Adviser will make independent evaluations as to
the creditworthiness of issuers of debt securities that may differ from those of
internationally recognized credit rating agency organizations, such as Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group ("S&P").
The Fund's success in attaining its investment objective with respect to
investments in debt securities will depend largely on the Investment Adviser's
and the Sub-Adviser's evaluation of the current and future creditworthiness of
issuers, and of interest rate trends. Sustained periods of deteriorating
economic conditions or rising interest rates are more likely to lead to a
weakening in the issuer's capacity to pay interest and repay principal than in
the case of higher-rated securities.

Most of the securities purchased by the Fund are expected to be traded on a
stock exchange or in an over-the-counter market. Subject to applicable laws and
regulations, the Fund, however, may invest up to 35% of its total assets in
illiquid securities, that is, equity or debt securities for which there is no
readily available market or no market at all. The Fund may therefore not be able
to readily sell such securities. Such securities are unlike securities that are
traded in the open market and which can be expected to be sold immediately.

The sale price of securities that are not readily marketable may be lower
or higher than the Fund's most recent estimate of their fair value. Generally,
less public information is available with respect to the issuers of these
securities than with respect to companies whose securities are traded on an
exchange. Securities not readily marketable are more likely to be issued by
start-up, small or family businesses and therefore subject to greater economic,
business and market risks than the listed securities of more well-established
companies. Adverse conditions in the public securities markets may at certain
times preclude a public offering of an issuer's securities. While Korean law
requires registration with a government agency of public offerings of
securities, that law does not contain restrictions like those contained in the
U.S. Securities Act of 1933, as amended (the "Securities Act") regarding the
length of time the securities must be held or manner of resale. There may also
be contractual restrictions on the resale of securities.

22
<PAGE> 25

Up to 35% of the Fund's total assets may be invested in equity or debt
securities of Asian Issuers, if warranted, in Fidelity's judgment, by economic
or political conditions in Korea or by regulatory restrictions or overvaluation
in the Korean securities markets. Asian Issuers are issuers (other than issuers
meeting the definition of Korean Issuers as defined above), that, as determined
by Fidelity, (i) are organized under the laws of Hong Kong, Japan or Taiwan,
(ii) regardless of where organized derive at least 50% of their revenues or
profits from goods produced or sold, investments made, or services performed in
Hong Kong, Japan or Taiwan, (iii) have the primary trading market for their
securities in Hong Kong, Japan or Taiwan or (iv) are governments, or their
agencies, instrumentalities or other political sub-divisions, of Hong Kong,
Japan or Taiwan. The Fund may also hold other instruments described below and in
"Appendix A -- General Characteristics and Risks of Derivatives."

The Fund may invest its assets in a broad spectrum of industries. In
selecting industries and companies for investment, Fidelity may consider overall
growth prospects, financial condition, earnings, valuations, competitive
position, technology, research and development, productivity, labor costs, raw
material costs and sources, profit margins, return on investment, structural
changes in local economies, capital resources, the degree of government
regulation or deregulation, management and other factors.

Fidelity normally will invest the Fund's assets according to its investment
strategy. For temporary defensive purposes, the Fund may invest without
limitation in Temporary Investments and investment grade debt instruments,
including unrated securities of equivalent credit quality as determined by the
Investment Adviser or the Sub-Adviser, short-term indebtedness or cash
equivalents denominated in U.S. dollars or, if it becomes permissible for the
Fund to so invest, denominated in Won. The Fund may also at any time, with
respect to up to 35% of its total assets, invest funds in U.S.
dollar-denominated money market instruments as reserves for dividends and other
distributions to shareholders.

TEMPORARY INVESTMENTS

The Fund may hold and/or invest its assets without limitation in cash
and/or Temporary Investments (as defined below) pending initial investment in
accordance with the Fund's investment objective and policies and for temporary
defensive purposes. To the extent that the Fund invests in Temporary
Investments, it may not achieve its investment objective. In addition, for cash
management purposes, the Fund may invest its assets in cash and/or rated or
unrated short-term debt securities of any quality.

Temporary Investments include high grade debt securities (rated A or above
by S&P or A or above by Moody's or with an equivalent rating by other nationally
recognized securities rating organizations) or unrated securities judged by the
Investment Adviser or Sub-Adviser to be of equivalent quality, denominated in
U.S. dollars or in another freely convertible currency including: (1) short-term
(less than 12 months to maturity) and medium-term (not more than five years to
maturity) obligations issued or guaranteed by (a) the U.S. government, its
agencies or instrumentalities or (b) international organizations designated or
supported by multiple foreign governmental entities to promote economic
reconstruction or development ("supranational entities"); (2) U.S. finance
company obligations, corporate commercial paper and other short-term commercial
obligations; (3) obligations (including certificates of deposit, time deposits,
demand deposits and bankers' acceptances) of banks; and (4) repurchase
agreements with respect to securities in which the Fund may invest.

Repurchase agreements are contracts pursuant to which the seller of a
security agrees at the time of sale to repurchase the security at an agreed upon
price and date. When the Fund enters into a repurchase agreement, the seller
will be required to maintain the value of the securities subject to the
repurchase agreement, at not less than their repurchase price. Repurchase
agreements may involve risks in the event of insolvency or other default by the
seller, including possible delays or restrictions upon the Fund's ability to
dispose of the underlying securities. While it does not appear possible to
eliminate all risks from these transactions, it will be the Fund's policy to
limit repurchase agreement transactions to those parties whose creditworthiness
has been reviewed and found satisfactory by the Investment Manager.

23
<PAGE> 26

OTHER INVESTMENTS

Illiquid Securities. The Fund may invest up to 35% of its total assets,
valued at the time of purchase, in illiquid securities, that is, securities for
which there is no readily available market, or no market at all. The Fund may be
unable to dispose of its holdings in illiquid securities at market prices and
may have to dispose of such securities over extended periods of time. See "Risk
Factors and Special Considerations -- Market Characteristics and -- Thinly
Traded Markets and Illiquid Investments." In many cases, illiquid securities
will be subject to contractual or legal restrictions on transfer. In addition,
issuers whose securities are not publicly traded may not be subject to the
disclosure and other investor protection requirements that may be applicable if
their securities were publicly traded.

Although not all the securities held by the Fund will be illiquid, the Fund
anticipates that all or most of its portfolio securities generally will be less
liquid than those traded in U.S. securities markets.

Depositary Receipts. The Fund may invest in securities of Korean Issuers
through sponsored or unsponsored American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs"), and other types of Depositary Receipts (which,
together with ADRs and GDRs, are hereinafter referred to as "Depositary
Receipts"). Depositary Receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. In
addition, the issuers of the stock of unsponsored Depositary Receipts are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
the Depositary Receipts. ADRs are Depositary Receipts typically issued by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they also may be
issued by U.S. banks or trust companies, and evidence ownership of underlying
securities issued by either a foreign or a U.S. corporation. Generally,
Depositary Receipts in registered form are designed for use in the U.S.
securities markets and Depositary Receipts in bearer form are designed for use
in securities markets outside the United States. For purposes of the Fund's
investment policies, the Fund's investments in ADRs, GDRs and other types of
Depositary Receipts will be deemed to be investments in the underlying
securities.

Shares of Other Investment Funds. The Fund may invest in investment funds
which invest principally in securities in which the Fund is authorized to
invest. The Fund does not intend to invest in such investment funds unless, in
the judgment of the Investment Adviser or the Sub-Adviser, the potential
benefits of such investment justify the payment of any applicable premium, sales
load and expenses. From time to time, such investment funds may be the sole
means by which the Fund may invest in securities of certain Korean Issuers. See
"Risk Factors and Special Considerations -- Investment Restrictions and Foreign
Exchange Controls." Under the 1940 Act, the Fund may invest a maximum of 10% of
its total assets in the securities of other investment companies. In addition,
under the 1940 Act, not more than 5% of the Fund's total assets may be invested
in the securities of any one investment company provided that the investment
does not represent more than 3% of the voting stock of the related acquired
investment company. To the extent the Fund invests in other investment funds,
the Fund's shareholders will indirectly incur certain duplicative fees and
expenses, including investment advisory fees and sales loads paid for
transactions in shares of such funds. For a discussion of possible consequences
under U.S. federal income tax laws of the Fund's investment in foreign
investment funds, see "Taxation -- U.S. Federal Income Taxes."

Rule 144A Securities. The Fund may purchase certain restricted securities
("Rule 144A securities") for which there is a secondary market of qualified
institutional buyers, as contemplated by Rule 144A under the Securities Act.
Rule 144A provides an exemption from the registration requirements of the
Securities Act for the resale of certain restricted securities to qualified
institutional buyers. One effect of Rule 144A is that certain Rule 144A
securities may be liquid, though there is no assurance that a liquid market for
any particular Rule 144A security will develop or be maintained. In promulgating
Rule 144A, the Commission stated that the ultimate responsibility for liquidity
determinations is that of an investment company's board of directors. However,
the Commission stated that the board may delegate the day-to-day function for
determining liquidity to a fund's investment adviser, provided that the board
retains sufficient oversight. The Board of Directors has adopted policies and
procedures for the purpose of determining whether securities that are

24
<PAGE> 27

eligible for resale under Rule 144A are liquid or illiquid securities. Pursuant
to those policies and procedures, the Board of Directors delegated to the
Investment Manager, the Investment Adviser or the Sub-Adviser the determination
as to whether a particular security is liquid or illiquid. For the purpose of
determining whether the Fund can invest in additional illiquid securities, if
any Rule 144A security previously determined to be liquid is later determined to
be illiquid, such security will be considered illiquid.

Convertible Securities. The Fund may invest in convertible securities
including securities that are unrated or rated below investment grade. See "Risk
Factors and Special Considerations -- Debt Securities -- High Yield, High Risk
Securities."

A convertible security might be subject to redemption at the option of the
issuer at a price established in the convertible security's governing
instrument. If a convertible security held by the Fund is called for redemption,
the Fund may be required to permit the issuer to redeem the security, convert it
into the underlying common or preferred stock or sell it to a third party.

Warrants. The Fund may invest in warrants, which are securities
permitting, but not obligating, their holder to subscribe for other securities.
Warrants do not carry the right to dividends or voting rights with respect to
their underlying securities, and they do not represent any rights in the assets
of the issuer. An investment in warrants may be considered speculative. In
addition, the value of a warrant does not necessarily change with the value of
the underlying securities and a warrant ceases to have value if it is not
exercised prior to its expiration date. Currently, foreign investors, including
the Fund, are not permitted to invest in rights or warrants to purchase equity
securities issued in Korea.

Equity-Linked Debt Securities. The Fund may invest in equity-linked debt
securities. The amount of interest and/or principal payments which the issuer of
equity-linked debt securities is obligated to make is linked to the performance
of a specified index of equity securities and may be significantly greater or
less than payment obligations in respect of other types of debt securities. As a
result, equity-linked debt securities are more volatile than other types of debt
securities and an investment in equity-linked debt securities may be considered
speculative.

Loans and Other Direct Debt Instruments. The Fund may invest in loans and
other direct debt instruments. Loans and other direct debt instruments are
interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services (trade claims
or other receivables), or to other parties. Direct debt instruments involve the
risk of loss in case of default or insolvency of the borrower and may offer less
legal protection to the Fund in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending bank
or other financial intermediary. Direct debt instruments may also include
standby financing commitments that obligate the Fund to supply additional cash
to the borrower on demand. Loans and other direct debt instruments are generally
illiquid and transfers are normally possible only through individually
negotiated private transactions. See "Risk Factors and Special Considerations --
Loans and Other Direct Debt Instruments."

Borrowings. The Fund may borrow for temporary or emergency purposes and to
finance tender offers and share repurchases. Borrowings by the Fund create an
opportunity for greater total return but, at the same time increase exposure to
capital risk. In addition, borrowed funds are subject to interest costs which
may offset or exceed the return earned on investment of such funds, and which,
if the borrowed funds are used to pay dividends or finance share repurchases or
tender offers, will reduce the Fund's net income. Although the Fund is permitted
to borrow, as indicated above, the Fund has no present intention of engaging in
leveraging by borrowing.

Reverse Repurchase Agreements. In a reverse repurchase agreement, the Fund
sells a portfolio instrument to another party, such as a bank or broker-dealer,
in return for cash and agrees to repurchase the instrument at a particular price
and time. While a reverse repurchase agreement is outstanding, the Fund will
maintain appropriate assets in a segregated custodial account to cover its
obligation under the agreement, which will consist only of liquid assets, such
as cash, U.S. government securities or other liquid high grade debt securities
("liquid assets"). The Fund will enter into reverse repurchase agreements only
with parties

25
<PAGE> 28

whose creditworthiness has been found satisfactory by the Investment Manager,
the Investment Adviser or the Sub-Adviser. Such transactions may increase
fluctuations in the market value of the Fund's assets and may be viewed as a
form of leverage.

Real Estate-Related Instruments. The Fund may invest in real
estate-related instruments, including real estate investment trusts, commercial
and residential mortgage-backed securities, and real estate financings. Real
estate-related instruments are sensitive to factors such as changes in real
estate values and property taxes, interest rates, cash flow of underlying real
estate assets, overbuilding, and the management skill and creditworthiness of
the issuer. Real estate-related instruments may also be affected by tax and
regulatory requirements, such as those relating to the environment.

ADDITIONAL INVESTMENT ACTIVITIES

HEDGING AND DERIVATIVES

Certain investment practices in which the Fund is authorized to engage to
hedge market risk, such as certain currency hedging techniques, including
currency options and futures, options on such futures and forward foreign
currency transactions, and certain investment techniques, such as the lending of
portfolio securities, forward commitments, standby commitment agreements and the
purchase or sale of put and call options, are not currently permitted under
Korean laws or regulations. The Fund may engage in these hedging or investment
practices to the extent the practices become available in the future or with
respect to instruments outside Korea. See "Appendix A -- General Characteristics
and Risks of Derivatives" for a further discussion of currency hedging
techniques. The Fund is also authorized to manage the effective maturity or
duration of debt instruments held by the Fund, or to seek to increase the Fund's
income or gain. Although these strategies are regularly used by some investment
companies and other institutional investors, few of these strategies can
practicably be used to a significant extent by the Fund at the present time and
may not become available for extensive use in the future. Over time, techniques
and instruments may change as new instruments and strategies are developed or
regulatory changes occur.

Subject to the constraints described above, the Fund may purchase and sell
interest rate, currency or stock index futures contracts and enter into currency
forward contracts and currency swaps; it may purchase and sell (or write)
exchange listed and over-the-counter put and call options on debt and equity
securities, currencies, futures contracts, fixed income and stock indices and
other financial instruments and it may enter into interest rate transactions,
equity swaps and related transactions and other similar transactions which may
be developed to the extent the Investment Manager, the Investment Adviser or the
Sub-Adviser determines that they are consistent with the Fund's investment
objective and policies and applicable regulatory requirements (collectively,
these transactions are referred to herein as "Derivatives." See "Appendix A --
General Characteristics and Risks of Derivatives"). The Fund may enter into
futures contracts or options thereon for purposes other than bona fide hedging
if, immediately thereafter, the sum of the amount of its initial margin and
premiums on open contracts and options would not exceed 5% of the liquidation
value of the Fund's portfolio; provided, that in the case of an option that is
in-the-money at the time of the purchase, the in-the-money amount may be
excluded in calculating the 5% limitation. The Fund's interest rate transactions
may take the form of swaps, caps, floors and collars, currency forward
contracts, currency futures contracts, currency swaps and options on currency or
currency futures contracts.

Derivatives may be used to attempt to protect against possible changes in
the market value of securities held in or to be purchased for the Fund's
portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of those securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a substitute for
purchasing or selling particular debt or equity securities. The ability of the
Fund to utilize Derivatives successfully will depend on the Investment Adviser's
and the Sub-Adviser's ability to predict pertinent market movements, which
cannot be assured. These skills are different from those needed to select
portfolio securities. The use of Derivatives in certain circumstances will
require that the Fund segregate cash, liquid high grade debt obligations or
other

26
<PAGE> 29

assets to the extent the Fund's obligations are not otherwise "covered" through
ownership of the underlying security, financial instrument or currency.

A detailed discussion of Derivatives, including applicable requirements of
the Commodity Futures Trading Commission, the requirement to segregate assets
with respect to these transactions and special risks associated with such
strategies, appears in Appendix A. See also "Risk Factors and Special
Considerations -- Investment Practices."

The degree of the Fund's use of Derivatives may be limited by certain
provisions of the Code. See "Taxation."

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Fund may purchase securities on a when-issued or delayed delivery
basis. Securities purchased on a when-issued or delayed delivery basis are
purchased for delivery beyond the normal settlement date at a stated price. No
income accrues to the purchaser of a security on a when-issued or delayed
delivery basis prior to delivery. Such securities are recorded as an asset and
are subject to changes in value based upon changes in market prices. Purchasing
a security on a when-issued or delayed delivery basis can involve a risk that
the market price at the time of delivery may be lower than the agreed-upon
purchase price, in which case there could be an unrealized loss at the time of
delivery. The Fund generally will establish a segregated account in which it
will maintain liquid assets in an amount at least equal in value to the Fund's
commitments to purchase securities on a when-issued or delayed delivery basis.
If the value of these assets declines, the Fund will place additional liquid
assets in the account on a daily basis so that the value of the assets in the
account is equal to the amount of such commitments. As an alternative, the Fund
may elect to treat when-issued or delayed delivery securities as senior
securities representing indebtedness, which are subject to asset coverage
requirements under the 1940 Act.

PURCHASE OF SECURITIES ON MARGIN

The Fund does not currently intend to purchase securities on margin, except
that the Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts will not constitute
purchasing securities on margin. Current Korean laws and regulations do not
allow foreign investors such as the Fund to purchase Korean securities on
margin.

SHORT SALES "AGAINST THE BOX"

The Fund may from time to time sell securities short "against the box." If
the Fund enters into a short sale against the box, it will be required to set
aside securities equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities at no added cost)
and will be required to hold such securities while the short sale is
outstanding. The Fund will incur transaction costs, including interest expense,
in connection with opening, maintaining, and closing short sales against the
box. If the Fund engages in any short sales against the box it will incur the
risk that the security sold short will appreciate in value after the sale, with
the result that the Fund will lose the benefit of any such appreciation.

The Fund may enter into short sales with respect to stocks underlying its
convertible security holdings. For example, if the Investment Adviser or the
Sub-Adviser anticipates a decline in the price of the stock underlying a
convertible security the Fund holds, it may sell the stock short. If the stock
price subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value of the
convertible security.

The Fund's obligation to replace the securities borrowed in connection with
a short sale will be secured by collateral deposited with the broker that
consists of cash, U.S. government securities or other liquid high grade debt
obligations. In addition, the Fund will place in a segregated account with its
custodian, or designated sub-custodian, an amount of cash, U.S. government
securities or other liquid high grade debt obligations equal to the difference,
if any, between (1) the market value of the securities sold at the time they
were sold short and (2) any cash, U.S. government securities or other liquid
high grade debt obligations deposited as collateral

27
<PAGE> 30

with the broker in connection with the short sale (not including the proceeds of
the short sale). Until it replaces the borrowed securities, the Fund will
maintain the segregated account daily at a level so that (1) the amount
deposited in the account plus the amount deposited with the broker (not
including the proceeds from the short sale) will equal the current market value
of the securities sold short and (2) the amount deposited in the account plus
the amount deposited with the broker (not including the proceeds from the short
sale) will not be less than the market value of the securities at the time they
were sold short. A lesser amount of assets may be set aside by the Fund if it
owns certain types of instruments, such as a call option on the security sold
short, that effectively "cover" the short sale.

Short sales by the Fund involve certain risks and special considerations.
Possible losses from short sales differ from losses that could be incurred from
a purchase of a security, because losses from short sales may be unlimited,
whereas losses from purchases can equal only the total amount invested. The Fund
is not currently permitted under Korean laws and regulations to engage in short
sales of Korean securities.

INVESTMENT RESTRICTIONS

The Fund's only fundamental policies, that is, policies that cannot be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities, are (i) its investment objective, (ii) its policy
that under normal market conditions, at least 65% of the Fund's total assets
will be invested in equity and debt securities of Korean Issuers, and (iii) the
following seven restrictions. As used herein, a "majority of the Fund's
outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares. The other policies
and investment restrictions referred to herein are not fundamental policies of
the Fund and may be changed by the Fund's Board of Directors without shareholder
approval. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly, any subsequent change in values, assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations. Under its fundamental policies, the
Fund may not:

(1) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities), if, as a result, more than 25% of the Fund's total
assets would be invested in companies whose principal business activities
are in the same industry;

(2) issue senior securities, except as permitted under the 1940 Act;

(3) borrow money, except that the Fund may borrow money for temporary
or emergency purposes or to finance tender offers and/or share repurchases
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings); any borrowings
that come to exceed this amount will be reduced promptly in accordance with
reasonable investment practice to the extent necessary to comply with the
33 1/3% limitation;

(4) underwrite securities issued by others, except to the extent that
the Fund may be considered an underwriter within the meaning of the
Securities Act in the disposition of restricted securities;

(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this will not prevent the
Fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);

(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this will not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by or indexed to, or
representing interests in, physical commodities or investing or trading in
derivative investments); or

(7) make any loan if, as a result, more than 33 1/3% of its total
assets would be lent to other parties, but this limitation does not apply
to purchases of debt securities or to repurchase agreements.

28
<PAGE> 31

As a matter of non-fundamental policy, the Fund will not purchase any
portfolio securities while borrowings representing more than 5% of its total
assets are outstanding. To meet federal tax requirements for qualification as a
"regulated investment company," the Fund intends to limit its investments so
that at the close of each quarter of its taxable year: (a) with regard to at
least 50% of total assets, no more than 5% of total assets are invested in the
securities of a single issuer and the Fund will not hold more than 10% of the
outstanding voting securities of that issuer; and (b) no more than 25% of total
assets are invested in the securities of a single issuer. Limitations (a) and
(b) do not apply to "Government securities" as defined for federal tax purposes.

AFFILIATED FINANCIAL INSTITUTION TRANSACTIONS

The Fund may engage in transactions with financial institutions that are,
or may be considered to be, "affiliated persons" of the Fund under the 1940 Act.
These transactions may include, for example, repurchase agreements with
custodian banks; purchase of short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. government securities with affiliated financial institutions
that are primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued by the
SEC, the Board of Directors will establish and periodically review procedures
applicable to transactions involving affiliated financial institutions.

FUND'S RIGHTS AS A SHAREHOLDER

The Fund does not intend to direct or administer the day-to-day operations
of any company. The Fund, however, may exercise its rights as a shareholder and
may communicate its views on important matters of policy to management, the
Board of Directors, and shareholders of a company when the Investment Manager,
the Investment Adviser or the Sub-Adviser determines that such matters could
have a significant effect on the value of the Fund's investment in the company.
The activities that the Fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in a
company's direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third party
takeover efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that the Fund could be involved in lawsuits
related to such activities. The Investment Manager, the Investment Adviser or
the Sub-Adviser will monitor such activities with a view to mitigating, to the
extent possible, the risk of litigation against the Fund, and the risk of actual
liability if the Fund is involved in litigation. No guarantee can be made,
however, that litigation against the Fund will not be undertaken or liabilities
incurred.

RISK FACTORS AND SPECIAL CONSIDERATIONS

Investors should recognize that investing in securities of Korean Issuers
and other Asian Issuers involves certain risks and special considerations
including those set forth below, which are not typically associated with
investing in U.S. Securities. These include: (i) certain restrictions on foreign
investment in the Korean securities markets which will preclude investment in
certain securities by the Fund and limit investment opportunities for the Fund;
(ii) currency devaluations and fluctuations in the rate of exchange between the
U.S. dollar and the Won with the resultant fluctuations in the net asset value
of the Fund (which is expressed in U.S. dollars); (iii) substantial government
involvement in, and influence on, the economy and the private sector; (iv)
political, economic and social instability, including the potential for
increased militarization in North Korea; (v) the substantially smaller size and
lower trading volume of the securities markets for Korean equity securities
compared to the U.S. securities markets, resulting in a potential lack of
liquidity and increased price volatility; (vi) the risk that the sale of
portfolio securities by the Korea Securities Stabilization Fund (the
"Stabilization Fund"), a fund established in order to stabilize the Korean
securities markets, or other large Korean institutional investors may adversely
impact the market value of securities in the Fund's portfolio; (vii) the risk
that less information with respect to Korean companies may be available due to
the fact that Korean accounting, auditing and financial reporting standards are
not equivalent to those applicable to U.S. companies; (viii) heavy concentration
of market capitalization and trading volume in a small number

29
<PAGE> 32

of issuers, which result in potentially fewer investment opportunities for the
Fund; (ix) fluctuations in the prices and premium valuations of securities held
by the Fund that are traded over the counter among foreign investors; (x)
controls on foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to exchange Wons for U.S. dollars; (xi) the
risk of nationalization or expropriation of assets or confiscatory taxation;
(xii) higher rates of inflation; (xiii) less government supervision and
regulation of Korean securities markets and participants in those markets; (xiv)
settlement delays; (xv) the risk that dividends will be withheld at the source;
(xvi) unavailability of currency hedging techniques in the Korean markets;
(xvii) the fact that companies in Korea may be smaller, less seasoned and newly
organized; (xviii) the risk that it may be more difficult to obtain and/or
enforce a judgment in a court outside the United States; and (xix) the risk of
taxation of the Fund, its investments and its income by Korea.

INVESTMENT RESTRICTIONS AND FOREIGN EXCHANGE CONTROLS

Investment in securities of Korean companies by foreign investors is
subject to significant restrictions and controls. As a result, the Fund may be
limited in its investments or precluded from investing in certain Korean
companies, which may adversely affect the performance of the Fund. Conversion of
Won into U.S. dollars or other foreign exchange, transfer of funds from Korea to
foreign countries and repatriation of foreign capital invested in Korea are
subject to certain regulatory requirements pursuant to foreign exchange control
laws and regulations. See "The Securities Markets of Korea -- Regulation of
Foreign Investment." Under the Foreign Exchange Management Act, if the Minister
of Finance of Korea deems that an event of emergency is likely to occur, he may
impose any necessary restrictions such as requiring foreign investors, including
the Fund, to obtain approval for the acquisition of Korean equity shares or for
the remittance overseas of the sale proceeds thereof.

On January 3, 1992, the Korean stock markets were opened to general
investment directly by foreign investors following the adoption and
implementation by the KSEC and the Ministry of Finance (the "MOF") of certain
regulations (as amended from time to time, the "New Regulations") that allow
foreign investors to directly purchase and sell equity shares listed on the KSE
subject to certain investment ceilings and procedural requirements. Pursuant to
the New Regulations, the percentage of each class of a company's outstanding
equity shares that may be held by a particular foreign investor and by all
foreign investors as a group is limited generally to 3% and 10%, respectively.
On October 5, 1994, the MOF announced that, effective December 1, 1994, such 10%
limit on aggregate foreign ownership will be increased to 12%. Certain
designated public corporations are subject to an aggregate 8% ceiling on
acquisitions of equity shares by foreigners. Of the Korean companies listed on
the KSE, Pohang Iron & Steel Co., Ltd. ("POSCO") and Korea Electric Power
Corporation ("KEPCO") have been so designated. On October 5, 1994, the MOF
announced that, in 1995, such 8% ceiling on acquisitions of equity shares by
foreigners applicable to POSCO and KEPCO will be increased to 10%. In addition
to the ceiling set by the KSEC, under the authority of the Securities and
Exchange Act (the "SEA"), the Articles of Incorporation of POSCO and KEPCO set a
1% ceiling on acquisition by a single investor of equity shares of their
respective common stock. The KSEC has authority to increase or decrease foreign
investment limits and from time to time has exercised such authority. The Korean
government has announced its intention to gradually raise the aggregate foreign
investment limit. While no specific date has been set for such action, the MOF
has targeted 1994-1995 as its goal. If, and when, the aggregate foreign
investment limit is raised, the Fund may have more flexibility in selecting
investments for its portfolio. There can be no assurance that the aggregate
foreign investment limit will be raised. As of July 1, 1994, foreign investors
are allowed (1) to invest in non-guaranteed convertible bonds listed on the KSE
which are issued by small and medium-sized companies the shares of which are
listed on the KSE, with foreign investors in the aggregate and a single foreign
investor being allowed to invest in up to 30% and 5% of the listed value of each
class of such bonds, respectively; and (2) to participate in new issues of
certain low interest rate government or public bonds to be designated from time
to time and up to the limit determined from time to time by the KSEC, each
denominated in Won and in each case subject to certain procedural requirements.

Securities acquired by foreign investors must be traded on the KSE, with
certain exceptions as described below. For transactions on the KSE, a foreign
investor must open a Won account for securities transactions

30
<PAGE> 33

with a securities company for stock investment and a separate account for bond
investment and at that time must present its investment registration card to the
securities company.

A foreign investor which intends to acquire shares must designate a foreign
exchange bank in Korea at which it must open a foreign currency account and a
Won account ("Foreign Currency Account" and "Won Account", respectively)
exclusively for stock investments and a separate set of such accounts for bond
investments. No approval is required for remittance into Korea and deposit of
foreign currency funds in the Foreign Currency Account. Upon confirmation by the
designated foreign exchange bank, foreign currency funds may be transferred from
the Foreign Currency Account at the time required to place a deposit for, or to
settle the purchase price of, a stock purchase transaction to a Won account
opened at a securities company. Funds in the Foreign Currency Account may be
remitted abroad without any governmental approval.

Dividends on shares, or interest on bonds, of Korean companies are paid in
Won. No governmental approval is required for foreign investors to receive
dividends or interest on, or the Won proceeds of the sale of, any such shares or
bonds to be paid, received and retained in Korea. Dividends paid on, and the Won
proceeds of the sale of, any such shares or bonds held by a non-resident of
Korea must be deposited either in a Won account with the investor's securities
company or its Won Account according to the type of investment (i.e., monies
relating to stock investment must be deposited at the stock account and monies
relating to bond investment must be placed in the bond account). Funds in the
investor's Won Account may be transferred to its Foreign Currency Account or
withdrawn for local living expenses (subject to a certain limitations), in each
case subject to approval by the investor's designated foreign exchange bank. In
addition, funds in the Won Account may be used for future investment in stocks
or bonds or for payment of the subscription price of new shares obtained through
the exercise of pre-emptive rights.

The repatriation of capital invested by foreign investors may be restricted
by the Korean government in its discretion in certain emergency circumstances
including, but not limited to, sudden fluctuations in interest rates or exchange
rates, extreme difficulty in stabilizing the balance of payments or a
substantial disturbance in the Korean financial or capital markets. It is
impossible to predict the extent to which foreign investment will continue to
increase in Korea or the Fund's ability to participate in such increased foreign
investment in light of the foreign holding limitations or governmental
restrictions that may be imposed in the future.

Foreign investors such as the Fund are unable to effect share purchase
transactions on the KSE in a security that has reached or exceeded the maximum
aggregate foreign ownership limit (or the limit less odd-lot shares). As of June
30, 1994, of the 30 largest KSE-listed companies (as measured by total market
capitalization), which accounted for approximately 51.5% of the aggregate market
capitalization of the KSE, nearly all had reached or exceeded the applicable
maximum aggregate foreign ownership limit. As of December 31, 1993, 165
companies of the 693 companies listed on the KSE had reached or exceeded the
applicable maximum aggregate foreign ownership limit (23.8% of all companies
listed on the KSE) and an additional 159 companies were within 0.5% of the
limit. At such date, 84.5% and 77.0% of the permitted foreign holding amount
were invested by foreign investors in terms of KSE market capitalization and the
number of shares, respectively. During 1992 and 1993, U.S.$10.3 billion was
invested in Korea by foreign investors for stock investment, of which U.S.$2.6
billion in stock investments was sold and repatriated outside Korea. During the
first six months in 1994, aggregate inflow of foreign stock investments totaling
U.S.$3.6 billion by foreign investors and aggregate sales and repatriation of
foreign stock investments equaled U.S.$2.5. The Korean government has
implemented a system to monitor foreign investment limits and transactions,
including the issuance of an investment registration card to each foreign
investor for stock investment and a separate card for bond investment. The Fund
has obtained the stock investment registration card and intends to apply to
obtain the bond investment registration card.

As of the end of 1993, foreign investors held 503.3 million shares, which
amounted to 8.74% of the total number of listed shares and 9.81% of total KSE
market capitalization at that time.

31
<PAGE> 34

The following table shows amounts of aggregate foreign inflow and outflow
related to stock investment for the periods indicated since 1992.

<TABLE>
<CAPTION>
INFLOW OUTFLOW
(IN MILLIONS (IN MILLIONS
OF U.S. DOLLARS) OF U.S. DOLLARS)
---------------- ----------------
<S> <C> <C> <C>
1992......................................... 2,735.5 662.5
1993......................................... 7,636.8 1,935.7
1994 Jan................................... 898.4 265.8
Feb................................... 749.3 300.5
Mar................................... 473.1 610.3
Apr................................... 300.1 379.6
May................................... 639.0 433.9
June(1)............................... 582.8 517.5
</TABLE>

- ---------------
(1) Preliminary.
Source: Monthly Review, July 1994, Securities Supervisory Board.

The following table shows the volume and value of transactions in stocks in
Korea by foreigners since 1992.

<TABLE>
<CAPTION>
ON THE KSE
SALES VOLUME SALES VALUE OUTSIDE THE KSE(1)
----------------------- ----------------------- SALES SALES
YEAR PURCHASE SALE PURCHASE SALE VOLUME VALUE
- ----- ---------- ---------- ---------- ---------- ------------ ------------
(IN MILLIONS OF WON) (IN MILLIONS (IN MILLIONS
(IN MILLIONS OF SHARES) OF SHARES) OF WON
<S> <C> <C> <C> <C> <C> <C> <C>
1992........... 123 52 2,385 877 2 113
1993........... 383 126 6,419 2,089 23 571
1994 Jan..... 41 10 639 193 4 160
Feb..... 20 7 448 124 7 195
Mar..... 12 22 199 383 14 409
Apr..... 16 17 331 309 6 125
May..... 24 16 370 255 8 210
June(2).. 21 22 326 375 11 262
</TABLE>

- ---------------
(1) Sales Volume and Sales Value are calculated on either purchase or sale side.
(2) Preliminary.
Source: Monthly Review, July 1994, Securities Supervisory Board.

Foreign investors may trade securities of Korean companies only through the
KSE except in certain limited circumstances, which include odd-lot trading of
securities, acquisition of shares by exercise of warrant, conversion rights
under convertible bonds or withdrawal rights under depositary receipts issued
outside of Korea by a Korean company, acquisition of shares as a result of
inheritance, donation, bequeathal or exercise of shareholders' rights
(preemptive rights or rights to participate in free distributions and receive
dividends), and direct transactions between foreigners involving the transfer of
a class of shares for which the ceiling on acquisition by foreigners in total
(as explained above) has been reached or exceeded ("foreign OTC transactions").
Odd-lot trading of shares outside the KSE must involve a licensed securities
company in Korea as the second party. For direct transfers of shares outside the
KSE between foreigners, a securities company licensed in Korea must act as an
intermediary. However, foreign investors such as the Fund are not permitted to
enter into such foreign OTC transactions with branches and subsidiaries of
foreign banks, securities companies and insurance companies. Foreign OTC
transactions typically occur at a premium over prices on the KSE. The Fund may
invest in shares of KSE-listed companies through such foreign OTC transactions,
and thus pay a premium over the share prices quoted on the KSE. There can be no
assurance that the Fund will be able to realize such premium if it sells the
shares to another foreign investor. Such premium may be affected by changes in
regulation and otherwise, including any change in the percentage of foreign
stock ownership permitted in KSE-listed companies. Foreign investors are
prohibited from engaging in margin transactions.

32
<PAGE> 35

Certificates evidencing securities acquired by the Fund must be kept in
custody with an eligible custodian in Korea. Only foreign exchange banks
(including Korean branches of foreign banks), securities companies (including
Korean branches of foreign securities companies) and the Korea Securities
Depository are eligible to act as a custodian of securities for a foreign
investor. Further, a foreign investor is required to have its custodian deposit
its securities with the Korea Securities Depository on a fungible basis for book
transfer unless otherwise approved by the Governor of the Securities Board
("Governor").

Unless otherwise approved by the Governor, a foreign investor such as the
Fund must appoint one or more standing proxies from among the Korea Securities
Depository, securities companies (including Korean branches of foreign
securities companies) which have obtained a license to act as standing proxy and
foreign exchange banks (including Korean branches of foreign banks) to exercise
shareholders' rights, apply to change a name on the shareholders' registry,
place an order to sell or purchase shares or engage in any matters related to
these activities, if any such activities are not conducted by the foreign
investor itself. The Fund has appointed SsangYong Investment & Securities Co.,
Ltd and also intends to appoint a subsidiary of the Fund's sub-custodian as
standing proxy. Because the Fund will be engaging in transactions with several
Korean brokers, it may need to appoint a number of standing proxies to
efficiently conduct its trading activities. Each such standing proxy appointed
will receive a commission for its services. If and only to the extent that a
standing proxy other than the Fund's custodian or sub-custodian were deemed to
have custody over certain assets of the Fund, the Fund may be required to obtain
relief from the Commission or a waiver or modification of the standing proxy
requirement from the KSEC or the Governor. There can be no assurance that such
relief, waiver or modification will be obtained.

EXCHANGE RATE FLUCTUATIONS

Fidelity currently anticipates that, once fully invested, at least 80% of
the Fund's total assets will be invested in equity securities of Korean Issuers.
As a result, most of the income received by the Fund, and assets held by the
Fund will be denominated in Won. The computation of net asset value and the
distribution of income by the Fund, however, will be made in U.S. dollars.
Therefore, the Fund's reported net asset value and its computation and
distribution of income in U.S. dollars will be affected adversely by reductions
in the value of the Won relative to the U.S. dollar. The Fund also will incur
costs of conversion between currencies. In addition, the computation of income
will be made on the date of its accrual by the Fund at the foreign exchange rate
in effect on that date, and thus, if the value of the Won falls relative to the
U.S. dollar between recognition of the income and the making of Fund
distributions, the Fund may be required to liquidate investments in order to
make distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Code. Such liquidation of investments, if
required, may have adverse effects on the Fund's performance. In addition, if
the liquidated investments include securities that have been held less than
three months, such sales may jeopardize the Fund's status as a regulated
investment company under the Code. See "Taxation."

Prior to 1980, the value of the Won was fixed against the U.S. dollar. In
January 1980, the Korean government devalued the Won against the U.S. dollar by
16.6%, in part to enhance the competitiveness of Korean exports. From February
1980 to March 1990, the Won was traded on the basis of a floating exchange rate,
known as the concentration base rate, which was determined by The Bank of Korea
by reference to a multi-currency basket. In March 1990, The Bank of Korea
concentration base rate system was abolished, and since such date, the exchange
rate has been determined by averaging the previous day's inter-bank rates. This
system is known as the Market Average Exchange Rate System. Under this system,
foreign exchange rates are permitted to move each day within narrow ranges on
either side of the market average exchange rates announced by the Korea
Financial Telecommunications and Clearings Institute. Since October 1, 1993, the
permitted daily range of fluctuation was increased to plus or minus 1.0%. See
"The Securities Markets of Korea -- Recent Market and Economic Developments --
Financial Liberalization and Market Opening Plan" and "The Republic of Korea --
Foreign Exchange." The Won appreciated in value an aggregate of 23.74% relative
to the U.S. dollar between December 1985 and December 1989, and then depreciated
by 18.9% in value relative to the U.S. dollar between December 1989 and December
1993. See "The Republic of Korea."

33
<PAGE> 36

The Fund is permitted to engage in a variety of currency hedging
transactions, which may involve certain risks, although such transactions, with
certain exceptions, are not currently permitted under Korean law or regulations.
See "Investment Objective and Policies -- Other Investments," "Additional
Investment Activities" and "Appendix A -- General Characteristics and Risks of
Derivatives."

POLITICAL AND ECONOMIC FACTORS

The value of the Fund's assets may be adversely affected by political,
economic or social instability in Korea. Following World War II, the Korean
peninsula was partitioned. The demilitarized zone at the boundary between Korea
and North Korea was established after the Korean War of 1950-1953 and is
supervised by United Nations forces. The United States maintains a military
force in Korea to help deter the ongoing military threat from North Korean
forces. The situation remains a source of tension, although negotiations to ease
tensions and resolve the political division of the Korean peninsula have been
carried on from time to time. There also have been efforts from time to time to
increase economic, cultural and humanitarian contacts between North Korea and
Korea. There can be no assurance that such negotiations or efforts will continue
to occur or will result in an easing of tensions between North Korea and the
Republic. Tension between the two Koreas rose following the announcement in
March 1993 by North Korea of its intention to withdraw from the Nuclear
Non-Proliferation Treaty. Subsequent events involving, among other things, North
Korea's refusal to comply with the Nuclear Non-Proliferation Treaty and the
death on July 8, 1994 of North Korea's President, Kim Il-Sung, have caused the
level of tension between the two Koreas to fluctuate. No assurance can be given
that the level of tension with North Korea will not increase or change abruptly
as a result of future events, including political developments in North Korea
following the death of Kim Il-Sung, developments in the dispute concerning North
Korea's nuclear program (such as any moves to impose trade sanctions against
North Korea, further increasing political tensions and the risk of military
conflict) or developments related to proposed meetings between Korea and North
Korea. See "The Republic of Korea."

The heightened tensions between Korea and North Korea have depressed new
foreign investment in Korea and the availability of foreign financing for Korean
companies, and the uncertainty surrounding the situation may adversely affect
the economic climate in Korea. The tensions between North Korea and Korea also
may adversely affect both the prices of the Fund's portfolio securities and the
Fund's share price.

In addition, there have been reports of increased militarization in North
Korea, accompanied by a general economic decline in that country. Military
action or the risk of military action or the economic collapse of North Korea
could have a material adverse effect on Korea, and consequently, on the ability
of the Fund to achieve its investment objective.

The domestic political situation in Korea has undergone significant change
in recent years. Following the 1979 assassination of President Park Chung Hee,
General Chun Doo Hwan became President under an authoritarian regime which
emphasized social and political order, while encouraging renewed economic
growth. Following public demonstrations, Roh Tae Woo was democratically elected
as President in December 1987. In December 1992, the Korean people elected Kim
Young Sam as President. Kim Young Sam is the first popularly elected President
of Korea since 1960 not affiliated with the military.

With its lack of natural resources and with exports constituting a large
proportion of GNP, the Korean economy is significantly affected by changes in
commodity prices (particularly oil), changes in protectionist sentiment among
its trading partners and exchange rate movements. The rapid economic development
of Korea has in the past led to large foreign borrowings.

Korean companies tend to be substantially more leveraged than U.S. and
European companies. The high degree of leverage increases the risk of business
failures should adverse business conditions develop. In addition, Korean
accounting, auditing and financial reporting standards and practices are not
equivalent to those in the United States. Therefore, certain material
disclosures (including disclosures as to off-balance sheet financing loan
guaranties) may not be made, and less information may be available with respect
to investments in Korea than with respect to those in the United States.

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MARKET CHARACTERISTICS

Differences Between the U.S. and Korean Markets. The Korean securities
markets have substantially less volume than the NYSE, and equity and debt
securities of most Korean companies are less liquid and more volatile than
equity and debt securities of U.S. companies of comparable size. Many companies
traded on Korean securities markets are smaller, newer and less seasoned than
companies whose securities are traded on securities markets in the United
States. Investments in smaller companies involve greater risk than is
customarily associated with investing in larger companies. Smaller companies may
have limited product lines, markets or financial or managerial resources and may
be more susceptible to losses and risks of bankruptcy. Additionally, market
making and arbitrage activities are generally less extensive in such markets,
which may contribute to increased volatility and reduced liquidity of such
markets. Accordingly, the Korean securities markets may be subject to greater
influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the United
States. To the extent that Korea experiences rapid increases in its money supply
and investment in equity securities for speculative purposes, the equity
securities traded in Korea may trade at price-earnings multiples higher than
those of comparable companies trading on securities markets in the United
States, which may not be sustainable. Korean securities markets may also be
subject to substantial governmental control, which may cause sudden or prolonged
disruptions in market prices unrelated to supply and demand considerations. This
may also be true of currency markets. The development of the Korean securities
markets may be attributed to, among other things, the Korean government's
extensive involvement in the private sector, including the securities markets.
The aggregate market capitalization of domestic equity securities listed on the
KSE was approximately W128.4 trillion (approximately U.S.$159.4 billion) at June
30, 1994, as compared to U.S.$4.4 trillion on the NYSE. As discussed above in
"Investment Restrictions and Foreign Exchange Controls," however, only a small
portion of the equity securities that compose this market capitalization may be
purchased by foreign investors.

The Korean government has from time to time taken measures to minimize
excessive price volatility on the KSE, including the imposition of limitations
on daily price movements of securities and varying margin requirements. Such
actions by the Korean government have had and in the future could have a
significant effect on the market prices and dividend yields of Korean equity
securities. In particular, during 1990, the Stabilization Fund, a partnership
operated by its contributors which include substantially all KSE-listed
companies, Korean securities companies and certain institutional investors, was
formed to stabilize the market through the purchase and sale of securities. The
size of the Stabilization Fund is not officially reported. However, as of
January 1994, the Stabilization Fund was reported by the financial press to
constitute approximately 5% of the total listed equity market capitalization of
the KSE. The purchase and sale of portfolio securities by the Stabilization Fund
could exert significant pressure on the market price of KSE-listed securities in
which the Fund may invest.

In an attempt to avoid market manipulation, regulations of the KSE require
that institutional investors, such as the Fund, place an "entrustment guarantee"
deposit in an amount equal to 20% of the purchase order price with the relevant
broker on or prior to placing a purchase order. Non-institutional investors are
required to place an entrustment guarantee deposit in an amount equal to 40% of
the purchase order price. The remaining purchase price must be paid on or prior
to the settlement date, which typically occurs two days after the date of
execution. The "entrustment guarantee" deposit requirement applies to both
Korean and foreign investors and will expose the Fund to the broker's credit
risk. If an entity other than the Fund's custodian or sub-custodian were deemed
to have custody over certain assets of the Fund, the Fund may be required to
obtain relief from the Commission or a waiver or modification of the entrustment
guarantee requirements from the KSE. There can be no assurance that such relief,
waiver or modification will be obtained.

There are currently a limited number of securities firms engaged in
securities underwriting and trading in Korea. In addition, under current Korean
laws and regulations, the Fund is prohibited from participating in initial
public offerings of securities except for certain low interest rate government
or public bonds to be designated from time to time by the KSEC as explained
above. Brokerage commissions and other transaction costs on the KSE are
generally higher than in the United States. In addition, security settlements
may in some instances be subject to delays and related administrative
uncertainties, including risk of loss associated with the credit of local
brokers.

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<PAGE> 38

Government Supervision of Korean Securities Markets; Legal System. There
is less government supervision and regulation of securities exchanges, listed
companies and brokers in Korea than exists in the United States. Less
information, therefore, may be available to the Fund than in respect of
investments in the United States. Further, in Korea, less information may be
available to the Fund than to local market participants. Brokers in Korea may
not be as well capitalized as those in the United States, so that they are more
susceptible to financial failure in times of market, political, or economic
stress. In addition, existing laws and regulations are often inconsistently
applied. As legal systems in Korea develop, foreign investors may be adversely
affected by new laws and regulations, changes to existing laws and regulations
and preemption of local laws and regulations by national laws. In circumstances
where adequate laws exist, it may not be possible to obtain swift and equitable
enforcement of the law. Currently a mixture of legal and structural restrictions
affect the Korean securities markets.

Financial Information and Standards. Korean accounting, auditing and
financial standards and requirements differ, in some cases significantly, from
those applicable to U.S. issuers. In particular, the assets and profits
appearing on the financial statements of a Korean issuer may not reflect its
financial position or results of operations in accordance with U.S. generally
accepted accounting principles. In addition, for an issuer that keeps accounting
records in local currency, inflation accounting rules may require, for both tax
and accounting purposes, that certain assets and liabilities be restated on the
issuer's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition of
those issuers and securities markets. Moreover, substantially less information
may be publicly available about issuers in Korea than is available about U.S.
issuers.

SUBSTANTIAL GOVERNMENT INFLUENCE ON THE PRIVATE SECTOR

The Korean government has historically exercised and continues to exercise
substantial influence over many aspects of the private sector. The Korean
government from time to time has informally influenced the payment of dividends
and the prices of certain products, encouraged companies to invest or to
concentrate in particular industries, induced mergers between companies in
industries suffering from excess capacity and induced private companies to
publicly offer their securities. In addition, the government has sought to
minimize excessive price volatility on the KSE through various steps, including
the imposition of limitations on daily price movements of securities. Such
actions by the government in the future could have a significant effect on the
market prices and dividend yields of equity securities, including those in the
Fund's portfolio.

The Korean government has attempted, through regulation or other measures,
to stabilize the securities market. These included measures intended to channel
additional funds from various financial institutions into investment in
KSE-listed securities. Another measure was to authorize securities "buy-back
funds" to be established as open-ended unit investment trusts with a limited
life of five years. Each such trust is managed by one of the three largest
Korean securities investment trust management companies. The stated objective of
the trusts is to invest in shares of the largest listed companies. However, it
is expected that each trust will invest in the shares of companies holding units
of such trust. Such trusts are generally restricted from investing in excess of
20% of their total assets in any class of shares of a company. The redemption
rights of unit holders are subject to certain restrictions for a period of three
years following subscription for the relevant units. Other measures taken
include tax incentives for small investors, regular government oversight to
ensure that financial institutions are not net sellers of shares and changes in
margin requirements for securities transactions. Indirect measures have included
from time to time urging institutional investors to act as net buyers to
forestall a significant decline in the market.

THINLY TRADED MARKETS AND ILLIQUID INVESTMENTS

Compared to securities traded in the United States, generally all
securities of Korean Issuers may be considered to be thinly traded. Even
relatively widely held securities in Korea may not be able to absorb trades of a
size customarily transacted by institutional investors, without price
disruptions. Accordingly, the Fund's ability to reposition itself will be more
constrained than would be the case for a mutual fund that invests in the U.S.
equity market. The Fund, in addition, may invest up to 35% of its total assets
in illiquid equity or debt

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<PAGE> 39

securities, that is, securities for which there is no readily available market,
or no market at all. Investment of the Fund's assets in relatively illiquid
securities may restrict the ability of the Fund to dispose of its investments in
a timely fashion and for a fair price as well as its ability to take advantage
of market opportunities. The risks associated with illiquidity will be
particularly acute in situations in which the Fund's operations require cash,
such as when the Fund repurchases shares, commences a tender offer, or pays
dividends or distributions, and could result in the Fund borrowing to meet
short-term cash requirements or incurring capital losses on the sale of illiquid
investments. Further, companies whose securities are not publicly traded are not
subject to the disclosure and other investor protection requirements which would
be applicable if their securities were publicly traded.

Illiquid investments are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they are
valued because of the absence of a market for such investments. Under the
supervision of the Board of Directors, the Investment Manager will determine the
liquidity of the Fund's investments and, through reports from the Investment
Manager, the Board will monitor investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Investment Manager may
consider various factors, including (1) the frequency of trades and quotations,
(2) the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by a committee
appointed by the Board of Directors. If through a change in values, assets, or
other circumstances, the Fund were in a position where more than 35% of its
total assets were invested in illiquid securities, the Fund would seek to take
appropriate steps to protect liquidity.

SETTLEMENT PROCEDURES AND DELAYS

Settlement procedures in Korea are somewhat less developed and reliable
than those in the United States and in other developed securities markets, and
the Fund may experience settlement delays or other material difficulties.
Accordingly, the Fund may be subject to significant delays or limitations on the
volume of trading during any particular period as a result of these factors. The
foregoing factors could impede the ability of the Fund to effect portfolio
transactions on a timely basis and could have an adverse impact on the net asset
value of the shares of the Fund's Common Stock and the price at which the shares
trade.

INVESTMENTS IN ASIAN ISSUERS

Up to 35% of the Fund's total assets may be invested in equity and debt
securities of Asian Issuers, if warranted, in Fidelity's judgment, by economic,
political or regulatory conditions in Korea or valuations in the Korean
securities markets relative to such conditions. Asian Issuers are issuers (other
than issuers meeting the definition of Korean Issuers as defined above), that
(i) are organized under the laws of Hong Kong, Japan or Taiwan, (ii) regardless
of where organized, and as determined by Fidelity, derive at least 50% of their
revenues or profits from goods produced or sold, investments made, or services
performed in Hong Kong, Japan or Taiwan, (iii) have the primary trading market
for their securities in Hong Kong, Japan or Taiwan or (iv) are governments, or
their agencies, instrumentalities or other political sub-divisions of Hong Kong,
Japan or Taiwan.

The risk factors identified herein generally also apply to investments the
Fund may make in Asian Issuers, although the specific nature of such risks may
vary according to the country in which investments are made. In addition, Korea,
Hong Kong, Japan and Taiwan may be subject to greater degrees of economic,
political and social instability than is the case in the United States and
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic, religious and
racial disaffection. Such social, political and economic instability could
disrupt the principal financial markets in which the Fund invests and cause
losses to the Fund.

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<PAGE> 40

Hong Kong. In Hong Kong, British proposals to extend limited democracy
have caused a political rift with the Peoples Republic of China (the "PRC"),
which is scheduled to assume sovereignty over the colony in 1997. Although the
PRC has committed by treaty to preserve the economic and social freedoms enjoyed
in Hong Kong for fifty years after regaining control of Hong Kong, the
continuance of the current form of economic system in Hong Kong after the
reversion will depend on the actions of the government of the PRC. The PRC and
the United Kingdom have also yet to resolve their differences on certain issues
relating to the reversion of sovereignty, such as the nationality status of
certain ethnic minorities in Hong Kong, the construction of a new international
airport and most recently, electoral reforms. In addition, such reversion has
increased sensitivity in Hong Kong to political developments and statements by
public figures in the PRC. Business confidence in Hong Kong, therefore, can be
significantly affected by such developments and statements, which in turn can
affect markets and business performance.

Hong Kong's economy, followed by Taiwan's economy, is the most likely to be
affected by reform in the PRC. Hong Kong and Taiwan have been the leading
investors in the PRC. Because direct travel and investment from Taiwan to the
PRC is generally banned, Hong Kong has served as an important conduit for
Taiwanese trade and investment with the PRC. Rapid development of the PRC's
southern provinces has created a diversification of investment from Hong Kong.
Producers which originally sought to utilize low cost labor for export
production are now investing in facilities that produce an array of goods and
services aimed at meeting emerging consumer demand within the PRC. These include
finance, telecommunications, electricity production, leisure facilities and
consumer goods distribution.

The Hong Kong stock market can be volatile and is sensitive both to
developments in the PRC and to the strength of other world markets. As an
example, in 1989, the Hang Seng Index of the Hong Kong stock market rose to
3,310 in May from its previous year-end level of 2,687, but fell to 2,094 in
early June following the events at Tiananmen Square. The Hang Seng Index
gradually climbed in subsequent months, but fell by 181 points on October 16,
1989 (approximately 6.5%) following a substantial fall in the U.S. stock market,
and at the year end closed at a level of 2,837. More recently, the Hong Kong
stock market has shown its volatility with the Hang Seng Index dropping
approximately 26% to 9,029.91 on March 31, 1994 after reaching a record high of
12,201.09 on January 4, 1994 following a sustained bull run that began in
December 1992.

Japan. Japan currently has the second-largest GDP in the world. The
Japanese economy has grown substantially over the last three decades. Its growth
rate averaged over 5% in the 1970s and 1980s. However, in 1992, the growth rate
in Japan slowed to 0.6% and the budget showed a deficit of 1.5% percent of GDP.
Despite small rallies and market gains, Japan has been plagued with economic
sluggishness. Economic conditions have weakened considerably in Japan since
October 1992. The boom in Japan's equity and property markets during the
expansion of the late 1980s supported high rates of investment and consumer
spending on durable goods, but both of these components of demand have now
retreated sharply following the decline in asset prices. Profits have fallen
sharply, the previously tight labor market conditions have eased considerably,
and consumer confidence is low. The banking sector has experienced a sharp rise
in non-performing loans, and strains in the financial system are likely to
continue. The decline in interest rates and two large fiscal stimulus packages
should help to contain the recessionary forces, but substantial uncertainties
remain. The general government position has deteriorated as a result of
weakening economic growth, as well as stimulative measures taken recently to
support economic activity and to restore financial stability.

Although Japan's economic growth has declined significantly since 1990,
Fidelity believes many Japanese companies seem capable of rebounding due to
increased investments, smaller borrowings, increased product development and
continued government support. Growth has recovered in 1994. Japan's economic
growth in the early 1980s was due in part to government borrowings. Japan is
heavily dependent upon international trade and, accordingly, has been and may
continue to be adversely affected by trade barriers, and other protectionist or
retaliatory measures of, as well as economic conditions in, the United States
and other countries with which they trade. Industry, the most important sector
of the economy, is heavily dependent on imported raw materials and fuels.
Japan's major industries are in the engineering, electrical, textile, chemical,
automobile, fishing and telecommunication fields. Japan imports iron ore,
copper, and many forest products. Only 19% of its land is suitable for
cultivation. Japan's agricultural economy is subsidized and protected. Japan's
high

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<PAGE> 41

volume of exports such as automobiles, machine tools, and semiconductors have
caused trade tensions with other countries, particularly the United States.
Attempts to approve trading agreements between the countries may reduce the
friction caused by the current trade imbalance.

Taiwan. As Taiwan's domestic labor costs have risen, Taiwanese
manufacturers have been aggressively relocating production facilities to the
southern PRC provinces of Guangdong and Fuijan. In addition, as costs in the
southern PRC have increased, Taiwanese manufacturers are developing facilities
further north, utilizing their historic ties to the region surrounding Shanghai.
If official relations between the PRC and Taiwan improve, Taiwan may eventually
replace Hong Kong as the PRC's largest regional trading partner.

In addition, in Hong Kong and Taiwan, there are restrictions on the percent
of permitted foreign investment in shares of certain companies, mainly those in
highly regulated industries, although in Taiwan there are limitations on foreign
ownership of shares of any listed company. Investment in Taiwan requires an
investment permit. The Investment Manager intends to apply for a permit on
behalf of the Fund and certain other funds managed by the Investment Manager.
The Fund may not be permitted to invest in Taiwan until such permit is issued.
Taiwan imposes a waiting period on the repatriation of investment capital for
certain foreign investors. These restrictions may in the future make it
undesirable to invest in Taiwan.

With respect to investments in Taiwan, it should be noted that Taiwan lacks
formal diplomatic relations with many nations, although it conducts trade and
financial relations with most major economic powers. Both the government of the
PRC and the government of the Republic of China in Taiwan claim sovereignty over
all of China. Although relations between Taiwan and the PRC are currently
peaceful, renewed frictions or hostility could interrupt operations of Taiwanese
companies in which the Fund invests and create uncertainty that could adversely
affect the value and marketability of its Taiwanese investments. Tension also
exists over the PRC's possession of nuclear capabilities and its proximity to
Taiwan.

DEBT SECURITIES -- HIGH YIELD, HIGH RISK SECURITIES

The Fund's investment policies do not limit the percentage of the Fund's
debt securities investments which may be invested in debt securities that are
unrated or rated below investment grade. Under current Korean laws and
regulations, the Fund is prohibited from investing in debt securities
denominated in Won except to a very limited extent as explained above. The
market value of debt securities generally varies in response to changes in
interest rates and the financial conditions of each issuer. During periods of
declining interest rates, the value of debt securities generally increases.
Conversely, during periods of rising interest rates, the value of such
securities generally declines. These changes in market value will be reflected
in the Fund's net asset value.

The Fund's investments in debt securities of Korean Issuers or of Asian
Issuers may generally be considered to have credit quality below investment
grade as determined by internationally recognized credit rating agency
organizations. Debt securities rated below investment grade (commonly referred
to as "junk bonds" when issued in the United States) are considered to be
speculative. Investment in low rated securities typically involves risks not
associated with higher rated securities, including, among others, overall
greater risk of timely and ultimate payment of interest and principal,
potentially greater sensitivity to general economic conditions, greater market
price volatility and less liquid secondary market trading. Certain of the Fund's
investments may be considered to have extremely poor prospects of ever attaining
any real investment standing, to have a current identifiable vulnerability to
default, to be unlikely to have the capacity to pay interest and repay principal
when due in the event of adverse business, financial or economic conditions, or
to be in default or not current in the payment of interest or principal.

Low rated debt securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of low rated debt securities have been found to be less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic downturns or individual corporate developments. A
projection of an economic downturn or of a period of rising interest rates, for
example, could cause a decline in low rated debt securities prices because the
advent of a recession could lessen the ability of a highly leveraged company to
make principal and interest payments on its debt securities. If the issuer of
low rated debt securities defaults, the Fund may incur

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<PAGE> 42

additional expenses in seeking recovery. See "Appendix B -- Debt Ratings" for a
description of ratings of debt instruments.

LOANS AND OTHER DIRECT DEBT INSTRUMENTS

Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If the Fund does not receive scheduled interest or principal payments
on such indebtedness, the Fund's share price and yield could be adversely
affected. Loans that are fully secured offer the Fund more protections than an
unsecured loan in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from a secured
loan would satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks, and may be highly speculative. Borrowers that are
in bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Direct indebtedness of Korea will also
involve a risk that the governmental entities responsible for the repayment of
the debt may be unable, or unwilling, to pay interest and repay principal when
due.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the Fund. For
example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the Fund could be held liable as a
co-lender. Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to the Fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory guidance,
the Fund relies on the Investment Manager's, the Investment Adviser's and the
Sub-Adviser's research in an attempt to avoid situations where fraud or
misrepresentation could adversely affect the Fund.

A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of the Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.

Direct indebtedness purchased by the Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
the Fund to pay additional cash on demand. These commitments may have the effect
of requiring the Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. The Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
potential obligations under standby financing commitments.

The Fund limits the amount of total assets that it will invest in any one
issuer. For purposes of these limitations, the Fund generally will treat the
borrower as the "issuer" of indebtedness held by the Fund. In the case of loan
participations where a bank or other lending institution serves as financial
intermediary between the Fund and the borrower, if the participation does not
shift to the Fund the direct debtor-creditor relationship with the borrower, SEC
interpretations require the Fund, in appropriate circumstances, to treat both
the lending bank or other lending institution and the borrower as "issuers" for
these purposes. Treating a financial intermediary as an issuer of indebtedness
may restrict the Fund's ability to invest in indebtedness related to a single
financial intermediary, even if the underlying borrowers represent many
different companies.

SWAP AGREEMENTS

Swap agreements can be individually negotiated and structured to include
exposure to a variety of different types of investments or market factors.
Depending on their structure, swap agreements may increase or decrease the
Fund's exposure to long-or short-term interest rates (in the United States or
abroad), foreign currency values, mortgage securities, corporate borrowing
rates, or other factors such as security prices or

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<PAGE> 43

inflation rates. Swap agreements can take many different forms and are known by
a variety of names. The Fund is not limited to any particular form of swap
agreement if the Investment Manager, the Investment Adviser or the Sub-Adviser
determines it is consistent with the Fund's investment objective and policies.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an agreed-
upon level, while the seller of an interest rate floor is obligated to make
payments to the extent that a specified interest rate falls below an agreed-upon
level. An interest rate collar combines elements of buying a cap and selling a
floor.

Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
payments in U.S. dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and increase
its exposure to foreign currency and interest rates. Caps and floors have an
effect similar to buying or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall volatility of the Fund's
investments and its share price and yield.

The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that determine
the amounts of payments due to and from the Fund. If a swap agreement calls for
payments by the Fund, the Fund must be prepared to make such payments when due.
In addition, if the counterparty's creditworthiness declined, the value of a
swap agreement would be likely to decline, potentially resulting in losses. The
Fund expects to be able to eliminate its exposure under swap agreements either
by assignment or other disposition, or by entering into an offsetting swap
agreement with the same party or a similarly creditworthy party.

The Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the Fund
enters into a swap agreement on a net basis, it will segregate assets with a
daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If the Fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value equal
to the full amount of the Fund's accrued obligations under the agreement.

INDEXED SECURITIES

The Fund may purchase securities whose prices are indexed to the prices of
other securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic.
Gold-indexed securities, for example, typically provide for a maturity value
that depends on the price of gold, resulting in a security whose price tends to
rise and fall together with gold prices. Currency-indexed securities typically
are short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a security
that performs similarly to a foreign currency-denominated instrument, or their
maturity value may decline when foreign currencies increase, resulting in a
security whose price characteristics are similar to a put on the underlying
currency. Currency-indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each other.

To the extent that the Fund invests in indexed securities, it will be
subject to the risks associated with changes in the particular indices, which
may include reduced or eliminated interest payments and losses of invested
principal. Certain indexed securities may have the effect of providing a degree
of investment leverage, because they may increase or decrease in value at a rate
that is a multiple of the changes in applicable indices. As a result, the market
value of such securities will generally be more volatile than the market values
of fixed-rate securities.

41
<PAGE> 44

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates. Recent
issuers of indexed securities have included banks, corporations, and certain
U.S. government agencies. Indexed securities may be more volatile than the
underlying instruments.

INVESTMENT PRACTICES

Certain risks and special considerations of certain of the investment
practices in which the Fund may engage are described above under "Investment
Objective and Policies" and "Additional Investment Activities." In addition, the
Fund's ability to engage in these investment practices may be limited by certain
rules and regulations in Korea. Derivatives involve special risks, including
possible default by the other party to the transaction, illiquidity and, to the
extent Fidelity's view as to certain market movements is incorrect, the risk
that the use of a Derivative could result in greater losses than if it had not
been used. Use of put and call options could result in losses to the Fund, force
the purchase or sale of portfolio securities at inopportune times or for prices
higher or lower than current market values, or cause the Fund to hold a security
it might otherwise sell. The use of currency transactions could result in the
Fund's incurring losses as a result of the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified
currency in addition to exchange rate fluctuations. The use of options and
futures transactions entails certain special risks. In particular, the variable
degree of correlation between price movements of futures contracts and price
movements in the related portfolio position of the Fund could create the
possibility that losses on the derivative instrument will be greater than gains
in the value of the Fund's position. In addition, futures and options markets
could be illiquid in some circumstances and certain over-the-counter options
could have no markets. The Fund might not be able to close out certain positions
without incurring substantial losses. To the extent the Fund utilizes futures
and options transactions for hedging, such transactions should tend to minimize
the risk of loss due to a decline in the value of the hedged position and, at
the same time, limit any potential gain to the Fund that might result from an
increase in value of the position. Finally, the daily variation margin
requirements for futures contracts create a greater ongoing potential financial
risk than would purchases of options, in which case the exposure is limited to
the cost of the initial premium and transaction costs. Losses resulting from the
use of Derivatives will reduce the Fund's net asset value, and possibly income,
and the losses may be greater than if Derivatives had not been used. Additional
information regarding the risks and special considerations associated with
Derivatives appears in "Appendix A -- General Characteristics and Risks of
Derivatives."

NON-DIVERSIFICATION

The Fund is classified as a non-diversified investment company under the
1940 Act, which means that the Fund is not limited by the 1940 Act in the
proportion of its assets that may be invested in the obligations of a single
issuer. Thus, the Fund may invest a greater proportion of its assets in the
securities of a smaller number of issuers and, as a result, could be subject to
greater risk of loss. The Fund, however, intends to comply with the
diversification requirements imposed by the Code for qualification as a
regulated investment company, which generally limits investments in any one
issuer to 25% of the Fund's total assets. See "Taxation -- U.S. Federal Income
Taxes" and "Investment Restrictions."

WITHHOLDING AND OTHER TAXES

The Fund may be subject to certain taxes, including withholding or other
taxes on income and capital gains, that are or may be imposed by Korea or other
foreign governments, which will reduce the return to the Fund. The Fund does not
intend to engage in activities that will create a permanent establishment in
Korea within the meaning of the Korea-U.S. Tax Treaty. Therefore, the Fund
generally will not be subject to any Korean income taxes other than Korean
withholding taxes. Exemptions or reductions in these taxes apply if the
Korea-U.S. Tax Treaty applies to the Fund. If the treaty provisions are not, or
cease to be, applicable to the Fund, significant additional withholding taxes
would apply. Korean counsel to the Fund, Shin & Kim, have given their opinion
that the treaty presently does apply to the Fund if and so long as the Fund
operates as

42
<PAGE> 45

described herein. The Fund has received written confirmation from the MOF that,
so long as all of the issued shares of the Fund are listed on one or more
publicly acknowledged stock exchanges in the United States only and they are
traded on such exchanges by the general public, the Fund will be entitled to the
benefits of the Treaty. See "Taxation -- Korean Taxes." The imposition of such
taxes and the rates imposed are subject to change. The Fund may elect, when
eligible, to "pass-through" to the Fund's shareholders such taxes that are
treated as income taxes for U.S. Federal income tax purposes. If the Fund makes
such election, shareholders will be required to include in income their
proportionate shares of the amount of non-U.S. income taxes paid by the Fund and
may be entitled to claim either a credit or deduction for all or a portion of
such taxes. See "Taxation -- U.S. Federal Income Taxes" below for a discussion
of the rules and limitations applicable to the treatment of non-U.S. income
taxes under the U.S. Federal income tax laws. Certain shareholders, including
some non-U.S. shareholders, will not be entitled to the benefit of a deduction
or credit with respect to non-U.S. income taxes paid by the Fund. If a
shareholder is eligible and elects to credit foreign taxes, such credit is
subject to limitations. Other foreign taxes, such as transfer taxes, may be
imposed on the Fund, but would not be eligible to be passed through to
shareholders as a credit or deduction. Also, additional U.S. Federal income
taxes and charges may be incurred as a result of any investment made in "passive
foreign investment companies." See "Taxation -- U.S. Federal Income Taxes" and
"-- Other Taxation."

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION

The Fund's Articles of Incorporation include provisions that could have the
effect of limiting the ability of other entities or persons to acquire control
of the Fund or to change the composition of its Board of Directors. Such
provisions could have the effect of depriving shareholders of an opportunity to
sell their shares of Common Stock at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of the Fund. See
"Description of Capital Stock -- Special Voting Provisions."

SECONDARY MARKET AND NET ASSET VALUE DISCOUNT

The Fund is a newly organized company with no prior operating history.
Prior to the Offering, there has been no public market for the Fund's shares of
Common Stock. The Fund cannot predict what effect, if any, the relative sizes of
the U.S. Offering and the International Offering will have on the secondary
market trading for the Shares of Common Stock in the United States or on the
value of the Shares. There can be no assurance that an active trading market
will develop or be sustained. In addition, shares of closed-end investment
companies have in the past frequently traded at a discount from their net asset
values and initial offering prices. This characteristic of shares of a
closed-end fund is a risk separate and distinct from the risk that a fund's net
asset value will decrease. The Fund cannot predict whether its own Shares will
trade at, below or above net asset value. The risk of loss associated with
purchasing shares of a closed-end investment company is more pronounced for
investors who purchase in the initial public offering and who wish to sell their
shares of Common Stock in a relatively short period of time.

FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES

Rules adopted under the 1940 Act permit the Fund to maintain its foreign
securities and cash in the custody of certain eligible non-U.S. banks and
securities depositories. Certain banks in foreign countries may not be eligible
sub-custodians for the Fund under such rules, in which event the Fund may be
precluded from purchasing securities in which it would otherwise invest, and
other banks that are eligible foreign sub-custodians may be recently organized
or otherwise lack extensive operating experience. In addition, in certain
countries, such as Korea, there may be legal restrictions or limitations on the
ability of the Fund to recover assets held in custody by foreign sub-custodians
in the event of the bankruptcy of the sub-custodian. The Fund also may
experience settlement delays or other material difficulties. See "Risk Factors
and Special Considerations -- Settlement Procedures and Delays."

TRANSFER RESTRICTIONS

Investors who purchase Shares at a reduced price will be restricted from
transferring such Shares for a period of 90 days after the closing of the
Offering. There is no restriction on the number of Shares that may be purchased
subject to the transfer restriction described above, except that the
Underwriters have undertaken to

43
<PAGE> 46

comply, with respect to non-restricted Shares, with the distribution
requirements of the NYSE. See "Underwriting." To the extent these investors sell
their Shares once the transfer restriction is no longer applicable, the market
price of the Common Stock could be adversely affected. In addition, the transfer
restriction will reduce the number of Shares available for sale in the secondary
market during the 90-day restriction period.

EXPENSES

The operating expense ratio of the Fund can be expected to be higher than
that of a fund investing primarily in the securities of U.S. issuers since the
expenses of the Fund (such as custodial, currency exchange and communication
costs) are higher. See "Summary of Expenses." Brokerage commissions and
transaction costs for transactions both on and off the KSE are generally higher
than in the United States. It is expected, however, that the Fund's investment
advisory fee, as well as its overall expense ratio, will be comparable to those
of many closed-end management investment companies of comparable size that
invest primarily in securities of issuers in a single foreign country.

44
<PAGE> 47

THE REPUBLIC OF KOREA

The information set forth herein has been extracted from various
governmental and private sources. The Fund, its Board of Directors, the
Investment Manager, the Investment Adviser and the Sub-Adviser make no
representation as to the accuracy of the information, nor has the Fund or its
Board of Directors attempted to verify the statistical information presented
herein. Statistical data may vary from source to source as a result of
differences in the underlying assumptions or methodology used. In addition, no
representation is made that any correlation will exist between the Republic of
Korea or its economy in general and the performance of the Fund.

GENERAL INFORMATION

GENERAL

The Republic of Korea ("Korea") was founded on August 15, 1948 following
elections held in southern Korea. Korea has since controlled and administered
the portion of the Korean peninsula that lies generally to the south of the 38th
parallel.

The Korean peninsula is approximately 620 miles long and 125 miles wide.
Korea has a land area of about 38,000 square miles (98,966 square kilometers),
approximately one-fourth of which is arable. It is bordered to the north by The
Democratic People's Republic of Korea ("North Korea") and to the east, west and
south by the East Sea, the Yellow Sea and the Korean Strait, respectively.

The country was under Japanese rule from 1910 until 1945 when, following
the Japanese surrender at the end of World War II, U.S. forces occupied the
southern half of the Korean peninsula and Soviet forces established a presence
in the northern half. In 1948 the United Nations General Assembly declared Korea
to be the only legal government in the Korean peninsula.

The Korean War of 1950-1953 began with the invasion of Korea by communist
forces from the North, and following a military stalemate, ended with an
armistice establishing a demilitarized zone in the vicinity of the 38th parallel
which became the boundary between Korea and North Korea. The armistice agreement
continues to be supervised by United Nations forces.

By 1993, the population of Korea had risen to approximately 44 million from
25 million in 1960. The proportion of the population engaged in agriculture and
forestry was decreasing over the same period, dropping to approximately 14
percent of the economically active population in 1993. Correspondingly, the
population segment engaged in manufacturing was increasing, reaching
approximately 24 percent of the economically active population in 1993. The
population density, at approximately 1,134 persons per square mile, is one of
the highest in the world. Over half the population lives in cities, the largest
of which is the capital Seoul, with a population of about 10.9 million in 1993.
Pusan is the second largest city (population around 3.9 million in 1993) and is
also Korea's largest port.

POLITICS AND FOREIGN RELATIONS

The early years of Korea were dominated by the successive presidencies of
Dr. Syngman Rhee, who was first elected in 1948 and re-elected in 1952, 1956 and
1960. President Rhee resigned shortly after his 1960 re-election, partly in
response to pressure from student-led demonstrations, and was succeeded by Yoon
Bo Sun. In 1961, a group of military leaders headed by Park Chung-Hee assumed
power. A civilian government was subsequently established, and Mr. Park was
formally elected President in October 1963. President Park served until 1979
when he was assassinated following a period of increasing strife between the
Government and its critics. Martial law was declared and an interim government
was formed under Prime Minister Choi Kyu-Ha who became the next President. After
clashes between the Government and its critics, President Choi resigned and was
succeeded in August 1980 by General Chun Doo Hwan.

Under the leadership of President Chun, a new Constitution, providing for
the indirect election of the President and for certain democratic reforms, was
approved in a national referendum and shortly thereafter, in early 1981,
President Chun was re-elected and inaugurated as President. In 1987, following
public demonstra-

45
<PAGE> 48

tions against the prospect of choosing President Chun's successor through
indirect elections in an electoral college, the Constitution was revised to
permit the direct election of the President. In December 1987, Roh Tae Woo was
elected President by a narrow plurality, after the opposition parties led by Kim
Young Sam and Kim Dae Joong failed to unite behind a single candidate. In
February 1990, members of two opposition political parties, including the party
led by Kim Young Sam, merged into the ruling Democratic Liberal Party led by
President Roh.

In December 1992, Kim Young Sam was elected President as the candidate of
the Democratic Liberal Party. This election of a civilian and former opposition
party leader as President significantly reduced the controversy concerning the
legitimacy of the political regime. President Kim has emphasized reform, the
liberalization of politics, deregulation and the revitalization of the economy
of Korea.

Relations between Korea and North Korea have been tense over most of
Korea's history. North Korea maintains a regular military force estimated at
close to one million troops, the majority of which are concentrated near the
northern border of the demilitarized zone. Korea maintains a state of military
preparedness along the southern border of the demilitarized zone. Korea has a
national conscription system and a regular military force consisting of
approximately 655,000 troops. In addition to the regular forces, there are
reserves of almost 3.2 million troops. The United States currently maintains
military forces of approximately 40,000 troops in Korea.

Political contacts between Korea and North Korea have increased in recent
years. Commencing in September 1990, the Prime Ministers of Korea and North
Korea have from time to time held talks in Seoul and Pyongyang to discuss
various matters. In December 1991, the Prime Ministers of Korea and North Korea
signed an "Agreement on Reconciliation, Nonaggression and Exchange and
Cooperation" in which the two sides agreed, among other things, to take further
steps toward conciliation, nonaggression and economic cooperation. The agreement
was put into force in February 1992. Tension between the two Koreas rose
following the announcement in March 1993 by North Korea of its intention to
withdraw from the Nuclear Non-Proliferation Treaty and North Korea's continuing
refusal to allow full inspection of its nuclear facilities by officials of the
International Atomic Energy Commission. Subsequent events involving, among other
things, North Korea's refusal to comply with the Nuclear Non-Proliferation
Treaty and the death on July 8, 1994 of North Korea's President, Kim Il-Sung,
have caused the level of tension between the two Koreas to fluctuate. No
assurance can be given that the level of tension with North Korea will not
increase or change abruptly as a result of future events, including political
developments in North Korea following the death of Kim Il-Sung, developments in
the dispute concerning North Korea's nuclear program (such as any moves to
impose trade sanctions against North Korea, further increasing political
tensions and the risk of military conflict) or developments related to proposed
meetings between Korea and North Korea. The Fund cannot predict the effect, if
any, of recent or future events in North Korea on the securities markets in
Korea or elsewhere.

Korea maintains diplomatic relations with most nations of the world.
Korea's strongest ties are with the United States and include a mutual defense
treaty and several agreements designed to promote Korea's economy. Korea's
relationship with Japan, now its largest trading partner after the United
States, is also increasingly important. Japan constitutes Korea's leading source
of imported capital goods, technology and direct foreign investment and provides
more than half of all foreign visitors to Korea.

Korea continues to seek improved relations with communist and formerly
communist countries. Since the beginning of 1989, Korea has established
diplomatic relations with Hungary, Poland, Yugoslavia, the Czech Republic,
Slovakia, Bulgaria, Rumania, Mongolia, and the People's Republic of China. In
January 1991, the Government announced an accord with the Soviet Union
contemplating a general purpose loan to the Soviet Union and loans for the
purchase of Korean products. Such loans were to be made available pursuant to
Korean bank facilities over the subsequent three year period. Advances of the
remaining loans to be made pursuant to the accord have been suspended by the
Government and discussions have been held with the Commonwealth of Independent
States, successor to the Soviet Union concerning possible lifting of such
suspension. Korea has also established diplomatic relations with the
Commonwealth of Independent States and its other members.

46
<PAGE> 49

GOVERNMENT

Governmental authority in Korea is highly centralized and is concentrated
in a strong Presidency. The Constitution provides for the direct election of the
President by popular vote. Under the Constitution, the term of office of the
President is five years and he may not be re-elected.

The President, who is Chief of State and head of government, is also
Chairman of the State Council (cabinet), which consists of the Prime Minister,
who is appointed by the President with the consent of the National Assembly, the
deputy prime ministers, the heads of the government ministries and ministers of
state. The President has the authority to select who shall serve in the State
Council on the recommendation of the National Assembly and also can appoint or
remove other government officials, including local officials such as governors
and mayors. The Prime Minister, by order of the President, is responsible for
the overall coordination of various ministries and agencies.

The President has the right to veto new legislation and to take emergency
measures in case of natural disaster, serious fiscal or economic crisis, state
of war or similar conditions. The President is required to notify the National
Assembly promptly of any such emergency measures taken, and to seek its
concurrence, failing which the emergency measures are automatically invalidated.

Legislative power is vested in the National Assembly, consisting of 299
members. About three-quarters (224) of the members of the National Assembly are
elected by popular vote for a term of four years, and the remaining seats (75)
are distributed proportionately among parties winning over 3% of the votes in
the direct election. The term of office of all members is set at four years. The
National Assembly enacts laws, approves treaties and approves the national
budget. Most legislation is drafted by the executive branch, which then submits
the bill to the National Assembly for approval. In the event of violation of the
constitution by the President, the Prime Minister, members of the State Council,
heads of executive ministries, judges, or other public officials, the National
Assembly has the power to pass a motion for impeachment.

Judicial power is vested in the Supreme Court, the Constitutional Court and
other lower courts at various levels. The highest court of Korea is the Supreme
Court which has the final power to review the constitutionality or legality of
administrative decrees, regulations or dispositions. There are 14 justices on
the Supreme Court.

The Constitutional Court consisting of nine members appointed by the
President for six year terms has the power to rule on the constitutionality of a
law, impeach public officials, dissolve political parties and review petitions
relating to the constitution. Disputes relating to the separation of powers
between the branches of national government, governmental agencies and local
autonomous entities are also resolved by the Constitutional Court.

Administratively, Korea is divided into nine provinces and six cities with
provincial status, Seoul, Pusan, Taegu, Inchon, Kwangju and Taejon. Local
governments are directed by the Government and principal officials are appointed
by the President. However, the Government has announced its intention to
introduce some measure of local autonomy. In March and June 1991, the Government
held local assembly elections at the county and province levels. The next local
assembly elections at the county and province levels are scheduled to be held in
April 1995 and will be accompanied by the first mayoral election for the
province of Seoul.

POLITICAL ORGANIZATIONS

Three opposition parties were officially formed in anticipation of the
Presidential elections of December 1987. The first election to the National
Assembly under the current constitution occurred in April 1988. In February
1990, two of the opposition parties and the ruling party led by President Roh
were each disbanded to form the Democratic Liberal Party (the "DLP"). Certain
members of the two opposition parties so disbanded established a new party,
which merged later into the other remaining opposition party forming a
consolidated new opposition party named the Democratic Party (the "DP"). The
last National Assembly elections were

47
<PAGE> 50

held on March 24, 1992 and the next election is scheduled to be held by April
11, 1996. As of August 31, 1993, the distribution of seats in the National
Assembly by parties was as follows:

<TABLE>
<CAPTION>
DLP DP OTHER TOTAL
--- --- ----- -----
<S> <C> <C> <C> <C>
Number of Seats.......................... 176 98 25 299
</TABLE>

INTERNATIONAL ORGANIZATIONS

Korea maintains membership in a number of supranational organizations,
including the International Monetary Fund, the International Bank for
Reconstruction and Development (the World Bank), the International Development
Association, the Asian Development Bank and the International Finance
Corporation. It is a party to the General Agreement on Tariffs and Trade. In
September 1991, Korea and North Korea became members of the United Nations.

THE ECONOMY

ECONOMIC POLICY AND THE FIVE YEAR PLANS

Korean industry and commerce are predominantly privately owned and
operated. The Government, however, is actively involved in establishing economic
policy objectives and implementing such policies with a view toward maintaining
national security, encouraging industrial development and improving living
standards. Economic, financial and business priorities can be influenced by the
Government through its control of approvals and licenses and through the
allocation of credit. However, such Government influence has gradually
diminished through deregulation and market self-regulation, in keeping with
Korea's liberalization policy.

The Economic Planning Board, headed by the Deputy Prime Minister, is
primarily responsible for formulating economic policies, including the Five Year
Economic and Social Development Plans which have guided economic policy since
1962. The Economic Planning Board exercises overall direction of the economy by
means of economic policies in cooperation with the various ministries. The
Ministry of Finance implements fiscal, financial and monetary policies. To
encourage particular industries, the Government uses such measures as financial
assistance and tax incentives.

The emphasis of the Five Year Plans has changed over the years from the
development of import substitution industries, the building up of infrastructure
and the development of industries with export potential to a focus on economic
stabilization, liberalization of the economy, reduction of restrictions on
direct foreign investment and improvements in social conditions. Since the
establishment of the Five Year Plans, the economy of Korea has changed from one
characterized by agricultural production and the export of raw materials,
textiles and clothing to one characterized by the production and export of
manufactured goods, particularly electronic products, ships, machinery and
steel. The new Government announced in early 1993 economic reform and
development programs to be implemented in a new Five Year Economic Plan for the
period through 1997. Pursuant to the Plan, the Government will promote fiscal,
financial and administrative reforms and changes in prevailing patterns of
economic behavior. The current plan anticipates enhancing the growth of the
economy by a variety of measures, including industrial structural adjustment,
the establishment of new competition rules and the development of the
information industry, small and medium-sized firms and the agriculture and
fishery sectors. The plan also anticipates fiscal reform in a number of areas
and further reform and liberalization of the financial sector. Growth in GNP is
projected to be maintained at or above 7% in real terms, with a balance of
payments surplus by 1995 and consumer price inflation reduced steadily to a rate
of under 4% per annum. The Plan is also intended to promote stable growth and
globalization of the Korean economy and to improve the quality of life in Korea.

GROSS NATIONAL PRODUCT

During the past two decades, the average annual real increase in GNP has
been approximately 9.0%. Such increase is attributable in part to Government
policies, as articulated in the Five Year Economic Plan, favoring export-led
growth and an industrious and well-trained labor force. During this period,
Korea made

48
<PAGE> 51

significant progress toward the transformation of its economy from one
characterized by agricultural production and the export of raw materials to that
of a modern industrial state.

The Korean economy has in recent years displayed high growth and, until
1988 when inflation accelerated, low inflation rates. In 1989, GNP growth slowed
by comparison to the previous two years, with GNP rising by 6.9%. This drop in
the GNP growth rate was largely attributable to appreciation of the Won and to
nationwide labor-management disputes which reduced the competitiveness of Korean
products in international markets. In 1990 and 1991, GNP rebounded and grew at a
rate of 9.6% and 9.1%, respectively, due in part to increased domestic demand.
In 1992, GNP grew at a rate of 5.0%. This low growth rate of GNP in 1992 was
affected by various factors, including the previous administration's policy of
cooling down the overheated economy to ensure stable growth. In 1993, GNP grew
at a rate of 5.6% based on preliminary figures published by the Bank of Korea.

The following table shows the composition of Korea's GNP at current market
prices and GNP in constant 1990 market prices from 1989 to 1993. Also shown is
the annual average increase in Korea's GNP.

GROSS NATIONAL PRODUCT

<TABLE>
<CAPTION>
AS %
OF GNP
1989 1990 1991 1992 1993(1) 1993
----------- ----------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
(BILLIONS OF WON)
Gross National Product at Current
Market Prices:
Private Consumption................. W 79,424.0 W 96,387.7 W 115,042.8 W 129,735.2 W 143,743.3 54.5%
General Government Consumption...... 15,237.4 18,187.0 22,169.5 26,110.3 28,563.2 10.8
Gross Domestic Fixed Capital
Formation......................... 47,625.3 66,568.7 82,946.5 87,907.0 94,322.3 35.7
Increase in Stocks.................. 2,538.7 (270.0) 973.0 35.2 (3,115.2) (1.2)
Exports of Goods and Services....... 48,828.7 53,467.0 60,735.0 69,432.7 78,007.1 29.6
Less Imports of Goods and
Services.......................... (44,784.8) (54,417.2) (66,049.7) (71,840.0) (76,948.9) (29.2)
Statistical Discrepancy............. 295.4 (384.3) (82.6) (988.2) 976.4 0.4
Expenditures on Gross Domestic
Product........................... 149,164.7 179,539.0 215,734.4 240,392.2 265,548.1 100.6
Net Factor Income from the Rest of
the World......................... (1,223.1) (1,276.9) (1,494.5) (1,687.6) (1,687.2) (0.6)
----------- ----------- ----------- ----------- ----------- -------
Total........................... W 147,941.6 W 178,262.1 W 214,239.9 W 238,704.6 W 263,860.9 100.0%
=========== =========== =========== =========== =========== ========
Percentage Increase of GNP over
Previous Year:
At Current Prices................. 12.6% 20.5% 20.2% 11.4% 10.5%
At Constant 1990 Market Prices.... 6.9% 9.6% 9.1% 5.0% 5.6%
</TABLE>

- ---------------
(1) Preliminary.
Source: Monthly Bulletin, July 1994, The Bank of Korea.

49
<PAGE> 52

From 1988 through 1993, real GNP increased at an average annual rate of
7.2%. This high rate of growth was due to rapid growth in the export of goods
and services and in domestic fixed capital formation. The growth in the volume
of exports has been achieved by diversification of geographical markets and a
shift in emphasis in the composition of exports from agricultural products, raw
materials and textile products to manufactured goods. In 1989 and 1990, as
growth in exports slowed compared to prior periods, domestic construction
expenditures and private consumption expenditures increased, primarily as a
result of the steady increase in income levels in recent years and the
concomitant demand for housing and consumption goods, particularly consumer
durables such as passenger cars and household electric appliances. See "Foreign
Trade and Balance of Payments -- Foreign Trade." The following table sets forth
the industrial origin of Korea's GNP in current prices for the years 1989 to
1993.

GROSS NATIONAL PRODUCT BY INDUSTRIAL SECTOR

<TABLE>
<CAPTION>
AS %
OF GNP
1989 1990 1991 1992 1993(1) 1993
----------- ----------- ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
(BILLIONS OF WON)
Primary Industries
Agriculture, Forestry and Fisheries.... W 14,380.6 W 15,592.4 W 16,549.8 W 17,805.8 W 18,785.0 7.1%
Secondary Industries
Mining and Quarrying................... 992.0 1,025.0 1,142.4 928.5 923.3 0.3
Manufacturing.......................... 46,252.9 52,351.0 61,527.3 66,710.1 71,960.0 27.3
Construction........................... 13,358.2 20,736.6 30,035.3 32,870.6 36,228.2 13.7
Tertiary Industries
Electricity, Gas and Water............. 3,731.5 3,888.7 4,506.7 5,285.2 6,080.4 2.3
Transport, Storage and Communication... 10,328.1 12,017.3 14,356.7 16,390.1 18,626.0 7.1
Wholesale and Retail Trade, Restaurants
and Hotels........................... 19,822.0 23,110.6 26,419.5 28,802.6 31,487.2 11.9
Financing, Insurance, Real Estate and
Business Services.................... 21,302.1 26,801.0 33,052.3 39,923.0 45,303.4 17.2
Public Administration and Defense...... 5,984.4 7,386.0 8,995.1 10,616.1 11,674.5 4.4
Community, Social and Personal
Services............................. 9,966.1 11,974.5 14,617.0 17,593.8 20,092.7 7.6
Net Private Household Services, Import
Duties and Bank Service Charges...... 3,046.6 4,655.9 4,532.3 3,466.1 4,387.5 1.7
Net Factor Income from the Rest of the
World................................ (1,223.1) (1,276.9) (1,494.5) (1,687.6) (1,687.2) (0.6 )
----------- ----------- ----------- ----------- ----------- ------
Total.............................. W 147,941.6 W 178,262.1 W 214,239.9 W 238,704.6 W 263,860.9 100.0%
=========== =========== =========== =========== =========== =======
</TABLE>

- ---------------
(1) Preliminary.
Source: Monthly Bulletin, July 1994, The Bank of Korea.

PRICES, WAGES AND EMPLOYMENT

During the 1960s and early 1970s, Korea experienced a period of
increasingly high inflation rates. Government measures successfully reduced
inflation rates from 1982 to 1987; inflation, as measured by the Consumer Price
Index, increased by an average of 2.8%. However, inflation, as measured by the
Consumer Price Index, began to accelerate from 3.0% in 1987 to 7.1% in 1988,
5.7% in 1989, 8.6% in 1990 and 9.3% in 1991. Recently, the rate of inflation has
decreased to 6.2% in 1992 and 4.8% in 1993.

The following table shows selected price and wage indices for the periods
indicated:

<TABLE>
<CAPTION>
INCREASE INCREASE INCREASE
PRODUCER OVER CONSUMER OVER OVER
PRICE PREVIOUS PRICE PREVIOUS WAGE PREVIOUS UNEMPLOYMENT
INDEX(1) YEAR INDEX(1) YEAR INDEX(1)(2) YEAR RATE(1)(3)
---------- -------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(1990=100) (%) (1990=100) (%) (1985=100) (%) (%)
1989..................... 96.0 1.5 92.1 5.7 166.7 21.2 2.6
1990..................... 100.0 4.2 100.0 8.6 198.1 18.8 2.4
1991..................... 104.7 4.7 109.3 9.3 232.7 17.5 2.3
1992..................... 107.0 2.2 116.1 6.2 268.1 15.2 2.4
1993..................... 108.6 1.5 121.7 4.8 300.7 12.2 2.8
</TABLE>

- ---------------
(1) Average for year.
(2) Nominal wages index of earnings in all industries.
(3) Expressed as a percentage of the economically active population.
Source: Monthly Bulletin, July 1994, The Bank of Korea; Report on Monthly Labor
Survey, December 1993, The Ministry of Labor.

50
<PAGE> 53

The history of the labor movement in Korea is short. Until the mid-1980s,
the Korean labor movement had been constrained by labor laws and policies which
limited the ability of workers and their unions to take collective action. In
December 1986 and November 1987, these laws were amended, relaxing constraints
on the formation of democratic unions and the staging of strikes. In 1988 and
1989, backed by stronger labor unions, the Korean work force won significant
wage concessions as workers demanded higher pay to compensate for the large
increases in productivity that they achieved in the 1980s. Labor disputes in
Korea have decreased since 1990. Since 1987, wages have increased sharply. The
rate of increase in the Wage Index in recent years has greatly exceeded the
rates of increase in both the Producer Price Index and the Consumer Price Index.
Monthly wages in all industries rose 21.2% in 1989, 18.8% in 1990, 17.5% in
1991, 15.2% in 1992 and 12.2% in 1993. These wage increases can be compared with
increases in productivity of 7.5% in 1989, 12.7% in 1990, 13.3% in 1991, 10.2%
in 1992 and 7.8% in 1993. These wage increases put increased inflationary
pressure on the economy, resulting in an increase of 8.6% in consumer prices in
1990, 9.3% in 1991, 6.2% in 1992 and 4.8% in 1993.

Korea's labor force is one of the economy's principal assets. In the period
from 1988 to 1993, the economically active population of Korea increased by
16.7% to 19.8 million, while the number of employees increased 17.2% to 19.2
million. The economically active population over 15 years old as a percentage of
the total population over 15 years old has remained fairly stable at between 58%
and 61% over the past decade. The labor force is well educated, with literacy
being almost universal among workers under 50.

INDUSTRY

Industrial production increased by 3.3% in 1989, 8.8% in 1990, 9.6% in
1991, 5.8% in 1992 and 4.4% in 1993. Because of the importance of exports to
Korean industry, increases in protectionist trade barriers by countries to which
Korean industry exports products would adversely affect industrial production.
See "Foreign Trade and Balance of Payments -- Foreign Trade."

The following table sets forth production indices for the principal
industrial products of Korea for the years 1989-1993 and their relative
contribution to total industrial production:

INDUSTRIAL PRODUCTION

<TABLE>
<CAPTION>
1990 INDEX
WEIGHT(1) 1989 1990 1991 1992 1993
---------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Mining.......................................................... 184.5 109.7 100.0 99.8 85.9 79.9
Coal........................................................ 95.8 116.2 100.0 84.4 66.6 51.6
Metal ores.................................................. 4.9 117.2 100.0 94.8 95.8 69.3
Other mining & quarrying.................................... 83.8 97.4 100.0 117.6 107.3 112.9
Manufacturing................................................... 9,392.9 91.8 100.0 109.7 116.2 121.1
Food products & beverages................................... 709.9 94.3 100.0 108.4 110.9 112.7
Tobacco products............................................ 93.2 94.2 100.0 101.1 104.7 107.2
Textiles.................................................... 633.1 100.8 100.0 98.1 94.6 86.5
Wearing apparel & fur articles.............................. 343.3 103.5 100.0 95.1 86.5 73.3
Leather, luggage, saddlery harness, handbags & footwear..... 385.7 93.2 100.0 93.4 86.5 66.0
Wood & products of wood & cork.............................. 104.5 96.2 100.0 108.2 103.6 85.6
Pulp, paper & paper products................................ 227.7 94.9 100.0 103.9 110.5 119.5
Publishing, printing & reproduction of record media......... 223.4 92.2 100.0 103.1 114.6 110.6
Coke, refined petroleum products & nuclear fuel............. 379.8 93.6 100.0 128.8 164.0 179.4
Chemicals & chemical products............................... 826.5 86.6 100.0 116.3 138.1 152.3
Rubber & plastic products................................... 449.4 96.4 100.0 108.3 114.8 119.9
Non-metallic mineral products............................... 504.1 93.2 100.0 116.0 123.6 124.7
Basic metals................................................ 555.3 89.4 100.0 110.8 115.9 129.0
Fabricated metal products................................... 416.6 92.7 100.0 108.1 103.2 102.4
Machinery & equipment, n.e.c................................ 916.2 89.7 100.0 110.7 107.6 114.4
Office, accounting & computing machinery.................... 150.5 89.6 100.0 104.9 112.3 139.9
Electrical machinery & apparatus, n.e.c..................... 276.6 83.4 100.0 108.1 115.6 121.4
Radio, television & communication equipment................. 768.1 92.2 100.0 115.4 125.4 136.3
Medical precision & optical instruments, watches............ 118.9 104.0 100.0 105.8 106.1 118.0
Motor vehicles & trailers................................... 814.0 80.8 100.0 115.4 131.4 153.2
Other transport equipment................................... 205.6 89.7 100.0 118.0 147.3 136.3
Furniture & n.e.c........................................... 290.5 102.2 100.0 101.6 94.5 87.7
</TABLE>

51
<PAGE> 54

<TABLE>
<CAPTION>
1990 INDEX
WEIGHT(1) 1989 1990 1991 1992 1993
---------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Electricity & Gas............................................... 422.6 87.8 100.0 111.3 124.4 139.2
Electricity................................................. 410.8 87.8 100.0 110.4 121.6 134.2
Gas......................................................... 11.8 -- 100.0 152.2 219.6 315.3
---------- ----- ----- ----- ----- -----
All Items....................................................... 10,000.0 91.9 100.0 109.6 116.6 121.1
Percentage Increase of All Items Over Previous Year......... -- 3.3% 8.8% 9.6% 5.8% 4.4%
</TABLE>

- ---------------
(1) Index weights were established on the basis of an industrial census in 1990
and reflect the average annual value added by production in each of the
classifications shown, expressed as a percentage of total value added in the
mining, manufacturing and electricity and gas industries in that year.
Source: Monthly Statistics of Korea, June 1994, National Statistical Office,
Monthly Bulletin, July 1994, The Bank of Korea.

Manufacturing. The manufacturing sector has grown rapidly in recent years.
In 1992 and 1993, however, the production of manufactured goods increased only
5.9% and 4.2%, respectively, compared with 9.7% in 1991, as a result of overall
slow economic growth. Production activities, especially in the light industries,
were not brisk due to reduced price competitiveness in world markets. The heavy
chemical industry, which had shown steady growth including in export markets,
increased only 9.2% in 1992 and 8.4% in 1993, compared with 13.7% in 1991.

Performance has been particularly strong in the petrochemical,
semiconductor and automobile industries, which have experienced strong growth in
domestic and overseas markets.

The petrochemical industry in 1992 remained strong. Production grew by
35.7% over the previous year, as petrochemical facilities completed in 1991
became fully operational in 1992. Domestic demand increased 11.5% in 1992,
compared with a 5.8% increase in 1991, because of substantial growth in the
automobile and electronics industries. Exports in 1992 grew 95.7% with a surge
in demand from China attributable to the progressing industrialization of that
country. In 1993 the production of the petrochemical industry grew by 11.4%.

The electronics industry grew at an average annual rate of approximately
12.0% during the period 1987 to 1992. This growth may be traced to both domestic
and overseas demand, as well as to encouragement by the Korean government of
technology through tax incentives, loans at favorable interest rates and tariff
protection. Korea is among the world's largest producers of electronic products
and semiconductors. The electronics goods produced in Korea include personal
computers, videocassette recorders and compact disc players.

Semiconductor sales grew 30.4% from 1991 to 1992. Semiconductor exports
increased 20.2% from 1991 to 1992. Both domestic and overseas demand grew with
the recovery of the computer and communications industries in the United States
and with the growth of the computer and consumer electronics industries in
Southeast Asian countries.

The Korean automobile industry made significant progress in the 1980s. In
1984, Hyundai Motor, Korea's leading car manufacturer, began exporting cars to
Canada and in 1986 shipped its first cars to the United States. Daewoo Motors
began exporting cars to the United States in 1987, and Kia Motors began
exporting cars to the United States in 1988. Recently, exports to Europe and
Asia have become increasingly important as United States demand for Korean cars
has declined. Automobile manufacturers grew by 18.6% from 1,730,000 cars in 1992
to 2,051,000 cars in 1993. This growth reflects increasing domestic demand,
sales stimulated by the introduction of new models, and the diversification of
exports markets. Export growth, which faltered in 1989 and 1990, has since shown
gradual recovery.

The textiles and apparel industry, which grew rapidly in the early 1970s,
has grown more slowly in recent years as a result of severe worldwide price
competition and increased trade barriers.

Supported by large increases in domestic demand for steel due to the growth
of other heavy industry and large scale public investment in road, harbor and
housing construction, steel production increased from 16.8 million tons in 1987
to approximately 33.8 million tons in 1993. This growth has been achieved in
large part by the expansion of POSCO integrated facilities, which in 1993
produced approximately 22.5 million tons of crude steel. These increases in
production have permitted a substantial increase in iron and steel exports.

52
<PAGE> 55

The shipbuilding industry is an important aspect of the Korean economy.
Korea's share of world shipbuilding production is second only to Japan's.

Construction. The construction industry has become one of the major
industries in Korea, contributing 13.7% to Korea's GNP in 1993. Recently, the
domestic construction markets have expanded rapidly with orders rising, from
W 32,870.6 billion in 1992 to W 36,228.2 billion in 1993. In 1993, the amount of
new overseas construction orders under contract reached U.S.$5,117 million.

AGRICULTURE, FORESTRY AND FISHERIES

The contribution of agriculture, forestry and fisheries to Korea's GNP has
declined from 9.7% in 1989 to 7.1% in 1993 as a result of industrialization.

The Government's agricultural policy continues to emphasize increasing food
grain production, the development of irrigation systems, land consolidation and
reclamation, seed improvement, mechanization measures to combat drought and
flood damage, and increasing agricultural incomes. The Government has encouraged
the development of the fishing industry by encouraging the building of large
fishing vessels, and the modernization of fishing equipment, marketing
techniques and distribution outlets.

Owing to geographical and physical constraints, crop yields are limited,
thereby necessitating dependence on imports for certain basic foodstuffs.

ENERGY

<TABLE>
Korea has no domestic oil or gas production and is heavily dependent on
imported oil to meet its energy requirements. The performance of the Korean
economy is, therefore, broadly affected by the price of oil, resulting in high
inflation when world oil prices have risen sharply. Any significant long-term
increase in the price of oil may increase inflationary pressures on the Korean
economy and adversely affect Korea's balance of trade. See "Foreign Trade and
Balance of Payments -- Foreign Trade." The following table shows Korea's
dependence on imports for energy consumption for the years 1989 to 1993:

DEPENDENCE ON IMPORTS FOR ENERGY CONSUMPTION

<CAPTION>
TOTAL IMPORT
ENERGY DEPENDENCE
CONSUMPTION IMPORTS RATIO
----------- ------- ----------
(MILLION TONS OF OIL EQUIVALENTS)
<S> <C> <C> <C>
1989.............................. 81.7 69.8 85.5%
1990.............................. 93.2 81.9 87.9%
1991.............................. 103.6 94.6 91.3%
1992.............................. 116.0 108.5 94.8%
1993.............................. 126.6 119.8 94.6%
<FN>
- ---------------
Source: Monthly Energy Statistics, May 1994, Korea Energy Economics Institute;
Major Statistics of the Korean Economy, 1994, National Statistical Office.
</TABLE>

To reduce its dependence on oil imports, the Government has encouraged
efforts to implement an energy source diversification program, with primary
emphasis on nuclear energy. The total Korean nuclear power generating capacity
at the end of 1992 was 7,616 megawatts, accounting for 31.6% of total annual
power generation. Under the government's program, 18 nuclear power plants are
scheduled to be completed during the period from 1991 to 2006. Growing public
resistance against nuclear power, however, has become a major obstacle to
accomplishing this program. The following table sets out the primary sources of
energy consumed

53
<PAGE> 56
<TABLE>
in Korea, expressed in oil equivalents and as a percentage of total energy
consumption, for the period 1989 to 1993:

CONSUMPTION OF ENERGY BY SOURCE

<CAPTION>
COAL PETROLEUM NUCLEAR OTHER TOTAL
--------------- --------------- --------------- -------------- ----------------
QUANTITY % QUANTITY % QUANTITY % QUANTITY % QUANTITY %
-------- ---- -------- ---- -------- ---- -------- --- -------- -----
(MILLION TONS OF OIL EQUIVALENTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989............. 24.5 30.0 40.5 49.6 11.8 14.4 4.9 6.0 81.7 100.0
1990............. 24.4 26.2 50.2 53.9 13.2 14.2 5.4 5.8 93.2 100.0
1991............. 24.5 23.7 59.6 57.5 14.1 13.6 5.4 5.2 103.6 100.0
1992............. 23.6 20.4 71.7 61.8 14.1 12.2 6.5 5.6 116.0 100.0
1993............. 25.4 20.1 78.5 62.0 14.5 11.5 8.1 6.4 126.5 100.0
<FN>
- ---------------
Source: Monthly Energy Statistics, May 1994, Korea Energy Economics Institute;
Major Statistics of the Korean Economy, 1994, National Statistical Office.
</TABLE>

THE FINANCIAL SECTOR

Korea's financial sector has grown to accommodate the development of the
economy and today comprises a banking system, a range of non-banking financial
institutions and a securities market.

Korean financial institutions may be divided into two main categories:
monetary institutions and other financial institutions. Monetary institutions
are comprised of The Bank of Korea and deposit-taking banks. Deposit-taking
banks are in turn divided into commercial banks and special banks according to
their legal status and the banking businesses in which they may engage. Other
financial institutions consist of development institutions, life insurance
companies and investment companies.

Commercial banks are classified into city banks, regional banks and foreign
bank branches. City banks engage in both domestic and foreign business and are
owned by the private sector. Regional banks perform similar functions to the
city banks.

Korea's commercial banks have a high level of non-performing assets,
reflecting in part the high leverage typical of Korean companies and the decline
in several Korean industries, notably shipping and overseas construction during
the 1980s. The Bank of Korea selectively extends concessional loans to
commercial banks burdened by such non-performing loans.

Specialized banks are established by statutes and currently include:
Industrial Bank of Korea, The Citizens National Bank, The Korea Housing Bank,
National Agricultural Cooperative Federation, The National Federation of
Fisheries Cooperatives and National Livestock Cooperative Federation.

Other financial institutions are divided into development institutions,
investment institutions, savings institutions and insurance institutions.
Development institutions include The Korea Development Bank, The Export-Import
Bank of Korea and the Korea Long Term Credit Bank. There are 24 investment and
finance companies and six joint-venture merchant banks. The financial sector
also includes a number of domestic and foreign insurance companies and mutual
savings companies.

In June 1993, the Korean government announced a plan for restructuring and
liberalizing the financial services industry. The plan includes accelerating a
1991 plan for deregulation of interest rates, changing the measures of monetary
control, liberalization of loans by banks, development and liberalization of
short-term financing markets, internationalization of the Won and reducing
restrictions on foreign currency transactions. The plan also includes opening
capital markets and financial industry liberalization programs. The financial
industry will be restructured through specialization as well as adjustments in
the business scope of financial service firms.

In August 1993, the Government introduced a real-name financial
transactions system. Financial institutions are now required to confirm,
whenever they enter into financial transactions with their clients, that those
clients are using their real names. The system was introduced to increase
transparency in financial

54
<PAGE> 57

transactions and is expected by the Government to enhance the integrity and
efficiency of the Korean financial markets. See "The Securities Markets of Korea
- -- Recent Market and Economic Developments."

MONETARY POLICY

Established in 1950, The Bank of Korea is the central bank and the sole
currency issuing bank in Korea. Monetary and credit policies of The Bank of
Korea are formulated and controlled by a nine-member Monetary Board comprised of
the Minister of Finance, the Governor of The Bank of Korea and seven other
members. The Monetary Board regulates the activities of banking institutions and
sets and implements monetary policy. The Monetary Board determines maximum
interest rates and the rediscount rate of The Bank of Korea. It also fixes
reserve ratios and exercises other normal methods of monetary control as well as
regulating the activities of banking institutions.

Although The Bank of Korea has primary responsibility for monetary policy
in Korea, the Government, through the Ministry of Finance, does exert
considerable influence on monetary policy. For example, the Ministry of Finance
has the power to request the reconsideration of resolutions adopted by the
Monetary Board and, if such a request is rejected by the Monetary Board, the
President has the authority to override the Monetary Board's decision.

Monetary policy is implemented by influencing the reserve positions of
banking institutions, principally through changes in the terms and conditions of
discounts, open market operations and changes in reserve requirements. The Bank
of Korea also sets interest rates on certain types of deposits and loans and, in
periods of extreme monetary expansion, may directly control the volume and
nature of bank credit. In practice, The Bank of Korea's power to set interest
rates and to impose direct credit controls have proved to be the most effective
means of implementing monetary policy.

In December 1988, the Government deregulated interest rates on loans (other
than loans entailing government subsidies) and certain types of deposits
(including such money market instruments as certain types of commercial paper,
certificates of deposit, bank debentures, corporate bonds, cash management
accounts and development trust funds, but excluding traditional time deposits
and savings deposits).

In August 1991, the Monetary Board adopted a four-stage interest rate
deregulation plan in furtherance of the deregulation process. Pursuant to such
plan, the Government has recently further deregulated interest rates on other
financial products, including certain time deposits. In addition, The Bank of
Korea has indicated that it will rely increasingly on adjustments in the
discount rate and in reserve requirements to implement monetary policy, and less
frequently on direct restrictions on bank credit policies. In June 1993, the
Korean government announced that by the end of 1993 it would lift all
restrictions on interest rates for loans, long-term (not less than two years)
deposits, short-term (less than two years) corporate and financial debts,
monetary stabilization bonds and public bonds. It also announced that during
1994 to 1996, interest rates will be liberalized for all deposits other than
demand deposits, and that in 1997 limitations on interest rates for demand
deposits gradually will be lifted. The Korean government has also taken steps to
encourage Korean companies to replace debt with equity financing. See "The
Securities Markets of Korea -- Recent Market and Economic Developments."

MONEY SUPPLY

From 1983 to 1984, the Korean government, in an effort to consolidate a
foundation for price stability, maintained a tight control of monetary
aggregates. However, as economic growth slowed in 1985, the government reversed
its tight monetary policy and money supply increased 15.6% in 1985. In response
to greatly expanded economic activity, the money supply increased at a rate of
18.4% in 1986, 19.1% in 1987, 21.5% in 1988, 19.8% in 1989, 17.2% in 1990, 21.9%
in 1991, 14.9% in 1992 and 16.6% in 1993.

55
<PAGE> 58
<TABLE>
The following table shows the money supply for the period 1989 to 1993:

MONEY SUPPLY

<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- -----------
(BILLIONS OF WON)
<S> <C> <C> <C> <C> <C>
Money Supply (M1)............. W 14,329.0 W 15,905.3 W 21,752.4 W 24,586.3 W 29,041.4
Quasi-money(1)................ 44,309.0 52,802.2 61,993.5 71,672.3 83,177.8
---------- ---------- ---------- ---------- -----------
Money Supply (M2)(2).......... W 58,638.0 W 68,707.5 W 83,745.9 W 96,258.6 W 112,219.2
Percentage Increase Over
Previous Year............ 19.8% 17.2% 21.9% 14.9% 16.6%
<FN>
- ---------------
(1) Comprising time and savings deposits and residents' foreign currency deposits at monetary institutions.
(2) Money supply is the sum of currency in circulation, demand deposits and quasi-money.
Source: Monthly Bulletin, July 1994, The Bank of Korea; Major Statistics of the Korean Economy,
June 1994, National Statistical Office.
</TABLE>

FOREIGN TRADE AND BALANCE OF PAYMENTS

FOREIGN TRADE

Foreign trade is vital to the economy of Korea, which lacks natural
resources and must rely on extensive trading activity as a base for growth.
Virtually all domestic requirements for petroleum, wood and rubber are imported,
as are much of Korea's requirements for coal and iron ore. Korea has a very high
ratio of exports as a percentage of GNP, and the international economic
environment is accordingly of crucial importance to Korea's economy. From 1989
to 1993, export growth averaged 6.3%. In 1991, 1992 and 1993 export growth was
10.5%, 6.6% and 7.3%, respectively. Such growth levels reflect reduced
international competitiveness resulting primarily from the continuation of the
relatively high value of the Won, domestic wage increases, increased foreign
competition, and economic slowdowns in countries constituting Korea's principal
export markets.

Korea's trade balance has been highly sensitive to world crude oil prices.
The country's trade deficit reached U.S.$4.4 billion in 1979, the year of the
second large oil price rise of that decade. After that year, Korea's balance of
trade improved. In 1986, Korea recorded the first substantial trade surplus,
U.S.$4.2 billion, in the nation's history. The trade surplus nearly doubled to
U.S.$7.7 billion in 1987 and increased to U.S.$11.5 billion in 1988. In 1989,
the trade surplus declined to U.S.$4.6 billion, due principally to the decline
in export growth. In 1990, 1991 and 1992, Korea recorded trade deficits of
U.S.$2.0 billion, U.S.$7.0 billion and U.S.$2.1 billion, respectively. The
balance of trade in 1990, 1991 and 1992 has been adversely affected by increases
in oil prices that occurred in late 1990 as a result of the Persian Gulf crisis,
by increased imports of machinery and other capital goods and consumer goods, by
the economic recession in countries constituting important markets for Korean
exports, principally the United States, and by increased competition for Korea's
exports in certain markets, principally exports to Japan from other Asian
countries. The balance of trade could continue to be adversely affected if,
among other things, Korea's trading partners increase barriers against imports,
prices for essential natural resources imported by Korea increased or the
economic slowdown continues in countries constituting important markets for
Korean exports. However, Korea recorded a trade surplus of U.S.$1.9 billion in
1993.

Korea's largest trading partners are the United States and Japan. In 1993,
the United States accounted for approximately 22.1% of Korea's total exports and
approximately 21.4% of Korea's total imports, while Japan accounted for
approximately 14.1% of Korea's total exports and approximately 23.9% of Korea's
total imports. No other trading partner accounted for over 8.0% of Korea's total
exports or total imports. Over 85% of Korea's exports are manufactured goods,
machinery and transportation equipment, whereas the bulk of imports are
commodities such as oil and iron ore, although imports of consumer durables have
grown in recent years following the lowering of customs tariffs on many items as
part of a five-year import liberalization program begun in 1984. From 1979 until
the recent Gulf War, world oil and commodity prices had risen more slowly than
inflation rates, and several of Korea's major imports (including oil, iron ore
and coal) experienced price weakness.

56
<PAGE> 59
<TABLE>
The following tables contain information regarding Korea's exports and imports by major commodity groups for the years 1989
to 1993, and the geographic distribution of Korea's foreign trade for each of the years 1989 through 1993.

EXPORTS BY MAJOR COMMODITY GROUPS (F.O.B.)(1)
<CAPTION>
AS % AS % AS % AS % AS %
1989 OF TOTAL 1990 OF TOTAL 1991 OF TOTAL 1992 OF TOTAL 1993 OF TOTAL
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Crude Materials.... $ 902.0 1.4% $ 990.6 1.5% $ 989.1 1.4% $ 1,072.6 1.4% $ 1,160.0 1.4%
Minerals (including
Fuels)........... 686.6 1.1 697.2 1.1 1,508.6 2.1 1,742.3 2.3 1,851.7 2.3
Chemicals 2,049.7 3.3 2,511.3 3.9 3,190.0 4.4 4,454.9 5.8 4,921.9 6.0
Manufactured
Goods............ 13,733.9 22.0 14,357.2 22.1 16,078.7 22.4 18,490.8 24.1 20,685.6 25.2
Machinery and
Transportation
Equipment........ 23,590.3 37.8 25,544.5 39.3 29,978.3 41.7 32,547.4 42.4 36,950.4 44.9
Miscellaneous
Manufactured
Goods............ 18,970.3 30.4 18,573.3 28.6 17,649.6 24.6 15,883.2 20.7 14,233.3 17.3
Others............. 2,444.4 3.9 2,341.63 3.6 2,475.8 3.4 2,440.2 3.2 2,433.0 3.0
--------- ----- --------- ----- -------- ----- --------- ----- --------- -----
Total.......... $62,377.2 100.0% $65,015.7 100.0% $71,870.1 100.0% $76,631.5 100.0% $82,235.9 100.0%
========= ===== ========= ===== ========= ===== ========= ===== ========= =====
<FN>
- ---------------
(1) These entries are derived from customs clearance statistics.
Source: Monthly Bulletin, July 1994, The Bank of Korea; Economic Statistics Yearbook, 1994, The Bank of Korea.
</TABLE>

<TABLE>
IMPORTS BY MAJOR COMMODITY GROUPS (C.I.F.)(1)
<CAPTION>
AS % AS % AS % AS % AS %
1989 OF TOTAL 1990 OF TOTAL 1991 OF TOTAL 1992 OF TOTAL 1993 OF TOTAL
---- -------- ---- -------- ---- -------- ---- -------- ---- --------
(MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Crude Materials.... $ 8,728.2 14.2% $ 8,647.8 12.4% $ 8,900.2 10.9% $ 8,314.9 10.2% $8,869.5 10.6%
Minerals (including
Fuels)........... 7,627.1 12.4 11,023.2 15.8 12,747.9 15.6 14,636.1 17.9 15,052.6 18.0
Chemicals.......... 7,157.7 11.6 7,433.5 10.6 8,288.6 10.2 7,667.6 9.4 8,234.8 9.8
Manufactured
Goods............ 9,672.2 15.7 10,580.8 15.1 13,461.7 16.5 11,898.4 14.5 12,069.7 14.4
Machinery and
Transportation
Equipment........ 21,104.8 34.3 23,940.0 34.3 28,250.7 34.6 28,965.7 35.4 28,416.8 33.9
Miscellaneous
Manufactured
Goods............ 3,555.0 5.8 4,241.6 6.1 5,102.9 6.3 5,227.4 6.4 6,147.8 7.3
Others............. 3,610.2 5.9 3,976.8 5.7 4,772.9 5.9 5,065.2 6.2 5,009.1 6.0
--------- ----- --------- ------- --------- ----- --------- ----- --------- -----
Total.......... $61,464.8 100.0% $69,843.7 100.0% $81,524.9 100.0% $81,775.3 100.0% $83,800.1 100.0%
========= ====== ========= ======= ========= ===== ========= ===== ========= =====
<FN>
- ---------------
(1) These entries are derived from customs clearance statistics.
Source:Monthly Bulletin, July 1994, The Bank of Korea; Economic Statistics Yearbook, 1994, The Bank of Korea.
</TABLE>

<TABLE>
EXPORTS
<CAPTION>
COUNTRY 1988 1989 1990 1991 1992 1993
------- ---- ---- ---- ---- ---- ----
(PERCENTAGE OF TOTAL EXPORTS)
<S> <C> <C> <C> <C> <C> <C>

U.S.A........................ 35.3 33.1 29.8 25.8 23.6 22.0
Canada....................... 2.8 3.0 2.7 2.4 2.1 1.7
United Kingdom............... 3.2 3.0 2.7 2.5 2.4 2.0
France....................... 1.8 1.4 1.7 1.6 1.3 1.1
Germany...................... 3.9 3.4 4.4 4.4 3.8 4.4
Netherlands.................. 1.4 1.2 1.5 1.6 1.3 1.2
Japan........................ 19.8 21.6 19.4 17.2 15.1 14.1
Hong Kong.................... 5.9 5.4 5.8 6.6 7.7 7.8
Saudi Arabia................. 1.9 1.3 1.1 1.4 1.2 1.2
All Others................... 24.0 26.6 30.9 36.6 41.5 44.5
----- ----- ----- ----- ----- -----
Total(1)................ 100.0 100.0 100.0 100.0 100.0 100.0
===== ===== ===== ===== ===== =====
</TABLE>

57
<PAGE> 60
<TABLE>

IMPORTS

<CAPTION>
COUNTRY 1988 1989 1990 1991 1992 1993
------- ---- ---- ---- ---- ---- ----
(PERCENTAGE OF TOTAL IMPORTS)
<S> <C> <C> <C> <C> <C> <C>
U.S.A........................ 24.6 25.9 24.3 23.2 22.4 21.4
Canada....................... 2.3 2.7 2.1 2.3 1.9 2.0
United Kingdom............... 1.8 1.5 1.8 1.9 1.7 1.7
France....................... 2.2 1.4 1.8 1.9 1.9 2.0
Germany...................... 4.0 4.3 4.7 4.5 4.6 4.7
Netherlands.................. 1.0 0.6 0.7 0.7 0.8 0.9
Japan........................ 30.7 28.4 26.6 25.9 23.8 23.9
Hong Kong.................... 1.1 1.0 0.9 0.9 1.0 1.1
Saudi Arabia................. 1.6 1.7 2.5 4.0 4.6 4.5
All Others................... 30.7 32.5 34.8 34.7 37.3 37.8
----- ----- ----- ----- ----- -----
Total(1)................ 100.0 100.0 100.0 100.0 100.0 100.0
===== ===== ===== ===== ===== =====
<FN>
- ---------------
(1) Amounts may not add up due to rounding.
Source: Monthly Bulletin, July 1994, The Bank of Korea; Economic Statistics
Yearbook, 1994, The Bank of Korea.
</TABLE>

Following export surges in 1986, 1987 and the beginning of 1988, the export
growth rate began to decline under the influence of the "triple demerits" of an
appreciating Won, rising costs of raw materials and rising wages. To offset
these adverse trends, domestic enterprises have invested more in factory
automation, thereby accelerating the movement away from low value-added,
labor-intensive production. Efforts have also been made to diversify export
markets.

<TABLE>
The following table summarizes Korea's balance of trade from 1989 to 1993:

BALANCE OF TRADE

<CAPTION>
EXPORTS AS
BALANCE % OF
EXPORTS(1) IMPORTS(1) OF TRADE IMPORTS
----------- ----------- --------- ----------
(MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
1989........................................ 61,408.7 56,811.5 4,597.2 109.1
1990........................................ 63,123.6 65,127.2 (2,003.6) 96.9
1991........................................ 69,581.5 76,561.3 (6,979.8) 90.9
1992........................................ 75,169.4 77,315.8 (2,146.4) 97.2
1993........................................ 80,949.9 79,089.7 1,860.2 102.4
Average Annual Percentage Growth Rate
1989-1993................................. 6.3% 10.7%
<FN>
- ---------------
(1) These entries are derived from trade statistics and are valued on a f.o.b.
basis.
Source: Economic Statistics Yearbook, 1994, The Bank of Korea.
</TABLE>

BALANCE OF PAYMENTS

From 1986 to 1989, Korea had a surplus on the current account of its
balance of payments. The surplus increased to U.S.$14.2 billion in 1988 before
declining to U.S.$5.1 billion in 1989. Korea incurred a deficit on the current
account of its balance of payments of U.S.$2.2 billion during 1990, with
deficits in the visible and invisible trade balances. In 1990, exports increased
by 2.8% to U.S.$63.1 billion. During the same period imports increased 14.6% to
U.S.$65.1 billion. The invisible trade balance decreased from a U.S.$0.2 billion
surplus in 1989 to a deficit of U.S.$0.5 billion in 1990. The deficit on the
current account of its balance of payments increased to U.S.$8.7 billion in
1991, U.S.$4.5 billion in 1992. The current account recorded a U.S.$0.4 billion
surplus in 1993, but is expected to record a deficit in 1994.

58
<PAGE> 61
<TABLE>
The following table sets forth certain information with respect to Korea's
balance of payments for the years 1989 to 1993:

BALANCE OF PAYMENTS

<CAPTION>
CLASSIFICATION 1989 1990 1991 1992 1993
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Current Balance...................... 5,054.6 (2,179.4) (8,727.7) (4,528.5) 384.6
Trade Balance................... 4,597.2 (2,003.6) (6,979.8) (2,146.4) 1,860.2
Exports(1)................. 61,408.7 63,123.6 69,581.5 75,169.4 80,949.9
Imports(1)................. 56,811.5 65,127.2 76,561.3 77,315.8 79,089.7
Invisible Trade Balance......... 210.8 (450.6) (1,595.5) (2,614.3) (1,966.8)
Unrequited Transfer (Net)....... 246.6 274.8 (152.4) 232.2 491.2
Long-Term Capital Balance(2)......... (3,362.5) 547.5 4,185.8 7,232.7 8,899.8
Loans and Foreign Investment.... (1,104.8) 33.3 3,091.2 5,160.3 8,707.4
Other (Net)..................... (2,257.7) 514.2 1,094.6 2,072.4 (676.9)
Basic Balance........................ 1,692.1 (1,631.9) (4,541.9) 2,704.2 9,284.4
Short-term Capital Balance(2)........ 60.3 3,333.7 41.2 1,109.9 (2,021.2)
Errors and Omissions................. 700.7 (1,975.7) 759.9 1,084.0 (721.0)
Overall Balance...................... 2,453.1 (273.9) (3,740.8) 4,898.1 6,542.2
Financial Account(3)................. (2,453.1) 273.9 3,740.8 (4,898.1) (6,542.2)
Liabilities..................... 966.3 1,486.6 8,429.8 1,947.4 673.7
Assets.......................... (3,419.4) (1,212.7) (4,689.0) (6,845.5) (7,215.9)
<FN>
- ------------------
(1) These entries are derived from trade statistics and are valued on a f.o.b.
basis.
(2) The distinction between long-term and short-term capital is based on an
original maturity of one year or more.
(3) Includes borrowings from the International Monetary Fund, syndicated bank
loans and short-term borrowings.
Source: Economic Statistics Yearbook, 1994, The Bank of Korea.
</TABLE>

<TABLE>
The following table shows Korea's total official reserves as of December 31
for the years 1989 to 1993:

TOTAL OFFICIAL RESERVES

<CAPTION>
1989 1990 1991 1992 1993
--------- --------- --------- --------- ---------
(MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
Gold(1)............................. $ 31.6 $ 31.6 $ 32.3 $ 32.6 $ 33.3
Foreign Exchange(2)................. 14,977.8 14,459.1 13,306.0 16,639.9 19,704.2
--------- --------- --------- --------- ---------
Total Gold and Foreign
Exchange..................... 15,009.4 14,490.7 13,338.3 16,672.5 19,737.5
Reserve Position at IMF............. 234.2 317.3 364.9 439.3 466.7
Special Drawings Rights............. 1.6 14.3 29.8 42.1 58.2
--------- --------- --------- --------- ---------
Total Official Reserves........ $15,245.2 $14,822.4 $13,733.0 $17,153.9 $20,262.4
========= ========= ========= ========= =========
<FN>
- ------------------
(1) For this purpose, domestically-owned gold is valued at U.S.$42.22 per troy
ounce (31.1035 grams) and gold deposited overseas is calculated at cost of
purchase.
(2) Since January 1, 1988, foreign exchange holdings of domestic foreign
exchange banks have been excluded.
Source: Monthly Bulletin, July 1994, The Bank of Korea.
</TABLE>

EXCHANGE CONTROLS

Only authorized foreign exchange banks are permitted to effect foreign
exchange transactions. Approval by the Ministry of Finance is required to become
an authorized foreign exchange bank. Authorized foreign exchange banks can enter
into foreign exchange transaction contracts directly with overseas banks.

Authorization or approval, either by the Ministry of Finance, The Bank of
Korea or authorized foreign exchange banks, as applicable, is necessary for
overseas remittances, the issuance of international bonds and certain other
instruments, overseas investments and certain other transactions involving
foreign exchange payments in conformity with the Foreign Exchange Management Law
and Regulations thereunder unless such authorization or approval is exempted
under such regulations. Remittance of principal and profits to their home
countries by overseas investors is guaranteed under the Foreign Capital
Inducement Act.

59
<PAGE> 62

FOREIGN EXCHANGE

The Bank of Korea, prior to 1989, set daily exchange rates for the Won
based on a trade-weighted multi-currency basket system. This rate was known as
The Bank of Korea concentration base rate. In 1989, the Korean government
announced a three phase plan to produce a free-floating exchange rate system.
The first phase allowed the domestic banks to decide buying and selling rates of
foreign exchange within narrow limits of The Bank of Korea concentration base
rate. In the second phase, which took effect in March 1990, the trade-weighted
multi-currency basket system was replaced by a system whereby the foreign
exchange rates are determined by averaging the previous day's inter-bank rates
settled through the Korean Financial Telecommunications and Clearings Institute
("KFTCI"), weighted by trading volume. This system is known as the Market
Average Exchange Rate System. Under this system, foreign exchange rates are
permitted to move each day within narrow ranges on either side of that day's
published market average exchange rates announced by the KFTCI. In the third
phase, the Government intends to gradually enlarge the ranges through 1996 and
to remove controls on exchange rates by 1997.

<TABLE>
The following table shows the exchange rate between the Won and the U.S.
Dollar (in Won per U.S. Dollar) at the dates indicated:

EXCHANGE RATE

<CAPTION>
WON/U.S.
DOLLAR
EXCHANGE
RATE(1)
-------------
<S> <C>
December 31, 1990........................................................... 716.40
June 30, 1991............................................................... 723.10
December 31, 1991........................................................... 760.80
June 30, 1992............................................................... 790.20
December 31, 1992........................................................... 788.40
June 30, 1993............................................................... 803.70
December 31, 1993........................................................... 808.10
January 31, 1994............................................................ 808.10
February 28, 1994........................................................... 808.00
March 31, 1994.............................................................. 806.50
April 30, 1994.............................................................. 807.50
May 31, 1994................................................................ 806.10
June 30, 1994............................................................... 805.50
July 31, 1994............................................................... 802.60
August 31, 1994............................................................. 801.10
<FN>
- ---------------
(1) For all dates prior to March 31, 1990, exchange rates are The Bank of Korea
concentration base rates on such dates. Exchange rates for subsequent dates
are the market average exchange rates on such dates, as announced by the
Korea Financial Telecommunications and Clearings Institute.
Source: Monthly Bulletin, July 1994, The Bank of Korea.
</TABLE>

The market average exchange rate between the Won and the U.S. Dollar as of
a recent date is set forth on the inside cover page of this Prospectus.

GOVERNMENT FINANCE

Responsibility for the preparation of the national budget lies with the
Economic Planning Board, and the administration of the Government's finances is
the responsibility of the Ministry of Finance. The fiscal year commences on
January 1, and the budget must be submitted to the National Assembly for its
approval not later than 90 days prior to the commencement of the fiscal year.
Supplementary budgets revising the original budget may be submitted to the
National Assembly for its approval at any time during the fiscal year.

The fiscal budget of the Government consists of a General Account and
Special Accounts. Revenues in the General Account include national taxes, stamp
duties and profits from government monopolies. Expenditures include those for
general administration, national defense, community service, education, health,

60
<PAGE> 63

social security services, certain annuities and pensions and local finance which
comprises the transfer of tax revenues to local governments.

Special Accounts are set up to segregate the accounts of certain functions
of the Government to achieve more effective budgetary control and
administration. They include government activities of a business nature, such as
economic development, roads, monopolies, railways and communications and
administration of loans received from official international financial
organizations and from foreign governments.

<TABLE>
The following table sets forth Government revenues and expenditures for the
years 1989 through 1993:

CONSOLIDATED CENTRAL GOVERNMENT REVENUES AND EXPENDITURES

<CAPTION>
1989 1990 1991 1992 1993(1)
---- ---- ---- ---- -------
(BILLIONS OF WON)
<S> <C> <C> <C> <C> <C>
Revenues
Internal Taxes................ W 15,211.0 W 19,134.2 W 24,029.8 W 30,099.1 W 34,178.2
Customs Duties................ 2,099.1 2,774.5 3,435.3 3,153.4 2,885.9
Defense Surtax................ 3,614.7 4,575.1 1,462.5 329.7 269.1
Education Surtax.............. 423.4 521.3 816.0 943.2 998.3
Monopoly Profits.............. 74.6 -- -- -- --
Government Enterprises
Receipts (Net)............. 408.3 590.5 810.2 1,042.2 902.3
Others........................ 7,016.8 6,942.7 8,774.7 10,699.1 13,893.6
---------- ---------- ---------- ---------- ----------
Total Revenues.................. 28,847.9 34,538.3 39,328.5 46,266.6 53,127.9
---------- ---------- ---------- ---------- ----------
Expenditures
Defense....................... 6,147.4 6,854.0 8,012.0 8,770.8 9,308.1
General Expenses.............. 14,703.7 18,973.0 22,319.5 23,682.6 26,951.1
Fixed Capital Formation....... 2,032.5 2,401.0 2,048.8 2,821.4 2,889.1
Others........................ 5,483.5 5,609.0 8,616.6 11,685.6 13,721.3
---------- ---------- ---------- ---------- ----------
Total Expenditures............ 28,367.1 33,836.9 40,996.8 46,960.4 52,869.7
---------- ---------- ---------- ---------- ----------
Net Lending................... 37.0 (53.6) 38.4 (5.3) 23.3
Budget Surplus (Deficit)...... W 443.8 W 754.9 W (1,706.7) W (688.5) W 234.9
========== ========== ========== ========== ==========
<FN>
- ---------------
(1) Preliminary.
Source: Monthly Bulletin, July 1994, The Bank of Korea.
</TABLE>

The decrease in Defense Surtax Revenues after 1991, as compared to prior
years, is primarily attributable to the repeal of Korea's defense tax effective
January 1, 1991.

61
<PAGE> 64

THE SECURITIES MARKETS OF KOREA

The information set forth herein has been extracted from various government
and private publications, including publications issued by the government of the
Republic of Korea and the Korea Stock Exchange. Information was also gathered
from academic literature and interviews of government officials, stock exchange
officials and Korean securities market participants and professionals. Certain
statistical information regarding the Korean securities market has been prepared
by the Sub-Adviser based upon information derived from the foregoing sources.
The Fund, its Board of Directors, the Investment Manager, the Investment Adviser
and the Sub-Adviser make no representation as to the accuracy of the
information, nor has the Fund or its Board of Directors attempted to verify the
statistical information presented herein.

BACKGROUND AND DEVELOPMENT

The development of the Korean securities markets has been substantially
influenced by Korean government policy designed to stimulate the Korean economy
and investment in Korea. The Korea Stock Exchange (the "KSE") was established in
1956, at which time it functioned primarily as a market for the trading of
Korean government bonds, with only twelve equity securities and three government
bonds listed for trading. As part of the First Five-Year Economic Development
Plan (1962-1966), the Korean government adopted its first securities law to
regulate the primary and secondary markets. Beginning in 1968, the Korean
government passed additional measures to encourage Korean companies to list on
the KSE by means of a wide variety of tax, credit and other benefits only
available to listed companies and to facilitate trading on the KSE. Primarily as
a result of these measures, the number of listed companies on, and the market
capitalization of, the KSE increased significantly in the 1970s. In 1976, the
Securities and Exchange Act of Korea (the "SEA") was amended to provide for,
among other things, the establishment of the Securities and Exchange Commission
of Korea (the "KSEC") and its executive body, the Securities Supervisory Board
(the "Securities Board"). Since 1981, the Korean government has adopted or
announced measures to open the Korean securities markets to foreign investment.

RECENT MARKET AND ECONOMIC DEVELOPMENTS

Financial Liberalization and Market Opening Plan. The Ministry of Finance
of Korea (the "MOF") has adopted a Financial Liberalization and Market Opening
Plan (the "Liberalization Plan") for the Korean financial markets. The
Liberalization Plan's main focus is to deregulate and liberalize the financial
industry, traditionally tightly controlled by the government and to open Korean
securities markets. The first phase of the Liberalization Plan, which was
announced in March of 1992, liberalized the requirements for the issuance of
certificates of deposit, extended national treatment (i.e., treatment on a
parity with domestic financial institutions) to foreign financial institutions
operating in Korea for their investments in Korean securities and liberalized
the requirements regarding underlying transaction documents in foreign exchange
dealings.

The second phase of the Liberalization Plan, announced in June of 1992,
included allowing further openings of representative and branch offices of
foreign securities companies, expansion of overseas securities investments by
Korean institutional investors, establishment of representative offices of
foreign investment trust and advisory companies, and investment in the aggregate
by foreign entities in up to 10% of the equity ownership of Korean investment
trust and advisory companies.

On June 30, 1993, the MOF announced the third phase of the Liberalization
Plan. The principal proposals under such phase relate to interest rate
deregulation, improvement of monetary control measures and the development of
money markets, improvement of credit control management, and foreign exchange
and capital market liberalization. Related proposals would further ease access
to the Korean securities industry for foreign securities companies and credit
rating agencies wishing to establish branches in Korea. Each area of
deregulation is to be phased in under three stages from 1993 to 1997.

The third phase of the Liberalization Plan also provides for capital market
liberalization on a step-by-step basis. The areas of regulation that the third
phase seeks to liberalize include direct investment by foreigners in Korean
companies, overseas investment in securities by Korean institutions and
individuals, limits on foreign investment in both equity and debt securities and
overseas borrowing by Korean companies. The third phase of

62
<PAGE> 65

the Liberalization Plan also provides for the gradual liberalization of
regulation on foreign equity participation in Korean banks.

Specifically, with respect to foreign investment in the Korean securities
market, the third phase of the Liberalization Plan provides for the gradual
raising of the aggregate foreign ownership limit (at present 10% per class of
shares until December 1, 1994 when the limit will become 12%) applicable to
equity securities of individual companies listed on the KSE, commencing in 1994.
Other measures provided for under the third phase of the Liberalization Plan
include permitting international institutions to issue Won-denominated debt
securities and permitting foreign investors to invest in funds investing in debt
securities and to acquire non-guaranteed long-term debt securities issued by
small and medium-sized companies and low interest rate national or public bonds.
As part of this process, as of July 1, 1994, foreign investors are allowed to
(i) invest directly in non-guaranteed convertible bonds listed on the KSE which
are issued by small or medium-sized listed companies, with foreign investors in
the aggregate and a single foreign investor being allowed to invest in up to 30%
and 5% of the listed amount of each such issue, respectively, and (ii)
underwrite certain low interest rate government or public bonds to be designated
by the KSEC from time to time up to the limit determined by the KSEC from time
to time, each denominated in Won and in each case subject to certain procedural
requirements.

In order to facilitate the conversion from the current system of direct
monetary controls to market-based controls, under the third phase of the
Liberalization Plan the MOF intends to accelerate the timetable to deregulate
the deposit and lending rates of banks and non-bank financial institutions, and
the interest rates on corporate bonds, financial debt instruments, monetary
stabilization bonds and government/public bonds. The deregulation of all lending
rates of both banks and non-bank financial institutions, except for rates on
certain loans regarded by the government as furthering policy goals, and of the
interest rates on corporate bonds with maturities of less than two years,
financial bonds, monetary stabilization bonds and government/public bonds
occurred as of November 1, 1993.

The MOF, pursuant to the third phase of the Liberalization Plan, seeks to
promote effective monetary control through the development of traditional
indirect monetary control measures. Such measures include the implementation of
rediscount policies, bank minimum reserve requirements and government open
market operations. The third phase of the Liberalization Plan seeks to develop
the money markets in order to allow the government to pursue indirect monetary
policies. Such development is intended to lead to a greater variety of
short-term instruments available for investment in the money markets.

Pursuant to the third phase of the Liberalization Plan, the MOF also seeks
to improve credit control management separately for large business conglomerates
and small and medium sized enterprises. With respect to large business
conglomerates, the credit control provisions focus on streamlining excessive
credit control. Lending to small and medium sized enterprises is currently
required at a certain ratio of the overall lending of financial institutions.
Under the third phase of the Liberalization Plan, the current compulsory lending
system to such companies will continue for the immediate future, but will be
gradually phased out as interest rate deregulation proceeds and the practice of
credit-based lending is established.

The third phase of the Liberalization Plan also reflects the MOF's
intention of pursuing more consistently the internationalization of the Won.
Under the third phase, regulations on foreign exchange transactions will be
relaxed and the foreign exchange market will be further developed. The third
phase of the Liberalization Plan provides for further expanding the daily range
of exchange rate fluctuations, which was increased as of October 1, 1993 from a
range of plus or minus 0.8% to a range of plus or minus 1.0%. It is anticipated
that such relaxation of controls will enhance the pricing function of the
exchange rate mechanism. The third phase of the Liberalization Plan would also
eliminate certain documentation requirements for foreign exchange transactions.

There can be no assurance that the provisions of the third phase of the
Liberalization Plan will be put into effect or have the intended impact.

Real-Name Financial Transaction System. On August 12, 1993, President Kim
Young Sam issued an Emergency Executive Order (the "Order") containing measures
designed to establish a real-name financial

63
<PAGE> 66

transaction system, to deter the use of false names in financial dealings and to
provide for the confidentiality of financial transactions. The announced purpose
of the Order is to protect the integrity of Korea's financial markets and to
achieve greater economic justice. The Order was ratified by the Korean National
Assembly as of August 19, 1993.

The Order applies to all financial transactions, including transactions
involving deposits, installment savings, checks, certificates of deposit, stocks
and bonds. Pursuant to the Order, in any transaction involving a financial
institution, the financial institution must verify the real name of the
counterparty before entering into the transaction. In addition, existing account
holders at financial institutions as of August 12, 1993 who did not confirm
their real names or convert aliases to real names by October 12, 1993 are
subject to severe penalties.

In order to provide for confidentiality of financial transactions, the
Order states that, unless otherwise approved by the relevant customer,
information about financial transactions may be made available only in
accordance with stipulated procedures and for such limited purposes as tax
investigations, court proceedings, regulatory supervision and mandatory
requirement.

The practice of engaging in financial transactions under false or borrowed
names had been prevalent in Korea. On the day following the issuance of the
Order, the Index, the major measure of changes in stock values on the KSE
declined 4.46% to 693.57. However, by August 20, 1993, the Index had increased
to close at 729.86.

REGULATION OF FOREIGN INVESTMENT

The Korean securities markets have historically been closed to direct
investment by most foreign investors although the Korean government has allowed
direct foreign investment by foreigners who intended to or could participate in
the management of an invested enterprise under the Foreign Capital Inducement
Act ("FCIA") and the Foreign Exchange Management Act ("FEMA"), and indirect
foreign investment in Korean securities such as through certain domestic trusts
of foreign investment funds specifically authorized by the MOF. In 1981, the MOF
announced its intention to gradually internationalize the Korean securities
markets. Since then, the Korean government has progressively implemented steps
to liberalize foreign investment in the Korean securities markets. Beginning on
January 3, 1992, foreign investors have been able to invest directly in equity
shares listed on the KSE, subject to certain restrictions that are described
below. At the present time, however, foreign investors, including the Fund,
generally are not permitted to make direct or indirect investments in
Won-denominated debt securities except that as of July 1, 1994 foreign investors
are allowed to purchase (i) non-guaranteed convertible bonds of listed small and
medium-sized companies, shares of which are listed on the KSE and (ii) certain
low interest rate government or public bonds to be designated by the KSEC from
time to time in the primary market subject to certain foreign holding limits and
procedural requirements as described below. In addition, foreign investors
currently may not participate in the purchase of shares through initial or
secondary public offerings (other than through rights issues).

The liberalization of the Korean securities markets has generally
progressed in gradual stages beginning with the authorization of indirect
investment by foreign investors in Korean securities through Korean investment
trusts and foreign investment funds, investing in Korean securities with a
specific license from the MOF. The first type of permitted indirect foreign
investments in Korea was a Korean unit investment trust established in late
1981. By June 30, 1994 there were a total of 39 such trusts aggregating
approximately U.S.$1,705 million outstanding including matching funds (which
invest in Korean and non-Korean securities markets). As of August 31, 1994,
three foreign investment funds had been licensed by the MOF to invest in Korean
securities subject to certain limitations. The units of such trusts or shares of
such funds have been offered to foreign investors to permit such investors to
participate in Korean securities markets by purchasing such units or shares.

Since 1985, a limited number of Korean companies have been permitted to
issue equity-related securities denominated in currencies other than Won,
including convertible bonds, bonds with equity warrants and depositary receipts,
to foreign investors outside of Korea as a means of raising capital. These types
of equity-related securities are convertible into the issuer's equity shares
listed on the KSE. In 1992, seven issues of convertible bonds, two issues of
bonds with equity warrants and one issue of depositary receipts representing

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equity shares, were made outside of Korea by companies listed on the KSE
aggregating U.S.$639 million. In 1993, eleven issues of convertible bonds, one
issue of bonds with equity warrants and three issues of depositary receipts were
made outside of Korea by companies listed on the KSE aggregating U.S.$916
million. During the first six months in 1994, thirteen issues of convertible
bonds, one issue of bonds with equity warrants and six issues of depositary
receipts, aggregating U.S.$780 million, were made.

Since January 3, 1992, foreigners have been permitted to invest in all
shares listed on the KSE, subject to the ceilings on foreign shareholdings and
procedural limitations set out below. Except as described below, foreign
investors are only permitted to trade such shares on the KSE itself and are
currently prohibited from engaging in margin transactions. In addition, a
foreign investor is subject to specific registration and reporting requirements,
custody requirements and requirements prescribing the use of certain types of
entities as proxies to exercise shareholder's rights, to place orders to sell or
purchase shares or to take other related action that it does not undertake
directly.

Current regulations generally limit the percentage of any class of shares
of a listed issuer in which a single foreign investor and all foreign investors
in the aggregate may acquire beneficial ownership to 3% and 10%, respectively.
The KSEC, however, may increase or decrease these percentages if it deems
necessary for the public interest, protection of investors or industrial policy.
Currently, the KSEC has authorized several exceptional ceilings, including the
following: (1) subject to the approval by the KSEC of an application submitted
by a company whose shares are held by foreign investors under the FCIA or
certain sections of the FEMA if such holdings by foreigners do not reach 25% of
the company's outstanding shares, a ceiling on acquisition of shares by
foreigners in the aggregate may be established separately for each such company,
depending on the shareholding of foreigners under the FCIA and the FEMA, but in
any case not equal to or exceeding 25%; (2) a special ceiling determined by any
company more than 50% of whose shares are held by foreigners under the FCIA or
certain sections of the FEMA; and (3) an 8% ceiling on the acquisition of shares
by foreigners in the aggregate established for certain corporations designated
by the Finance Minister (currently, only KEPCO and POSCO are subject to this
lower ceiling).

The Government has announced its intention to raise the aggregate foreign
ownership limit gradually during the period from 1994 to 1997. No assurances can
be given, however, as to whether or when such increase will be implemented and,
if and when implemented, to what levels such limit will be raised.

These ceilings may be exceeded, however, (i) as a result of acquiring
shares obtained pursuant to the FCIA or the FEMA, (ii) by a depositary acquiring
shares for the purpose of the issue of depositary receipts evidencing an
interest in such shares, (iii) as a result of acquiring shares listed on the KSE
upon conversion of, or exercise of warrants or withdrawal rights under or
attached to equity-related securities issued overseas by Korean companies
(collectively, "Converted Shares"), (iv) as a result of acquiring shares of a
small or medium-sized company through the exercise of a conversion right
attached to non-guaranteed convertible bonds listed on the KSE of such company,
or (v) by the acquisition of shares arising from the exercise of shareholder's
rights and other rights and shares obtained by way of gift, inheritance or
bequest; provided that the number of shares held by a single foreign investor
exceeding the 3% limit (except in the cases of (i) and (ii) above) must be sold
within three months from the date of acquisition.

In calculating these ceilings, all foreign shareholdings (other than those
owned by Korean branches and subsidiaries of certain foreign financial
institutions) must be counted regardless of whether the shares were purchased
through the KSE, or whether they are newly issued shares or outstanding shares.
Newly issued shares (including Converted Shares) are calculated as of the date
of their listing on the KSE. When applying a ceiling with respect to
acquisitions by a single foreign investor, each entity (including individuals,
corporations, foreign government agencies, and foreign funds, unit trusts and
partnerships) is entitled to a separate 3% limitation. In calculating the
holding of shares of a class in a particular company, foreign investors are
entitled to disregard holdings of shares held indirectly through an investment
in a Korean securities investment trust or through a holding in any funds or
investment trusts established overseas. All branches in Korea of any foreign
investor as a group are entitled to their own 3% limitation separate from that
of their head office. When calculating these ceilings, shares purchased are
deemed to be acquired at the time of placing the relevant order and shares sold
are deemed to be disposed of at the time of execution.

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A foreigner who has acquired shares in excess of any ceiling described
above may not exercise its voting rights with respect to the shares exceeding
such limit, and the KSEC may take necessary corrective action with regard to
such foreigner pursuant to the SEA. The Governor of the Securities Board may, at
his discretion, disclose the numbers of shares of a class available for
investment by a single foreign investor and foreign investors in the aggregate,
and provide a list of shares that have reached or exceeded the ceiling on
acquisition by foreign investors in the aggregate. Currently, the Governor
discloses this list every morning on which trading occurs. Orders for shares
made during a trading day which, if executed, will lead to the relevant ceiling
being exceeded would not be accepted by the KSE's trading system.

Under the SEA, certain companies designated by the MOF are generally
authorized to adopt provisions in their articles of incorporation restricting or
prohibiting foreign ownership of such companies' shares. At present, KEPCO and
POSCO have adopted a provision in each of their articles of incorporation
restricting ownership of their common shares by a single foreigner to 1% of
their common shares. In addition, under the Telecommunications Basic Act,
foreign investors are prohibited from acquiring any shares in Dacom Corporation.

The SEA generally imposes a 10% beneficial ownership limitation on the
total outstanding voting shares of a listed company that may be held by any one
individual or entity, including Korean nationals, without the approval of the
KSEC (which limitation is due to be repealed as of January 1, 1997). The KSEC
rules also provide that a company may not issue convertible bonds, bonds with
warrants or depositary receipts outside of Korea if the sum of (i) shares which
may be acquired by foreigners by the exercise of the conversion rights, warrants
or withdrawal rights for underlying shares under the proposed issue and under
any previously issued bonds, warrants or depositary receipts and (ii) shares
held by foreigners in excess of the applicable ceiling (generally 10%) on
aggregate foreign investment (except any such excess held under the FCIA), in
the aggregate, exceeds or would exceed 15% (or such greater percentage as may in
exceptional circumstances be permitted by the KSEC) of the issued capital of the
issuer at the date of issue of the relevant securities. If foreign investors
hold or will hold, upon exercise of conversion rights, warrants or withdrawal
rights, 50% or more of the outstanding shares of a company, the shares to be
issued, upon exercise of conversion rights, warrants or withdrawal rights by
foreign investors must be non-voting shares to the extent that shares held or
which may be held by foreign investors exceeds or will exceed this 50% limit. In
addition, the Foreign Exchange Management Regulations currently provide that the
percentage of the outstanding shares of a company (including shares which would
be outstanding as a result of the conversion of convertible bonds and the
exercise of warrants attached to bonds or withdrawal rights attached to
depositary receipts) that may be held by non-residents or foreigners, unless
provided otherwise in any other relevant laws and regulations (including those
of the KSEC), is limited to 50%.

Foreigners are permitted to trade shares only on the KSE, except that
foreigners may (i) acquire shares by gift or inheritance, (ii) acquire shares
pursuant to rights issues or pursuant to investments, convertible bonds or
depositary receipts issued outside Korea, (iii) buy and sell odd lots of shares
with Korean securities companies, (iv) buy and sell shares directly with other
foreigners once the relevant ceiling on aggregate foreign ownership in a class
of shares in a company (or such ceiling less the number of odd-lot shares) is
reached or exceeded through a Korean broker as an intermediary ("foreign OTC
transactions") and (v) trade shares off the KSE with the approval of the KSEC
for specific trades.

The Fund may acquire a substantial portion of its portfolio securities in
foreign OTC transactions involving premium prices in excess of the KSE price.
There can be no assurance that the Fund will be able to realize such premiums if
it sells the shares to another foreign investor. Such premiums may be affected
by changes in regulations and otherwise, including changes in the percentage of
foreign ownership permitted in KSE-listed companies.

Since July 1, 1994, foreigners have been permitted (1) to invest in
non-guaranteed convertible bonds listed on the KSE which are issued by small and
medium-sized companies the shares of which are listed on the KSE, with foreign
investors in the aggregate and a single foreign investor being allowed to invest
in up to 30% and 5% of the listed value of each class of such bonds,
respectively; and (2) to participate in new issues of certain low interest rate
government or public bonds to be designated from time to time by the KSEC up to

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the limit determined by the KSEC from time to time, each denominated in Won and
in each case subject to certain procedural requirements described below.

A foreign investor who wishes to invest in shares or bonds issued in Korea
by Korean companies is required to register its identity with the Securities
Board prior to making any such investment in shares or bonds, respectively. Upon
registration, the Securities Board will issue to the foreign investor an
Investment Registration Card for stock or bond, as the case may be, which must
be presented each time the foreign investor opens a brokerage account with a
securities company.

Upon a foreign investor's purchase or sale of shares or bonds through the
KSE, no separate report by the investor is required because the Investment
Registration Card system is designed to control and oversee foreign investment
through a computer system. However, a foreign investor's acquisition or sale of
shares or bonds outside the KSE (as discussed above) must be reported by the
foreign investor or his standing proxy to the Governor at the time of each such
acquisition or sale, and, upon request of such securities company, a copy of
that report must be submitted to the securities company with which the foreign
investor opened a brokerage account; provided, however, that a foreign investor
must ensure that his acquisition or sale of shares or bonds outside the KSE for
odd-lot trading or in a foreign OTC transaction is reported by the securities
company engaged to facilitate such transaction and his acquisition of shares as
a result of a rights issue, stock dividend and bonus issue is reported by the
company issuing the shares concerned.

A foreign investor must appoint one or more standing proxies from among the
Korea Securities Depository, foreign exchange banks (including domestic branches
of foreign banks) and securities companies (including domestic branches of
foreign securities companies) which have obtained a license to act as a standing
proxy to exercise rights as a holder of shares or bonds, place an order to sell
or purchase shares or bonds or perform any matters related to the foreign
activities if the foreign investor does not perform these activities himself.
However, a foreign investor may be exempted from complying with these standing
proxy rules with the approval of the Governor in cases in which such exemption
is deemed inevitable by reason of conflict between laws of Korea and the home
country of such foreign investor.

Certificates evidencing shares or bonds of Korean companies must be kept in
custody with an eligible custodian in Korea. Only foreign exchange banks
(including domestic branches of foreign banks), securities companies (including
domestic branches of foreign securities companies) and the Korea Securities
Depository are eligible to be a custodian of shares or bonds for a foreign
investor. A foreign investor must ensure that his custodian deposits such shares
or bonds with the Korea Securities Depository. However, a foreign investor may
be exempted from complying with this deposit requirement with the approval of
the Governor in circumstances where such compliance is made impracticable,
including cases where such compliance would contravene the laws of the home
country of such foreign investor.

A foreign investor who intends to acquire shares or bonds must designate a
single foreign exchange bank and open a Won Account and Foreign Currency
Account, for investment in shares and separately for investment in bonds. No
approval is required for remittance into Korea and the deposit of foreign
currency funds in the Foreign Currency Account. With the confirmation of the
investor's designated foreign exchange bank, foreign currency funds may be
transferred to a Won Account for stock investment or bond investment, as the
case may be, held with a broker (i.e., securities company) only at the time Won
funds are necessary for the purchase of shares or bonds, as the case may be
(i.e., for payment of the deposit money at the time of placing an order, and the
remainder of the purchase price outstanding at the time of settlement). Funds in
the Foreign Currency Account may be remitted abroad without any governmental
approval.

Dividends on shares or interest on bonds of Korean companies are paid in
Won. No governmental approval is required for foreign investors to receive
dividends or interest on, or the Won proceeds of the sale of, any such shares or
bonds, as the case may be, to be paid, received and retained in Korea. Dividends
or interest paid on, and the Won proceeds of the sale of, any such shares or
bonds, as the case may be, held by a non-resident of Korea must be deposited
either in a Won Account for stock investment or bond investment, as the case may
be, with the investor's securities company or its Won Account. Funds in the
investor's Won Account may be transferred to its Foreign Currency Account or
withdrawn for local living expenses (subject to certain limitations), in each
case subject to approval of the investor's designated foreign exchange bank. In
addition,

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funds in the Won Account may be used for future investment in shares or bonds or
for payment of the subscription price of new shares obtained through the
exercise of pre-emptive rights.

Foreign investors may, without any governmental approval, enter into
forward transactions between Won currency and foreign currency with a foreign
exchange bank in Korea to the extent necessary to hedge foreign exchange risk
resulting from their investment in Korean shares or bonds or holding of Won
currency for the purposes of such investment.

The MOF or the KSEC may issue orders imposing additional restrictions when
deemed in the public interest, for the protection of investors or in the
interest of maintaining an orderly securities market. Under the FEMA, the MOF
has the authority, with prior public notice of scope and duration, to suspend
all or a part of foreign exchange transactions when emergency measures are
deemed necessary in case of a radical change in the international or domestic
economic situation. To date, the MOF has not exercised this authority.

THE KOREA STOCK EXCHANGE

The KSE, established in 1956, is the only stock exchange in Korea and has
its only trading floor in Seoul. The KSE is a non-profit organization, the
shares of which are wholly-owned by its 32 member firms. Both equity and debt
securities are traded on the KSE. Although the KSE market capitalization and
trading volume have increased substantially over the past ten years, it is still
small relative to the U.S. exchanges. The aggregate market value of equity
securities listed on the KSE was approximately W 128.4 trillion (approximately
U.S.$159.4 billion) at June 30, 1994, and the average daily trading value of
such securities was W 548,048 million (approximately U.S.$710,400) for 1993.
Equity securities listed on the KSE are divided into two separate trading
sections

THE PRIMARY MARKETS

Equity Market

Securities companies with requisite MOF approval are permitted to
underwrite new issues, and managers of underwriting syndicates are required to
endorse two year profit forecasts submitted to the Securities Board. The KSEC
may issue warnings to lead managers or restrict their participation in the
managing of public offerings if the company's profits are less than 60% of the
forecasts in the first year and less than 50% of the forecasts in the second
year or if the company is declared bankrupt. All shares must have a par value,
but the offering price of a new issue will generally exceed par value. Before
June 1991, listed companies were, unless otherwise qualified, required to offer
100% of their issues at "market price" although it was possible to apply a
discount to the theoretical ex-rights price when establishing the "market
price." However, in an attempt to stimulate the securities market, the KSEC
repealed the rules requiring issues at "market price" in June 1991, and adopted
a new rule allowing the Chairman of the KSEC to impose a ceiling on any discount
from "market price." The Chairman has not yet published any such ceiling but may
do so in the future.

Listed companies may issue further shares for cash or non-cash
consideration; further issues are normally in the form of rights issues to
existing shareholders. However, by law, members of a listed company's employee
stock ownership association are entitled to subscribe up to 20% in aggregate of
any new shares publicly issued irrespective of whether or not they are already
shareholders. Companies may also issue shares without consideration as bonus
issues.

In common with other foreign investors, the Fund is not permitted to
subscribe for new issues otherwise than by exercising its rights in a rights
issue. It may not underwrite new issues or buy or sell rights.

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<TABLE>
The following table indicates the number and aggregate size of new issues
of equity through public offerings or rights issues during the past decade.

<CAPTION>
TOTAL EQUITY
INITIAL PUBLIC OFFERINGS OFFERINGS TO SHAREHOLDERS CAPITAL RAISED
------------------------------------ ------------------------------------ ----------------------------
IN MILLIONS IN THOUSANDS IN MILLIONS IN THOUSANDS IN MILLIONS IN THOUSANDS
YEAR NUMBER OF WON OF U.S. DOLLARS NUMBER OF WON OF U.S. DOLLARS OF WON OF U.S. DOLLARS
----- ------ ----------- --------------- ------ ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1984.................... 13 81,190 98,127 107 397,672 480,628 478,862 578,755
1985.................... 10 33,860 38,036 60 259,528 291,539 293,388 329,575
1986.................... 12 33,360 38,728 110 797,705 926,056 831,065 1,003,512
1987.................... 40 197,714 249,544 178 1,654,950 2,088,792 1,852,664 2,338,336
1988.................... 98 554,115 809,991 298 6,720,644 9,824,067 7,274,759 10,634,058
1989.................... 119 1,962,236 2,887,340 274 11,124,538 16,369,244 13,086,774 19,256,583
1990.................... 33 315,709 440,688 169 2,581,808 3,603,864 2,897,517 4,044,552
1991.................... 22 506,894 666,264 136 2,180,164 2,865,620 2,687,058 2,531,885
1992.................... 19 318,001 403,350 133 1,711,188 2,170,457 2,029,189 2,573,806
1993.................... 35 355,619 440,068 171 2,788,862 3,451,135 3,144,481 3,891,203
1994(1)................. 5 136,435 168,960 67 2,410,955 2,985,703 2,547,390 3,154,663
<FN>
- ---------------
(1) During the period from January 1 to April 30, 1994.
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

Bond Market

Most corporate bonds which are issued domestically are issued through
public offerings which are underwritten by securities companies, banks,
investment and finance companies, merchant banks and certain other licensed
financial institutions. The majority of corporate bonds are guaranteed by banks
and other financial institutions, although an increasing number of corporate
bonds are issued without such guarantees. Since maturities are relatively short
(about half of all new issues of bonds tend to be for under four years), a
significant portion of new issues is required to refund maturing bonds.

<TABLE>
Levels of new issue activity in the corporate bond market are given in the
following table.

<CAPTION>
IN
NUMBER OF MILLIONS IN THOUSANDS
YEAR ISSUES OF WON OF U.S. DOLLARS
---- --------- --------- ---------------
<S> <C> <C> <C>
1984........................................ 872 1,804,063 2,180,400
1985........................................ 1,096 3,176,744 3,568,719
1986........................................ 900 2,728,871 3,167,949
1987........................................ 1,019 3,189,617 4,693,374
1988........................................ 1,063 4,244,320 6,204,239
1989........................................ 1,217 6,959,035 10,239,898
1990........................................ 1,776 11,083,555 15,471,182
1991........................................ 2,797 12,740,679 16,746,423
1992........................................ 2,382 11,137,260 14,126,405
1993........................................ 2,680 15,598,264 19,302,394
1994 through June 30........................ 1,402 10,540,060 13,052,708
<FN>
- ---------------
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

Bonds are also issued by the public sector in the name of, or guaranteed
by, the MOF, The Bank of Korea or institutions owned by the Korean government.
Some of these are tax-exempt and not all of them are listed on the KSE. The Bank
of Korea has issued large volumes of Monetary Stabilization Bonds (which have
maturities of less than one year) principally to absorb excess liquidity in the
economy. Monetary Stabilization Bonds accounted for more than 40% of all
domestic bond issues, public and corporate, at December 31, 1993. Generally,
public bonds yield less than corporate bonds and are held mainly by
institutions.

THE SECONDARY MARKETS

The listing of securities is regulated by the Securities Listing Regulation
of the KSE, which classifies the four types of securities which may be listed as
equity securities, warrants to subscribe for new shares, beneficial certificates
and debt securities. A listing application and initial listing fee (except for
the listing of certain bonds) must be submitted to the KSE, which determines
whether an applicant is eligible for listing. The KSE is empowered to de-list
securities.

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Equity Market

Equity securities transactions may only be effected on the KSE through
securities companies acting as brokers or principals that are members of the
KSE. As of July 31, 1994, there were 32 member firms of the KSE. Currently all
32 members of the KSE are licensed in all three categories: dealing, brokering
and underwriting. Financial intermediaries including banks, short-term finance
companies and merchant banking corporations are not eligible for membership on
the KSE. However, they may engage in underwriting to a limited extent upon
obtaining a license from the MOF. Currently, foreign securities companies may
establish representative offices in Korea upon the approval of the MOF but their
participation in the securities business is prohibited. In addition, twelve
foreign securities firms have established branch offices in Korea to engage in
brokerage business or other securities business depending upon the respective
terms of MOF approval.

Information regarding individual securities, including bid and asked
quotations, trading volume, price-earnings ratios, earnings and yields, and the
composite stock price index and stock price indices by sector, is available
through a network of computer terminals located in offices of securities
companies in Korea. There is a small over-the-counter market, which is not open
to foreign investors.

The equity securities listed on the KSE are divided into two sections
within which the equity securities are traded. The main difference between the
two sections is that margin transactions are permitted only in the first trading
section (with the exception of securities issued by a securities company which
acts as a broker for the transaction concerned). A newly listed equity security
must be traded in the second trading section for at least one year after its
initial listing. Additional listing criteria must be met in order for an equity
security to be traded in the first trading section. As of December 31, 1992, the
securities of 483 companies listed on the KSE were traded in the first trading
section. An equity security trading in the first trading section that fails to
maintain certain criteria will be reassigned to the second trading section.

For initial listing on the KSE, equity securities must meet certain
requirements, including: (i) corporate existence for at least five years; (ii)
paid-in capital of at least W 3 billion; at least 300,000 outstanding shares and
stockholders' equity of at least W 5 billion; (iii) average annual sales revenue
for the last three accounting periods of at least W 15 billion and sales revenue
for the most recent accounting period of at least W 20 billion; (iv) the
provision of a favorable auditor's opinion (whether qualified or not) on the
company's financial statements for the last three accounting periods; (v) at
least 30% of the outstanding shares, including at least 30% of all voting
shares, must have been publicly offered for subscription or sale within six
months prior to the listing application date; (vi) a debt to equity ratio of
less than 150% of the average for the same industry sector; (vii) shares issued
by way of rights or bonus issues (including stock dividends) during the past
year must not exceed a specified percentage, and, with certain exceptions, the
stockholding ratio must not have been changed during the one year prior to the
listing application date; and (viii) the asset value per share and the earnings
value per share (as defined in the KSE regulations) must exceed 150% and 100% of
its par value, respectively.

The listing criteria a company must meet for its equity securities to be
traded on the first trading section of the KSE include the following: (i)
paid-in capital of at least W 5 billion as of the end of the most recent
accounting period; (ii) after-tax net profit for each of the last three
accounting periods must have been at least 10% of paid-in capital, or,
alternatively, the ratio of stated capital plus reserves to stated capital as of
the end of each such accounting period must have been at least 250%; (iii) debt
to equity ratio for each of the last three accounting periods must be no greater
than the average for the same industry section; (iv) liquidity ratio for each of
the last three accounting periods must have equalled or exceeded the average for
the same industry sector; (v) a dividend of at least 5% of the par value per
share must have been declared and paid to each stockholder holding voting shares
of less than 1% of the issued and outstanding shares in respect of at least two
out of the last three accounting periods; (vi) the provision of a favorable
auditor's opinion (whether qualified or not) on the company's financial
statements for the last three accounting periods; (vii) at least 40% of the
outstanding shares, excluding those held by the Korean government or certain
foreign investors ("Government and Foreign Owned Shares"), must be held by
certain institutional investors and a minimum number (400 to 500 depending on
the amount of the paid-in capital) of stockholders, each holding less than 1% of
the company's issued and outstanding shares; (viii) monthly average trading
volume on the KSE for the

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accounting period in which listing in the first trading section is to take place
must be at least 1% of the company's shares, excluding Government and Foreign
Owned Shares, if any; (ix) with the exception of the Korean government holding
shares of certain designated companies, no stockholder may own more than 51% of
the company's outstanding shares; and (x) the company's shares must have been
listed for at least one year in the second trading section.

Listed companies are required to submit both semi-annual and annual reports
to the KSE and the KSEC. Upon the occurrence of certain events such as the
revocation of a license for the main line of business, the suspension of a bank
account or conditions for corporate dissolution, direct disclosure of such event
must be made by listed companies to the public investors through the
broadcasting facilities located in the KSE. Within two days after certain less
material events such as a change of business objectives, the filing of a
significant lawsuit against the company or the notification of a tax
investigation, disclosure must be made to the KSE, which will be disseminated to
the public.

An over-the-counter market for non-listed securities was established in
April 1987 as a mechanism for smaller companies that are unable to meet the KSE
listing requirements to gain access to the securities markets. As of May 31,
1994, 220 Korean companies were registered on the over-the-counter market. This
market is not open to foreign investors.

Purchases and sales of shares may be completed fully in cash or by means of
a margin transaction. As of July 31, 1994, the margin requirement is the amount
equivalent to 40% of the total value of the stocks purchased on margin or sold
short. Only shares in the first trading section of the KSE, with certain
exceptions, may be purchased or sold by means of a margin transaction. The
margin requirements are varied from time to time by the KSE. According to
statistics prepared by the KSE, margin transactions in 1992 and 1993 amounted to
31.2% and 19.5%, respectively, of total trading volume by number of shares, and
36.2% and 24.0%, respectively, of the trading volume of those shares eligible
for margin transactions. Foreign investors, including the Fund, are not
permitted to engage in margin transactions, as discussed under "The Securities
Markets of Korea -- Regulation of Foreign Investment."

The KSE may require deposits in cash or substituted securities to be paid
in advance of settlement, in varying amounts depending on the type of investor.
Currently, the required deposit in cash or substitute securities from certain
institutional investors is 20% of the consideration payable. The figure for non-
institutional investors is 40%. A foreign investor may be treated as an
institutional investor in respect of the foregoing deposit requirement upon
designation as such by the KSE. The Fund will apply for such designation with
the KSE. The Fund has entered into custody account arrangements with the
Custodian, Subcustodian and the Fund's brokers, whereby funds required to be
deposited would be deposited, at a nominal interest rate, with the Subcustodian
on irrevocable instructions to pay them to the broker on settlement day against
the delivery of the relevant securities. Short selling of equity securities is
permitted on the KSE, but may not be effected by foreign investors including the
Fund under the KSEC Rules.

MARKET CAPITALIZATION AND TRADING VOLUME

The Korean securities markets, while relatively small as compared to the
securities markets of the United States, Japan and certain European countries,
have, with the exception of 1990 and 1991, been generally characterized by
gradual and consistent growth. The development of the Korean securities markets
may be attributed to, among other things, the Korean government's extensive
involvement in the private sector, including the securities markets. From 1982
to 1989, market capitalization of equity securities listed on the KSE increased
substantially from approximately W 3.0 trillion to a record high of
approximately W 95.5 trillion at December 31, 1989. During 1990 and 1991,
however, market capitalization did not continue such growth, and the total
market capitalization of equity securities listed on the KSE decreased 17.2% to
approximately W 79.0 trillion at December 31, 1990 and decreased 7.5% to
approximately W 73.1 trillion at December 31, 1991. Since the beginning of 1992
and the opening of the Korean securities markets to foreign investment, market
capitalization has generally increased, and as of June 30, 1994 was W 128.4
trillion.

Large groups of related companies referred to as "chaebol" are engaged in a
wide range of businesses and play a significant role in the Korean economy. The
Korean government has requested the chaebol companies

71
<PAGE> 74

to reduce their shareholdings both within and outside of the chaebol group. The
Korean government's policy is to encourage the growth of smaller and
medium-sized companies.

Total trading volume of equity securities listed on the KSE has fluctuated
widely, but also has, with the exception of 1990 and 1991, generally increased
from 1982 through 1993. In 1993, total trading volume was approximately W 169.9
trillion, which represented an increase of 87.5% from total trading volume of W
90.6 trillion in 1992. Trading activity in equity securities is concentrated in
relatively few securities. In 1993, the 30 most actively traded equity
securities listed on the KSE accounted for 28.8% of total trading volume.

<TABLE>
The number of companies listed, the corresponding aggregate market value at
the end of the periods indicated and the average daily trading volume for those
periods are set out in the following table.

<CAPTION>
MARKET VALUE AT
PERIOD END AVERAGE DAILY TRADING VOLUME/VALUE
NUMBER OF ----------------------------- --------------------------------------------
LISTED IN BILLIONS IN MILLIONS IN THOUSANDS IN MILLIONS IN THOUSANDS
YEAR COMPANIES OF WON OF U.S. DOLLARS OF SHARES OF WON OF U.S. DOLLARS
---- --------- ----------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1984..................... 336 5,148 6,222 14,847 10,642 12,862
1985..................... 342 6,570 7,380 18,925 12,315 13,834
1986..................... 355 11,994 13,923 3,402(1) 32,870 38,159
1987..................... 389 26,172 33,033 56,701(1) 70,185 88,584
1988..................... 502 64,544 94,349 10,367 198,364 289,963
1989..................... 626 95,477 140,490 11,757 280,967 413,430
1990..................... 669 79,020 110,302 10,866 183,692 256,411
1991..................... 686 73,118 96,107 14,021 214,263 281,629
1992..................... 688 84,712 107,448 24,028 308,246 390,977
1993..................... 693 112,665 139,420 35,130 574,048 710,368
1994(2).................. 692 128,362 159,357 35,867 662,208 912,164
<FN>
- ---------------
(1) Equivalent to the trading volume after consolidation of shares. From 1986 to
1987, shares were consolidated at the ratio of 10 to 1 or 5 to 1 to improve
the efficiency of trading. The actual trading volumes, before consolidation
of shares was completed, were 31,755 and 20,353 in 1986 and 1987,
respectively.
(2) As of June 30, 1994 and during the period from January 1 to June 30, 1994,
as the case may be.
Source: Monthly Review, July 1994, Securities Supervisory Board.
</TABLE>

<TABLE>
The total trading volume of equity securities in 1993 was approximately W
10.4 trillion representing an increase of 47% from the 1992 level of W 7.1
trillion. In 1992, the total trading volume increased 73% from the 1991 level to
W 4.1 trillion. Trading activity, however, is concentrated in a limited number
of companies within a small number of industries. The 30 most actively traded
domestic equity securities accounted for 28.8% of total trading volume of
domestic equity securities for the year ended December 31, 1993. The following
table illustrates the annual trading volume of the 30 most actively traded
equity securities on the KSE for the year ended December 31, 1993.

<CAPTION>
ANNUAL TRADING
VOLUME
COMPANY (WON MILLIONS)
- ------------------------------------------------------------------------- ------------------
<S> <C>
Daewoo Heavy Ind. ....................................................... 3,244,470
Korea Electric Power Corporation......................................... 3,207,740
Pohang Iron & Steel Co., Ltd. ........................................... 2,821,601
Hyundai Motor............................................................ 2,438,805
Daewoo Corporation....................................................... 2,389,966
Samsung Electronics Co., Ltd. ........................................... 2,311,690
Daewoo Securities Co., Ltd. ............................................. 2,194,911
Dongsuh Securities Co., Ltd. ............................................ 2,067,358
The Korea Commercial Bank of Korea....................................... 2,052,412
Daishin Securities Co., Ltd. ............................................ 1,950,169
Lucky Securities Co., Ltd. .............................................. 1,924,933
</TABLE>

72
<PAGE> 75

<TABLE>
<CAPTION>
ANNUAL TRADING
VOLUME
COMPANY (WON MILLIONS)
- ------------------------------------------------------------------------- ------------------
<S> <C>
Goldstar Co., Ltd. ...................................................... 1,750,126
Daewoo Electronics....................................................... 1,709,620
Bank of Seoul............................................................ 1,675,062
Saeil Heavy Ind. ........................................................ 1,484,378
Hyundai Engineering & Const. ............................................ 1,428,796
Sammi Steel.............................................................. 1,420,201
Cho Hung Bank............................................................ 1,293,306
Asia Motor............................................................... 1,268,295
Coryo Securities Corporation............................................. 1,113,835
Lucky.................................................................... 1,033,161
SsangYong Motor.......................................................... 997,929
Poong San................................................................ 956,434
Sammi.................................................................... 942,677
Korea First Bank......................................................... 921,436
Hanbo Steel & General Const.............................................. 920,446
I.C.C. Corp. ............................................................ 866,229
Hanil Bank............................................................... 850,113
Kia Motors Corporation................................................... 810,011
Daelim Industrial........................................................ 805,225
----------
Total............................................................... 48,851,335
==========
<FN>
- ---------------
Source: Fact Book, 1994, Korea Stock Exchange.
</TABLE>

<TABLE>
The following tables set forth the number of listed companies, market
capitalization and trading volume of domestic equity securities in Korea through
June 30, 1994 and other selected countries.

<CAPTION>
EQUITY TRADING
MARKET VOLUME ON THE
NUMBER OF LISTED NUMBER OF CAPITALIZATION EXCHANGE
EQUITY ISSUES LISTED COMPANIES (WON BILLIONS) (WON BILLIONS)
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
1984................................... 455 336 5,148.5 3,118.2
1985................................... 414 342 6,570.4 3,620.6
1986................................... 485 355 11,994.2 9,598.1
1987................................... 603 389 26,172.2 20,493.9
1988................................... 970 502 64,543.7 58,120.6
1989................................... 1,284 626 95,476.8 81,199.6
1990................................... 1,115 669 79,019.7 53,454.5
1991................................... 1,013 686 73,117.8 62,564.9
1992................................... 1,014 688 84,712.0 90,624.4
1993................................... 1,045 693 112,665.3 169,918.1
1994(1)................................ 925 692 128,362.0 90,231.6
<FN>
- ---------------
(1) January through June 30, 1994.
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

73
<PAGE> 76
<TABLE>
<CAPTION>

MARKET ANNUAL
CAPITALIZATION TRADING
NUMBER OF DECEMBER 31, VALUE
LISTED U.S.$ U.S.$
COMPANIES BILLIONS BILLION
-------------- ----------- ----------------
EXCHANGE LOCAL INDEX 1983 1992 1983 1992 1983 1992
- ------------------------------- --------------------- ------ ------ ---- ---- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Hong Kong...................... Hang Seng n/a 413 17 172 5,116 90,611
India.......................... FE Bombay Index 3,118 6,700 7 65 2,377 20,597
Indonesia...................... JSE Composite 19 155 0.1 12 11 3,903
Korea.......................... KOSPI 328 688 4 107 2,260 116,101
Malaysia....................... KLSE Composite 204 366 23 94 3,398 21,730
Pakistan....................... SBP Index 327 628 1 8 n/a 980
Philippines.................... Manila Com/Ind Index 208 170 1 14 483 3,104
PRC............................ n/a -- 53 -- 18 -- 13,363
Singapore...................... DBS 50 118 163 16 49 5,588 14,084
Sri Lanka...................... CSE All Shares -- 190 -- 1 -- 114
Taiwan......................... TSE 119 256 8 101 9,081 240,667
Thailand....................... SET 88 305 1 58 381 72,060
<FN>
- ---------------
Source: Emerging Stock Markets Factbook 1993; International Finance Corp.
</TABLE>

GOVERNMENT INVOLVEMENT IN THE PRIVATE SECTOR

The Korean government has historically exercised and continues to exercise
substantial influence over many aspects of the private sector including the
securities markets, often viewing equity financing as a means of achieving
broader policy goals such as the diffusion of majority shareholder control in
large companies. The Korean government from time to time has influenced the
payment of dividends and the prices of certain products, encouraged companies to
invest in or to concentrate in particular industries, induced mergers between
companies in industries suffering from excess capacity and induced private
companies to publicly offer their securities. The KSE has also sought to
minimize excessive price volatility through various steps, including the
imposition of limitations on daily price movements of securities.

In May 1990, the Securities Market Stabilization Fund ("Stabilization
Fund"), a fund operated by its contributors which include substantially all of
the KSE-listed companies and Korean securities companies, as well as Korean
banks, insurance companies, and certain other institutional investors, was
established by the securities industry with government cooperation in order to
stabilize the market primarily through the purchase and sale of securities The
size of the Stabilization Fund is not officially reported. However, as of
January 1994, the Stabilization Fund was reported by the financial press to
constitute approximately 5% of the total listed equity market capitalization of
the KSE. The Stabilization Fund was initially established for a three-year
period, which has been extended for an additional three years to 1996. See "Risk
Factors and Special Considerations -- Market Characteristics."

In January and February of 1994, the Korean government announced a series
of measures designed to stabilize the securities market. Significant measures
include, among others, increasing the number of new listings on the KSE;
strengthening the guarantee deposit requirement for new listings on the KSE;
lowering the interest rate on deposits with securities companies; encouraging
institutional investors, including the Stabilization Fund, to sell listed stocks
in their possession; permitting short sales; lowering the ceiling on shares of a
single company which may be held by a securities investment trust; and raising
the securities transaction tax rate for sales effected on the KSE.

MARKET DATA

Market performance of the KSE is measured by a composite index and several
additional indices based on the first and second trading sections of the KSE,
industry sectors and the capitalization of individual stocks. The Korea
Composite Stock Price Index ("Index") is the major measure of changes in the
aggregate market

74
<PAGE> 77

value of all common stocks listed on the KSE. Under the current weighted market
value method of computing the Index, the market price of each listed common
stock is multiplied by the number of shares listed and then aggregated. Prior to
1983, the Index was determined through a simple average method of computation.

The Index generally increased through the 1980s but has generally decreased
from its high annual close in 1989. During 1992, the Index fluctuated widely
reaching a high point of 691.48 on February 8 and a low point of 459.07 on
August 21. On December 31, 1992, the Index closed at 678.44, an 11.1% increase
from year-end 1991. On December 31, 1993 and June 30, 1994, the Index closed at
866.18 and 933.36, respectively. At July 31, 1994 the Index was at 927.97. See
"The Securities Markets of Korea -- Recent Market and Economic Developments."

<TABLE>
The following table illustrates the market performance of the KSE as
measured by the Index from 1984 through 1994, together with the associated
dividend yield and price-to-earnings ratios for listed securities as of the end
of the periods indicated.

KOREA COMPOSITE STOCK PRICE INDEX(1)

<CAPTION>
AVERAGE
------------------------------
PERIOD DIVIDEND PRICE/EARNINGS
YEAR HIGH LOW END YIELD(2)(3) RATIO(2)(3)
---- ---- --- ------ ----------- --------------
<S> <C> <C> <C> <C> <C>
1984................................. 142.46 114.37 142.46 5.7 4.5
1985................................. 163.37 131.40 163.37 6.0 5.2
1986................................. 279.67 153.85 272.61 4.8 7.6
1987................................. 525.11 264.82 525.11 2.9 10.9
1988................................. 922.56 527.89 907.20 2.6 11.2
1989................................. 1,007.77 844.75 909.72 2.3 14.4
1990................................. 928.82 566.27 696.22 2.6 13.3
1991................................. 763.10 586.51 610.92 2.9 11.7
1992................................. 691.48 459.07 678.44 2.5 11.4
1993................................. 874.10 605.93 866.18 1.9 14.1
1994 through June 30................. 974.26 855.37 933.36 1.4 16.2
<FN>
- ---------------
(1) The Index covers all common stocks listed on the KSE with a base date of
January 4, 1980 and a base index of 100. In 1983 the method of computing the
Index was changed from a price-weighted method to a market value method.
(2) Korean companies normally report earnings only on an annual basis. As a
result, the earnings used to calculate price/earnings ratios may not be
comparable to those customarily used in the United States. The figures do
not include companies that recorded losses in the previous years.
(3) Dividend Yield is derived from a simple average method by dividing the sum
of dividends per share for KSE-listed issues paying dividends during the
period by the sum of closing per share prices of such issues. Price/Earnings
Ratio, as published by the KSE, is derived from a simple average method by
dividing the sum of closing prices for KSE-listed stocks by the sum of the
earnings per share of the individual issues. Price/earnings ratios
calculated pursuant to a weighted market value method (the customary method
utilized in the United States) could indicate significantly higher ratios.
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

Shares are quoted "ex-dividend" on the first trading day of the relevant
company's accounting period. Since the calendar year is the accounting period
for a large majority of all listed companies, this may account for the drop (if
any) in the Index between its closing level at the end of one calendar year and
its opening level at the beginning of the following calendar year.

Movements in individual company share prices are confined to fixed limits
around the previous day's closing price. Such restrictions limit the maximum
movement in the Index on any day. As a result, the quoted closing price of a
listed security, if such closing price has been fixed by the limit, may not
necessarily represent the price at which persons are willing to buy and to sell
such security in the absence of such a limit.

75
<PAGE> 78

<TABLE>
Movements in individual company share prices are confined to fixed limits
around the previous day's closing price as set forth below.

<CAPTION>
PREVIOUS DAY'S FLUCTUATION
CLOSING PRICE LIMIT
- ---------------------------------------------------------------------------------- -----------
(WON) (WON)
<S> <C>
Less than 3,000................................................................... 100
3,000 to less than 5,000.......................................................... 200
5,000 to less than 7,000.......................................................... 300
7,000 to less than 10,000......................................................... 400
10,000 to less than 15,000........................................................ 600
15,000 to less than 20,000........................................................ 800
20,000 to less than 30,000........................................................ 1,000
30,000 to less than 40,000........................................................ 1,300
40,000 to less than 50,000........................................................ 1,600
50,000 to less than 70,000........................................................ 2,000
70,000 to less than 100,000....................................................... 2,500
100,000 to less than 150,000...................................................... 3,000
150,000 to less than 200,000...................................................... 4,000
200,000 to less than 300,000...................................................... 6,000
300,000 to less than 400,000...................................................... 8,000
400,000 to less than 500,000...................................................... 10,000
500,000 or more................................................................... 12,000

- ---------------
Note: The fluctuation limits are different for designated administered issues.

</TABLE>

<TABLE>

The aggregate market capitalization of all equity securities of the 693
companies listed on the KSE as of December 31, 1993 was approximately W 112.7
trillion (approximately U.S.$139.4 billion). Market capitalization, along with
trading volume, is concentrated in a limited number of companies within a small
number of industries. As of December 31, 1993, the 30 largest companies by
market capitalization represented approximately 49.4% of the total market
capitalization of Korean equity securities. The following table illustrates the
30 largest companies on the KSE by market capitalization on December 31, 1993.

<CAPTION>
MARKET CAPITALIZATION
AT DECEMBER 31, 1993
--------------------------------
COMPANY (WON BILLIONS) (U.S. $ MIL.)
- ----------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Korea Electric Power Corporation................................. 13,322.6 16,486.3
Pohang Iron & Steel Co., Ltd..................................... 5,002.5 6,190.5
Samsung Electronics Co., Ltd..................................... 3,428.5 4,242.7
Hyundai Motor.................................................... 2,159.3 2,672.1
Goldstar Co., Ltd................................................ 1,926.1 2,383.5
Daewoo Securities Co., Ltd....................................... 1,699.6 2,103.2
Korea First Bank................................................. 1,560.0 1,930.5
Daewoo Corporation............................................... 1,554.5 1,923.7
Kia Motors Corporation........................................... 1,537.4 1,902.5
Korea Mobile Telecommunication................................... 1,445.9 1,789.3
Yukong Ltd. ..................................................... 1,442.0 1,784.5
Shinhan Bank..................................................... 1,403.5 1,736.8
Hanil Bank....................................................... 1,372.8 1,698.8
Cho Hung Bank.................................................... 1,352.0 1,673.1
Lucky Securities Co., Ltd........................................ 1,308.1 1,618.7
Daewoo Heavy Industry............................................ 1,297.9 1,606.1
</TABLE>

76
<PAGE> 79

<TABLE>
<CAPTION>
MARKET CAPITALIZATION
AT DECEMBER 31, 1993
--------------------------------
COMPANY (WON BILLIONS) (U.S. $ MIL.)
- ----------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Lucky............................................................ 1,225.6 1,516.7
Hyundai Engineering & Construction............................... 1,209.6 1,496.8
Bank of Seoul.................................................... 1,205.1 1,491.3
The Korea Commercial Bank of Korea............................... 1,118.0 1,383.5
Daishin Securities Co., Ltd...................................... 1,113.1 1,377.4
Dongsuh Securities Co., Ltd...................................... 1,112.5 1,376.7
SsangYong Refinery............................................... 985.5 1,219.5
Daewoo Electronics............................................... 951.9 1,178.0
Samsung Electron Devices......................................... 949.8 1,175.4
SsangYong Cement Industry........................................ 822.0 1,017.2
The Korea Long Term Credit Bank.................................. 815.3 1,008.9
Dong-A Construction Ind.......................................... 804.9 996.0
Korean Air....................................................... 783.7 969.8
SsangYong Investment & Securities Co., Ltd....................... 728.5 901.4
-------------- -------------
Total.................................................. 55,638.2 68,850.9

- ---------------
Note: (1) Under its articles of incorporation, each of KEPCO and POSCO provides
for a 1% ceiling on the acquisition by a single foreign investor of its
common shares.
Source: Factbook, 1994, Korea Stock Exchange.

</TABLE>

<TABLE>
The following table sets forth the market value, as of June 30, 1994, of
companies listed on the KSE by industry category, as classified by the KSE.

<CAPTION>
AGGREGATE
MARKET VALUE
NUMBER OF IN BILLIONS PERCENT OF
INDUSTRIES COMPANIES OF WON TOTAL VALUE
- --------------------------------------------------- --------- ------------ -----------
<S> <C> <C> <C>
Fishing............................................ 3 52.0 0.0
Mining............................................. 3 91.6 0.0
Foods and Beverages................................ 47 2,738.9 2.1
Textiles and Wearing Apparel....................... 61 4,550.0 3.5
Luggage, Handbags, Saddlery, Harness and
Footwear......................................... 15 444.3 0.3
Wood and Wood Products............................. 4 292.0 0.2
Paper and Paper Products........................... 25 1,216.7 0.9
Publishing, Printing, Reproduction of Recorded
Media............................................ 2 57.7 0.0
Chemicals and Chemical Products.................... 104 11,330.0 8.8
Non-metallic Minerals.............................. 25 3,315.6 2.5
Basic Metal Industries............................. 37 10,359.0 8.0
Fabricated Metal Products, Machinery and
Equipment........................................ 151 26,993.7 21.0
Other Manufactured Products........................ 10 380.0 0.2
Electricity and Gas................................ 2 16,398.5 12.7
Construction....................................... 46 8,315.2 6.4
Wholesale Trade.................................... 43 5,255.5 4.0
Retail Trade....................................... 6 1,118.2 0.8
Hotels and Restaurants............................. 1 225.1 0.1
Transport and Storage.............................. 15 2,002.9 1.5
Communication...................................... 2 2,978.4 2.3
</TABLE>

77
<PAGE> 80

<TABLE>
<CAPTION>
AGGREGATE
MARKET VALUE
NUMBER OF IN BILLIONS PERCENT OF
INDUSTRIES COMPANIES OF WON TOTAL VALUE
- --------------------------------------------------- --------- ------------ -----------
<S> <C> <C> <C>
Financial Institutions............................. 77 28,333.9 22.0
Insurance.......................................... 12 1,905.9 1.4
Recreational and Cultural Services................. 1 6.6 0.0
--- --------- -----
Total......................................... 692 128,361.7 100.0
=== ========= =====
- ---------------
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

THE DEBT MARKET

The Korean listed bond market is less developed than the market for listed
equity securities. The Korean bond market is comprised of corporate bonds issued
by Korean corporations and public bonds including government bonds, municipal
bonds issued by city governments and special bonds issued by government-run
corporations. The majority of corporate bonds are guaranteed by banking
institutions. As of June 30, 1994, the total amount of listed corporate bonds
and listed public bonds was W 53.0 trillion and W 41.3 trillion, respectively.

The listing requirements for corporate bonds include, but are not limited
to: (i) the capital stock of the issuer must equal or exceed W 500 million; (ii)
the total face value amount issued must equal or exceed W 300 million; (iii)
less than one year has passed since issuance; (iv) a total unredeemed amount of
at least W 300 million at par value; (v) the issuer must be a listed or
registered company; and (vi) the bonds must be offered publicly. The following
table illustrates the total Won amount of all bond issues listed on the KSE for
1988 through 1993 and for 1994 through June 30.

<TABLE>

OUTSTANDING BOND ISSUES

<CAPTION>
LISTED PUBLIC BONDS LISTED CORPORATE BONDS TOTAL LISTED BONDS
----------------------------- ----------------------------- -----------------------------
IN BILLIONS IN MILLIONS IN BILLIONS IN MILLIONS IN BILLIONS IN MILLIONS
YEAR OF WON OF U.S. DOLLARS OF WON OF U.S. DOLLARS OF WON OF U.S. DOLLARS
- -------------------------- ----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1988...................... 22,159 32,391 11,521 16,841 33,680 49,233
1989...................... 28,095 41,340 15,395 22,653 43,490 63,994
1990...................... 29,049 40,549 22,068 30,804 51,117 71,353
1991...................... 32,250 42,390 29,241 38,435 61,491 80,824
1992...................... 32,447 41,156 32,697 41,473 65,143 82,627
1993...................... 41,359 51,181 37,574 46,497 78,932 97,676
As of June 30, 1994....... 52,978 65,770 41,296 51,268 94,274 117,038

- ---------------
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

Statistics are not regularly compiled with respect to unlisted public
bonds, although there is a significant volume outstanding.

Until June 24, 1988, brokerage commissions were charged at a fixed rate of
0.3% for transactions in bonds. Since that date, brokerage commissions on
transactions in debt securities may be negotiated up to a maximum of 0.3%. A
further amendment to the regulations in June 1991 permits the KSE to alter the
maximum commission rate from time to time. No transaction tax is levied on bond
sales. Bonds may not be purchased on margin or sold short. For bonds,
over-the-counter trading constitutes a substantially larger part of the overall
bond trading market than trading on the KSE. In 1993, the value of bonds traded
on the KSE was W 5.5 billion, while the value of bonds traded in the
over-the-counter market was W 127,231.9 billion. The value of bonds traded on
the KSE is set forth in the following table. The table does not include
over-the-counter trading.

78
<PAGE> 81

<TABLE>
TRADING VALUE OF BONDS
<CAPTION>
PUBLIC SECTOR BONDS CORPORATE SECTOR BONDS TOTAL BONDS
----------------------------- ----------------------------- -----------------------------
IN BILLIONS IN MILLIONS IN BILLIONS IN MILLIONS IN BILLIONS IN MILLIONS
YEAR OF WON OF U.S. DOLLARS OF WON OF U.S. DOLLARS OF WON OF U.S. DOLLARS
- -------------------------- ----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1988...................... 7,001 10,234 1,545 2,258 8,545 12,491
1989...................... 4,378 6,442 771 1,134 5,149 7,577
1990...................... 2,455 3,427 795 1,110 3,250 4,537
1991...................... 1,394 1,832 704 925 2,098 2,758
1992...................... 453 575 152 193 605 767
1993...................... 4 5 2 2 6 7
1994 through June 30...... 22 27 228 283 250 310
- ---------------
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

The number of bonds issues and the volume of issues outstanding have both
increased. However, the total trading volume during 1993 decreased sharply to
W 5.5 billion, about 1% of that of the previous year, while the volume in the
over-the-counter market recorded an increase of 76% in its annual rate.

Set forth below is information indicating the average annual yields for
various categories of bonds outstanding during the periods indicated.

<TABLE>
YIELDS ON BONDS
<CAPTION>
GOVERNMENT
BONDS SPECIFIC LAWS BONDS CORPORATE BONDS
-------- ---------------------------- -----------------------
COMPOUND DISCOUNT COMPOUND COUPON NON
YEAR BONDS BONDS BONDS BONDS GUARANTEED GUARANTEED
- ------------------------------------ -------- -------- -------- ------ ---------- ----------
(%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C>
1988................................ 13.02 15.61 14.62 14.54 14.49 14.59
1989................................ 14.39 15.92 15.40 15.41 15.23 15.29
1990................................ 15.27 16.19 16.00 16.34 16.40 16.41
1991................................ 16.70 18.47 18.26 18.37 18.84 18.73
1992................................ 16.56 16.93 17.20 17.20 17.13 18.07
1993................................ -- 13.69 -- -- 14.07 --

- ---------------
Source: Stock, July 1994, Korea Stock Exchange.
</TABLE>

OPTIONS AND FUTURES

Currently, the Korean securities markets do not provide mechanisms for the
purchase and sale of options and futures contracts. The KSE has announced that
stock index futures will be introduced in January 1996. Initially, however,
foreigners may not be permitted to invest in such future contracts.

TRADING, SETTLEMENT AND ENTRUSTMENT DEPOSIT PROCEDURES

The KSE is open Monday through Friday for trading between 9:40 a.m. - 11:40
a.m. and 1:20 p.m. - 3:20 p.m. It is also open on Saturday mornings. The KSE has
established a daily price change limitation schedule for shares traded on the
KSE based on the previous day's closing price. See "The Secondary Markets
- -- Equity Market -- Market Data." The KSE may suspend trading in the securities
of an individual company in certain circumstances. Share transactions are
effected through accounts with one of the 32 securities companies which act as
brokers, but which may also buy and sell as principals.

Currently, certain institutional investors, including the Fund, are
required to make a 20% entrustment guarantee deposit in cash or substitute
securities with their Korean broker prior to executing any trades. The Fund has
entered into custody account arrangements with the Subcustodian and the Fund's
brokers, whereby monies required to be advanced as the entrustment guarantee
deposit will deposited, at a nominal interest rate,

79
<PAGE> 82

with the Fund's brokers in accounts maintained by them at the Subcustodian on
instructions to pay the broker on settlement day against the delivery of the
relevant securities. To the extent that the Fund makes deposits with its brokers
in advance of delivery of securities, the Fund will be exposed to the risk of
the broker's insolvency prior to settlement. Although this risk cannot be
eliminated, the Manager will monitor broker creditworthiness. A broker's
insolvency could, nonetheless, cause the Fund to lose some or all of the
entrustment deposit.

All orders are transmitted directly and individually to the floor or the
Stock Market Automated Trading System ("SMATS") of the KSE via the computerized
order-routing system. In cases where the ordered issues are designated for
computerized trading, the system transmits the orders automatically to the
SMATS. Almost all of the transactions on the KSE are executed by the SMATS,
except a small number of issues designated as issues subject to manual matching.
As of the end of 1993, SMATS encompassed 895 stock issues, accounting for 97.0%
of the total trading volume. When a member firm inputs an order in the order-
routing terminal located at its offices, the order, via the order-routing
system, is fed directly into and recorded in the files of the SMATS by issue,
price, and time of order. Then the order is matched automatically under the
auction principle.

In the case of manually handled issues, however, the order-routing system
generates printouts on its system printer located at the member booth on the
floor of the KSE. Thereafter, floor representatives of a member firm submit the
order slips to the KSE clerk in the post who is in charge of matching the issues
concerned, who will match the best bid and offers according to the auction
principle.

Opening prices are determined by all bids and offers received during the
first five minutes of the trading session. The KSE has established procedures
for block sales of shares.

All securities transactions on the KSE are settled and cleared through the
Korea Securities Depository, a clearing and settlement agent of the KSE.
Transactions are classified either as regular way transactions, for which
settlement is due on the second business day following the day of contract, or
as cash transactions which are due on the day of contract. Shares and beneficial
certificates are traded as regular way transactions, while bonds may be traded
either as regular way or cash transactions. The delivery and receipt of
securities may be cleared by a book-entry clearing system of the Korea
Securities Depository. In 1993, the total volume cleared was 5.53 billion
shares, of which 5.394 billion were settled by way of book-entry deliveries.

TRANSACTION COSTS

Regulations of the KSE have established certain maximum brokerage
commission rates for all transactions effected on the KSE. The rates currently
provide for a commission of up to 0.6% for equity securities and up to 0.3% for
bonds and beneficial certificates. Each individual broker may determine
brokerage commissions within the established ranges. Each broker is required to
report its commission rate schedule and any deviation therefrom to the KSE seven
days prior to its application. Practically, there is generally no deviation in
commission rate schedules among Korean brokers. The same commission rates are,
in practice, applied to all trades in the same volume range. In addition, a
securities transaction tax is levied on the seller for most transactions at a
rate of 0.35% of the value of shares sold on the KSE and 0.5% of the value of
the shares sold off the KSE. From July 1, 1994, a special agricultural and
fishery tax is levied on the seller for most transactions at a rate of 0.15% of
the value of shares sold on the KSE. For detailed information, see "Taxation --
Korean Taxes."

SECURITIES FINANCING

The Korea Securities Finance Corporation (the "KSFC"), which was
established in 1955 to facilitate financing in the securities markets, is the
only institution authorized to engage in business specializing in securities
financing in Korea. The KSFC provides loans to underwriting groups and
securities collateral loans to the public. In March 1986 the KSFC suspended
credit extension for margin transactions as one measure to stabilize the
securities markets. Korean securities companies may extend credit for margin
transactions and provide for their clients subscription loans, purchase loans
and securities collateral financing by using their own resources or by borrowing
from the KSFC.

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<PAGE> 83

The margin requirement as set by the KSE is 40% of the total of the sale or
purchase order value of the securities. The margin requirements are varied by
the KSE depending upon market conditions. Foreign investors, including the Fund,
are not permitted to engage in margin transactions or enjoy the benefit of other
loans or financing.

REGULATION

The MOF establishes the basic policies governing the overall operation of
the Korean securities markets. Although the KSEC is authorized to regulate and
make decisions on all major issues relating to the securities markets pursuant
to the SEA, all decisions of the KSEC must be reported to the MOF. The MOF may
repeal any decision of the KSEC or suspend its enforcement. The KSEC is composed
of nine commissioners, one of whom is appointed as chairman by the President.
The day-to-day management and implementation of the policies of the KSEC are
conducted by the Securities Board.

The SEA was originally enacted in 1962 and amended fundamentally in 1976,
1982, 1987 and 1991 to broaden the scope and improve the effectiveness of
official supervision of the securities markets. The 1987 amendment generally
improved the regulatory and disclosure requirements under the SEA, established a
more effective system for the transfer of securities through the use of a
book-entry system without the need for physical delivery of securities
certificates, and provided a statutory basis for futures trading on the KSE. As
amended, the SEA introduced restrictions on insider trading, required that
specified information be made available by listed companies to investors and
established rules regarding margin trading, proxy solicitation and takeover
bids. In addition, the 1987 amendments strengthened control over insider trading
and contained extensive new provisions which, for the first time, regulated the
investment advisory business. The 1991 amendments introduced stricter
restrictions on insider trading and supplemented the existing disclosure system.
The SEA and regulations promulgated thereunder currently require the initial
registration of companies and the filing of separate registration statements for
both initial and subsequent issues of securities and provide for the
administration and supervision of securities companies, investment advisory
companies, listed companies, and other securities-related institutions,
including foreign securities firms conducting business in Korea and domestic
securities companies conducting business abroad.

The SEA was amended most recently in January 1994, generally with effect
from April 1, 1994, in order to de-regulate the securities markets by lifting
the 10% individual limit on the acquisition of shares of a listed company (with
effect from January 1, 1997) and permitting listed companies to hold their own
shares subject to certain limitations, to improve the central depository system
and securities dispute conciliation committee, to strengthen the reporting
requirements imposed on shareholders holding 5% or more of the shares of a
listed company and to extend to holders of non-voting shares the right to
request the issuer to purchase their shares under certain circumstances,
including at the time of a merger or business transfer. The amendments also
provide detailed provisions for securities index futures transactions.

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<PAGE> 84

MANAGEMENT OF THE FUND

DIRECTORS AND OFFICERS

The names of the directors and principal officers of the Fund are set forth
below, together with their positions and their principal occupations during the
past five years and, in the case of the directors, their positions with certain
other international organizations and publicly held companies.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FUND AND OTHER AFFILIATIONS
- --------------------------------- ----------------------- --------------------------------------
<S> <C> <C>
*Edward C. Johnson 3d Director and President Chairman, Chief Executive Officer and
FMR Corp. a Director of FMR Corp.; Director and
82 Devonshire Street Chairman of the Board and of the
Mail Stop F5A Executive Committee of FMR; Chairman
Boston, MA 02109 and a Director of FMR Texas Inc.
(1989), Fidelity Management & Research
(U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; Director or
Trustee and President of all other
registered management investment
companies advised by FMR, Chairman of
Fidelity International Limited;
Chairman of all other Funds in the
Fidelity Group of International Funds.
*J. Gary Burkhead Director and Senior President of FMR; and President and a
Fidelity Investments Vice President Director of FMR Texas Inc. (1989),
82 Devonshire Street Fidelity Management & Research (U.K.)
Mail Stop E14G Inc. and Fidelity Management &
Boston, MA 02109 Research (Far East) Inc.; Director or
Trustee and Senior Vice President of
all other registered management
investment companies managed by FMR.
Helmert Frans van den Hoven Director Former Member, Supervisory Board,
Marevista 35 Royal Dutch Petroleum Company; former
2202 BX Noordwijk Aan Zee Chairman, Supervisory Board ABN/Amro
The Netherlands Bank (1992-1994) and of Unilever N.V.
(1975-1984); Member, Supervisory
Boards, Hunter Douglass and Vendex
International; Director of a number of
other funds in the Fidelity Group of
International Funds; Director of
Fidelity Advisor Emerging Asia Fund,
Inc.
Bertram High Witham, Jr. Director Chairman and Director, Villager Compa-
89 Fox Hill Road nies; Director, System Control
Stamford, CT 06903 Technology, Bill Glass Ministries;
Trustee, Fidelity North Carolina
Management Fund; former Treasurer, IBM
Co. (1973-1978); Director of Fidelity
Advisor Emerging Asia Fund, Inc.
</TABLE>

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<PAGE> 85

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FUND AND OTHER AFFILIATIONS
- --------------------------------- ----------------------- ------------------------------------
<S> <C> <C>
David L. Yunich Director Director and Consultant, W.R. Grace
W.R. Grace & Company & Company (1977-present); Director,
1114 Avenue of the Americas New York Racing Association
New York, NY 10036 (1977-present); former Director,
Prudential Insurance Company of
America (1955-1991); Director, River
Bank America (1964-present); former
Director, NYNEX Corporation
(1970-1990); Trustee, Saratoga
Performing Arts Center, Boy Scouts
of America, and Carnegie Hall;
former President, Vice Chairman and
Director, R.H. Macy & Company
(1955-1978), Director of Fidelity
Advisor Emerging Asia Fund, Inc.

William Ebsworth Vice President Chief Investment Officer, Fidelity
Fidelity Investments Investments (Hong Kong)
Management (H.K.) Ltd. (1991-present); Director, Fidelity
16th Floor Investments Management (H.K.) Ltd.;
Citibank Tower Research Director, Fidelity
3 Garden Road Investments (Hong Kong) (1990-1991);
Central, Hong Kong Fund Manager, Fidelity Investments
(Boston and Tokyo) (1986-1990); Vice
President of Fidelity Advisor
Emerging Asia Fund, Inc.
</TABLE>

<TABLE>
<S> <C> <C>
Billy W. Wilder Vice President Director of Research, Fidelity
Fidelity Management & Management & Research (Far East)
Research (Far East) (1992-present); Director of Research
Shiroyama JT Mori Building and General Manager, Schroder
19th Floor Securities (Japan), Ltd.
4-3-1 Toranomon, Minato-ku (1988-1992); Senior Analyst,
Tokyo 105 Japan Schroder Securities (Japan), Ltd.
(1986-1988); Manager, Impedance
Analysis Equipment Marketing,
Yokogawa-Hewlett-Packard, Ltd.
(1979-1986).

Arthur S. Loring Secretary Senior Vice President and General
Fidelity Investments Counsel of FMR; Vice
82 Devonshire Street President -- Legal of FMR Corp.;
Mail Stop F5C Vice President and Clerk of Fidelity
Boston, MA 02109 Distributors Corporation; Secretary
of all other registered management
investment companies managed by FMR.
</TABLE>

83
<PAGE> 86

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION WITH FUND AND OTHER AFFILIATIONS
- --------------------------------- ----------------------- ------------------------------------
<S> <C> <C>
Gary L. French Treasurer Treasurer of all other registered
Fidelity Investments management investment companies
82 Devonshire Street managed by FMR; Senior Vice
Mail Stop D8 President, Fund Accounting, Fidelity
Boston, MA 02109 Accounting & Custody Services Co.
(1991); Vice President, Fund
Accounting, Fidelity Accounting &
Custody Services Co. (1990); Senior
Vice President, Chief Financial and
Operations Officer, Huntington
Advisers, Inc. (1985-1990).

Stuart E. Fross Assistant Secretary An employee of FMR Corp. (1990-
Fidelity Investments present); Associate, Dechert Price &
82 Devonshire Street Rhoads (law firm) (1987-1990);
Mail Stop F5H Assistant Secretary of Fidelity
Boston, MA 02109 Advisor Emerging Asia Fund, Inc.

John Costello Assistant Treasurer Assistant Treasurer of all other
Fidelity Investments registered management investment
82 Devonshire Street companies
Mail Stop D8 managed by FMR and an employee of
Boston, MA 02109 FMR Co.

Leonard M. Rush Assistant Treasurer An employee of FMR Co.
Fidelity Investments
82 Devonshire Street
Mail Stop D8
Boston, MA 02109
</TABLE>

- ---------------
* Director who is an "interested person" of the Fund within the meaning of the
1940 Act.

Directors who are not "interested persons" (as defined in the 1940 Act) of
the Investment Manager, the Investment Adviser or the Sub-Adviser will be paid a
fee of $7,000 per year, plus up to $1,500 for every meeting of the Board
attended and $1,000 as an annual committee meeting fee. All directors will be
reimbursed for travel and out-of-pocket expenses incurred in connection with
meetings of the Board of Directors.

The officers of the Fund conduct and supervise the daily business
operations of the Fund, while the directors, in addition to their functions set
forth elsewhere under "Management of the Fund," review such actions and decide
on general policy.

The Fund also has an Audit Committee composed currently of Messrs. van den
Hoven, Witham and Yunich.

In addition, at the Fund's first annual stockholders meeting, the Board of
Directors will be classified into three classes, each with a term of three years
with only one class of directors standing for election in any year. Such
classification may prevent replacement of a majority of the directors for up to
a two-year period while the classification is in effect. Commencing on the date
of the annual meeting of stockholders in the year 2000, the Board of Directors
will no longer be divided into classes and each director will stand for election
at such meeting and at each annual meeting of stockholders held thereafter.

The Articles of Incorporation and By-Laws of the Fund provide that the Fund
will indemnify its directors and officers and will indemnify employees or agents
of the Fund against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with the Fund
to the fullest extent permitted by law. Under Maryland law, a corporation may
indemnify any director or officer made a

84
<PAGE> 87

party to any proceeding by reason of service in that capacity unless it is
established that (1) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (A) was committed in bad faith
or (B) was the result of active and deliberate dishonesty; (2) the director or
officer actually received an improper personal benefit in money, property or
services; or (3) in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was unlawful. In
addition, the Fund's Articles of Incorporation provide that the Fund's directors
and officers will not be liable to shareholders for money damages, except in
limited instances. Under Maryland law, a corporation may restrict or limit the
liability of directors or officers to the corporation or its stockholders for
money damages, except to the extent that (1) it is proved that the person
actually received an improper benefit or profit in money, property, or services,
or (2) a judgment or other final adjudication adverse to the person is entered
in a proceeding based on a finding in the proceeding that the person's action,
or failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. However, nothing
in the Articles of Incorporation, or By-Laws of the Fund protects or indemnifies
a director, officer, employee or agent against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

The Fund's Articles of Incorporation and By-Laws provide that the Fund's
Board of Directors has the sole power to adopt, alter or repeal the Fund's
By-Laws.

INVESTMENT MANAGER, INVESTMENT ADVISER AND SUB-ADVISER

The Investment Manager is Fidelity Management & Research Company. Pursuant
to a management agreement (the "Management Agreement") between the Fund and the
Investment Manager, the Investment Manager will supervise the Fund's investment
program. The Investment Manager will consult with the Investment Adviser and the
Sub-Adviser on a regular basis regarding the Investment Adviser's and the Sub-
Adviser's decisions concerning the purchase, sale or holding of particular
securities. In addition to the foregoing, the Investment Manager will monitor
the performance of the Fund's service providers, including the Fund's
administrator, transfer agent and custodian. The Investment Manager will pay the
reasonable salaries and expenses of such of the Fund's officers and employees
and any fees and expenses of such of the Fund's directors who are directors,
officers or employees of the Investment Manager, except that the Fund may bear
travel expenses or an appropriate portion thereof of directors and officers of
the Fund who are directors, officers or employees of the Investment Manager to
the extent that such expenses relate to attendance at meetings of the Board of
Directors or any committees thereof.

Pursuant to an investment advisory agreement (the "Advisory Agreement")
among the Investment Manager, the Investment Adviser and the Fund, the
Investment Adviser is responsible on a day-to-day basis for investing the Fund's
portfolio in accordance with its investment objective, policies and limitations.
The Investment Adviser has discretion over investment decisions for the Fund
and, in that connection, will place purchase and sale orders for the Fund's
portfolio securities. The Advisory Agreement authorizes delegation of these
responsibilities to the Sub-Adviser. Pursuant to a Sub-Advisory Agreement (the
"Sub-Advisory Agreement"), the Investment Adviser has delegated certain of its
responsibilities for the day-to-day management of the Fund to the Sub-Adviser
which will manage the Fund's portfolio through its Tokyo office. Edward S.J.
Bang will be primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Bang will work with a team of professionals in Japan in managing
the Fund's portfolio. Mr. Bang has served as a Korean analyst for various
Fidelity funds since September 1993. He currently oversees approximately
U.S.$290 million of Korean equities for such funds. Mr. Bang joined Fidelity
Investments in August 1991, after graduating from the Wharton School, University
of Pennsylvania. Mr. Bang was initially a senior analyst covering four sectors
in the Japanese stock market. In September 1993, he was assigned to cover the
Korean stock market. Prior to studying at Wharton and joining Fidelity
Investments, Mr. Bang worked at The Boston Company's Institutional Investors
Group, managing pension portfolios in the U.S. stock market. In addition, the
Investment Adviser will make available research and statistical data to the
Fund. The Investment Adviser and the Sub-Adviser will pay the reasonable
salaries and expenses of such of the Fund's officers and employees and any fees
and expenses of such of the Fund's directors who are directors, officers or
employees

85
<PAGE> 88

of the Investment Adviser or the Sub-Adviser, except that the Fund may bear
travel expenses or an appropriate portion thereof of directors and officers of
the Fund who are directors, officers or employees of the Investment Adviser or
the Sub-Adviser to the extent that such expenses relate to attendance at
meetings of the Board of Directors or any committees thereof.

Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions. For example, all personal trades
require pre-clearance, and participation in initial public offerings are
prohibited. In addition, restrictions on the timing of personal investing
relative to trades by Fidelity funds and on short-term trading have been
adopted. Personal investing is monitored to protect shareholders' interests.

Investment Manager. Fidelity Management & Research Company will act as
Investment Manager of the Fund. The Fidelity investment management organization
was established in 1946. Today, the Fidelity organization is the largest mutual
fund company in the United States, and is known as an innovative provider of
high quality financial services to individuals and institutions. In addition to
its mutual fund business, the Fidelity organization operates one of the leading
discount brokerage firms in the United States, Fidelity Brokerage Services, Inc.
As of August 31, 1994, the Investment Manager, the Investment Adviser, the Sub-
Adviser and their affiliates had over $270 billion under management, of which
more than $35 billion was invested in non-U.S. securities (including over $15
billion in Asian securities, over $550 million in Korean securities and over $7
billion managed from Asian offices). The Fidelity organization employs over 375
investment professionals worldwide. The Investment Manager also manages the
Fidelity Advisor Emerging Asia Fund, Inc., a closed-end investment company.

The Investment Manager, together with the Investment Adviser, the
Sub-Adviser and its other affiliates, has extensive research capabilities both
worldwide, with over 300 investment professionals, as of August 31, 1994 and
within the Asian region, and maintains offices in Hong Kong, Singapore, Taiwan
and Tokyo which were staffed by 35 investment professionals. The Sub-Adviser,
through its Tokyo office researches and screens for investment potential in
Korean Issuers through management contacts and on-site visits. In 1993, Fidelity
conducted over 170 company visits in Korea.

FMR Corp. is the ultimate parent company of the Investment Manager. Through
ownership of voting common stock, members of the Edward C. Johnson 3d family
form a controlling group with respect to FMR Corp. Changes may occur in the
Johnson family group, through death or disability, which would result in changes
in each individual family member's holding of FMR Corp. stock. Such changes
could result in one or more family members becoming holders of over 25% of such
stock. FMR Corp. has received an opinion of special counsel that changes in the
composition of the Johnson family group under these circumstances would not
result in the termination of the Fund's management or distribution contracts
and, accordingly, would not require a shareholder vote to continue operation
under those contracts.

The Investment Manager's main offices are located at 82 Devonshire Street,
Boston, Massachusetts 02109.

Investment Adviser. Fidelity International Investment Advisors, the Fund's
Investment Adviser and an affiliate of the Investment Manager, has delegated
certain of its responsibilities for providing discretionary portfolio management
services to the Sub-Adviser. The Investment Adviser may, however, elect to
manage the portfolios directly through the Investment Adviser's office in Hong
Kong. The Investment Adviser is an investment adviser registered under the
Investment Advisers Act of 1940 and was organized in 1983 under the laws of
Bermuda. The Investment Adviser primarily provides investment advisory services
to U.S. investment companies investing throughout the world. The Investment
Adviser is a 98% owned subsidiary of Fidelity International Limited ("FIL"),
although it is contemplated that the Investment Adviser will become a 100% owned
subsidiary of FIL. The Investment Adviser's and FIL's main offices are located
at Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda.

FIL is a Bermuda company formed in 1968 which primarily provides investment
advisory services to non-U.S. investment companies and institutional investors
investing in securities of issuers throughout the world.

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<PAGE> 89

More than 25% of the voting stock of FIL is owned directly or indirectly by
Edward C. Johnson 3d and trusts for the benefits of Johnson family members.

Sub-Adviser. Fidelity Investments Japan Limited ("FIJ"), the Sub-Adviser,
will, acting upon delegation by the Investment Adviser, provide advisory
services concerning the Fund's assets invested in Japanese and other securities
and will be primarily responsible for the day-to-day management of the Fund's
portfolio. The Sub-Adviser is an affiliate of the Investment Manager and the
Investment Adviser and is registered as an investment adviser under the
Investment Advisers Act of 1940. The Sub-Adviser was formed on November 17, 1986
under the laws of Japan and its main offices are located at 19th Floor,
Shiroyama JT Mori Building, 4-3-1 Toranomon, Minato-ku, Tokyo 105, Japan. It is
a wholly-owned subsidiary of FIL.

COMPENSATION AND EXPENSES

As compensation for its services, the Investment Manager will receive from
the Fund a monthly fee at an annual rate of 1.00% of the Fund's average daily
net assets. The Investment Adviser will receive from the Investment Manager 60%
of the fees paid by the Fund to the Investment Manager. The Sub-Adviser will
receive from the Investment Adviser a fee equal to 50% of the fee paid to the
Investment Adviser with respect to any assets managed by the Sub-Adviser on a
discretionary basis and 30% of the fee paid to the Investment Adviser with
respect to any assets managed by the Sub-Adviser on a non-discretionary basis.
Currently, the Sub-Adviser has been delegated full discretion to manage the
entire portfolio.

Except for the expenses borne by the Investment Manager, the Investment
Adviser or the Sub-Adviser pursuant to the Management Agreement, the Advisory
Agreement and the Sub-Advisory Agreement, the Fund will pay or cause to be paid
all of its expenses including, among other things: organizational and offering
expenses (which will include out-of-pocket expenses, but not overhead or
employee costs, of the Investment Manager, the Investment Adviser and the
Sub-Adviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership in
investment company organizations; fees and expenses incurred in connection with
listing the Fund's shares on any stock exchange; costs of printing and
distributing shareholder reports, proxy materials, prospectuses, offering
circulars, stock certificates and distributions of dividends; charges of the
Fund's custodians, sub-custodians, registrars, transfer agents, dividend
disbursing agents and dividend reinvestment plan agents; payment for portfolio
pricing services to a pricing agent, if any; registration and filing fees of the
SEC; expenses of registering or qualifying securities of the Fund for sale in
the various states; freight and other charges in connection with the shipment of
the Fund's portfolio securities; fees and expenses of non-interested directors;
costs of shareholders' meetings; insurance; interest; brokerage costs; and
litigation and other extraordinary or nonrecurring expenses. The Fund will also
reimburse the Underwriters for certain of their expenses up to $200,000. See
"Underwriting."

DURATION AND TERMINATION; NON-EXCLUSIVE SERVICES

Unless earlier terminated as described below, each of the Management
Agreement, the Advisory Agreement and the Sub-Advisory Agreement will remain in
effect until October 24, 1996 and from year to year thereafter if approved
annually (i) by a majority of the non-interested directors of the Fund and (ii)
by the Board of Directors of the Fund or by a majority of the outstanding voting
securities of the Fund. The Management Agreement may be terminated upon 60 days'
written notice without penalty by the Fund's Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund or by the Investment
Manager and will terminate in the event it is assigned (as defined in the 1940
Act). The Advisory Agreement may be terminated upon 60 days' written notice
without penalty by the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund or by the Investment Manager and will
terminate in the event it is assigned (as defined in the 1940 Act). The
Sub-Advisory Agreement may be terminated upon 60 days written notice without
penalty by the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund or by the Investment Adviser or the
Sub-Adviser and will terminate in the event it is assigned (as defined in the
1940 Act).

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<PAGE> 90

The services of the Investment Manager, the Investment Adviser and the
Sub-Adviser are not deemed to be exclusive, and nothing in the relevant service
agreements will prevent any of them or their affiliates from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities.

ADMINISTRATION

Fidelity Service Co. ("Service"), a division of FMR Corp., will serve as
the Fund's administrator pursuant to an agreement with the Fund (the
"Administration Agreement"). As compensation for its services, Service will
receive from the Fund monthly fees at an annual rate of .20% of the Fund's
average daily net assets. Service is located at 82 Devonshire Street, Boston, MA
02109.

Service performs various administrative services, including providing the
Fund with the services of persons to perform administrative and clerical
functions, maintenance of the Fund's books and records, pricing and securities
lending services, preparation of various filings, reports, statements and
returns filed with government authorities, and preparation of financial
information for the Fund's proxy statements and semiannual and annual reports to
shareholders.

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<PAGE> 91

PORTFOLIO TRANSACTIONS

The Fund has no obligation to deal with any brokers or dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Fund's Board of Directors, the Investment Adviser has
delegated to the Sub-Adviser primary responsibility for the Fund's portfolio
decisions and the placing of the Fund's portfolio transactions.

All orders for the purchase or sale of portfolio securities will be placed
on behalf of the Fund by the Sub-Adviser pursuant to authority contained in the
Sub-Advisory Agreement or by the Investment Adviser pursuant to authority
contained in the Investment Advisory Agreement. The Investment Adviser and the
Sub-Adviser also will be responsible for the placement of transaction orders for
other investment companies and accounts for which either of them or their
affiliates act as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, the Investment Adviser
and the Sub-Adviser will consider various relevant factors, including, but not
limited to the size and type of the transaction; the nature and character of the
markets for the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions and arrangements for payment of Fund expenses.
The Fund anticipates that its portfolio transactions involving securities of
companies domiciled in Korea will be conducted primarily on the KSE and in
foreign OTC transactions. Commissions for foreign investments traded on the KSE
will generally be higher than for U.S. investments and may not be subject to
negotiation.

The Fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the Fund or other accounts over which the
Investment Adviser, the Sub-Adviser or their affiliates exercise investment
discretion. Such services may include advice concerning the value of securities;
the advisability of investing in, purchasing, or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). The selection of such broker-dealers
generally is made by the Investment Adviser or Sub-Adviser, (to the extent
possible consistent with execution considerations) in accordance with a ranking
of broker-dealers determined periodically by the Investment Adviser's or
Sub-Adviser's investment staff based upon its assessment of the quality of
research and execution services provided.

The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to the Investment Adviser or the Sub-Adviser in
rendering investment management services to the Fund or their other clients, and
conversely, such information provided by broker-dealers who have executed
transaction orders on behalf of other Investment Adviser or Sub-Adviser clients
may be useful to the Investment Adviser or Sub-Adviser in carrying out their
obligations to the Fund. The receipt of such research will not reduce the
Investment Adviser's or the Sub-Adviser's normal independent research
activities; however, it will enable the Investment Adviser and the Sub-Adviser
to avoid the additional expenses that could be incurred if the Investment
Adviser and the Sub-Adviser tried to develop comparable information through
their own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the Fund
to pay such higher commissions, the Investment Adviser or the Sub-Adviser must
determine in good faith that such commissions are reasonable in relation to the
value of the brokerage and research services provided by such executing
broker-dealers, viewed in terms of a particular transaction or the Investment
Adviser's or the Sub-Adviser's overall responsibilities to the Fund and their
other clients. In reaching this determination, the Investment Adviser and the
Sub-Adviser will not attempt to place a specific U.S. dollar value on the
brokerage and research services provided, or to determine what portion of the
compensation should be related to those services.

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The Investment Adviser and the Sub-Adviser are authorized to use research
services provided by and to place portfolio transactions with brokerage firms
that have provided assistance in the distribution of shares of the Fund or
shares of other Fidelity funds to the extent permitted by law. The Investment
Adviser and the Sub-Adviser may use research services provided by and place
agency transactions with Fidelity Brokerage Services, Inc. ("FBSI") and Fidelity
Brokerage Services, Ltd. ("FBSL"), subsidiaries of FMR Corp., if the commissions
are fair, reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.

The Investment Adviser and the Sub-Adviser may allocate brokerage
transactions to the Fund's custodians, acting as a broker-dealer, or the other
broker-dealers who have entered into arrangements with the Investment Manager,
the Investment Adviser or the Sub-Adviser under which the broker-dealer
allocates a portion of the commissions paid by the Fund toward payment of the
Fund's expenses, such as transfer agency fees or custodian fees. The transaction
quality must, however, be comparable to those of other qualified broker-dealers
and the commissions comparable to those of other broker-dealers, when the
broker-dealer will allocate a portion of the commissions paid to payment of the
Fund's expenses.

Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for accounts
which they or their affiliates manage, except if certain requirements are
satisfied. Pursuant to such requirements, the Board of Directors has authorized
FBSI to effect Fund portfolio transactions on national securities exchanges in
accordance with approved procedures and applicable SEC rules.

The Board of Directors periodically will review the Investment Adviser's
and the Sub-Adviser's performance of their responsibilities in connection with
the placement of portfolio transactions on behalf of the Fund and review the
commissions paid by the Fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the Fund.

The Investment Adviser may, in its sole discretion and without a
shareholder vote, terminate its delegation to the Sub-Adviser of some or all of
its responsibilities with respect to portfolio transactions. If this were to
occur the Investment Adviser would perform these responsibilities directly under
the Investment Advisory Agreement in the manner described herein.

From time to time the Board of Directors will review whether the recapture
for the benefit of the Fund of some portion of the brokerage commissions or
similar fees paid by the Fund on portfolio transactions is legally permissible
and advisable. The Fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture arrangements
are in effect. The Board of Directors intends to continue to review whether
recapture opportunities are available and are legally permissible and, if so, to
determine in the exercise of their business judgment, whether it would be
advisable for the Fund to seek such recapture.

Investment decisions for the Fund are made independently from those for
other funds and accounts advised or managed by the Investment Adviser or the
Sub-Adviser. When two or more funds or accounts managed by the Investment
Adviser or the Sub-Adviser are simultaneously engaged in the purchase or sale of
the same security, the prices and amounts are allocated in accordance with a
formula considered by the Investment Adviser or the Sub-Adviser to be equitable
to each fund. In some cases this system could adversely affect the size of the
position obtained for or disposed of by the Fund and could have a detrimental
effect on the price or value of a security as far as the Fund is concerned. In
other cases, however, the ability of the Fund to participate in volume
transactions will produce better executions and prices for the Fund. In
addition, because of different investment objectives, a particular security may
be purchased for one or more funds or accounts when one or more funds or
accounts are selling the same security. It is the current opinion of the Board
of Directors that the desirability of retaining FIIA and FIJ as Investment
Adviser and Sub-Adviser, respectively, to the Fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.

It is expected that the annual portfolio turnover rate of the Fund will not
normally exceed 150%. The portfolio turnover rate is calculated by dividing the
lesser of sales or purchases of portfolio securities by the average monthly
value of the Fund's portfolio securities. For purposes of this calculation,
portfolio securities exclude all securities having a maturity when purchased of
one year or less.

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DIVIDENDS AND DISTRIBUTIONS; DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN

The Fund intends to distribute annually to shareholders substantially all
of its net investment income, and to distribute any net realized capital gains
at least annually. Net investment income for this purpose is income other than
net realized long-and short-term capital gains net of expenses.

Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names 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
distributions in cash paid by check in U.S. dollars mailed directly to the
shareholder by State Street Bank and Trust Company, as dividend paying agent. In
the case of shareholders, such as banks, brokers or nominees, that hold shares
for others who are beneficial owners, the Plan Agent will administer the Plan on
the basis of the number of shares certified from time to time by the
shareholders as representing the total amount registered in such shareholders'
names and held for the account of beneficial owners that have not elected to
receive distributions in cash. Investors that own shares registered in the name
of a bank, broker or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.

The Plan Agent serves 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,
nonparticipants 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; provided,
however, if the net asset value is less than 95% of the market price on the
valuation date, then such 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, 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 an income 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, for
the participants' accounts on, or shortly after, the payment date. If, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date. Because of the foregoing
difficulty with respect to open-market purchases, the Plan provides that if the
Plan Agent is unable to invest the full dividend amount in open-market purchases
during the purchase period or if the market discount shifts to a market premium
during the purchase period, the Plan Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued shares at the close of business on the last purchase date.

Participants have the option of making additional cash 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. Any
voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any invested cash
payment. 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 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 48 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 an account, including information
needed by shareholders for personal and tax records. Shares

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in the account of each Plan participant will be held by the Plan Agent in the
name of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.

There is no charge to participants for reinvesting dividends or capital
gains distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains 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 will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and 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 receipt of dividends and distributions under the Plan will not relieve
participants of any income tax which may be payable on such dividends or
distributions. See "Taxation."

Experience under the Plan may indicate that changes in the Plan are
desirable. Accordingly, the Fund and the Plan Agent reserve the right to
terminate the Plan as applied to any voluntary cash payments made and any
dividend or distribution paid subsequent to notice of the termination 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 the Plan Agent, but
(except when necessary or appropriate to comply with applicable law, rules or
policies of a regulatory authority) only by at least 30 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Plan Agent at Two Heritage Drive, Quincy, Massachusetts 02171.

TAXATION

U.S. FEDERAL INCOME TAXES

The Fund intends to elect to qualify as a regulated investment company
under the Code. To so qualify the Fund must, among other things: (a) derive at
least 90% of its gross income from dividends, interest, payment with respect to
securities loans, gains from the sale or other disposition of stock or
securities and gains from the sale or other disposition of foreign currencies,
or other income (including gains from options, futures contracts and forward
contracts) derived with respect to the Fund's business of investing in stocks,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of the following assets held for less than three
months -- (i) stock and securities, (ii) options, futures and forward contracts
(other than options, futures and forward contracts on foreign currencies), and
(iii) foreign currencies (and options, futures and forward contracts on foreign
currencies) which are not directly related to the Fund's principal business of
investing in stocks and securities (or options and futures with respect to stock
or securities); and (c) diversify its holdings so that, at the end of each
quarter, (i) at least 50% of the value of the Fund's total assets is represented
by cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and other securities, with such other securities
limited in respect of any one issuer to an amount not greater in value than 5%
of the Fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
total assets is invested in the securities (other than U.S. Government
securities or securities of other regulated investment companies) of any one
issuer or of any two or more issuers that the Fund controls and that are
determined to be engaged in the same business or similar or related businesses.

As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on its investment company taxable income that it distributes
to its shareholders, provided that at least 90% of its investment company
taxable income for the taxable year is distributed to its shareholders; however,
the Fund will be subject to tax on its income and gains to the extent that it
does not distribute to its shareholders an amount equal to such income and
gains. See "Passive Foreign Investment Companies" below. Investment company
taxable income includes dividends, interest and net short-term capital gains in
excess of net long-

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term capital losses, but does not include net long-term capital gains in excess
of net short-term capital losses. The Fund intends to distribute annually to its
shareholders substantially all of its investment company taxable income. If
necessary, the Fund may borrow money temporarily or liquidate assets to make
such distributions. Dividend distributions of investment company taxable income
(including distributions from short-term capital gains) are taxable to a U.S.
shareholder as ordinary income to the extent of the Fund's current and
accumulated earnings and profits, whether paid in cash or in shares. Since the
Fund will not invest in the stock of domestic corporations, distributions to
corporate shareholders of the Fund will not be entitled to the deduction for
dividends received by corporations. If the Fund fails to satisfy the 90%
distribution requirement or fails to qualify as a regulated investment company
in any taxable year, it will be subject to tax in such year on all of its
taxable income, whether or not the Fund makes any distributions to its
shareholders.

As a regulated investment company, the Fund also will not be subject to
U.S. federal income tax on its net long-term capital gains, if any, that it
distributes to its shareholders. If the Fund retains for reinvestment or
otherwise an amount of such net long-term capital gains, it will be subject to a
tax of up to 35% of the amount retained. The Board of Directors of the Fund will
determine at least once a year whether to distribute any net long-term capital
gains in excess of net short-term capital losses and capital loss carryovers
from prior years. The Fund expects to designate amounts retained as
undistributed capital gains in a notice to its shareholders who, if subject to
U.S. federal income taxation on long-term capital gains, (a) will be required to
include in income for U.S. federal income tax purposes, as long-term capital
gains, their proportionate shares of the undistributed amount, and (b) will be
entitled to credit against their U.S. federal income tax liabilities their
proportionate shares of the tax paid by the Fund on the undistributed amount and
to claim refunds to the extent that their credits exceed their liabilities. For
U.S. federal income tax purposes, the basis of shares owned by a shareholder of
the Fund will be increased by an amount equal to 65% of the amount of
undistributed capital gains included in the shareholder's income. Distributions
of net long-term capital gains, if any, by the Fund are taxable to its
shareholders as long-term capital gains whether paid in cash or in shares and
regardless of how long the shareholder has held the Fund's shares. Such
distributions of net long-term capital gains are not eligible for the dividends
received deduction. Under the Code, net long-term capital gains will be taxed at
a rate no greater than 28% for individuals and 35% for corporations.
Shareholders will be notified annually as to the U.S. federal income tax status
of their dividends and distributions.

Shareholders receiving dividends or distributions in the form of additional
shares pursuant to the Plan should be treated for U.S. federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that the shareholders receiving cash dividends or distributions will receive,
and should have a cost basis in the shares equal to such amount.

If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Fund, the distribution will be taxable even if
it, in effect, represents a return of invested capital. Investors considering
buying shares just prior to a dividend or capital gain distribution payment date
should be aware that, although the price of shares purchased at that time may
reflect the amount of the forthcoming distribution, those who purchase just
prior to the record date for a distribution will receive a distribution which
will be taxable to them. The amount of capital gains realized and distributed
(which from an investment standpoint may represent a partial return of capital
rather than income) in any given year will be the result of investment
performance, among other things, and can be expected to vary from year to year.

If the Fund is the holder of record of any stock on the record date for any
dividends payable with respect to such stock, such dividends are included in the
Fund's gross income not as of the date received but as of the later of (a) the
date such stock became ex-dividend with respect to such dividends (i.e., the
date on which a buyer of the stock would not be entitled to receive the
declared, but unpaid, dividends) or (b) the date the Fund acquired such stock.
Accordingly, in order to satisfy its income distribution requirements, the Fund
may be required to pay dividends based on anticipated earnings, and shareholders
may receive dividends in an earlier year than would otherwise be the case.

Under the Code, the Fund may be subject to a 4% excise tax on a portion of
its undistributed income. To avoid the tax, the Fund must distribute annually at
least 98% of its ordinary income (not taking into account any capital gains or
losses) for the calendar year and at least 98% of its capital gain net income
for the

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12-month period ending, as a general rule, on October 31 of the calendar year.
For this purpose, any income or gain retained by the Fund that is subject to
corporate income tax will be treated as having been distributed at year-end. In
addition, the minimum amounts that must be distributed in any year to avoid the
excise tax will be increased or decreased to reflect any under-distribution or
over-distribution, as the case may be, in the previous year. For a distribution
to qualify under the foregoing test, the distribution generally must be declared
and paid during the year. Any dividend declared by the Fund in October, November
or December of any year and payable to shareholders of record on a specified
date in such a month shall be deemed to have been received by each shareholder
on December 31 of such year and to have been paid by the Fund not later than
December 31 of such year, provided that such dividend is actually paid by the
Fund during January of the following year.

The Fund will maintain accounts and calculate income by reference to the
U.S. dollar for U.S. federal income tax purposes. If the Fund's dividends exceed
its taxable income in any year, which is sometimes the result of currency
related losses, all or a portion of the Fund's dividends may be a return of
capital to shareholders for tax purposes. Furthermore, exchange control
regulations may restrict the ability of the Fund to repatriate investment income
or the proceeds of sales of securities. These restrictions and limitations may
limit the Fund's ability to make sufficient distributions to satisfy the 90%
distribution requirement and avoid the 4% excise tax.

The Fund's transactions in foreign currencies, forward contracts, options
and futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund, defer Fund losses, and affect the
determination of whether capital gains and losses are characterized as long-term
or short-term capital gains or losses. These rules could therefore affect the
character, amount and timing of distributions to shareholders. These provisions
also may require the Fund to mark-to-market certain types of the positions in
its portfolio (i.e., treat them as if they were closed out) which may cause the
Fund to recognize income without receiving cash with which to make distributions
in amounts necessary to satisfy the 90% and 98% distribution requirements for
avoiding income and excise taxes.

The Fund may make investments that accrue income that is not matched by a
current receipt of cash by the Fund, such as investments in certain obligations
having original issue discount (i.e., an amount equal to the excess of the
stated redemption price of the security at maturity over its issue price), or
market discount (i.e., an amount equal to the excess of the stated redemption
price of the security at maturity over its basis immediately after it was
acquired) if the Fund elects to accrue market discount on a current basis. In
addition, income may continue to accrue for federal income tax purposes with
respect to a non-performing investment. Any of the foregoing income would be
treated as income earned by the Fund and therefore would be subject to the
distribution requirements of the Code. Because such income may not be matched by
a concurrent receipt of cash to the Fund, the Fund may be required to dispose of
other securities to be able to make distributions to its investors. See the
discussion of distribution requirements above. The extent to which the Fund may
liquidate securities at a gain may be limited by the 30% limitation discussed
above.

Upon the sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending upon the amount realized and the shareholder's
basis in the shares. Such gain or loss will be treated as a capital gain or loss
if the shares are capital assets in the shareholder's hands, and will be
long-term if the shareholder's holding period for the shares is more than 12
months and otherwise will be short-term. Any loss realized on a sale or exchange
will be disallowed to the extent that the shares disposed of are replaced
(including replacement through the reinvesting of dividends and capital gains
distributions in the Fund) within a period of 61 days beginning 30 days before
and ending 30 days after the disposition of the shares. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated for federal income tax
purposes as a long-term capital loss to the extent of any distributions of
long-term capital gains received by the shareholder with respect to such shares.

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An amount received by a shareholder from the Fund in exchange for shares of
the Fund (pursuant to a repurchase of shares in a tender offer or otherwise)
generally will be treated as a payment in exchange for the shares tendered,
which may result in taxable gain or loss as described above. However, if the
amount received by a shareholder exceeds the fair market value of the shares
tendered, or if a shareholder does not tender all of the shares of the Fund
owned or deemed to be owned by the shareholder, all or a portion of the amount
received may be treated as a dividend taxable as ordinary income or as a return
of capital. In addition, if a tender offer is made, shareholders who do not
tender their shares could be deemed, under certain circumstances, to have
received a taxable distribution as a result of their increased proportionate
interest in the Fund.

Backup Withholding

The Fund may be required to withhold federal income tax at a rate of 31%
("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) the
shareholder fails to furnish the Fund with the shareholder's correct taxpayer
identification number (ii) the IRS notifies the Fund that the shareholder has
failed to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (iii) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Redemption proceeds may be subject to withholding under the
circumstances described in (i) above. Backup withholding is not an additional
tax. Any amounts withheld under the backup withholding rules from payments made
to a shareholder may be credited against such shareholder's federal income tax
liability.

Passive Foreign Investment Companies

The Fund intends to make investments which may, for federal income tax
purposes, constitute investments in shares of foreign corporations. If the Fund
purchases shares in certain foreign passive investment entities described in the
Code as passive foreign investment companies ("PFIC"), the Fund will be subject
to U.S. federal income tax on a portion of any "excess distribution" (the Fund's
ratable share of distributions in any year that exceeds 125% of the average
annual distribution received by the Fund in the three preceding years or the
Fund's holding period, if shorter, and any gain from the disposition of such
shares), even if such income is distributed as a taxable dividend by the Fund to
its shareholders. Additional charges in the nature of interest may be imposed on
the Fund in respect of deferred taxes arising from such "excess distributions."
If the Fund were to invest in a PFIC and elect to treat the PFIC as a "qualified
electing fund" under the Code (and if the PFIC were to comply with certain
reporting requirements), in lieu of the foregoing requirements the Fund would be
required to include in income each year its pro rata share of the PFIC's
ordinary earnings and net realized capital gains, whether or not such amounts
were actually distributed to the Fund. Such amounts would be subject to the 90%
and calendar year distribution requirements described above.

Legislation pending in the U.S. Congress would unify and, in certain cases,
modify the anti-deferral rules contained in various provisions of the Code,
including the provisions dealing with PFICs, related to the taxation of U.S.
shareholders of foreign corporations. In the case of a passive foreign company,
as defined in the proposed legislation ("PFC"), having "marketable stock," the
proposed legislation would require U.S. shareholders, such as the Fund, owning
less than 25% of a PFC that is not U.S.-controlled to mark-to-market the PFC
stock annually, unless the shareholders elected to include in income currently
their proportionate shares of the PFC's income and gain. Otherwise, U.S.
shareholders would be treated substantially the same as under current law.
Special rules applicable to mutual funds would classify as "marketable stock"
all stock in PFCs held by the Fund. It is unclear if or when the proposed
legislation will become law and if it is enacted, the form it will take.
Moreover, on April 1, 1992, proposed regulations of the IRS were published
providing a mark-to-market election for regulated investment companies that
would have effects similar to the proposed legislation. These regulations would
be effective for taxable years ending after promulgation of the regulations as
final regulations. The IRS subsequently issued a notice indicating that final
regulations will provide that regulated investment companies may elect the
mark-to-market election for tax years ending after March 31,

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1992 and before April 1, 1993. Whether and to what extent the notice will apply
to taxable years of the Fund is unclear.

Foreign Tax Credits

The Fund may be subject to certain taxes, including withholding taxes,
imposed by Korea and possibly other foreign countries with respect to its income
and capital gains. If the Fund qualifies as a regulated investment company, if
certain distribution requirements are satisfied and if more than 50% of the
value of the Fund's total assets at the close of any taxable year consists of
stock or securities of foreign corporations, which for this purpose may include
obligations of foreign governmental issuers, the Fund may elect, for U.S.
federal income tax purposes, to treat any foreign country's income or
withholding taxes paid by the Fund that can be treated as income taxes under the
U.S. income tax principles, as paid by its shareholders. The Fund expects to
qualify for and make this election. For any year that the Fund makes such an
election, each shareholder will be required to include in its income an amount
equal to its allocable share of such income taxes paid by the Fund to a foreign
country's government and shareholders will be entitled, subject to certain
limitations, to credit their portions of these amounts against their U.S.
federal income tax due, if any, or to deduct their portions from their U.S.
taxable income, if any. No deductions for foreign taxes paid by the Fund may be
claimed, however, by non-corporate shareholders (including certain foreign
shareholders described below) who do not itemize deductions. Shareholders that
are exempt from tax under Section 501(a) of the Code, such as pension plans,
generally will derive no benefit from the Fund's election. However, such
shareholders should not be disadvantaged either because the amount of additional
income they are deemed to receive equal to their allocable share of such foreign
countries' income taxes paid by the Fund generally will not be subject to U.S.
federal income tax.

The amount of foreign taxes that may be credited against a shareholder's
U.S. federal income tax liability generally will be limited, however, to an
amount equal to the shareholder's U.S. federal income tax rate multiplied by its
foreign source taxable income. For this purpose, the Fund generally expects that
the capital gains it distributes, whether as dividends or capital gains
distributions, will not be treated as foreign source taxable income. In
addition, this limitation must be applied separately to certain categories of
foreign source income, one of which is foreign source "passive income." For this
purpose, foreign source "passive income" includes dividends, interest, capital
gains and certain foreign currency gains. As a consequence, certain shareholders
may not be able to claim a foreign tax credit for the full amount of their
proportionate share of foreign taxes paid by the Fund. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether,
pursuant to the election described above, the foreign taxes paid by the Fund
will be treated as paid by its shareholders for that year and, if so, such
notification will designate (i) such shareholder's portion of the foreign taxes
paid to such country and (ii) the portion of the Fund's dividends and
distributions that represents income derived from sources within such country.

Foreign Shareholders

U.S. taxation of a shareholder who, as to the United States, is a foreign
investor depends, in part, on whether the shareholder's income from the Fund is
"effectively connected" with a U.S. trade or business carried on by the
shareholder.

If the foreign investor is not a resident alien and the income from the
Fund is not effectively connected with a United States trade or business carried
on by the foreign investor, distributions of net investment income and net
realized short-term capital gains will be subject to a 30% (or lower treaty
rate) U.S. withholding tax. Furthermore, such foreign investors may be subject
to an increased U.S. tax on their income resulting from the Fund's election
(described above) to "pass-through" amounts of foreign taxes paid by the Fund,
but will not be able to claim a credit or deduction in the United States with
respect to the foreign taxes treated as having been paid by them. Distributions
of net realized long-term capital gains, amounts retained by the Fund which are
designated as undistributed capital gains, and gains realized upon the sale of
shares of the Fund will not be subject to U.S. tax unless a foreign investor who
is a nonresident alien individual is physically present in the United States for
more than 182 days during the taxable year and, in the case of a gain realized
upon the sale of Fund shares, unless (i) such gain is attributable to an office
or fixed place of business in the

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United States or (ii) such nonresident alien individual has a tax home in the
United States and such gain is not attributable to an office or fixed place of
business located outside the United States. A determination by the Fund not to
distribute long-term capital gains may reduce a foreign investor's overall
return from an investment in the Fund, since the Fund will incur a U.S. federal
tax liability with respect to retained long-term capital gains, thereby reducing
the amount of cash held by the Fund that is available for distribution, and the
foreign investor may not be able to claim a credit or deduction with respect to
such taxes. In the case of a foreign investor who is a nonresident alien
individual, the Fund may be required to withhold U.S. federal income tax at a
rate of 31%, unless the foreign investor files an appropriate form certifying
under penalty of perjury as to his nonresident alien status.

If a foreign investor is a resident alien or if dividends or distributions
from the Fund are effectively connected with a U.S. trade or business carried on
by the foreign investor, dividends of net investment income, distributions of
net short-term and long-term capital gains, amounts retained by the Fund that
are designated as undistributed capital gains and any gains realized upon the
sale of shares of the Fund will be subject to U.S. income tax at the rates
applicable to U.S. citizens or domestic corporations. If the income from the
Fund is effectively connected with a U.S. trade or business carried on by a
foreign investor that is a corporation, then such foreign investor also may be
subject to the 30% branch profits tax.

The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described in
this section. Shareholders may be required to provide appropriate documentation
to establish their entitlement to the benefits of such a treaty. Foreign
investors are advised to consult their own tax advisers with respect to (a)
whether their income from the Fund is or is not effectively connected with a
U.S. trade or business carried on by them (b) whether they may claim the
benefits of an applicable tax treaty and (c) any other tax consequences to them
of an investment in the Fund.

OTHER TAXATION

Distributions also may be subject to state, local and foreign taxes
depending on each shareholder's particular position.

THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY
INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY. IN VIEW OF THE INDIVIDUAL NATURE
OF TAX CONSEQUENCES, EACH SHAREHOLDER IS ADVISED TO CONSULT HIS OWN TAX ADVISER
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO HIM OF PARTICIPATION IN THE
FUND, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN, AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.

Ordinary income and capital gain dividends may also be subject to state and
local taxes.

KOREAN TAXES

The following description of certain Korean tax matters relating to the
Fund and its shareholders represents the opinion of Shin & Kim, Korean counsel
to the Fund.

Under current Korean law, payments to non-residents of Korea (such as the
Fund) by Korean corporations in respect of income are subject to Korean
withholding tax and capital gains derived by non-residents of Korea (such as the
Fund) with respect to stock and securities of Korean corporations are subject to
withholding tax, unless exempted by relevant laws or tax treaties. More
specifically, dividends and interest will be subject to withholding tax at the
rate of 26.875% and capital gains (without deduction for capital losses) will be
subject to withholding tax equal to the lower of (i) 10.75% of the gross sales
proceeds, or (ii) if satisfactory evidence of acquisition cost is produced,
26.875% of the difference between the gross sales proceeds and the acquisition
cost of the stock or security sold (excluding any transaction charges,
commissions, fees or taxes paid at the time of acquisition).

The applicable withholding tax rate under the U.S.-Korea Income Tax Treaty
presently in effect (the "Treaty"), is generally 15% (plus a resident tax of
7.5% of such amount, or a total of 16.125%) on dividends

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paid to the Fund by Korean corporations, and generally 12% (plus a resident tax
of 7.5% of such amount, or a total of 12.9%) on interest paid to the Fund by
Korean corporations. Under the Treaty, no withholding tax will be applicable to
capital gains realized by the Fund.

The reduced tax rate and exemption under the provisions of the Treaty will
not apply to the dividend, interest and capital gain income derived by the Fund
from Korean corporations if both (i) the Fund is, by reason of the existence of
special measures under U.S. federal income tax law with respect to those types
of income, subject to U.S. federal income tax in an amount substantially less
than the U.S. federal income tax generally imposed on corporate profits (Article
17(a) of the Treaty), and (ii) at least 25% of the Fund's outstanding shares are
held of record or otherwise determined to be owned, directly or indirectly, by
one or more persons who are not individual residents of the United States
(Article 17(b) of the Treaty).

Questions have recently been raised as to whether the U.S. regulated
investment company provisions contained in the Code constitute "special
measures" for purposes of Article 17(a) of the Treaty. Regardless of the
resolution of these questions, under Article 17(b) of the Treaty, the Fund will
qualify for the benefits of the Treaty so long as less than 25% of the Fund's
outstanding shares are determined to be held other than by individual residents
of the United States.

Shin & Kim have given their opinion that the Treaty presently applies to
the Fund if and so long as the Fund operates as described herein. The Fund has
received written confirmation from the MOF that, so long as all of the issued
shares of the Fund are listed on one or more publicly acknowledged stock
exchanges in the United States only and they are traded on such exchanges by the
general public, the Fund will be entitled to the benefits of the Treaty because
Article 17(b) of the Treaty will not apply. The Fund's Common Stock has been
approved for listing on the New York Stock Exchange upon notice of issuance. In
order to qualify for the benefits of the Treaty, the Fund will not apply to list
the Fund's shares on any stock exchange outside the United States.

Notwithstanding the foregoing, the Tax Exemption and Reduction Control Law
(the "TERCL") exempts interest on bonds denominated in a non-Korean currency
from Korean income and corporation taxes. The residents' tax referred to above
is therefore eliminated with respect to such investments. The TERCL tax
exemptions expire on December 31, 1998.

Under present Korean law, the Korean Inheritance and Gift Tax will not
apply to any testate, intestate or inter-vivos transfer of shares of the Fund to
the extent the deceased or the donee, as the case may be, is not domiciled in
Korea. Korean stamp duty will not apply to transfers of Korean securities, nor
to the Fund's portfolio securities transactions.

A securities transaction tax is payable on the transfer by the Fund of
shares and certain other equities (throughout this paragraph, collectively,
"shares") issued by a Korean company at the rate of 0.35% of the sale price of
the shares (except in certain circumstances in which case no tax is charged, and
where the shares are traded outside the KSE, in which case the tax is payable at
the rate of 0.5% of the sale price) unless (i) the shares are listed on a
foreign stock exchange and the sales are executed on such exchange; or (ii)
those sales are executed between non-residents without a permanent establishment
in Korea, the non-resident transferor did not own 10% or more of the total
issued and outstanding shares of the issuer of such shares at any time during
the five years before the year within which the transfer occurs, and the
non-resident transferor does not sell such shares through a securities company
in Korea (which latter condition cannot be fulfilled under current KSEC
regulations which require all sales of Korean securities off the KSE to be
through a Korean securities company). Effective from July 1, 1994, the Korean
government introduced an additional agricultural and fishery special tax on
securities transactions on the KSE which is equal to 0.15% of the sale price of
the shares and which will remain effective for a period of ten years thereafter.
The transferor of the shares pays the securities transaction tax. When the
transfer is made through a securities company only, such securities company will
make the withholding. Where the transfer is effected by a non-resident
individual or a non-resident corporation without a permanent establishment in
Korea otherwise than through the Korea Securities Depository or a securities
company, the transferee is required to withhold the securities transaction tax.

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<PAGE> 101

This tax treatment could change in the event of changes in Korean or U.S.
tax laws, changes in the terms of, or the MOF's interpretation of, the Treaty,
or changes in relevant facts.

NOTICES

Shareholders will be notified annually by the Fund of the dividends,
distributions and deemed distributions made by the Fund to its shareholders.
Furthermore, shareholders will be sent, if appropriate, various written notices
after the close of the Fund's taxable year regarding certain dividends,
distributions and deemed distributions that were paid (or that were treated as
having been paid) by the Fund to its shareholders during the preceding taxable
year.

PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS
CONCERNING FOREIGN, FEDERAL, STATE AND LOCAL TAX MATTERS, AND WITH RESPECT TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.

NET ASSET VALUE

Net asset value will be determined daily by dividing the value of the net
assets of the Fund (the value of its assets less its liabilities including
borrowings, exclusive of capital stock and surplus) by the total number of
shares of Common Stock outstanding. Portfolio securities will be valued by
various methods depending on the primary market or exchange on which they trade.
Most equity securities for which the primary market is the United States will be
valued at the last sale price or, if no sale has occurred, at the closing bid
price. Equity securities for which the primary market is outside the United
States will be valued using the official closing price or the last sale price in
the principal market where they are traded. If the last sale price (on the local
exchange) is unavailable, the last evaluated quote or last bid price normally
will be used. Shares listed on the KSE which are traded by foreign investors in
foreign OTC transactions may be valued at prices at which it is expected such
shares may be sold, as determined by or under the direction of a committee
appointed by the Board of Directors, provided that the committee determines that
such valuations are accurate; otherwise such KSE shares will be valued using the
procedures for listed securities. Short-term securities will be valued either at
amortized cost or at original cost plus accrued interest, both of which
approximate current value. Convertible securities and fixed-income securities
will be valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. This two-fold approach is believed to
more accurately reflect fair value because it takes into account appropriate
factors such as institutional trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics, and
other market data, without exclusive reliance upon quoted, exchange, or
over-the-counter prices. Use of pricing services has been approved by the Board
of Directors.

Securities and other assets for which there is no readily available market
will be valued in good faith by a committee appointed by the Board of Directors.
The procedures set forth above need not be used to determine the value of the
securities owned by the Fund if, in the opinion of a committee appointed by the
Board of Directors, some other method (e.g., closing over-the-counter bid prices
in the case of debt instruments traded on an exchange) would more accurately
reflect the fair market value of such securities.

Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments, and
repurchase agreements, will be substantially completed each day at the close of
the NYSE. The values of any such securities held by the Fund are determined as
of such time for the purpose of computing the Fund's net asset value. Foreign
security prices are furnished by independent brokers or quotation services which
express the value of securities in their local currency. Fidelity Service
Company gathers all exchange rates daily at the close of the NYSE using the last
quoted price on the local currency and then translates the value of foreign
securities from their local currency into U.S. dollars. Any changes in the value
of forward contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of net asset value. If an extraordinary event that
is expected to materially affect the value of a portfolio security occurs after
the close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by a committee appointed by the Board
of Directors.

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<PAGE> 102

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The authorized capital stock of the Fund is 100,000,000 shares of Common
Stock ($.001 par value). The Common Stock, when issued, will be fully paid and
nonassessable. All shares of Common Stock are equal as to dividends,
distributions and voting privileges. There are no conversion, preemptive or
other subscription rights. In the event of liquidation, each share of Common
Stock is entitled to its proportion of the Fund's assets after payment of all
debts and expenses and any preferential liquidating distributions to holders of
any preferred stock issued by the Fund. There are no cumulative voting rights
for the election of directors. Prior to the Offering, the Investment Manager
will own 100% of the outstanding shares of Common Stock of the Fund and,
consequently, will be a controlling person of the Fund until the shares offered
hereby are issued and sold.

The Fund's Board of Directors has the authority to classify and reclassify
any authorized but unissued shares of capital stock and to establish the rights
and preferences of such unclassified shares. The Fund has no present intention
of offering additional shares of its Common Stock except in connection with any
future rights offering and the Plan. See "Future Rights Offering" and "Dividends
and Distributions: Dividend Reinvestment and Cash Purchase Plan." Other
offerings of its Common Stock, if made, will require approval of the Fund's
Board of Directors. Any additional offering will be subject to the requirements
of the 1940 Act that shares of Common Stock may not be sold at a price below the
then current net asset value (exclusive of underwriting discounts and
commissions) except in connection with an offering to existing shareholders or
with the consent of a majority of the Fund's outstanding Common Stock.

SPECIAL VOTING PROVISIONS

The Fund presently has provisions in its Articles of Incorporation and
By-Laws which may have the effect of limiting the ability of other entities or
persons to acquire control of the Fund, to cause it to engage in certain
transactions, or to modify its structure.

Under these provisions, a director may be removed from office only for
cause by vote of at least 75% of the shares of capital stock entitled to be
voted on the matter. Also conversion of the Fund from a closed-end to an
open-end investment company requires approval of 75% of the entire Board of
Directors and the affirmative vote of holders of at least 75% of the Common
Stock outstanding unless it is approved by a vote of 75% of the Continuing
Directors (as defined below), in which event such conversion requires the
approval of the holders of a majority of the outstanding Common Stock. A
"Continuing Director" is any member of the Board of Directors of the Fund who is
not a person or affiliate of a person who enters or proposes to enter into a
Business Combination (as defined below) with the Fund (an "Interested Party")
and who has been a member of the Board of Directors for a period of at least 12
months, or has been a member of the Board of Directors since April 1, 1994, or
is a successor of a Continuing Director who is unaffiliated with an Interested
Party and is recommended to succeed a Continuing Director by a majority of the
Continuing Directors then on the Board of Directors of the Fund.

In addition, at the Fund's first annual stockholders meeting, the Board of
Directors will be classified into three classes, each with a term of three years
with only one class of directors standing for election in any year. Commencing
on the date of the annual meeting of stockholders in the year 2000, the Board of
Directors will no longer be divided into classes and each director will stand
for election at such meeting and at each annual meeting of stockholders held
thereafter. Such classification may prevent replacement of a majority of the
directors for up to a two-year period while the classification is in effect.

Additionally, the affirmative vote of 75% of the entire Board of Directors
and the holders of at least (i) 75% of the Common Stock and (ii) in the case of
a Business Combination (as defined below), 66% of the Common Stock other than
Common Stock held by an Interested Party who is (or whose affiliate is) a party
to a Business Combination (as defined below) or an affiliate or associate of the
Interested Party, are required to authorize any of the following transactions:

(i) merger, consolidation or statutory share exchange of the Fund with
or into any other person;

(ii) issuance or transfer by the Fund (in one or a series of
transactions in any 12 month period) of any securities of the Fund to any
person or entity for cash, securities or other property (or combination
thereof) having an aggregate fair market value of $1,000,000 or more,
excluding issuances or transfers of

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<PAGE> 103

debt securities of the Fund, sales of securities of the Fund in connection
with a public offering, issuances of securities of the Fund pursuant to a
dividend reinvestment plan adopted by the Fund and issuances of securities
of the Fund upon the exercise of any stock subscription rights distributed
by the Fund and portfolio transactions effected by the Fund in the ordinary
course of its business;

(iii) sale, lease, exchange, mortgage, pledge, transfer or other
disposition by the Fund (in one or a series of transactions in any 12 month
period) to or with any person or entity of any assets of the Fund having an
aggregate fair market value of $1,000,000 or more except for portfolio
transactions (including pledges of portfolio securities in connection with
borrowings) effected by the Fund in the ordinary course of its business
(transactions within clauses (i), (ii) and (iii) above being known
individually as a "Business Combination");

(iv) the voluntary liquidation or dissolution of the Fund, or an
amendment to the Fund's Articles of Incorporation, to terminate the Fund's
existence; or

(v) unless the 1940 Act or federal law requires a lesser vote, any
stockholder proposal as to specific investment decisions made or to be made
with respect to the Fund's assets as to which stockholder approval is
required under federal or Maryland law.

However, the stockholder vote described above will not be required with
respect to the foregoing transactions (other than those set forth in (v) above)
if they are approved by a vote of 75% of the Continuing Directors. In that case,
if Maryland law requires stockholder approval, the affirmative vote of a
majority of the votes entitled to be cast thereon shall be required.

Reference is made to the Articles of Incorporation and By-Laws of the Fund,
on file with the Commission, for the full text of these provisions. See "Further
Information."

ANNUAL TENDER OFFERS AND SHARE REPURCHASES

In recognition of the possibility that the Fund's Shares might trade at a
discount to net asset value, the Board of Directors of the Fund has determined
that it would be in the best interests of the shareholders of the Fund to take
action to attempt to reduce or eliminate a market value discount from net asset
value. To that end, the Board of Directors of the Fund has determined that
annual tender offers for shares of its Common Stock may help reduce any market
discount that may develop. In this connection, during the first calendar quarter
of each calendar year commencing in 1998, the Board of Directors of the Fund has
committed to conduct a tender offer for shares of its Common Stock on an annual
basis under certain circumstances. During the fourth quarter of the previous
calendar year, the Board of Directors will fix in advance a period of 12
consecutive calendar weeks beginning during such fourth calendar quarter and
ending in the immediately following first quarter for the purpose of calculating
the average trading price of the Fund's Common Stock. In the event that the
average of the closing prices of the Common Stock of the Fund for the last
trading day in each week during such 12-week period, on the principal securities
exchange where listed, is below the initial offering price of $15.00 per share
and represents a discount of 10% or more from the average net asset value of the
Fund as determined on the same days in the same period, a tender offer for up to
10% of the then outstanding shares of Common Stock of the Fund will be conducted
during such first calendar quarter, subject to certain conditions described
below. In addition, the Board of Directors may consider from time to time open
market repurchases of the Fund's Common Stock or converting the Fund into an
open-end investment company.

Subject to the Fund's investment restrictions with respect to borrowings,
the Fund may incur debt to finance tender offers and/or repurchases. See
"Investment Restrictions." Interest on any such borrowings will reduce the
Fund's net investment income, and any such borrowings are subject to special
considerations.

No assurance can be given that annual tender offers or repurchases of
shares of its Common Stock will reduce or eliminate any market discount from net
asset value of the Fund's Common Stock. The Fund anticipates that the market
price of its Common Stock will from time to time vary from net asset value. The
market price of the Fund's Common Stock will, among other things, be determined
by the relative demand for and supply of shares of its Common Stock in the
market, the Fund's investment performance, the Fund's dividends and yield and
investor perception of the Fund's overall attractiveness as an investment as
compared with other investment alternatives. Nevertheless, the fact that the
Fund's Common Stock may be subject to tender offers at net asset value from time
to time may reduce the spread between market price and net asset

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value that might otherwise exist. In the opinion of the Investment Manager,
sellers may be less inclined to accept a significant discount if they have a
reasonable expectation of being able to recover net asset value in conjunction
with an annual tender offer.

Although the Board of Directors believes that tender offers and repurchases
of shares of Common Stock generally would have a favorable effect on the market
price of the Fund's Common Stock, the repurchase of shares of Common Stock by
the Fund will decrease the total assets of the Fund and, therefore, have the
effect of increasing the Fund's expense ratio. Because of the nature of the
Fund's investment objective and policies and the Fund's portfolio, the
Investment Manager does not anticipate that tender offers and repurchases should
have a materially adverse effect on the Fund's investment performance and does
not anticipate any material difficulty in disposing of sufficient portfolio
securities in order to consummate tender offers and repurchases.

Although the Board of Directors has committed to annual tender offers under
the circumstances set forth above, it is the Board of Directors' announced
policy, which may be changed by the Board of Directors, that the Fund cannot
accept tenders or effect repurchases if (1) such transactions, if consummated,
would (a) result in the delisting of the Fund's Common Stock from the NYSE (the
NYSE having advised the Fund that it would consider delisting if the aggregate
market value of the Fund's outstanding shares is less than $5,000,000, the
number of publicly held shares of Common Stock falls below 600,000 or the number
of round-lot holders falls below 1,200) or (b) impair the Fund's status as a
regulated investment company under the Code (which would make the Fund subject
to U.S. federal income taxes on all of its income and gains in addition to the
taxation of shareholders who receive distributions from the Fund); (2) the
amount of shares of Common Stock tendered would require liquidation of such a
substantial portion of the Fund's securities that the Fund would not be able to
liquidate portfolio securities in an orderly manner in light of the existing
market conditions and such liquidation would have an adverse effect on the net
asset value of the Fund to the detriment of non-tendering shareholders; (3)
there is any (a) in the Board of Directors' judgment, material legal action or
proceeding instituted or threatened challenging such transactions or otherwise
materially adversely affecting the Fund, (b) suspension of or limitation on
prices for trading securities generally on the NYSE or other national securities
exchange(s), or the NASDAQ National Market System, (c) declaration of a banking
moratorium by Federal or state authorities or any suspension of payment by banks
in the United States or New York State, (d) limitation affecting the Fund or the
issuers of its portfolio securities imposed by federal or state authorities on
the extension of credit by lending institutions, (e) commencement of war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, or (f) in the Board of Directors' judgment, other
event or condition which would have a material adverse effect on the Fund or its
shareholders if Shares were repurchased; or (4) the Board of Directors
determines that effecting any such transaction would constitute a breach of
their fiduciary duty owed to the Fund or its shareholders. The Board of
Directors may modify these conditions in light of experience.

Any tender offer made by the Fund for its shares of Common Stock will be at
a price equal to the net asset value of the Common Stock on a date subsequent to
the Fund's receipt of all tenders. During the pendency of any tender offer by
the Fund, the Fund will calculate daily the net asset value of the Common Stock
and will establish procedures which will be specified in the tender offer
documents, to enable shareholders to ascertain readily such net asset value.
Each offer will be made and shareholders notified in accordance with the
requirements of the Securities Exchange Act of 1934 and the 1940 Act, either by
publication or mailing or both. Each offering document will contain such
information as is prescribed by such laws and the rules and regulations
promulgated thereunder, including information for shareholders to consider in
deciding whether to tender shares of Common Stock and detailed instructions on
how to tender such shares of Common Stock. When a tender offer is authorized to
be made by the Fund's Board of Directors, a shareholder wishing to accept the
offer will be required to tender all (but not less than all) of the shares of
Common Stock owned by such shareholder (or attributed to him for U.S. federal
income tax purposes under Section 318 of the Code) unless the Fund has received
a ruling from the Internal Revenue Service, or an opinion satisfactory to it,
that a tender of less than all of a shareholder's shares of Common Stock will
not cause certain adverse tax consequences with respect to non-tendering
shareholders. There can be no assurance that the Fund will receive such a ruling
or opinion.

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A shareholder who sells all of his shares of Common Stock (including shares
attributed to him for U.S. Federal income tax purposes under Section 318 of the
Code) pursuant to a tender offer or open-market repurchase by the Fund will
realize a taxable gain or loss, treated as described in "Taxation -- U.S.
Federal Income Taxes." A shareholder who sells less than all of his shares of
Common Stock (including shares so attributed) may be treated as receiving a
dividend from the Fund in the amount of some or all of the proceeds of sale; in
that event, the amount of proceeds not treated as a dividend would be a return
of capital, reducing the shareholder's basis in his shares of Common Stock
(including the shares sold pursuant to the tender offer or repurchase) and a
gain (treated as a capital gain for a shareholder owning the shares as a capital
asset) to the extent of any amount in excess of such basis. Also, in the case of
open-market repurchases, it is possible that shareholders who do not have their
shares of Common Stock repurchased would be treated as having received a
dividend distribution as a result of their proportionate increase in the
ownership of the Fund.

The Fund will not specify a record date for the tender offer which will not
permit a shareholder of record on the effective date of the tender offer to
tender its shares of Common Stock. The Fund will purchase all shares of Common
Stock tendered in accordance with the terms of the offer unless it determines to
accept none of them (based upon one of the conditions set forth above), or
unless more shares are tendered than the Fund is required to purchase, in which
case the Fund will purchase the shares tendered on a pro rata basis. Each person
tendering shares of Common Stock will pay to the Fund a reasonable service
charge, currently anticipated to be $25.00, but subject to change, to help
defray certain costs, including the processing of tender forms, effecting
payment, postage and handling. It is the position of the staff of the Commission
that such service charge may not be deducted from the proceeds of the purchase.
The Fund's transfer agent will receive the fee as an offset to these costs. The
Fund expects that the cost to the Fund of effecting a tender offer will exceed
the aggregate of all service charges received from those who tender their shares
of Common Stock. Such excess costs associated with the tender will be charged
against capital. Tendered shares of Common Stock that have been accepted and
purchased by the Fund will be recorded and reported as an offset to
shareholders' equity and accordingly will reduce the Fund's total assets.

In order to finance share repurchases, the Fund currently anticipates that
it will liquidate a portion of its investments. Although the Fund has no current
intention to incur debt in order to finance share repurchases, it is permitted
to borrow to finance such repurchases. If the Fund does borrow to finance share
repurchases, this would have the effect of leveraging on the Fund.

If the Fund must liquidate portfolio securities in order to purchase shares
of Common Stock tendered, the Fund may realize gains and losses. Such gains may
be realized on securities held for less than three months. Because the Fund, as
a regulated investment company under the Code, may not derive 30% or more of its
gross income from the sale or disposition of stocks and securities held less
than three months, such gains would reduce the ability of the Fund to sell other
securities held for less than three months that the Fund may wish to sell in the
ordinary course of its portfolio management, which may adversely affect the
Fund's yield. See "Taxation -- U.S. Federal Income Taxes." The portfolio
turnover rate of the Fund may or may not be affected by the Fund's repurchases
of Shares pursuant to a tender offer.

CUSTODIAN, TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR

The Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New
York 10036, will act as custodian for the Fund's assets. The Hong Kong and
Shanghai Banking Corporation, Seoul Branch will serve as the Fund's
sub-custodian for its assets held in Korea. State Street Bank and Trust Company
will act as the transfer agent, dividend paying agent and registrar for the
Fund's Common Stock.

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UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), the Fund has agreed to sell an aggregate of
shares of Common Stock to each of the U.S. Underwriters named below
(the "U.S. Underwriters"), and each of the U.S. Underwriters, for whom Baring
Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation, Dillon,
Read & Co. Inc., Cowen & Company, Legg Mason Wood Walker, Incorporated, Rauscher
Pierce Refsnes, Inc. and Raymond James & Associates, Inc. are acting as the
representatives (the "U.S. Representatives"), have severally agreed to purchase
the respective number of shares of Common Stock set forth opposite its name
below:

<TABLE>
<CAPTION>
NUMBER
OF
U.S. UNDERWRITERS SHARES
----------------- ------
<S> <C>
Baring Securities Inc. ............................................
Donaldson, Lufkin & Jenrette Securities Corporation................
Dillon, Read & Co. Inc. ...........................................
Cowen & Company....................................................
Legg Mason Wood Walker, Incorporated...............................
Rauscher Pierce Refsnes, Inc. .....................................
Raymond James & Associates, Inc. ..................................
Bear, Stearns & Co. Inc. ..........................................
CS First Boston Corporation........................................
Alex. Brown & Sons Incorporated....................................
A.G. Edwards & Sons, Inc. .........................................
Kidder, Peabody & Co. Incorporated.................................
Lazard Freres & Co. ...............................................
Lehman Brothers Inc. ..............................................
Oppenheimer & Co., Inc. ...........................................
PaineWebber Incorporated...........................................
Prudential Securities Incorporated.................................
Robertson, Stephens & Company, L.P. ...............................
Salomon Brothers Inc ..............................................
Wertheim Schroder & Co. Incorporated...............................
Advest, Inc. ......................................................
Arnhold and S. Bleichroeder, Inc. .................................
Robert W. Baird & Co. Incorporated.................................
Black & Company, Inc. .............................................
J.C. Bradford & Co. ...............................................
Branch, Cabell & Company...........................................
J.W. Charles Securities, Inc. .....................................
The Chicago Corporation............................................
Crowell, Weedon & Co. .............................................
Dain Bosworth Incorporated.........................................
Fahnestock & Co. Inc...............................................
First of Michigan Corporation......................................
J.J.B. Hilliard, W.L. Lyons, Inc. .................................
Huntleigh Securities Corporation...................................
Interstate/Johnson Lane Corporation................................
Janney Montgomery Scott Inc. ......................................
Kemper Securities, Inc. ...........................................
Ladenburg, Thalmann & Co. Inc. ....................................
C.J. Lawrence/Deutsche Bank Securities Corporation.................
Luther, Smith & Small Inc. ........................................
McDonald & Company Securities, Inc. ...............................
Mesirow Financial, Inc. ...........................................
</TABLE>

104
<PAGE> 107

<TABLE>
<CAPTION>
NUMBER
OF
U.S. UNDERWRITERS SHARES
----------------- ------
<S> <C>
Morgan Keegan & Company, Inc. .....................................
The Ohio Company...................................................
Parker/Hunter Incorporated.........................................
Pennsylvania Merchant Group Ltd....................................
Piper Jaffray Inc. ................................................
Principal Financial Securities, Inc. ..............................
Roney & Co.........................................................
Scott & Stringfellow, Inc. ........................................
The Seidler Companies Incorporated.................................
Southwest Securities, Inc. ........................................
Sutro & Co. Incorporated...........................................
Tucker Anthony Incorporated........................................
Wheat First Butcher Singer.........................................
Cadaret, Grant & Co., Inc. ........................................
Commonwealth Equity Services, Inc. ................................
Gibraltar Securities Co. ..........................................
Hanmi Securities, Inc. ............................................
Nathan & Lewis Securities, Inc. ...................................
Total............................................................
=======
</TABLE>

Subject to the terms and conditions set forth in the International
Underwriting Agreement (the "International Underwriting Agreement"), and
concurrently with the sale of Shares of Common Stock to the U.S.
Underwriters, the Fund has agreed to sell an aggregate of shares of
Common Stock, for offer and sale to non-U.S. and non-Canadian investors, to each
of the International Managers named below (the "International Managers" and
together with the U.S. Underwriters, the "Underwriters"), for whom Baring
Brothers & Co., Limited, Donaldson, Lufkin & Jenrette Securities Corporation,
Lucky Securities International Ltd., SsangYong Securities Europe Limited, Cowen
& Company and KDB Securities Co., Ltd. are acting as representatives (the
"International Representatives" and together with the U.S. Representatives, the
"Representatives"), have severally agreed to purchase the respective numbers of
shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Baring Brothers & Co., Limited....................................
Donaldson, Lufkin & Jenrette Securities Corporation...............
Lucky Securities International Ltd................................
SsangYong Securities Europe Limited...............................
Cowen & Company...................................................
KDB Securities Co., Ltd...........................................
Total........................................................
========
</TABLE>

105
<PAGE> 108

Baring Securities Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation are the Global Coordinators of the Offering (the "Global
Coordinators").

The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that, if any of
the foregoing shares are purchased by the U.S. Underwriters pursuant to the U.S.
Underwriting Agreement or by the International Managers pursuant to the
International Underwriting Agreement, all the shares of Common Stock agreed to
be purchased by the U.S. Underwriters or the International Managers, as the case
may be, pursuant to their respective Underwriting Agreements must be so
purchased, and that the obligations of the U.S. Underwriters or the
International Managers thereunder are subject to approval of certain legal
matters by counsel and to various other conditions. The offering price,
underwriting discounts and commissions for the U.S. Offering and the
International Offering are identical. The closing of each Offering is a
condition to the closing of each other Offering.

The Representatives have advised the Fund that they propose to offer the
shares of Common Stock directly to the public at the public offering price set
forth on the cover page hereof except that the price will be reduced to $14.77
for purchases in transactions (as defined below) of 200,000 or more shares of
Common Stock, subject to the following. Purchasers who agree to purchase shares
of Common Stock at the reduced price will be restricted from selling, assigning
or otherwise transferring or contracting to sell, assign or otherwise transfer
those shares for a period of 90 days after the closing of the Offering. There is
no restriction on the number of shares that may be purchased subject to the
transfer restriction, except that the Underwriters have undertaken to comply,
with respect to non-restricted shares, with the distribution requirements of the
NYSE. The certificates evidencing shares of Common Stock purchased at the
reduced price will contain a legend stating the transfer restriction. Investors
must pay for any shares of Common Stock purchased in the initial public offering
on or before October 31, 1994. The sales loads of $. and $. are equal to
% and %, respectively, of the initial public offering price.

The Representatives have also advised the Fund that they propose to offer
shares of Common Stock to certain dealers (who may include Underwriters) at the
initial offering price per share set forth above less a concession not to exceed
$ per share ($ per share for purchases in single transactions (as
defined below) of 200,000 or more shares of Common Stock). Such dealers may
reallow a concession not to exceed $ per share of Common Stock to other
dealers. After the initial public offering, the public offering price, the
concession to selected dealers and the reallowance to other dealers may be
changed by the Representatives.

The term "single transaction," as used herein, refers to a single purchase
by an individual or to concurrent purchases, which in the aggregate are at least
equal to the prescribed amounts, by an individual, his parents, spouse, siblings
and children purchasing shares for his or their own account and to single
transactions by a trustee, money manager, or other fiduciary purchasing shares
for one or more trust estates, one or more fiduciary accounts and/or his own
account. The term "single transaction" also includes purchases by any "company,"
as that term is defined in the 1940 Act, its directors, senior executive
officers and controlling shareholders; provided, however, that it does not
include purchases by any such company which has not been in existence for at
least six months or which has no purpose other than the purchase of shares of
the Fund or shares of other registered investment companies at a discount; and
provided further, that it does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein are credit
cardholders of a company, policyholders of an insurance company or noninvestment
advisory customers of a bank.

The Investment Manager has agreed to pay the Underwriters a sales incentive
fee in an amount up to .30%, dependent on the value of Shares sold by each
Underwriter.

The Fund has granted the U.S. Underwriters options, exercisable by the U.S.
Representatives, to purchase up to an aggregate of 787,500 shares of Common
Stock at the initial public offering price, less the underwriting discounts and
commissions set forth on the cover page hereof. Such options, which expire 30
days after the date hereof, may be exercised one or more times solely to cover
over-allotments. To the extent that the U.S. Representatives exercise such
options, each of the U.S. Underwriters will be obligated, subject to certain
conditions, to purchase approximately the same percentage of the option shares
that the

107
<PAGE> 109

number of shares of Common Stock to be purchased initially by that U.S.
Underwriter bears to the total number of shares to be purchased initially by the
U.S. Underwriters.

The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers. Pursuant to this
Agreement, each U.S. Underwriter has agreed that, as part of the distribution of
the Shares (plus any of the 787,500 Shares to cover over-allotments) of
Common Stock offered in the U.S. Offering, (a) it is not purchasing any of such
Shares for the account of anyone other than a U.S. or Canadian Person and (b) it
has not offered or sold, and will not offer, sell, resell or deliver, directly
or indirectly, any of such Shares or distribute any prospectus relating to the
U.S. Offering to any person other than a U.S. or Canadian Person; and each
International Manager has agreed that, as part of the distribution of
the Shares of Common Stock offered in the International Offering, (a) it is
not purchasing any of such Shares for the account of any U.S. or Canadian Person
and (b) it has not offered or sold, and will not offer, sell, resell or deliver,
directly or indirectly, any of such Shares or distribute any prospectus relating
to the International Offering to any U.S. or Canadian Person. The foregoing
limitations do not apply to stabilization transactions or to certain other
transactions specified in the Underwriting Agreements and the Agreement Between
U.S. Underwriters and International Managers, including (i) certain purchases
and sales between the U.S. Underwriters and the International Managers, (ii)
certain offers, sales, resales, deliveries or distributions to or through
investment advisors or other persons exercising investment discretion, (iii)
purchases, offers or sales by a U.S. Underwriter who is also acting as an
International Manager, or by an International Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the U.S.
Underwriters and the International Managers. As used herein, "U.S. or Canadian
Person" means any individual who is resident in the United States or Canada, or
any corporation, pension, profit-sharing or other trust or other entity
organized under or governed by the laws of the United States or Canada or of any
political subdivision thereof (other than a foreign branch of any U.S. or
Canadian Person), and includes any U.S. or Canadian branch of a person other
than a U.S. or Canadian Person. "United States" means the United States of
America (including the District of Columbia) and its territories, its
possessions and all areas subject to its jurisdiction.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of such number of Shares as may be mutually agreed. The price of any
Shares so sold shall be the public offering price as then in effect for the
Shares of Common Stock being sold by the U.S. Underwriters and the International
Managers, less an amount not greater than the selling concession allocable to
such Shares. To the extent that there are sales between the U.S. Underwriters
and the International Managers pursuant to the Agreement Between U.S.
Underwriters and International Managers, the number of Shares initially
available for sale by the U.S. Underwriters or by the International Managers may
be more or less than the amount specified on the cover page hereof.

Each International Manager has represented and agreed that (i) it has not
offered or sold, and will not offer or sell, in the United Kingdom, by means of
any document, any Shares other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent (except under
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985 of Great Britain); (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on, and
will only issue or pass on to any person in the United Kingdom, any document
received by it in connection with the issue of the Common Stock, to any person
if that person is of a kind described in Article 9(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1988 or to any person to
whom the document may otherwise lawfully be issued or passed on.

Each International Manager has further represented and agreed that it has
not offered or sold, and agrees not to offer or sell, resell or deliver,
directly or indirectly, in Japan or to or for the account of any resident
thereof, any of the Shares, except for offers or sales to International Managers
or dealers and except pursuant to an exemption from the registration
requirements of the Securities and Exchange Law of Japan and otherwise in
compliance with applicable provisions of Japanese law.

108
<PAGE> 110

Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

Prior to the Offering, there has been no public market for the Fund's
Common Stock. There can be no assurance that an active trading market will
develop for the Common Stock or that the Common Stock will trade in the public
market subsequent to the offering at or above the initial public offering price.

In each of the Underwriting Agreements, the Fund, the Investment Manager,
the Investment Adviser and the Sub-Adviser have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Fund's Common Stock has been approved for listing on the NYSE upon
notice of issuance under the symbol "FAK." In order to satisfy one of the
requirements for listing of the Common Stock on the NYSE, the Underwriters have
undertaken to distribute the shares of Common Stock in a manner which complies
with NYSE distribution criteria (including to sell lots of 100 or more
non-restricted shares of Common Stock to a minimum of 2,000 beneficial holders
worldwide).

The Fund anticipates that certain of the Underwriters may, from time to
time, act as brokers or dealers in connection with the execution of portfolio
transactions after they have ceased to be Underwriters and, subject to certain
restrictions, may from time to time act as brokers or dealers while they are
Underwriters.

The Fund has agreed to pay the Underwriters up to $200,000 in partial
reimbursement of actual expenses incurred in connection with the Offering.

The relative sizes of the U.S. Offering and the International Offering will
be determined by negotiations between the Fund and the Underwriters and will
depend upon a number of factors, including the number of Shares to be offered in
the Offering. It is expected that the Shares may be sold substantially outside
the United States. The Fund cannot predict what effect, if any, the relative
sizes of the U.S. Offering and the International Offering will have on secondary
market trading of the shares of Common Stock in the United States or on the
market price of the Shares.

EXPERTS

The financial statement of the Fund included herein has been so included in
reliance on the report of Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts 02110, the Fund's independent accountants, given on the authority
of said firm as experts in auditing and accounting.

LEGAL MATTERS

The validity of the Shares offered hereby will be passed on for the Fund by
Rogers & Wells, New York, New York and certain legal matters will be passed upon
for the Underwriters by Simpson Thacher & Bartlett (a partnership which includes
professional corporations). Counsel for the Fund and the Underwriters will rely,
as to matters of Maryland law, on Piper & Marbury, Baltimore, Maryland. With
respect to all matters of Korean law, counsel for the Fund and counsel for the
Underwriters will rely on Shin & Kim, Seoul, Korea.

FURTHER INFORMATION

Further information concerning these securities and their issuer may be
found in the Fund's Registration Statement (which includes the Fund's
prospectus) on file with the Commission. Current holdings and recent investment
strategies will be described in the Fund's financial reports, which are sent to
shareholders twice a year.

109
<PAGE> 111

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of

FIDELITY ADVISOR KOREA FUND, INC.

In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of Fidelity
Advisor Korea Fund, Inc. (the "Fund") at October 20, 1994 in conformity with
generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

Price Waterhouse LLP

Boston, Massachusetts
October 21, 1994

110
<PAGE> 112

FIDELITY ADVISOR KOREA FUND, INC. (NOTE 1)

STATEMENT OF ASSETS AND LIABILITIES

OCTOBER 20, 1994

<TABLE>
<S> <C>
Assets:
Cash.................................................................... $100,011
Deferred organization expenses (Note 2)................................. 155,000
--------
Total Assets......................................................... $255,011
Liabilities:
Accrued organization expenses (Note 2).................................. $155,000
Commitments (Notes 2 and 3)............................................. --
--------
Total Liabilities.................................................... $155,000
--------
Net Assets (7,093 shares of $.001 par value shares of common stock issued
and outstanding; 100,000,000 shares authorized)......................... $100,011
========
Net asset value per share................................................. $ 14.10
========
</TABLE>

NOTES TO FINANCIAL STATEMENT

NOTE 1

Fidelity Advisor Korea Fund, Inc. (the "Fund") was incorporated as a
Maryland corporation on May 25, 1994 and has had no operations to date other
than matters relating to its organization and registration as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended, and the sale and issuance to Fidelity Management & Research
Company (the "Investment Manager") of 7,093 shares of its common stock for an
aggregate purchase price of $100,011. The books and records of the Fund will be
maintained in U.S. dollars.

NOTE 2

Organization expenses relating to the Fund incurred and to be incurred by
the Investment Manager will be reimbursed by the Fund. Such expenses, estimated
at $155,000, will be deferred and amortized on a straight-line basis for a
five-year period beginning at the commencement of operations of the Fund.
Offering costs, estimated at $700,000, will be paid from the proceeds of the
offering and charged to capital at the time of the issuance of such shares.

NOTE 3

The Fund will enter into a management agreement with the Investment
Manager, pursuant to which the Investment Manager will, among other things,
supervise the Fund's investment program and monitor the performance of the
Fund's service providers.

The Investment Manager will enter into an investment advisory agreement
with Fidelity International Investment Advisors (the "Investment Adviser"), an
affiliate of the Investment Manager, pursuant to which the Investment Adviser is
responsible for the management of the Fund's portfolio in accordance with the
Fund's investment policies and for making decisions to buy, sell, or hold
particular securities.

Pursuant to a Sub-Advisory Agreement, the Investment Adviser has delegated
certain of its responsibilities for the day-to-day management of the Fund to
Fidelity Investments Japan Limited (the "Sub-Adviser"), which will manage the
Fund's portfolio through its Tokyo office.

111
<PAGE> 113

Fidelity Service Co., a division of FMR Corp., the parent company of the
Investment Manager, will serve as the Fund's administrator pursuant to the terms
of an Administration Agreement. The Fund will pay Fidelity Service Co. a monthly
fee at an annual rate of .20% of the Fund's average daily net assets for its
services.

The Fund will pay the Investment Manager a monthly fee for its management
services at an annual rate of 1.00% of the Fund's average daily net assets. The
Investment Manager will pay the Investment Adviser a monthly fee for its
advisory services equal to 60% of the fees paid by the Fund to the Investment
Manager. The Investment Adviser will pay the Sub-Adviser a fee equal to 50% of
the fee paid to the Investment Adviser with respect to assets managed by the
Sub-Adviser on a discretionary basis and 30% of the fee paid to the Investment
Adviser with respect to assets managed by the Sub-Adviser on a non-discretionary
basis.

Certain officers and/or directors of the Fund are officers and/or directors
of the Investment Manager, the Investment Adviser, or the Sub-Adviser.

112
<PAGE> 114

APPENDIX A

GENERAL CHARACTERISTICS AND RISKS OF DERIVATIVES

The following investment practices in which the Fund is authorized to
engage are generally not currently permitted under Korean laws or regulations.

A detailed discussion of Derivatives (as defined below) that may be used by
the Investment Adviser or the Sub-Adviser on behalf of the Fund follows below.
The Fund will not be obligated, however, to use any Derivatives and makes no
representation as to the availability of these techniques at this time or at any
time in the future. "Derivatives," as used in this Appendix A, refers to
interest rate, currency or stock index futures contracts, currency forward
contracts and currency swaps, the purchase and sale (or writing) of exchange
listed and over-the-counter ("OTC") put and call options on debt and equity
securities, currencies, interest rate, currency or stock index futures and fixed
income and stock indices and other financial instruments, entering into various
interest rate transactions such as swaps, caps, floors, collars, entering into
equity swaps, caps, floors or trading in other types of derivatives.

The Fund's ability to pursue certain of these strategies may be limited by
the U.S. Commodity Exchange Act, as amended, applicable regulations of the
Commodity Futures Trading Commission ("CFTC") thereunder and the federal income
tax requirements applicable to regulated investment companies which are not
operated as commodity pools.

PUT AND CALL OPTIONS ON SECURITIES AND INDICES

The Fund may purchase and sell put and call options on debt and equity
securities and indices based upon the prices of debt or equity securities or
other market or economic factors that may affect securities in which the Fund
may invest, such as commodity price levels or rates of inflation. A put option
on a security gives the purchaser of the option the right to sell and the writer
the obligation to buy the underlying security at the exercise price during the
option period. The Fund may also purchase and sell options on indices based upon
the prices of debt or equity securities ("index options"). Index options are
similar to options on securities except that, rather than taking or making
delivery of securities underlying the option at a specified price upon exercise,
an index option gives the holder the right to receive cash upon exercise of the
option if the level of the index upon which the option is based is greater, in
the case of a call, or less in the case of a put, than the exercise price of the
option. The purchase of a put option on a security would be designed to protect
against a substantial decline in the market value of a security held by the
Fund. A call option on a security gives the purchaser of the option the right to
buy and the writer the obligation to sell the underlying security at the
exercise price during the option period. The purchase of a call option on a
security would be intended to protect the Fund against an increase in the price
of a security that it intended to purchase in the future. In the case of either
put or call options that it has purchased, if the option expires without being
sold or exercised, the Fund will experience a loss in the amount of the option
premium plus any related commissions. When the Fund sells put and call options,
it receives a premium as the seller of the option. The premium that the Fund
receives for writing the option will serve as a partial hedge, in the amount of
the option premium, against changes in value of the securities in its portfolio.
During the term of the option, however, a covered call seller has, in return for
the premium on the option, given up the opportunity for capital appreciation
above the exercise price of the option if the value of the underlying security
increases, but has retained the risk of loss should the price of the underlying
security decline. Conversely, a secured put seller retains the risk of loss
should the market value of the underlying security decline below the exercise
price of the option, less the premium received on the sale of the option. The
Fund is authorized to purchase and sell exchange listed options and
over-the-counter options ("OTC Options") which are privately negotiated with the
counterparty to such contract. U.S. listed options are issued by the Options
Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options.

All such call options sold (written) by the Fund will be "covered" as long
as the call is outstanding (i.e., the Fund will own the instrument subject to
the call or other securities or assets acceptable under applicable segregation
and coverage rules). All such put options sold (written) by the Fund will be
secured by segregated assets consisting of cash or liquid high grade debt
securities having a value not less than the exercise price.

A-1
<PAGE> 115

The Fund's ability to close out its position as a purchaser or seller of an
exchange listed put or call option is dependent upon the existence of a liquid
secondary market. Among the possible reasons for the absence of a liquid
secondary market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities; (iv)
interruption of the normal operations on an exchange; (v) inadequacy of the
facilities of an exchange or the OCC to handle current trading volume; or (vi) a
decision by one or more exchanges to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist,
although outstanding options on that exchange that had been listed by the OCC as
a result of trades on that exchange would generally continue to be exercisable
in accordance with their terms. OTC Options are purchased from or sold to
dealers, financial institutions or other counterparties which have entered into
direct agreements with the Fund. With OTC Options, such variables as expiration
date, exercise price and premium will be agreed upon between the Fund and the
counterparty, without the intermediation of a third party such as the OCC. If
the counterparty fails to make or take delivery of the securities underlying an
option it has written, or otherwise settle the transaction in accordance with
the terms of that option as written, the Fund would lose the premium paid for
the option as well as any anticipated benefit of the transaction. The Fund must
rely on the credit quality of the counterparty rather than the guarantee of the
OCC. OTC Options with foreign brokers in Korea subject the Fund to the credit of
such brokers which may be weak, making such options speculative.

The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the option markets.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Characteristics. The Fund may purchase and sell futures contracts on
interest rates and indices of debt and equity securities or other financial
indicators and purchase and sell (write) put and call options on such futures
contracts traded on recognized domestic exchanges as a hedge against anticipated
interest rate changes or movements in equity markets. The sale of a futures
contract creates an obligation by the Fund, as seller, to deliver the specific
type of financial instrument called for in the contract at a specified future
time for a specified price. Options on futures contracts are similar to options
on securities except that an option on a futures contract gives the purchaser
the right in return for the premium paid to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put).

Margin Requirements. At the time a futures contract is purchased or sold,
the Fund must allocate cash or securities as a deposit payment ("initial
margin"). It is expected that the initial margin that the Fund will pay may
range from approximately 1% to approximately 5% of the value of the instruments
underlying the contract. In certain circumstances, however, such as during
periods of high volatility, the Fund may be required by an exchange to increase
the level of its initial margin payment. Additionally, initial margin
requirements may be increased in the future pursuant to regulatory action. An
outstanding futures contract is valued daily and the payment in cash of
"variation margin" may be required, a process known as "marking to the market."
Transactions in listed options and futures are usually settled by entering into
an offsetting transaction, and are subject to the risk that the position may not
be able to be closed if no offsetting transaction can be arranged.

Limitations on Use of Futures Contracts and Options on Futures
Contracts. The Fund's use of futures contracts and options on futures contracts
will in all cases be consistent with applicable regulatory requirements and in
particular, the rules and regulations of the CFTC.

The Fund may enter into futures contracts or options thereon for purposes
other than bona fide hedging if, immediately thereafter, the sum of the amount
of its initial margin and premiums on open contracts and options would not
exceed 5% of the liquidation value of the Fund's portfolio; provided, further,
that in the case of an option that is in-the-money at the time of the purchase,
the in-the-money amount may be excluded in calculating the 5% limitation. Also,
when required, a segregated account of cash or cash equivalents will be
maintained and marked to market in an amount equal to the market value of the
contract. The Investment

A-2
<PAGE> 116

Adviser and the Sub-Adviser may be required to comply with such different
standards as may be established from time to time by CFTC (or Korean regulators)
rules and regulations with respect to the purchase and sale of futures contracts
and options thereon.

CURRENCY TRANSACTIONS

The Fund may deal in forward currency contracts and other currency
transactions such as futures contracts, options, options on futures contracts
and swaps for any purpose consistent with its investment objective and policies.
Currency transactions include currency forward contracts, exchange listed
currency futures contracts, exchange listed and OTC options on currencies and
currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with counterparties that are determined to be creditworthy by
Fidelity.

The following discussion summarizes some, but not all, of the possible
currency management strategies involving forward contracts, options on
currencies and futures on currencies that could be used by the Fund. Transaction
hedging is entering into a currency transaction with respect to specific assets
or liabilities of the Fund, which will generally arise in connection with the
purchase or sale of the Fund's portfolio securities or the receipt of income
from them. Position hedging is entering into a currency transaction with respect
to portfolio security positions denominated or generally quoted in that
currency.

The Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the fund expects
to have portfolio exposure. To reduce the effect of currency fluctuations on the
value of existing or anticipated holdings of portfolio securities, the Fund may
also engage in proxy hedging. Proxy hedging is often used when the currency to
which the Fund's portfolio is exposed is difficult to hedge or to hedge against
the U.S. dollar. Proxy hedging entails entering into a forward contract to sell
a currency whose changes in value are generally considered to be well correlated
with a currency or currencies in which some or all of the Fund's portfolio
securities are or are expected to be denominated, and to buy U.S. dollars.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, the risk exists that the perceived linkage between various
currencies may not be present or may not be present during the particular time
that the Fund is engaging in proxy hedging. If the Fund enters into a currency
hedging transaction, the Fund will comply with the asset segregation
requirements described below. The Fund may enter into forward contracts to shift
its investment exposure from one currency into another currency that is expected
to perform better relative to the U.S. dollar. For example, if the Fund held
investments denominated in or otherwise exposed to the Japanese Yen, the Fund
could enter into forward contracts to sell Japanese Yen and purchase Hong Kong
Dollars. This type of strategy, sometimes known as a "cross-hedge," will tend to
reduce or eliminate exposure to the currency that is sold, and increase exposure
to the currency that is purchased, much as if the Fund had sold a security
denominated in one currency and purchased an equivalent security denominated in
another. Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause the Fund to assume the risk of fluctuations in
the value of the currency it purchases.

Successful use of forward currency contracts will depend on the Investment
Adviser and the Sub-Adviser's skill in analyzing and predicting currency values.
Forward contracts may substantially change the Fund's investment exposure to
changes in currency exchange rates, and could result in losses to the Fund if
currencies do not perform as the Sub-Adviser anticipates. For example, if a
currency's value rose at a time when the Investment Adviser and the Sub-Adviser
had hedged the Fund by selling that currency in exchange for U.S. dollars, the
Fund would be unable to participate in the currency's appreciation. If the
Investment Adviser or the Sub-Adviser hedges currency exposure through proxy
hedges, the Fund could realize currency losses from the hedge and the security
position at the same time if the two currencies do not move in tandem.
Similarly, if the Investment Adviser or the Sub-Adviser increases the Fund's
exposure to a foreign currency, and that currency's value declines, the Fund
will realize a loss. There is no assurance that the Investment

A-3
<PAGE> 117

Adviser's or the Sub-Adviser's use of forward currency contracts will be
advantageous to the Fund, or that they will hedge at an appropriate time.

Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be adversely affected by
government exchange controls, limitations or restrictions on repatriation of
currency, and manipulations or exchange restrictions imposed by governments.
These forms of governmental actions can result in losses to the Fund if it is
unable to deliver or receive currency or monies in settlement of obligations and
could also cause hedges it has entered into to be rendered useless, resulting in
full currency exposure as well as incurring transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for the
purchase of most currencies must occur at a bank based in the issuing nation.
Trading options on currency futures is relatively new, and the ability to
establish and close out positions on these options is subject to the maintenance
of a liquid market that may not always be available. Currency exchange rates may
fluctuate based on factors extrinsic to that country's economy.

INTEREST RATE TRANSACTIONS

The Fund may enter into interest rate swaps and may purchase or sell
interest rate caps and floors. The Fund would enter into these transactions
primarily to preserve a return or spread on a particular investment or portion
of its portfolio, to manage the duration of its portfolio or to protect against
any increase in the price of the securities the Fund anticipates purchasing at a
later date or for any other purpose consistent with its objective.

The Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending on whether it is hedging its
assets or liabilities, and will usually enter into interest rate swaps on a net
basis, i.e., the two payments are netted out, with the Fund receiving or paying,
as the case may be, only the net amount of the two payments on the payment date.
If there is a default by the other party to such a transaction, the Fund will
have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.

EQUITY SWAPS AND RELATED TRANSACTIONS

The Fund may enter into equity swaps and may purchase or sell equity caps
and floors. The Fund would enter into these transactions primarily to preserve a
return or spread on a particular investment or portion of its portfolio, or to
protect against any increase in the price of the securities the Fund anticipates
purchasing at a later date or for any other purpose consistent with its
objective.

The Fund may enter into equity swaps, caps and floors on either an
asset-based or liability-based basis, depending on whether it is hedging its
assets or liabilities, and will usually enter in equity swaps on a net basis,
i.e., the two payment streams are netted out, with the Fund receiving or paying,
as the case may be, only the net amount of the two payments on the payment date.
If there is a default by the other party to such a transaction, the Fund will
have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps. Equity swaps, caps and floors
generally will be considered illiquid. In such instances, investment in such
equity swaps, caps and floors will be governed by the Fund's policy on
investment in illiquid securities and such securities will be included in the
35% limit on investment in illiquid securities by the Fund. The staff of the
Securities and Exchange Commission has taken the position that equity swaps,
caps and floors are illiquid securities. See "Risk Factors and Special
Considerations -- Thinly Traded Markets and Illiquid Investments" and
"Investment Objective and Policies -- Other Investments."

A-4
<PAGE> 118

RISKS OF DERIVATIVES

The use of Derivatives involves special risks, including possible default
by the other party to the transaction, illiquidity and, to the extent the
Investment Adviser's or the Sub-Adviser's view as to certain market movements is
incorrect, the risk that the use of Derivatives could result in losses greater
than if such investment strategies had not been used. The use of currency
transactions could result in the Fund's incurring losses as a result of the
imposition of exchange controls, suspension of settlements, or the inability to
deliver or receive a specified currency. The use of options and futures
transactions entails certain special risks. In particular, the variable degree
of correlation between price movements in the related portfolio position of the
Fund could create the possibility that losses on the hedging instrument are
greater than gains in the value of the Fund's position. In addition, futures and
options markets could be illiquid in some circumstances and certain
over-the-counter options could have no markets. As a result, in certain markets,
the Fund might not be able to close out a position without incurring substantial
losses. Although the Fund's use of futures and options transactions for hedging
purposes should tend to minimize the risk of loss due to a decline in the value
of the hedged position at the same time it will tend to limit any potential gain
to the Fund that might result from an increase in value of the position.
Finally, the daily variation margin requirements for futures contracts create a
greater ongoing potential financial risk than would purchases of options, in
which case the exposure is united to the cost of the initial premium and
transaction costs. Losses resulting from Derivatives will reduce the Fund's net
asset value, and possibly income, and the losses can be greater than if the
Derivatives had not been used.

When conducted outside the United States, the use of Derivatives may not be
regulated as rigorously as in the United States, may not involve a clearing
mechanism and related guarantees, and will be subject to the risk of
governmental actions affecting trading in, or the prices of, foreign securities,
currencies and other instruments. The value of positions taken as part of
non-U.S. Hedging also could be adversely affected by: (1) other complex foreign
political, legal and economic factors; (2) lesser availability of data on which
to make trading decisions in the United States; (3) delays in the Fund's ability
to act upon economic events occurring in foreign markets during non-business
hours in the United States; (4) the imposition of different exercise and
settlement terms and procedures and margin requirements than in the United
States; and (5) lower trading volume and liquidity.

SEGREGATION AND COVER REQUIREMENTS

Many of the Derivatives which may be used by the Fund are subject to
segregation and coverage requirements established by either the CFTC or the SEC,
with the result that, if the Fund does not hold the instrument underlying the
futures contract or option or another offsetting position, the Fund may be
required to segregate on an ongoing basis with its custodian, cash, U.S.
government securities, or other liquid high grade debt obligations in an amount
at least equal to the Fund's obligations with respect to such instruments. Such
amounts will fluctuate as the market value of the obligations increases or
decreases. The segregation requirement can result in the Fund maintaining
positions it would otherwise liquidate and consequently segregating assets with
respect thereto at a time when it might be disadvantageous to do so. In
addition, with respect to futures contracts purchased by the Fund, the Fund will
also be subject to the segregation requirements with respect to the value of the
instruments underlying the futures contract. In general, those Derivatives in
which the Fund may invest which involve the possibility of leverage are subject
to segregation and coverage requirements that do not require offsetting
positions and are not subject to such requirements.

OTHER LIMITATIONS

The degree of the Fund's use of Derivatives may be limited by certain
provisions of the Code. See "Taxation."

A-5
<PAGE> 119

APPENDIX B

DEBT RATINGS

A description of the rating policies of Moody's and S&P with respect to
bonds and debentures appears below.

MOODY'S INVESTORS SERVICE'S CORPORATE BOND RATINGS

Aaa -- Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment qualities
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers "1", "2" and "3" to certain of its
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA -- This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.

B-1
<PAGE> 120

AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and differs from AAA
issues only in small degree.

A -- Bonds rated A have a strong capacity to repay principal and pay
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB -- Bonds rated BBB are regarded as having an adequate capacity to repay
principal and pay interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for higher rated categories.

BB-B-CCC-CC-C -- Bonds rated BB, B, CCC and CC, and C are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

CI -- Bonds rated CI are income bonds on which no interest is being paid.

D -- Bonds rated D are in default. The D category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The D rating is also used upon the filing
of a bankruptcy petition if debt service payments are jeopardized.

The ratings set forth above may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

MOODY'S INVESTORS SERVICE'S COMMERCIAL PAPER RATINGS

Prime-1 -- Issuers (or related supporting institutions) rated Prime-1 have
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and well-
established access to a range of financial markets and assured sources of
alternate liquidity.

Prime-2 -- Issuers (or related supporting institutions) rated Prime-2 have
a strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.

Prime-3 -- Issuers (or related supporting institutions) rated Prime-3 have
an acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Not Prime -- Issuers rated Not Prime do not fall within any of the Prime
rating categories.

B-2
<PAGE> 121

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

A S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. The four categories are as follows:

A-1 -- This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.

A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

A-3 -- Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

B -- Issues rated "B" are regarded as having only speculative capacity for
timely payment.

C -- This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D -- Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.

B-3
<PAGE> 122

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND,
THE FUND'S INVESTMENT MANAGER, INVESTMENT ADVISER OR SUB-ADVISER OR ANY
UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE FUND SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. HOWEVER, IF
ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED BY LAW TO BE
DELIVERED, THIS PROSPECTUS WILL BE SUPPLEMENTED OR AMENDED ACCORDINGLY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED THEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary................................... 3
Summary of Expenses....................... 19
The Fund.................................. 20
Investment Strategy....................... 20
Investment in Korea....................... 20
Use of Proceeds........................... 21
Investment Objective and Policies......... 21
Additional Investment Activities.......... 26
Investment Restrictions................... 28
Risk Factors and Special Considerations... 29
The Republic of Korea..................... 45
The Securities Markets of Korea........... 62
Management of the Fund.................... 82
Portfolio Transactions.................... 89
Dividends and Distributions; Dividend
Reinvestment and Cash Purchase Plan..... 91
Taxation.................................. 92
Net Asset Value........................... 99
Description of Capital Stock.............. 100
Annual Tender Offers and Share
Repurchases............................. 101
Custodian, Transfer Agent, Dividend Paying
Agent and Registrar..................... 103
Underwriting.............................. 104
Experts................................... 109
Legal Matters............................. 109
Further Information....................... 109
Report of Independent Accountants......... 110
Statement of Assets and Liabilities....... 111
Appendix A: General Characteristics and
Risks of Derivatives.................... A-1
Appendix B: Debt Ratings.................. B-1
</TABLE>

UNTIL , 1994, ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- ------------------------------------------------------
- ------------------------------------------------------

5,250,000 SHARES

FIDELITY ADVISOR
KOREA FUND, INC.

COMMON STOCK
------------------------
PROSPECTUS
------------------------
BARING SECURITIES INC.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

DILLON, READ & CO. INC.

COWEN & COMPANY

LEGG MASON WOOD WALKER
INCORPORATED

RAUSCHER PIERCE REFSNES, INC.

RAYMOND JAMES & ASSOCIATES, INC.
October , 1994
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 123

PART C -- OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

<TABLE>
<S> <C> <C> <C> <C>
(1) Financial Statements
-- Report of Independent Accountants
-- Statement of Assets and Liabilities dated October 20, 1994
(2) Exhibits
(a) -- Articles of Incorporation**
(b) -- By-Laws, as amended*
(c) -- Not applicable
(d) -- Specimen certificate for Common Stock, par value $.001 per share*
(e) -- Dividend Reinvestment and Cash Purchase Plan*
(f) -- Not applicable
(g) (1) -- Form of Management Agreement with the Investment Manager*
(2) -- Form of Advisory Agreement with the Investment Adviser*
(3) -- Form of Sub-Advisory Agreement with Sub-Adviser*
(h) (1) -- Form of U.S. Underwriting Agreement*
(2) -- Form of International Underwriting Agreement*
(3) -- Form of Master Agreement Among U.S. Underwriters*
(4) -- Form of U.S. Selling Agreement*
(5) -- Form of Agreement Among International Managers*
(6) -- Form of International Selling Agreement*
(7) -- Form of Agreement between U.S. Underwriters and International Managers*
(i) -- Not applicable
(j) -- Form of U.S. Custodian Agreement*
(k) (1) -- Form of Transfer Agency and Service Agreement*
(2) -- Form of Administration Agreement*
(l) (1) -- Opinion and Consent of Rogers & Wells*
(2) -- Opinion and Consent of Piper & Marbury*
(3) -- Opinion and Consent of Shin & Kim*
(m) -- Not applicable
(n) -- Consent of Independent Accountants*
(o) -- Not applicable
(p) -- Form of Investment Letter*
(q) -- Not applicable
(3) Other Exhibit
-- Power of Attorney of Edward C. Johnson 3d**
</TABLE>

- ---------------
* Filed herewith.

** Previously filed.

C-1
<PAGE> 124

ITEM 25. MARKETING ARRANGEMENTS

See Exhibit 2(h) to this Registration Statement.

ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement.

<TABLE>
<S> <C>
U.S. Securities and Exchange Commission registration fees................. $ 32,229
New York Stock Exchange listing fee....................................... 88,100
Printing (other than stock certificates).................................. 168,000
Engraving and printing stock certificates................................. 16,000
Fees and expenses of qualification under state securities laws (including 20,000
fees of counsel)........................................................
Auditing and accounting fees.............................................. 2,900
Underwriters' expenses allowance.......................................... 200,000
Legal fees and expenses................................................... 140,000
NASD fee.................................................................. 9,500
Miscellaneous............................................................. 23,271
--------
Total........................................................... $700,000
========
</TABLE>

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Not applicable

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

As of the effective date of the Registration Statement:

<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
--------------------------------------------------------------- --------------
<S> <C>
Common Stock, $.001 par value.................................. one
</TABLE>

ITEM 29. INDEMNIFICATION

Section 2-418 of the General Corporation Law of the State of Maryland,
Article SEVENTH of the Fund's Articles of Incorporation, Article VII of the
Fund's By-Laws, the U.S. Underwriting Agreement, the International Underwriting
Agreement and the Administration Agreement provide for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Fund, pursuant to the foregoing provisions or
otherwise, the Fund has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Fund of
expenses incurred or paid by a director, officer or controlling person of the
Fund in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Fund will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

C-2
<PAGE> 125

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER AND INVESTMENT
ADVISER

The description of the business of Fidelity Management & Research Company
("FMR"), Fidelity International Investment Advisors ("FIIA") and Fidelity
Investments Japan Limited ("FIJ") is set forth under the caption "Management of
the Fund" in the Prospectus forming part of this Registration Statement.

The information as to the directors and officers of FMR, FIIA and FIJ is
set forth in their respective Form ADVs filed with the Securities and Exchange
Commission (File No. 801-7884), (File No. 801-21347) and (File No. 801-45731),
each as amended as of the date hereof is incorporated herein by reference.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street, Boston, Massachusetts 02109

(Fund's Articles of Incorporation and By-Laws)

Fidelity Management & Research Company
82 Devonshire Street, Boston, Massachusetts 02109

(with respect to its services as Investment Manager)

Fidelity International Investment Advisors
Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda

(with respect to its service as Investment Adviser)

Fidelity Investments Japan Limited
19th Floor, Shiroyama JT Mori Building, 4-3-1

Toranomon, Minato-ku, Tokyo 105, Japan

(with respect to its services as Sub-Adviser)

Fidelity Service Co.

82 Devonshire Street, Boston, Massachusetts 02109

(with respect to its services as Administrator)

The Chase Manhattan Bank, N.A.
1211 Avenue of the Americas, 39th Floor
New York, New York 10036

(with respect to its services as Custodian for the Fund's U.S. assets)

State Street Bank and Trust Company
Two Heritage Drive, Quincy, Massachusetts 02171

(with respect to its services as Transfer Agent)

ITEM 32. MANAGEMENT SERVICES

Not applicable

ITEM 33. UNDERTAKINGS

(a) The Fund undertakes to suspend offering its shares until it amends its
prospectus contained herein if (1) subsequent to the effective date of its
registration statement, the net asset value per share declines more than 10
percent from its net asset value per share as of the effective date of this
registration statement or (2) the net asset value increases to an amount greater
than its net proceeds as stated in the prospectus.

C-3
<PAGE> 126

(b) The Fund hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Fund under Rule 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

C-4
<PAGE> 127

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, the State of
New York on the 24th day of October, 1994.

FIDELITY ADVISOR KOREA FUND, INC.

By: /s/ EDWARD C. JOHNSON 3d
----------------------------------
Edward C. Johnson 3d, President
Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------- -------------------
<C> <S> <C>

/s/ EDWARD C. JOHNSON 3d Director and President October 24, 1994
- ------------------------------------------
Edward C. Johnson 3d

/s/ J. GARY BURKHEAD Director and Senior Vice October 24, 1994
- ------------------------------------------ President
J. Gary Burkhead (Principal Executive
Officer)

/s/ GARY L. FRENCH Treasurer (Principal October 24, 1994
- ------------------------------------------ Financial and Accounting
Gary L. French Officer

/s/ H.F. VAN DEN HOVEN Director October 24, 1994
- ------------------------------------------
H.F. Van den Hoven

/s/ DAVID YUNICH Director October 24, 1994
- ------------------------------------------
David Yunich

/s/ BERTRAM WITHAM Director October 24, 1994
- ------------------------------------------
Bertram Witham
</TABLE>

C-5

<PAGE> 1

- --------------------------------------------------------------------------------

FIDELITY ADVISOR KOREA FUND, INC.

A MARYLAND CORPORATION

BY-LAWS

OCTOBER 20, 1994

- --------------------------------------------------------------------------------

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.1. Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4. Notice of Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6. Quorum; Adjournment of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7. Voting and Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.8. Conduct of Stockholders' Meetings . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.9. Concerning Validity of Proxies, Ballots,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.10. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE II Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 2.1. Function of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3. Classes of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.5. Increase or Decrease in Number of
Directors . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6. Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.8. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.10. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.11. Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.12. Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.13. Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.14. Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.15. Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE III Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11\

Section 3.1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.3. Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4. Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE IV Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 4.1. Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.3. Stock Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4. Transfer Agents and Registrars . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

i
<PAGE> 3
TABLE OF CONTENTS
(Continued)

<TABLE>
<S> <C>
ARTICLE V Corporate Seal; Location of Offices;
Books; Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 5.1. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.2. Location of Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.4. Annual Statement of Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.5. Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE VI Fiscal Year and Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 6.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.2. Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VII Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.2. Indemnification of Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VIII Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE X Amendment of By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

</TABLE>

ii
<PAGE> 4
FIDELITY ADVISOR KOREA FUND, INC.

By-Laws

ARTICLE I

Stockholders

Section 1.1. Place of Meeting. All meetings of the
stockholders should be held at the principal office of the Corporation in the
State of Maryland or at such other place within the United States as may from
time to time be designated by the Board of Directors and stated in the notice
of such meeting.
Section 1.2. Annual Meetings. The annual meeting of the
stockholders of the Corporation shall be held during the month of February of
each year on such date and at such hour as may from time to time be designated
by the Board of Directors and stated in the notice of such meeting, for the
purpose of electing directors for the ensuing year and for the transaction of
such other business as may properly be brought before the meeting.
Section 1.3. Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called by the Chairman of the
Board, the President, or a majority of the Board of Directors. Special
meetings of stockholders shall also be called by the Secretary upon receipt of
the request in writing signed by stockholders holding not less than 25% of the
votes entitled to be cast thereat. Such request shall state the purpose or
purposes of the proposed meeting and the matters proposed to be acted on at
such proposed meeting. The Secretary shall inform such stockholders of the
reasonably estimated costs of preparing and mailing such notice of meeting and
upon payment to the Corporation

<PAGE> 5
of such costs, the Secretary shall give notice as required in this Article to
all stockholders entitled to notice of such meeting. No special meeting of
stockholders need be called upon the request of the holders of common stock
entitled to cast less than a majority of all votes entitled to be cast at such
meeting to consider any matter which is substantially the same as a matter
voted upon at any special meeting of stockholders held during the preceding
twelve months.
Section 1.4. Notice of Meetings of Stockholders. Not less
than ten days' and not more than ninety days' written or printed notice of
every meeting of stockholders, stating the time and place thereof (and the
purpose of any special meeting), shall be given to each stockholder entitled to
vote thereat and to each other stockholder entitled to notice of the meeting by
leaving the same with such stockholder or at such stockholder's residence or
usual place of business or by mailing it, postage prepaid, and addressed to
such stockholder at such stockholder's address as it appears upon the books of
the Corporation. If mailed, notice shall be deemed to be given when deposited
in the mail addressed to the stockholder as aforesaid.
No notice of the time, place or purpose of any meeting of
stockholders need be given to any stockholder who attends in person or by proxy
or to any stockholder who, in writing executed and filed with the records of
the meeting, either before or after the holding thereof, waives such notice.
Section 1.5. Record Dates. The Board of Directors may fix,
in advance, a record date for the determination of

2
<PAGE> 6
stockholders entitled to notice of or to vote at any stockholders meeting or to
receive a dividend or be allotted rights or for the purpose of any other proper
determination with respect to stockholders and only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting or to
receive such dividends or rights or otherwise, as the case may be; provided,
however, that such record date shall not be prior to ninety days preceding the
date of any such meeting of stockholders, dividend payment date, date for the
allotment of rights or other such action requiring the determination of a
record date; and further provided that such record date shall not be prior to
the close of business on the day the record date is fixed, that the transfer
books shall not be closed for a period longer than 20 days, and that in the
case of a meeting of stockholders, the record date or the closing of the
transfer books shall not be less than ten days prior to the date fixed for such
meeting.
Section 1.6. Quorum; Adjournment of Meetings. The presence
in person or by proxy of stockholders entitled to cast a majority of the votes
entitled to be cast thereat shall constitute a quorum at all meetings of the
stockholders, except as otherwise provided in the Articles of Incorporation.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the holders of a majority of the stock present in person or
by proxy shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite amount of
stock entitled to vote at such meeting shall be present, to a date not more
than 120 days

3
<PAGE> 7
after the original record date. At such adjourned meeting at which the
requisite amount of stock entitled to vote thereat shall be represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Any meeting of stockholders, annual or special, may adjourn
from time to time to reconvene at the same or some other place, and notice
need not be given of any such adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting.
Section 1.7. Voting and Inspectors. At all meetings,
stockholders of record entitled to vote thereat shall have one vote for each
share of common stock standing in his name on the books of the Corporation (and
such stockholders of record holding fractional shares, if any, shall have
proportionate voting rights) on the date for the determination of stockholders
entitled to vote at such meeting, either in person or by proxy appointed by
instrument in writing subscribed by such stockholder or his duly authorized
attorney.
All elections shall be had and all questions decided by a
majority of the votes cast at a duly constituted meeting, except as otherwise
provided by statute or by the Articles of Incorporation or by these By-Laws.
At any election of Directors, the Chairman of the meeting may,
and upon the request of the holders of ten percent (10%) of the stock entitled
to vote at such election shall, appoint two

4
<PAGE> 8
inspectors of election who shall first subscribe an oath or affirmation to
execute faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after the
election make a certificate of the result of the vote taken. No candidate for
the office of Director shall be appointed such Inspector.
Section 1.8. Conduct of Stockholders' Meetings. The meetings
of the stockholders shall be presided over by the Chairman of the Board, or if
he is not present, by the President, or if he is not present, by a
Vice-President, or if none of them is present, by a Chairman to be elected at
the meeting. The Secretary of the Corporation, if present, shall act as a
Secretary of such meetings, or if he is not present, an Assistant Secretary
shall so act; if neither the Secretary nor the Assistant Secretary is present,
then the meeting shall elect its Secretary.
Section 1.9. Concerning Validity of Proxies, Ballots, etc.
At every meeting of the stockholders, all proxies shall be received and taken
in charge of and all ballots shall be received and canvassed by the Secretary
of the meeting, who shall decide all questions touching the qualification of
voters, the validity of the proxies and the acceptance or rejection of votes,
unless inspectors of election shall have been appointed by the Chairman of the
meeting, in which event such inspectors of election shall decide all such
questions. Unless a proxy provides otherwise, it is not valid for more than
eleven months after its date.
Section 1.10. Action Without Meeting. Any action to be taken
by stockholders may be taken without a meeting if (1) all

5
<PAGE> 9
stockholders entitled to vote on the matter consent to the action in writing,
(2) all stockholders entitled to notice of the meeting but not entitled to vote
at it sign a written waiver of any right to dissent and (3) said consents and
waivers are filed with the records of the meetings of stockholders. Such
consent shall be treated for all purposes as a vote at the meeting.

ARTICLE II
Board of Directors

Section 2.1. Function of Directors. The business and affairs
of the Corporation shall be conducted and managed under the direction of its
Board of Directors. All powers of the Corporation shall be exercised by or
under authority of the Board of Directors except as conferred on or reserved to
the stockholders by statute.
Section 2.2. Number of Directors. The Board of Directors
shall consist of not more than twelve (12) Directors nor less than such number
of Directors as may be permitted under Maryland law, as may be determined from
time to time by vote of a majority of the Directors then in office. Directors
need not be stockholders.
Section 2.3. Classes of Directors. The Directors shall be
divided into three classes, designated Class I, Class II and Class III. All
classes shall be as nearly equal in number as possible. The Directors as
initially classified shall hold office for terms as follows: the Class I
Directors shall hold office until the date of the annual meeting of
stockholders in 1995 or until their successors shall be elected and qualified;
the Class II Directors shall hold office until the date of the annual meeting
of

6
<PAGE> 10
stockholders in 1996 or until their successors shall be elected and qualified;
and the Class III Directors shall hold office until the date of the annual
meeting of stockholders in 1997 or until their successors shall be elected and
qualified. Upon expiration of the term of office of each class as set forth
above, the Directors in each class shall be elected for a term of three years
to succeed the Directors whose terms of office expire, except that the
Directors elected in 1998 and 1999 shall be elected for a term of two years and
one year, respectively, to succeed the Directors whose terms of office expire.
Commencing on the date of the annual meeting of stockholders in 2000, the
Directors will no longer be divided into classes and will each stand for
election at such meeting and on each annual meeting of stockholders held
thereafter. Each Director shall hold office until the expiration of his term
and until his successor shall have been elected and qualified.
Section 2.4. Vacancies. In case of any vacancy in the Board
of Directors through death, resignation or other cause, other than an increase
in the number of Directors, subject to the provisions of law, a majority of the
remaining Directors, although a majority is less than a quorum, by an
affirmative vote, may elect a successor to hold office until the next annual
meeting of stockholders or until his successor is chosen and qualified.
Section 2.5. Increase or Decrease in Number of Directors.
The Board of Directors, by the vote of a majority of the entire Board, may
increase the number of Directors and may elect Directors to fill the vacancies
created by any such increase in the number of Directors until the next annual
meeting of

7
<PAGE> 11
stockholders or until their successors are duly chosen and qualified. The
Board of Directors, by the vote of a majority of the entire Board, may likewise
decrease the number of Directors to a number not less than that permitted by
law.
Section 2.6. Place of Meeting. The Directors may hold their
meetings within or outside the State of Maryland, at any office or offices of
the Corporation or at any other place as they may from time to time determine.
Section 2.7. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such time and on such notice as the Directors may
from time to time determine.
The annual meeting of the Board of Directors shall be held as
soon as practicable after the annual meeting of the stockholders for the
election of Directors.
Section 2.8. Special Meetings. Special meetings of the Board
of Directors may be held from time to time upon call of the Chairman of the
Board, the President, the Secretary or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each Director
not less than one day before such meeting.
Section 2.9. Notices. Unless required by statute or
otherwise determined by resolution of the Board of Directors in accordance with
these By-laws, notices to Directors need not be in writing and need not state
the business to be transacted at or the purpose of any meeting, and no notice
need be given to any Director who is present in person or to any Director who,
in writing executed and filed with the records of the meeting either before or

8
<PAGE> 12
after the holding thereof, waives such notice. Waivers of notice need not
state the purpose or purposes of such meeting.
Section 2.10. Quorum. One-third of the Directors then in
office shall constitute a quorum for the transaction of business, provided
that if there is more than one Director, a quorum shall in no case be less
than two Directors. If at any meeting of the Board there shall be less than
a quorum present, a majority of those present may adjourn the meeting from
time to time until a quorum shall have been obtained. The act of the majority
of the Directors present at any meeting at which there is a quorum shall be
the act of the Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation or by these By-Laws.
Section 2.11. Executive Committee. The Board of Directors
may appoint from the Directors an Executive Committee to consist of such number
of Directors (not less than two) as the Board may from time to time determine.
The Chairman of the Committee shall be elected by the Board of Directors. The
Board of Directors shall have power at any time to change the members of such
Committee and may fill vacancies in the Committee by election from the
Directors. When the Board of Directors is not in session, to the extent
permitted by law, the Executive Committee shall have and may exercise any or
all of the powers of the Board of Directors in the management and conduct of
the business and affairs of the Corporation. The Executive Committee may fix
its own rules of procedure, and may meet when and as provided by such rules or
by resolution of the Board of Directors, but in every case the

9
<PAGE> 13
presence of a majority shall be necessary to constitute a quorum. During the
absence of a member of the Executive Committee, the remaining members may
appoint a member of the Board of Directors to act in his place.
Section 2.12. Other Committees. The Board of Directors may
appoint from the Directors other committees which shall in each case consist of
such number of Directors (not less than two) and shall have and may exercise
such powers as the Board may determine in the resolution appointing them. A
majority of all the members of any such committee may determine its action and
fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have power at any time to
change the members and powers of any such committee, to fill vacancies and to
discharge any such committee.
Section 2.13. Telephone Meetings. Members of the Board of
Directors or a committee of the Board of Directors may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means, subject to the provisions of the
Investment Company Act of 1940, as amended, constitutes presence in person at
the meeting.
Section 2.14. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written

10
<PAGE> 14
consent is filed with the minutes of the proceedings of the Board or such
committee.
Section 2.15. Compensation of Directors. No Director shall
receive any stated salary or fees from the Corporation for his services as such
if such Director is, otherwise than by reason of being such Director, an
interested person (as such term is defined by the Investment Company Act of
1940, as amended) of the Corporation or of its investment manager or principal
underwriter. Except as provided in the preceding sentence, Directors shall be
entitled to receive such compensation from the Corporation for their services
as may from time to time be voted by the Board of Directors.

ARTICLE III

Officers

Section 3.1. Executive Officers. The executive officers of
the Corporation shall be chosen by the Board of Directors. These may include a
Chairman of the Board of Directors (who shall be a Director) and shall include
a President, a Secretary and a Treasurer. The Board of Directors or the
Executive Committee may also in its discretion appoint one or more Vice-
Presidents, Assistant Secretaries, Assistant Treasurers and other officers,
agents and employees, who shall have such authority and perform such duties as
the Board of Directors or the Executive Committee may determine. The Board of
Directors may fill any vacancy which may occur in any office. Any two offices,
except those of President and Vice-President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in

11
<PAGE> 15
more than one capacity, if such instrument is required by law or these By-Laws
to be executed, acknowledged or verified by two or more officers.
Section 3.2. Term of Office. The term of office of all
officers shall be one year and until their respective successors are chosen and
qualified. Any officer may be removed from office at any time with or without
cause by the vote of a majority of the whole Board of Directors. Any officer
may resign his office at any time by delivering a written resignation to the
Corporation and, unless otherwise specified therein, such resignation shall
take effect upon delivery.
Section 3.3. Powers and Duties. The officers of the
Corporation shall have such powers and duties as shall be stated in a
resolution of the Board of Directors, or the Executive Committee and, to the
extent not so stated, as generally pertain to their respective offices, subject
to the control of the Board of Directors and the Executive Committee.
Section 3.4. Surety Bonds. The Board of Directors may
require any officer or agent of the Corporation to execute a bond (including,
without limitation, any bond required by the Investment Company Act of 1940, as
amended, and the rules and regulations of the Securities and Exchange
Commission) to the Corporation in such sum and with such surety or sureties as
the Board of Directors may determine, conditioned upon the faithful performance
of his duties to the Corporation, including responsibility for negligence and
for the accounting of any of the Corporation's property, funds or securities
that may come into his hands.

12
<PAGE> 16
ARTICLE IV

Capital Stock

Section 4.1. Certificates for Shares. Each stockholder of
the Corporation shall be entitled to a certificate or certificates for the full
number of shares of stock of the Corporation owned by him in such form as the
Board may from time to time prescribe.
Section 4.2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in
person or by his duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require; in the case of shares not
represented by certificates, the same or similar requirements may be imposed by
the Board of Directors.
Section 4.3. Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them respectively, shall be kept at the principal
offices of the Corporation or, if the Corporation employs a Transfer Agent, at
the offices of the Transfer Agent of the Corporation.
Section 4.4. Transfer Agents and Registrars. The Board of
Directors may from time to time appoint or remove transfer agents and/or
registrars of transfers of shares of stock of the Corporation, and it may
appoint the same person as both transfer

13
<PAGE> 17
agent and registrar. Upon any such appointment being made, all certificates
representing shares of capital stock thereafter issued shall be countersigned
by one of such transfer agents or by one of such registrars of transfers or by
both and shall not be valid unless so countersigned. If the same person shall
be both transfer agent and registrar, only one countersignature by such person
shall be required.
Section 4.5. Lost, Stolen or Destroyed Certificates. The
Board of Directors or the Executive Committee or any officer or agent
authorized by the Board of Directors or Executive Committee may determine the
conditions upon which a new certificate of stock of the Corporation of any
class may be issued in place of a certificate which is alleged to have been
lost, stolen or destroyed; and may, in its discretion, require the owner of
such certificate or such owner's legal representative to give bond, with
sufficient surety, to the Corporation and each Transfer Agent, if any, to
indemnify it and each such Transfer Agent against any and all loss or claims
which may arise by reason of the issue of a new certificate in the place of the
one so lost, stolen or destroyed.

ARTICLE V

Corporate Seal; Location of
Offices; Books; Net Asset Value

Section 5.1. Corporate Seal. The Board of Directors may
provide for a suitable corporate seal, in such form and bearing such
inscriptions as it may determine. Any officer or director shall have the
authority to affix the corporate seal. If the Corporation is required to place
its corporate seal to a document,

14
<PAGE> 18
it shall be sufficient to place the word "(seal)" adjacent to the signature of
the authorized officer of the Corporation signing the document.
Section 5.2. Location of Offices. The Corporation shall have
a principal office in the State of Maryland. The Corporation may, in addition,
establish and maintain such other offices as the Board of Directors or any
officer may, from time to time, determine.
Section 5.3. Books and Records. The books and records of the
Corporation shall be kept at the places, within or without the State of
Maryland, as the directors or any officer may determine; provided, however,
that the original or a certified copy of the by-laws, including any amendments
to them, shall be kept at the Corporation's principal executive office.
Section 5.4. Annual Statement of Affairs. The President or
any other executive officer of the Corporation shall prepare annually a full
and correct statement of the affairs of the Corporation, to include a balance
sheet and a financial statement of operations for the preceding fiscal year.
The statement of affairs should be submitted at the annual meeting of
stockholders and, within 20 days of the meeting, placed on file at the
Corporation's principal office.
Section 5.5. Net Asset Value. The value of the Corporation's
net assets shall be determined at such times and by such method as shall be
established from time to time by the Board of Directors.

15
<PAGE> 19
ARTICLE VI

Fiscal Year and Accountant

Section 6.1. Fiscal Year. The fiscal year of the
Corporation, unless otherwise fixed by resolution of the Board of Directors,
shall begin on the 1st day of October and shall end on the 30th day of
September in each year.
Section 6.2. Accountant. The Corporation shall employ an
independent public accountant or a firm of independent public accountants as
its Accountant to examine the accounts of the Corporation and to sign and
certify financial statements filed by the Corporation. The employment of the
Accountant shall be conditioned upon the right of the Corporation to terminate
the employment forthwith without any penalty by vote of a majority of the
outstanding voting securities at any stockholders' meeting called for that
purpose.

ARTICLE VII
Indemnification and Insurance
Section 7.1. General. The Corporation shall indemnify
directors, officers, employees and agents of the Corporation against judgments,
fines, settlements and expenses to the fullest extent authorized and in the
manner permitted, by applicable federal and state law.
Section 7.2. Indemnification of Directors and Officers. The
Corporation shall indemnify to the fullest extent permitted by law (including
the Investment Company Act of 1940, as amended) as currently in effect or as
the same may hereafter be amended, any person made or threatened to be made a
party to any action, suit or

16
<PAGE> 20
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
director or officer of the Corporation or serves or served at the request of
the Corporation any other enterprise as a director or officer. To the fullest
extent permitted by law (including the Investment Company Act of 1940, as
amended) as currently in effect or as the same may hereafter be amended,
expenses incurred by any such person in defending any such action, suit or
proceeding shall be paid or reimbursed by the Corporation promptly upon receipt
by it of an undertaking of such person to repay such expenses if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation. The rights provided to any person by this Article VII shall be
enforceable against the Corporation by such person who shall be presumed to
have relied upon it in serving or continuing to serve as a director or officer
as provided above. No amendment of this Article VII shall impair the rights of
any person arising at any time with respect to events occurring prior to such
amendment. For purposes of this Article VII, the term "Corporation" shall
include any predecessor of the Corporation and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprises" shall include any
corporation, partnership, joint venture, trust or employee benefit plan;
service "at the request of the Corporation" shall include service as a director
or officer of the Corporation which imposes duties on, or involves services by,
such director or officer with respect to an

17
<PAGE> 21
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed
to be indemnifiable expenses; and action by a person with respect to any
employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.
Section 7.3. Insurance. Subject to the provisions of the
Investment Company Act of 1940, as amended, the Corporation, directly, through
third parties or through affiliates of the Corporation, may purchase, or
provide through a trust fund, letter of credit or surety bond insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or who, while a Director, officer, employee or agent of the
Corporation, is or was serving at the request of the Corporation as a Director,
officer, employee, partner, trustee or agent of another foreign or domestic
corporation, partnership joint venture, trust or other enterprise against any
liability asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Corporation would
have the power to indemnify such person against such liability.

ARTICLE VIII
Custodian
The Corporation shall have as custodian or custodians one or
more trust companies or banks of good standing, foreign or domestic, as may be
designated by the Board of Directors, subject to the provisions of the
Investment Company Act of 1940, as

18
<PAGE> 22
amended, and other applicable laws and regulations; and the funds and
securities held by the Corporation shall be kept in the custody of one or more
such custodians, provided such custodian or custodians can be found ready and
willing to act, and further provided that the Corporation and/or the Custodians
may employ such subcustodians as the Board of Directors may approve and as
shall be permitted by law.

ARTICLE IX
Nothing in these By-Laws protects or purports to protect any
director or officer against any liability to the Corporation or its security
holders to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.

ARTICLE X
Amendment of By-Laws
The By-Laws of the Corporation may be altered, amended, added
to or repealed only by majority vote of the entire Board of Directors.

<PAGE> 1

FIDELITY ADVISOR KOREA FUND, INC.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
TERMS AND CONDITIONS

1. The shareholder ("Shareholder") holding shares of
common stock of Fidelity Advisor Korea Fund, Inc. (the "Fund") elects, by
written instruction to State Street Bank and Trust Company (the "Plan Agent"),
to be a participant in the Fund's Dividend Reinvestment and Cash Purchase Plan
(the "Plan") and to have all distributions automatically reinvested by the Plan
Agent in Fund shares pursuant to the Plan. A Shareholder who does not wish to
participate in the Plan will receive all distributions in cash, net of any
applicable U.S. withholding tax, and will be paid by check in U.S. dollars
mailed directly to such Shareholder by the State Street Bank and Trust Company,
as dividend disbursing agent. The Plan Agent will act as agent for individual
Shareholders in administering the Plan and will open an account for each
Shareholder under the Plan in the same name as her or his shares of common
stock are registered.
2. Whenever the directors of the Fund declare an income
dividend or capital gains distribution payable either in shares of common stock
or in cash, non-participating Shareholders will receive cash, and participating
Shareholders will take such dividend or distribution entirely in shares of
common stock to be

<PAGE> 2
issued by the Fund or to be purchased on the open market by the Plan Agent, and
the Plan Agent shall automatically receive such shares of common stock,
including fractions, for the Shareholder's account. Whenever the market price
per share of common stock equals or exceeds the net asset value per share at
the time the shares of common stock are valued for the purpose of determining
the number of shares of common stock equivalent to the dividend or distribution
(the "Valuation 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 participants will be issued shares valued at 95% of
the market price. If net asset value per share on the Valuation Date exceeds
the market price per share on that date, the Plan Agent, as agent for the
participants, will buy shares of the Fund's common stock on the open market, on
the New York Stock Exchange or elsewhere in the United States, for the
participants' accounts. If, before the Plan Agent has completed such
purchases, the market price exceeds the net asset value per share, the average
per share purchase price paid by the Plan Agent may exceed the net asset value
per share, resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund at net asset value.
Additionally, if the market price exceeds the net asset value per share before
the Plan Agent has completed its purchases, the Plan Agent is permitted to
cease purchasing shares and the Fund may issue the remaining shares at a price
equal to the greater of (a) net asset value or (b) 95% of the then current
market price. In a case where the Plan Agent has terminated open

2
<PAGE> 3
market purchases and the Fund has issued the remaining shares, the number of
shares received by each participant in respect of the dividend or distribution
will be based on the weighted average of prices paid for shares purchased in
the open market and the price at which the Fund issues the remaining shares.
The Valuation Date shall be the dividend or distribution payment date or, if
that date is not a New York Stock Exchange trading day, the next preceding
trading day.
3. Whenever the directors of the Fund declare an income
dividend or capital gains distribution payable only in cash, the Plan Agent, as
agent for the participants, will buy shares of the Fund's common stock on the
open market, on the New York Stock Exchange or elsewhere in the United States,
with the cash in respect of such dividend or distribution for the participants'
accounts, on, or shortly after, the payment date. To the extent the market
price exceeds the net asset value of the common stock when the Plan Agent makes
such purchases, participants may receive fewer shares of common stock than if
the dividend or distribution had been payable in common stock issued by the
Fund.
4. Participants in the Plan have the option of making
additional cash payments to the Plan Agent, annually, in any amount from $100
to $3,000, for investment in shares of common stock of the Fund. The Plan
Agent will use all funds received from participants (as well as any dividends
or distributions received in cash) to purchase Fund shares of common stock on
the open market, on or about the 15th of February. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and

3
<PAGE> 4
processing by the Plan Agent, participants should send in voluntary cash
payments to be received by the Plan Agent approximately ten days before the
15th of February. Any voluntary cash payments received more than thirty days
prior to that date will be returned by the Plan Agent, and interest will not be
paid on any such uninvested cash payment amounts. 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.
All voluntary cash payments should be made by check drawn on a
U.S. bank, (or a non-U.S. bank, if the U.S. currency is imprinted on the check)
payable in U.S. dollars, and should be mailed to the Plan Agent, along with a
properly executed cash remittance form (copies of which will be provided by the
Plan Agent to participants), at State Street Bank and Trust Company, Two
Heritage Drive, Quincy, Massachusetts, 02171. If any check is returned unpaid
for any reason, the Plan Agent will be entitled to sell any number of shares
from the participant's account required to recoup any funds expended to
purchase shares for such participant's account.
5. The Plan Agent will apply all cash received as a
dividend or distribution or as a voluntary cash payment to purchase shares of
common stock on the open market as soon as practicable after the payment date
of the dividend or distribution, but in no event later than 30 days after such
payment date, except where necessary to comply with applicable provisions of
the federal securities laws. No participant will have any authority to direct

4
<PAGE> 5
the time or price at which the Plan Agent may purchase shares of the Fund's
common stock on such participant's behalf.
6. For all purposes of the Plan: (a) the market price
of shares of common stock of the Fund on a particular date shall be the last
sales price on the New York Stock Exchange at the close of the previous
trading day or, if there is no sale on the New York Stock Exchange on that
date, then the mean between the closing bid and asked quotations for such
stock on the New York Stock Exchange on such date, (b) each Valuation Date
shall be the dividend or distribution payment date or, if that date is not a
New York Stock Exchange trading day, the next preceding trading day, and (c)
the net asset value per share of common stock on a particular date shall be as
determined by or on behalf of the Fund.
7. The open-market purchases provided for above may be
made on any securities exchange in the United States where the shares of common
stock of the Fund are traded, in the over-the-counter market or in negotiated
transactions, and may be on such terms as to price, delivery and otherwise as
the Plan Agent shall determine. Funds held by the Plan Agent will not bear
interest. In addition, it is understood that the Plan Agent shall have no
liability (other than as provided in paragraph 15 hereof) in connection with
any inability to purchase shares of common stock within 30 days after the
payment date of any dividend or distribution as herein provided or with the
timing of any purchases effected. The Plan Agent shall have no responsibility
as to the value of the shares of common stock of the Fund acquired for any
Shareholder's account.

5
<PAGE> 6
8. The Plan Agent will hold shares of common stock
acquired pursuant to the Plan in non-certificated form in the name of the
Shareholder for whom such shares are being held, and each Shareholder's proxy
will include those shares of common stock held pursuant to the Plan. The Plan
Agent will forward to each Shareholder participating in the Plan any proxy
solicitation material received by it. In the case of Shareholders, such as
banks, brokers or nominees, that 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 such Shareholders as representing the
total amount registered in the names of such Shareholders and held for the
account of beneficial owners who participate in the Plan. Upon a Shareholder's
written request, the Plan Agent will deliver to her or him, without charge and
within ten days, a certificate or certificates representing all full shares of
common stock held by the Plan Agent pursuant to the Plan for the benefit of
such Shareholder.
9. The Plan Agent will confirm, in writing, each
acquisition made for the account of a Shareholder as soon as practicable, but
in any event not later than 60 days after the date thereof. Such confirmation
will indicate the number of shares purchased and the price per share paid, and
will include any applicable tax information pertaining to such Shareholder's
account. It is understood that the reinvestment of dividends and distributions
does not relieve the participant of any income tax which may be payable on such
dividends and distributions. Any Shareholder who is subject to U.S. backup
withholding tax, or who

6
<PAGE> 7
is a foreign Shareholder subject to U.S. income tax withholding, will have the
applicable tax withheld from all dividends and distributions received and only
the net amount will be reinvested in shares of the Fund's common stock.
Although a Shareholder may from time to time have an undivided fractional
interest (computed to three decimal places) in a share of common stock of the
Fund, no certificates for fractional shares will be issued. However,
distributions and dividends on fractional shares of common stock will be
credited to each Shareholder's account. In the event of termination of a
Shareholder's account under the Plan, the Plan Agent will adjust for any such
undivided fractional interest in cash at the current market value of the shares
of common stock at the time of termination.
10. Any stock dividends or split shares distributed by
the Fund on shares of common stock held by the Plan Agent for a Shareholder
will be credited to the Shareholder's account. In the event that the Fund
makes available to Shareholders rights to purchase additional shares of common
stock or other securities, the Plan Agent will forward to each Shareholder
participating in the Plan any materials received by it relating to such rights.
11. There is no charge to Shareholders for reinvesting
dividends or capital gains distributions. The Plan Agent's fees for the
handling of the reinvestment of dividends and distributions will be paid by the
Fund. However, each Shareholder will be charged a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open market purchases in
connection with the reinvestment of dividends or distributions. A Shareholder

7
<PAGE> 8
will also pay brokerage commissions incurred in connection with purchases from
voluntary cash payments made by the Shareholder. 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 large
blocks and prorating the lower commission thus attainable.
12. A Shareholder may terminate her or his participation
in the Plan by notifying the Plan Agent. Such notifications should be made in
writing on a properly executed withdrawal/termination form (copies of which
will be provided by the Plan Agent to participants) mailed to the Plan Agent at
State Street Bank and Trust Company, Two Heritage Drive, Quincy, Massachusetts,
02171. Such termination will be effective immediately if notice is received by
the Plan Agent prior to any dividend or distribution record date; otherwise
such termination will be effective, with respect to any subsequent dividend or
distribution, on the first trading day after the dividend or distribution paid
for such record date shall have been credited to such Shareholder's account.
The Plan may be terminated by the Plan Agent or the Fund with respect to any
voluntary cash payments made or any dividends or distributions paid subsequent
to the notice of termination in writing mailed to the Shareholders at least 30
days prior to the monthly contribution date, in the case of voluntary cash
payments, or the record date for the payment of any dividend or distribution by
the Fund. Upon any termination, the Plan Agent will cause a certificate or
certificates for the full shares held for a

8
<PAGE> 9
Shareholder under the Plan, and cash adjustment for any fractional shares to be
delivered to her or him or, upon the request of such Shareholder, will sell all
of the shares held for the Shareholder under the Plan, within ten days of
receiving the Shareholder's instructions, and will deliver the proceeds less
any brokerage commissions to the Shareholder.
13. If any Shareholder has withdrawn shares from the
Plan, or acquires shares which have been withdrawn from the Plan, and wishes to
have such shares held through and subject to the Plan, such Shareholder may
resubmit such shares by notifying the Plan Agent at State Street Bank and Trust
Company, Two Heritage Drive, Quincy, Massachusetts, 02171.
14. These terms and conditions may be amended or
supplemented by the Plan Agent or the Fund at any time or times but, except
when necessary or appropriate to comply with applicable law or the rules or
policies of the Securities and Exchange Commission or any other regulatory
authority, only by mailing to the Shareholders appropriate written notice at
least 30 days prior to the effective date thereof. The amendment or supplement
shall be deemed to be accepted by the Shareholders unless, prior to the
effective date thereof, the Plan Agent receives written notice of the
termination of a Shareholder's account under the Plan. Any such amendment may
include an appointment by the Plan Agent in its place and stead of a successor
Plan Agent under these terms and conditions, with full power and authority to
perform all or any of the acts to be performed by the Plan Agent under these
terms and conditions. Upon any such appointment of a successor Plan Agent

9
<PAGE> 10
for the purpose of receiving dividends and distributions, the Fund will be
authorized to pay to such successor Plan Agent, for the Shareholders' accounts,
all dividends and distributions payable on the shares of common stock held in
the Shareholders' name or under the Plan for retention or application by such
successor Plan Agent as provided in these terms and conditions.
15. The Plan Agent shall at all times act in good faith
and agree to use its best efforts within reasonable limits to ensure the
accuracy of all services performed under this Plan and to comply with
applicable law, but assumes no responsibility and shall not be liable for loss
or damage due to errors unless such error is caused by its negligence, bad
faith or willful misconduct or that of its employees.

<PAGE> 1

INVESTMENT MANAGEMENT AGREEMENT
between
FIDELITY ADVISOR KOREA FUND, INC.
and
FIDELITY MANAGEMENT & RESEARCH COMPANY

AGREEMENT made this ___th day of _____ 1994, by and between Fidelity
Advisor Korea Fund, Inc. a Maryland corporation (hereinafter called the
"Fund"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Manager ").

1. (a) Investment Advisory Services. The Manager undertakes to act
as investment manager of the Fund and shall, subject to the supervision of the
Fund's Board of Directors, direct the investments of the Fund in accordance
with the investment objective, policies and limitations as provided in the
Fund's Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 and rules thereunder, as amended from time
to time (the "1940 Act"), and such other limitations as the Fund may impose by
notice in writing to the Manager. To the extent that an investment adviser is
appointed by the Manager and by the Board of Directors of the Fund (the
"Investment Adviser"), the Manager may delegate any of its management services
and responsibilities hereunder at its sole expense, and the Manager shall
supervise the performance by the Investment Adviser of such services and
responsibilities and further shall provide the Investment Adviser with such
investment advice and research as they shall mutually agree upon. The Manager
shall also furnish for the use of the Fund office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Fund; and shall pay the salaries and fees of all officers of the Fund, of all
Directors of the Fund who are "interested persons" of the Fund or of the
Manager and of all personnel of the Fund or the Manager performing services
relating to research, statistical and investment activities. The Manager is
authorized, in its discretion and without prior consultation with the Fund, to
buy, sell, lend and otherwise trade in any stocks, bonds and other securities
and investment instruments on behalf of the Fund. The investment policies and
all other actions of the Fund are and shall at all times be subject to the
control and direction of the Fund's Board of Directors.

(b) Management Services. The Manager shall perform (or arrange
for the performance by its affiliates of) the management services necessary for
the operation of the Fund. The Manager shall, subject to the supervision of
the Board of Directors, perform various services for the Fund, including but
not limited to: (1) providing investment research and recommendations; (2)
providing investment and tax compliance services; (3) supervising any
Investment Adviser appointed under paragraph 1(a); (4) providing internal legal
services; (5) providing the Fund with office space, equipment and facilities
(which may be its own) for maintaining its organization; (6) on behalf of the
Fund, supervising relations with, and monitoring the performance of,
custodians, depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable; (7) preparing all general shareholder
communications, including shareholder reports; (8) conducting shareholder
relations; (9) maintaining the Fund's existence and its records; (10) during
such times as shares are publicly offered, maintaining the registration and
qualification of the Fund's shares under federal and state law; and (11)
investigating the development of and developing and implementing, if
appropriate, management and shareholder services designed to enhance the value
or convenience of the Fund as an investment vehicle.

The Manager shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Directors may request from time to
time or as the Manager may deem to be

<PAGE> 2
desirable. The Manager shall make recommendations to the Fund's Board of
Directors with respect to Fund policies, and shall carry out such policies as
are adopted by the Directors. The Manager shall, subject to review by the
Board of Directors, furnish such other services as the Manager shall from time
to time determine to be necessary or useful to perform its obligations under
this Contract.

(c) Unless an Investment Adviser has been appointed pursuant to
paragraph 1(a), the Manager shall place all orders for the purchase and sale of
portfolio securities for the Fund's account with brokers or dealers selected by
the Manager, which may include brokers or dealers affiliated with the Manager.
The Manager shall use its best efforts to seek to execute portfolio
transactions at prices which are advantageous to the Fund and at commission
rates which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Fund and/or the other accounts over which the Manager or its
affiliates exercise investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Manager determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed
in terms of either that particular transaction or the overall responsibilities
which the Manager and its affiliates have with respect to accounts over which
they exercise investment discretion. The Directors of the Fund shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in
relation to the benefits to the Fund.

The Manager shall, in acting hereunder, be an independent contractor.
The Manager shall not be an agent of the Fund.

2. It is understood that the Directors, officers and shareholders of
the Fund are or may be or become interested in the Manager as directors,
officers or otherwise and that directors, officers and stockholders of the
Manager are or may be or become similarly interested in the Fund, and that the
Manager may be or become interested in the Fund as a shareholder or otherwise.

3. The Manager will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Manager shall receive a
monthly management fee, payable monthly as soon as practicable after the last
day of each month. The Fee will be computed as follows:

(a) Fee Rate: The Annual Fee Rate shall be 1.00%.

(b) Fee. One-twelfth of the Fee Rate shall be applied to the average
of the net assets of the Fund (computed in the manner set forth in the Fund's
Articles of Incorporation, other organizational document or prospectus)
determined as of the close of business on each business day throughout the
month. The resulting dollar amount comprises the Fee.

(c) In the case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of the number
of weeks during which it is in effect for that month. The Fee Rate will be
computed on the basis of and applied to net assets averaged over that month
ending on the last business day on which this Contract is in effect.

<PAGE> 3
4. It is understood that the Fund will pay all its expenses other
than those expressly stated to be payable by the Manager hereunder, which
expenses payable by the Fund shall include, without limitation, (i) interest
and taxes; (ii) brokerage commissions and other costs in connection with the
purchase or sale of securities and other investment instruments; (iii) fees and
expenses of the Fund's Directors other than those who are "interested persons"
of the Fund or the Manager; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Fund and the Fund's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders of
the Fund; (viii) all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor; (ix) 50% of
insurance premiums for fidelity and other coverage; (x) its proportionate share
of association membership dues; (xi) expenses of typesetting for printing
Prospectuses and supplements thereto; (xii) expenses of printing and mailing
Prospectuses and supplements; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Fund is a party and the legal obligation which the
Fund may have to indemnify the Fund's Directors and officers with respect
thereto.

5. The services of the Manager to the Fund are not to be deemed
exclusive, the Manager being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner, with
the Manager's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Manager, the Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security
or other investment instrument.

6. (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph 6, this Contract shall continue in force until ________,
1996, and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund.

(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Fund.

(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Directors of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.

(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of any
penalty, by action of its Board of Directors or with respect to the Fund by
vote of a majority of the outstanding voting securities of the Fund. This
Contract shall terminate automatically in the event of its assignment.

7. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving effect to
the choice of laws provisions thereof.

<PAGE> 4
The terms "vote of a majority of the outstanding voting securities,"
"assignment", "investment adviser" and "interested persons," when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or as hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.

8. The Manager consents and grants to the Fund a non-exclusive
license for the use by the Fund of the word "Fidelity" in the name of the Fund.
Such consent is subject to revocation by the Manager in its discretion, and the
Manager may require the Fund to cease using the word "Fidelity" in its name, if
the Manager or an affiliate is not employed as an investment adviser to the
Fund. The Fund acknowledges that as between it and the Manager, the Manager
controls the use of the name of the Fund insofar as it contains the identifying
word "Fidelity" and the Manager and its affiliates may use the identifying word
"Fidelity" in any other connection and for any purpose, without limitation.

<PAGE> 5
IN WITNESS WHEREOF the parties have caused this instrument to be signed
in their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

FIDELITY ADVISOR KOREA FUND, INC.

By _________________________________________
Treasurer

FIDELITY MANAGEMENT & RESEARCH
COMPANY

By _________________________________________
Vice President

<PAGE> 1

INVESTMENT ADVISORY AGREEMENT
among
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY ADVISOR KOREA FUND, INC.

AGREEMENT made this ___th day of ______, 1994 by and among Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Manager"); Fidelity International Investment Advisors, a Bermuda company with
principal offices at Pembroke Hall, Pembroke, Bermuda (hereinafter called the
"Adviser"); and Fidelity Advisor Korea Fund, Inc., a Maryland corporation which
may issue one or more series of shares (hereinafter called the "Fund").

WHEREAS the Fund and the Manager have entered into an Investment
Management Agreement on behalf of the Fund, pursuant to which the Manager is to
act as investment manager of the Fund; and

WHEREAS the Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been formed
in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;

NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Fund, the Manager and the Advisor agree as follows:

1. Duties: The Manager hereby appoints the Advisor to perform the
following services with respect to all of the investments of the Fund. The
Advisor shall pay the salaries and fees of all personnel of the Advisor
performing services for the Fund relating to research, statistical and
investment activities.

(a) Investment Discretion: The Advisor shall, subject to the
supervision of the Manager, manage the investments of the Fund in
accordance with the investment objective, policies and limitations
provided in the Fund's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 (the "1940
Act") and rules thereunder, as amended from time to time, and such other
limitations as the Directors or the Manager may impose with respect to
the Fund by notice to the Advisor. The Advisor is authorized to make
investment decisions on behalf of the Fund with regard to any stock,
bond, other security or investment instrument, and to place orders for
the purchase and sale of such securities or other instruments through
such broker-dealers as the Advisor may select. The Advisor is also
authorized to provide additional investment management services to the
Fund, including but not limited to services such as managing foreign
currency investments, purchasing and selling or writing futures and
options contracts, borrowing money, or lending securities on behalf of
the Fund. All investment management and any other activities of the
Advisor shall at all times be subject to the control and direction of
the Manager and the Fund's Board of Directors.
<PAGE> 2
(b) Subsidiaries and Affiliates: The Advisor may perform any
or all of the services contemplated by this Agreement directly
or through such of its subsidiaries or other affiliated persons
as the Advisor shall determine; provided, however, that
performance of such services through such subsidiaries or other
affiliated persons shall have been approved by the Fund to the
extent required pursuant to the 1940 Act and rules thereunder.

2. Information to be Provided to the Fund and the Manager:
The Advisor shall furnish such reports, evaluations, information or
analyses to the Fund and the Manager as the Fund's Board of Directors or
the Manager may reasonably request from time to time, or as the Advisor
may deem to be desirable.

3. Brokerage: In connection with the services provided under
paragraph 1(a) of this Agreement, the Advisor shall place all orders
for the purchase and sale of Fund securities for the Fund's account with
brokers or dealers selected by the Advisor, which may include brokers or
dealers affiliated with the Manager or Advisor. The Advisor shall use
its best efforts to seek to execute Fund transactions at prices which
are advantageous to the Fund and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange
Act of l934) to the Fund and/or to the other accounts over which the
Advisor or Manager exercise investment discretion. The Advisor is
authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a Fund transaction for the
Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Advisor
determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall
responsibilities which the Advisor has with respect to accounts over
which it exercises investment discretion. The Directors of the Fund
shall periodically review the commissions paid by the Fund to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Fund.

4. Compensation: The Manager shall compensate the Advisor on
the following basis for the services to be furnished hereunder. For
services provided under this Agreement, the Manager agrees to pay the
Advisor a monthly Investment Advisory Fee. The Investment Advisory Fee
shall be equal to 60% of the monthly management fee rate (including
performance adjustments, if any) that the Fund is obligated to pay the
Manager under its Investment Management Agreement with the Manager. If
in any fiscal year the aggregate expenses of the Fund exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Manager waives all or a portion of its
management fee or reimburses the Fund for expenses to the extent
required to satisfy such limitation, the Investment Advisory Fee paid to
the Advisor will be reduced by 60% of the amount of such waivers or
reimbursements multiplied by the fraction equal to the net assets of the
Fund as to which the Advisor shall have provided the investment
management services divided by the net assets of the Fund for that
month. If the Advisor reduces its fees to reflect such waivers or
reimbursements and the Manager subsequently recovers all or any portion
of such waivers and reimbursements, then the Advisor shall be entitled
to receive from the Manager a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the Manager
required by such limitations are in excess of the Manager's management
fee, the Investment Advisory Fee paid to the Advisor will be reduced to
zero for that month, but in no event shall the Advisor be required to
reimburse the Manager for all or a portion of such excess
reimbursements.

<PAGE> 3
5. Expenses: It is understood that the Fund will pay all of its
expenses other than those expressly stated to be payable by the Advisor
hereunder or by the Manager under the Investment Management Agreement with the
Fund, which expenses payable by the Fund shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Directors other than those who are "interested
persons" of the Fund, the Manager or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Fund and
the Fund's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material
to shareholders of the Fund; (viii) all other expenses incidental to holding
meetings of the Fund's shareholders, including proxy solicitations therefor;
(ix) 50% of insurance premiums for fidelity and other coverage; (x) its
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and supplements thereto; (xii) expenses of printing and mailing
Prospectuses and supplements thereto; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Fund is a party and the legal obligation which the
Fund may have to indemnify the Fund's Directors and officers with respect
thereto.

6. Interested Persons: It is understood that Directors, officers, and
shareholders of the Fund are or may be or become interested in the Manager or
the Advisor as directors, officers or otherwise and that directors, officers
and stockholders of the Manager or the Advisor are or may be or become
similarly interested in the Fund, and that the Manager or the Advisor may be or
become interested in the Fund as a shareholder or otherwise.

7. Services to Other Companies or Accounts: The services of the
Advisor to the Manager are not to be deemed to be exclusive, the Advisor being
free to render services to others and engage in other activities, provided,
however, that such other services and activities do not, during the term of
this Agreement, interfere, in a material manner, with the Advisor's ability to
meet all of its obligations hereunder. The Advisor shall for all purposes be
an independent contractor and not an agent or employee of the Manager or the
Fund.

8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on
the part of the Advisor, the Advisor shall not be subject to liability to the
Manager, the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security
or other investment instrument.

9. Duration and Termination of Agreement; Amendments:

(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until
______, 1996 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at
least annually by vote of the Fund's Board of Directors or by
vote of a majority of the outstanding voting securities of the
Fund.

(b) This Agreement may be modified by mutual consent of the Manager,
the Advisor and the Fund, such consent on the part of the Fund to
be authorized by vote of a majority of the outstanding voting
securities of the Fund.

3
<PAGE> 4

(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of
this Agreement must have been approved by the vote of a majority
of those Directors of the Fund who are not parties to this
Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval.

(d) Either the Manager, the Advisor or the Fund may, at any time on
sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by
action of its Board of Directors, or with respect to the
Fund by vote of a majority of its outstanding voting securities.
This Agreement shall terminate automatically in the event of its
assignment.

10. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.

The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act as
now in effect or as hereafter amended.

IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.

FIDELITY INTERNATIONAL INVESTMENT ADVISORS

BY:_____________________________________________________
Title

FIDELITY MANAGEMENT & RESEARCH COMPANY

BY: ___________________________________________
Title

FIDELITY ADVISOR KOREA FUND, INC.

BY: ____________________________________________
Title

<PAGE> 1

SUB-INVESTMENT ADVISORY AGREEMENT
among
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
and
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY ADVISOR KOREA FUND, INC.

AGREEMENT made this ___th day of ______, 1994 by and among Fidelity
International Investment Advisors, a Bermuda company with principal offices at
Pembroke Hall, Pembroke, Bermuda (hereinafter called "Adviser"), Fidelity
Investments Japan Limited, a corporation organized under the laws of Japan with
principal offices at 19th Floor, Shiroyama JT Mori Building, 4-3-1 Toranomon
Minato-Ku, Tokyo 105, Japan, (hereinafter called the "Sub-Advisor") and
Fidelity Advisor Korea Fund, Inc., a Maryland corporation (the "Fund").

WHEREAS the Fund and the Advisor have entered into an Investment
Advisory Agreement pursuant to which the Advisor is to act as the investment
adviser of the Fund; and

WHEREAS the Sub-Advisor has personnel in Japan and has been formed in
part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, including
Japan, and securities of issuers located in such countries, and providing
investment advisory services in connection therewith;

NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Fund, the Advisor and the Sub-Advisor agree as
follows:

1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Fund. The services and the portion of the
investments of the Fund to be advised or managed by the Sub-Advisor shall be
as agreed upon from time to time by the Advisor and the Sub-Advisor; provided,
however, that until further notice from the Advisor to the Sub-Advisor, the
Advisor hereby appoints the Sub-Advisor, and the Sub-Advisor hereby accepts
appointment, to manage all the investments of the Fund in accordance with
subparagraph 1(b) of this Agreement. The Sub-Advisor shall pay the salaries
and fees of all personnel of the Sub-Advisor performing services for the Fund
relating to research, statistical and investment activities.

(a) Investment Advice: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Fund and the Advisor
with respect to all or a portion of the investments of the Fund, and in
connection with such advice shall furnish the Fund and the Advisor such
factual information, research reports and investment recommendations as
the Advisor may reasonably require. Such information may include
written and oral reports and analyses.

(b) Investment Management: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Fund in accordance
with the investment objective, policies and limitations provided in the
Fund's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time
<PAGE> 2

to time, and such other limitations as the Fund or Advisor may impose by
notice to the Sub-Advisor. With respect to the portion of the
investments of the Fund under its management, the Sub-Advisor is
authorized to make investment decisions on behalf of the Fund with
regard to any stock, bond, other security or investment instrument, and
to place orders for the purchase and sale of such securities or
investment instrument through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor is also authorized to provide additional
investment management services to the Fund, including but not limited to
services such as managing foreign currency investments, purchasing and
selling or writing futures and options contracts, borrowing money, or
lending securities on behalf of the Fund. All investment management and
any other activities of the Sub-Advisor shall at all times be subject to
the control and direction of the Advisor and the Fund's Board of
Directors.

(c) Subsidiaries and Affiliates: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the Sub-Advisor
shall determine; provided, however, that performance of such services
through such subsidiaries or other affiliated persons shall have been
approved by the Fund to the extent required pursuant to the 1940 Act and
rules thereunder.

2. Information to be Provided to the Fund and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Fund and the Advisor as the Fund's Board of Directors or the Advisor may
reasonably request from time to time, or as the Sub-Advisor may deem to be
desirable.

3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Fund's account with brokers or dealers selected by the Sub-Advisor, which may
include brokers or dealers affiliated with the Advisor or Sub-Advisor. The
Sub-Advisor shall use its best efforts to seek to execute portfolio
transactions at prices which are advantageous to the Fund and at commission
rates which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Fund and/or to the other accounts over which the Sub-Advisor or
Advisor exercise investment discretion. The Sub-Advisor is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Sub-Advisor determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over which
it exercises investment discretion. The Directors of the Fund shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in
relation to the benefits to the Fund.

-2-
<PAGE> 3
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.

(a) Investment Advisory Fee: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to: (i) 30% of the monthly management fee rate (including
performance adjustments, if any) that the Advisor receives under its
Investment Advisory Agreement, multiplied by (ii) the fraction equal to
the net assets of the Fund as to which the Sub-Advisor shall have
provided investment advice divided by the net assets of the Fund for
that month.

(b) Investment Management Fee: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment
Management Fee shall be equal to: (i) 50% of the monthly management fee
rate (including performance adjustments, if any) that the Advisor
receives under its Investment Advisory Agreement with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Fund as
to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Fund for that month. If in
any fiscal year the aggregate expenses of the Fund exceed any applicable
expense limitation imposed by any state or federal securities laws or
regulations, and the Advisor waives all or a portion of its management
fee or reimburses the Fund for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount recovered.
To the extent that waivers and reimbursements by the Advisor required
by such limitations are in excess of the Advisor's management fee, the
Investment Management Fee paid to the Sub-Advisor will be reduced to
zero for that month, but in no event shall the Sub-Advisor be required
to reimburse the Advisor for all or a portion of such excess
reimbursements.

(c) Provision of Multiple Services: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Fund for the same period, the
fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.

5. Expenses: It is understood that the Fund will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Investment Advisory Agreement, or by the
Fund's Investment Manager under the Investment Management Agreement with the
Fund, which expenses payable by the Fund shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Directors other than those who are "interested
persons" of the Fund, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Fund's
shares for distribution under state and federal securities laws; (vii) expenses
of printing and mailing reports and notices and proxy material to shareholders
of the Fund; (viii) all other expenses incidental to holding meetings of the
Fund's

-3-
<PAGE> 4

shareholders, including proxy solicitations therefor; (ix) 50% of insurance
premiums for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and supplements thereto; (xii) expenses of printing and mailing
Prospectuses and supplements thereto; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Fund is a party and the legal obligation which the
Fund may have to indemnify its Directors and officers with respect thereto.

6. Interested Persons: It is understood that Directors, officers, and
shareholders of the Fund are or may be or become interested in the Advisor or
the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be or
become similarly interested in the Fund, and that the Advisor or the
Sub-Advisor may be or become interested in the Fund as a shareholder or
otherwise.

7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do not,
during the term of this Agreement, interfere, in a material manner, with the
Sub-Advisor's ability to meet all of its obligations hereunder. The
Sub-Advisor shall for all purposes be an independent contractor and not an
agent or employee of the Advisor or the Fund.

8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on
the part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability
to the Advisor, the Fund or to any shareholder for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security or other
investment instrument.

9. Duration and Termination of Agreement; Amendments:

(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until
________, 1996 and indefinitely thereafter, but only so long as
the continuance after such period shall be specifically approved at
least annually by vote of the Fund's Board of Directors or by vote
of a majority of the outstanding voting securities of the Fund.

(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Fund, such consent on the part of the Fund
to be authorized by vote of a majority of the outstanding voting
securities of the Fund.

(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of
this Agreement must have been approved by the vote of a majority of
those Directors of the Fund who are not parties to this Agreement
or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.

-4-
<PAGE> 5

(d) Either the Advisor, the Sub-Advisor or the Fund may, at any time
on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by
action of its Board of Directors, or with respect to the Fund
by vote of a majority of its outstanding voting securities.
This Agreement shall terminate automatically in the event of its
assignment.

10. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.

The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," "investment advisor," and
"interested persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.

FIDELITY INTERNATIONAL INVESTMENT ADVISORS

BY:_____________________________________________________
Title

FIDELITY INVESTMENTS JAPAN LIMITED

BY:____________________________________________
Title

FIDELITY ADVISOR KOREA FUND, INC.

BY: ____________________________________________
Title

-5-

<PAGE> 1

DRAFT 10/21/94

___________ Shares

FIDELITY ADVISOR
KOREA FUND, INC.

Common Stock

U.S. UNDERWRITING AGREEMENT
---------------------------
October __, 1994

BARING SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DILLON, READ & CO. INC.
COWEN & COMPANY
LEGG MASON WOOD WALKER, INCORPORATED
RAUSCHER PIERCE REFSNES, INC.
RAYMOND JAMES & ASSOCIATES, INC.
As representatives of
the several underwriters
named in Schedule I hereto
c/o Baring Securities Inc.
667 Madison Avenue
New York, New York 10021

Dear Sirs:

Fidelity Advisor Korea Fund, Inc., a Maryland corporation (the
"Fund"), Fidelity Management & Research Company, a Massachusetts corporation
(the "Investment Manager"), Fidelity International Investment Advisors, a
Bermuda corporation (the "Investment Adviser") and Fidelity Investments Japan
Limited, a Japanese corporation (the "Sub-Adviser"), each confirms that the
Fund proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "U.S. Underwriters") an aggregate of _________ shares of its Common
Stock, par value $0.001 per share ("Common Stock"). The ____________ shares of
Common Stock to be issued and sold by the Fund are hereinafter called the U.S.
Firm Shares.

The Fund also proposes to issue and sell to the several U.S.
Underwriters not more than an additional ___________ shares of its Common Stock
(the "Additional U.S. Shares"), if requested by the U.S. Underwriters as
provided in Section 2 hereof.

It is understood that the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser are concurrently entering into an
agreement dated the date hereof (the "International Underwriting Agreement")
providing for the offering by the Fund of __________ shares of Common Stock
(the
<PAGE> 2
2

"International Firm Shares") to non-U.S. and non-Canadian investors
outside the United States and Canada through arrangements with certain
underwriters outside the United States (the "International Managers") for which
Baring Brothers & Co., Limited, Donaldson, Lufkin & Jenrette Securities
Corporation, Lucky Securities International Ltd., SsangYong Securities Europe
Limited, Cowen & Company and KDB Securities Co., Ltd. are acting as
representatives (the "International Representatives").

The U.S. Firm Shares and the International Firm Shares are
hereinafter called the "Firm Shares". It is understood that the Fund is not
obligated to sell, and the U.S. Underwriters are not obligated to purchase, any
U.S. Firm Shares unless all of the International Firm Shares are
contemporaneously purchased by the International Managers. The U.S.
Underwriters and the International Managers are hereinafter collectively called
the "Underwriters". The U.S. Firm Shares and the Additional U.S. Shares are
hereinafter collectively called the "U.S. Shares", and the U.S. Shares and the
International Shares are hereinafter collectively called the "Shares".

The Fund understands that the U.S. Underwriters and the
International Managers will concurrently enter into an Agreement Between U.S.
Underwriters and International Managers of even dated herewith (the "Agreement
Between") providing for the coordination of certain transactions among the U.S.
Underwriters and the International Managers under your direction. Baring
Securities Inc. and Donaldson, Lufkin & Jenrette Securities Corporation are the
Global Coordinators of the Offerings.

1. Registration Statement, Prospectus and Offering Circular.
The Fund has prepared and filed with the Securities and Exchange Commission
(the "Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Act") and the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder
(collectively called the "1940 Act", and together with the Act, the "Acts"), a
registration statement on Form N-2 (Nos. 33-81186 and 811-8608) including a
prospectus relating to U.S. Shares, which may be amended. In addition, a
notification of registration on Form N-8A (the "Notification") has been filed
by the Fund with the Commission under the 1940 Act. The registration statement
as amended at the time when it becomes effective, including information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to
as the Registration Statement; and the prospectus in the form first used to
confirm sales of U.S. Shares is hereinafter referred to as the Prospectus.

The Fund has also prepared an offering circular relating to
the International Shares which may be amended. The offering circular in the
form first used to confirm sales of
<PAGE> 3
3

International Shares is hereinafter referred to as the Offering Circular.

2. Agreements to Sell and Purchase. The Fund hereby agrees
to issue and sell the U.S. Firm Shares to the several U.S. Underwriters and
each of the U.S. Underwriters, upon the basis of the representations and
warranties contained in this Agreement, and subject to its terms and
conditions, agrees, severally and not jointly, to purchase from the Fund at a
price per share of $__ (the "Purchase Price"), the respective number of U.S.
Firm Shares set forth opposite the name of such U.S. Underwriter in Schedule I
hereto.

On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Fund agrees to
issue and sell to the U.S. Underwriters the Additional U.S. Shares and the U.S.
Underwriters shall have a right to purchase, in whole or in part, from time to
time, severally and not jointly, up to _____________ Additional U.S. Shares
from the Fund at the Purchase Price. Additional U.S. Shares may be purchased
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. The U.S. Underwriters may exercise their right to
purchase any Additional U.S. Shares by giving written notice thereof to the
Fund one or more times within 30 days after the date of this Agreement. You
shall give such notice on behalf of the U.S. Underwriters and the notice shall
specify the aggregate number of Additional U.S. Shares to be purchased and the
date for payment and delivery thereof. The date specified in the notice shall
be a business day (i) no earlier than the Closing Date (as hereinafter
defined), (ii) no later than ten business days after such notice has been given
and (iii) no earlier than two business days after such notice has been given.
If any Additional U.S. Shares are to be purchased, each U.S. Underwriter,
severally and not jointly, agrees to purchase from the Fund the number of
Additional U.S. Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total
number of Additional U.S. Shares to be purchased from the Fund as the number of
U.S. Firm Shares set forth opposite the name of such U.S. Underwriter in
Schedule I bears to the total number of U.S. Firm Shares in Schedule I.

The Fund hereby agrees that it will not, for a period of 180
days following the date the Registration Statement becomes effective, without
the prior written consent of Baring Securities Inc., offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, any shares of Common
Stock (other than pursuant to the Fund's Dividend Reinvestment and Cash
Purchase Plan).

3. Terms of Public Offering. The Fund is advised by you that
the U.S. Underwriters propose (i) to make a public offering of their respective
portions of the U.S. Shares as soon after the effective date of the
Registration Statement as in your
<PAGE> 4
4

judgment is advisable and (ii) initially to offer the U.S. Shares upon the
terms set forth in the Prospectus.

4. Delivery and Payment. Delivery to the U.S. Underwriters
of and payment for the U.S. Firm Shares shall be made at 10:00 A.M., New York
City time, on the fifth business day (the "Closing Date") following the date of
the initial public offering, at the office of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017. The Closing Date and the location
of delivery of and the form of payment for the U.S. Firm Shares may be varied
by agreement between you and the Fund.

Delivery to the U.S. Underwriters of and payment for any
Additional U.S. Shares to be purchased by the U.S. Underwriters shall be made
at 10:00 A.M., New York City time, on the date specified in each exercise
notice given by you pursuant to Section 2 (each, an "Option Closing Date") at
the office of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New
York 10017. The Option Closing Date and the location of delivery of and the
form of payment for the Additional U.S. Shares may be varied by agreement
between you and the Fund.

Certificates for the U.S. Shares shall be registered in such
names and issued in such denominations as you shall request in writing not
later than two-full business days prior to the Closing Date or the Option
Closing Date, as the case may be. Such certificates shall be made available to
you for inspection not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. Certificates in definitive form evidencing the U.S. Shares shall
be delivered to you on the Closing Date or the Option Closing Date, as the case
may be, with any transfer taxes thereon duly paid by the Fund, for the
respective accounts of the several U.S. Underwriters, against payment of the
Purchase Price therefor by certified or official bank checks payable in New
York Clearing House (next day) funds to the order of the Fund.

5. Agreements of the Fund. The Fund agrees with you:

(a) To use its best efforts to cause the Registration
Statement to become effective at the earliest possible time.

(b) At any time during the period specified in paragraph
(e), to advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment to it becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the application for and the
issuance of any order exempting the Fund from any provisions of the
1940 Act, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
<PAGE> 5
5

suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes,
(v) of the issuance by the Commission of a notice or order of
suspension or revocation of the Notification or the initiation of any
proceeding for that purpose, and (vi) of the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any time during the
period specified in paragraph (e), the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the
Fund will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.

(c) To furnish to you, without charge, three signed
copies of the Registration Statement and Notification as first filed
with the Commission and of each amendment to the Registration
Statement or Notification filed during the period specified in
paragraph (e), including all exhibits, and to furnish to you and each
U.S. Underwriter designated by you such number of conformed copies of
the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.

(d) During the period specified in paragraph (e), not to
file any amendment or supplement to the Registration Statement,
whether before or after the time when it becomes effective, or to make
any amendment or supplement to the Prospectus of which you shall not
previously have been advised or to which you shall reasonably object
and to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of the U.S. Shares by you, and to use
its best efforts to cause the same to become effective promptly.

(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the U.S. Underwriters a prospectus is required
by law to be delivered in connection with sales by a U.S. Underwriter
or a dealer, to furnish to each U.S. Underwriter and dealer as many
copies of the Prospectus (and of any amendment or supplement to the
Prospectus) as such U.S. Underwriter or dealer may reasonably request.

(f) If during the period specified in paragraph (e)
any event shall occur as a result of which, in the opinion of counsel
for the U.S. Underwriters it becomes necessary to
<PAGE> 6
6

amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with any applicable law,
forthwith to prepare and file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in
the Prospectus, as so amended or supplemented, will not in the light
of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each U.S.
Underwriter and to such dealers as you shall specify, such number of
copies thereof as such U.S. Underwriter or dealers may reasonably
request.

(g) Prior to any public offering of the U.S. Shares, to
cooperate with you and counsel for the U.S. Underwriters in connection
with the registration or qualification of the U.S. Shares for offer
and sale by the several U.S. Underwriters and by dealers under the
state securities or Blue Sky laws of such jurisdictions as you may
request, to continue such qualification in effect so long as required
for distribution of the U.S. Shares and to assist counsel to the U.S.
Underwriters in filing such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification.

(h) The Fund will make generally available to its
security holders as soon as reasonably practicable an earnings
statement which need not be audited covering a period of at least
twelve months after the effective date of the Registration Statement
(but in no event commencing later than 90 days after such date) which
shall satisfy the provisions of Section 11(a) of the Act and Rule 158
promulgated thereunder and to advise you in writing when such
statement has been so made available.

(i) During the period referred to in paragraph (h), to
furnish to you as soon as available a copy of each report or other
publicly available information of the Fund mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Fund as you may reasonably
request.

(j) To pay all costs, expenses, fees and taxes incident
to (i) the preparation, printing, filing and distribution under the
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e), (ii) the printing and delivery of the Prospectus and
all amendments or supplements to it during the period specified in
paragraph (e), (iii) the printing and delivery of this Agreement, the
International Underwriting Agreement, the Agreement Between, the
<PAGE> 7
7

Preliminary and Supplemental Blue Sky Memoranda and all other
agreements, memoranda, correspondence and other documents printed and
delivered in connection with the offering of the U.S. Shares
(including in each case any disbursements of counsel for the U.S.
Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the U.S. Shares for offer and sale
under the securities or Blue Sky laws of the several states and Canada
(including in each case the fees and disbursements of counsel for the
U.S. Underwriters relating to such registration or qualification and
memoranda relating thereto), (v) filings and clearance with the
National Association of Securities Dealers, Inc. in connection with
the offering, (vi) the listing of the Shares on the New York Stock
Exchange (the "NYSE"), (vii) the preparation, printing and
distribution of advertising and sales material used in connection with
the offering of the Shares, including the expenses of printing and
delivery to the Underwriters of any Omitting Prospectus (as defined
below) and the costs of preparing, printing and distributing "internal
use only" materials prepared on behalf of the Fund and not distributed
to the public, (viii) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto
as may be requested for use in connection with the offering or sale of
the U.S. Shares by the Underwriters or by dealers to whom U.S. Shares
may be sold, (ix) an aggregate of up to $200,000 in partial
reimbursement of the Underwriters' actual expenses, which will be
payable on the Closing Date, and (x) the performance by the Fund of
its other obligations under this Agreement. In the event the
transactions contemplated herein are not consummated, the Investment
Manager will pay all the costs, expenses, fees and taxes set forth
above that the Fund would have paid if such transactions were
consummated.

(k) To apply the net proceeds from the sale of the Shares
in accordance with the description set forth in the Prospectus under
"Use of Proceeds".

(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Fund prior to the Closing Date or the Option Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery
of the Shares.

(m) To use its best efforts to maintain its qualification
as a regulated investment company under Subchapter M of the U.S.
Internal Revenue Code of 1986, as amended ("Subchapter M").

(n) Not to establish a record date for the payment of
dividends or other distributions which is earlier than ten full
business days after the last day on which the several
<PAGE> 8
8

U.S. Underwriters may exercise their options to purchase any
Additional U.S. Shares pursuant to Section 2.

6. Agreement of the Investment Manager, Investment Adviser
and the Sub-Adviser. Each of the Investment Manager, the Investment Adviser
and the Sub-Adviser agrees with you that for a period of 180 days from the date
of the Prospectus, not to act, without your prior written consent, as
investment adviser to any other newly formed or existing closed-end investment
company registered under the 1940 Act investing 65% or more of its total assets
in securities of Korean Issuers (as defined in the Prospectus).

7. Agreement of the Investment Manager. The Investment
Manager agrees to pay each of the U.S. Underwriters a sales incentive fee equal
to 0.15% of all Shares such U.S. Underwriter sells if it sells between 250,000
Shares and 1,499,999 Shares, inclusive, 0.25% of all Shares such U.S.
Underwriter sells if it sells between 1,500,000 Shares and 3,499,999 Shares,
inclusive and 0.30% of all Shares such U.S. Underwriter sells if it sells
3,500,000 or more Shares computed according to the formulas set forth in
Schedule II hereto. Such sales incentive fee will be paid at the highest rate
achieved in respect of all Shares sold by such Underwriter. The sales
incentive fee shall be payable on the Closing Date.

8. Representations and Warranties of the Fund, the Investment
Manager, the Investment Adviser and the Sub-Adviser. The Fund, the Investment
Manager, the Investment Adviser and the Sub-Adviser each severally represents
and warrants to each U.S. Underwriter that:

(a) (i) The Fund meets the requirements for use of Form
N-2 under the Acts. A Registration Statement with respect to the U.S.
Shares, including a preliminary form of the prospectus, has been
prepared by the Fund in conformity in all material respects with
requirements of the Acts and has been filed with the Commission. The
Fund may have filed one or more amendments to such Registration
Statement, including the related preliminary prospectus, each of which
has previously been furnished to you. In addition, the Fund has
prepared and filed the Notification with the Commission in conformity
in all material respects with requirements of the Acts, which
Notification has previously been furnished to you; and (ii) no order
preventing or suspending the use of any preliminary prospectus has
been issued by the Commission and the preliminary prospectus, at the
time of filing thereof, complied in all material respects with the
provisions of the Acts and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
except that the representations and warranties contained in this
section (ii) shall not apply to statements or omissions in any
<PAGE> 9
9

preliminary prospectus based upon information relating to any U.S.
Underwriter furnished to the Fund in writing by or on behalf of any
U.S. Underwriter through you expressly for use therein.

(b) (i) The Notification, the Registration Statement and
the Prospectus and any amendments or supplements thereto at the time
they became or become effective, complied with or will comply in all
material respects with the provisions of the Acts and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading; and (ii) the Prospectus and any supplements
thereto did not or will not at such times contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties contained in clauses (i) and (ii)
of this paragraph (b) shall not apply to statements or omissions in
the Registration Statement or the Prospectus (or any supplement or
amendment to them) based upon information relating to any U.S.
Underwriter furnished to the Fund in writing by or on behalf of any
U.S. Underwriter through you expressly for use therein.

(c) The Fund is a duly organized, validly existing
corporation in good standing under the laws of the State of Maryland
and has the corporate power to own, lease and operate its properties
and the authority required to carry on its business as described in
the Registration Statement and Prospectus and to issue and sell the
Shares as contemplated in this Agreement and the International
Underwriting Agreement, and is duly qualified and is in good standing
as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Fund. The Fund has no subsidiaries.

(d) The Fund is duly registered with the Commission under
the 1940 Act as a closed-end, non-diversified management investment
company and the operations of the Fund, as described in the
Registration Statement and the Prospectus, are in compliance in all
material respects with all applicable laws, rules, regulations, orders
and similar requirements and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or
threatened by the Commission.

(e) All of the outstanding shares of capital stock of the
Fund have been duly authorized and validly issued and are fully paid
and non-assessable with no personal liability
<PAGE> 10
10

attaching to the ownership thereof and are not subject to any
preemptive or similar rights; and the Shares to be issued and sold by
the Fund hereunder and under the International Underwriting Agreement,
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement
and the International Underwriting Agreement, will be validly issued,
fully paid and non-assessable with no personal liability attaching to
ownership thereof, and the issuance of such Shares will not be subject
to any preemptive or similar rights; the Fund has not granted to any
person any right to require registration of shares of Common Stock or
any other security of the Fund.

(f) The authorized, issued and outstanding capital stock
of the Fund conforms in all material respects to the description
thereof contained in the Registration Statement and Prospectus.

(g) The Fund has full corporate power and authority to
enter into and perform its obligations under this Agreement, the
International Underwriting Agreement, the Investment Management
Agreement between the Fund and the Investment Manager (the "Management
Agreement"), the Investment Advisory Agreement among the Fund, the
Investment Manager and the Investment Adviser (the "Advisory
Agreement"), the Sub-Advisory Agreement among the Fund, the Investment
Adviser and the Sub-Adviser (the "Sub-Advisory Agreement"), the
Custodial Services Agreement between the Fund and The Chase Manhattan
Bank, N.A. (the "Custodian Agreement"), the Sub-Custodian Agreement
among the Fund, The Chase Manhattan Bank, N.A. and The Hong Kong and
Shanghai Banking Corporation (the "Sub-Custodian Agreement") and the
Transfer Agency Services Agreement between the Fund and State Street
Bank and Trust Company (the "Transfer Agency Agreement") (the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement, the Custodian Agreement, the Sub-Custodian Agreement and
the Transfer Agency Agreement are collectively referred to herein as
the "Fund Agreements").

(h) The Fund is not in violation of its charter or
by-laws or in default in the performance of any obligation, agreement,
covenant or condition contained in any bond, debenture, note or any
other evidence of indebtedness or contained in any other contract,
agreement, mortgage, lease, indenture or instrument material to the
conduct of the business of the Fund, to which the Fund is a party or
by which it or its property is bound.

(i) This Agreement, the International Underwriting
Agreement, and the Fund Agreements have each been duly authorized by
all requisite corporate action on the part of the Fund and have been
validly executed and delivered by the Fund and each complies in all
material respects with all
<PAGE> 11
11

applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each of the Fund
Agreements constitutes a valid and binding agreement of the Fund,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(j) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement and the Fund
Agreements, compliance by the Fund with all the provisions hereof and
thereof and the consummation of the transactions contemplated hereby
and thereby will not (A) violate the articles of incorporation or
by-laws of the Fund, or (B) conflict with or constitute a breach of
any of the terms or provisions of or a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Fund, pursuant to any contract, agreement,
note, bond, debenture, mortgage, lease, indenture or other instrument
to which the Fund is a party or by which the Fund's property is bound,
or (C) violate or conflict with any statutes, laws, regulations or
rulings to which the Fund or any of its property may be subject or any
judgment, injunction, decree or order of any court or governmental
agency or authority entered in any proceeding to which the Fund was or
is now a party or by which the Fund or any of its property is bound,
or (D) require any consent, approval, authorization or other order of
or registration or filing with, any court, regulatory body,
administrative agency or other governmental body (except such as have
been duly obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian jurisdictions in
which U.S. Shares will be offered or sold).

(k) There are no legal or governmental proceedings
pending to which the Fund is a party or of which any of its property
is the subject, which could reasonably be expected to have a material
adverse effect on the business or financial position of the Fund or
which questions the performance by the Fund of this Agreement, the
International Underwriting Agreement, or the Fund Agreements and, to
the best of the Fund's knowledge, no such proceedings are threatened
or contemplated. There is no contract or document of a character
required under the Acts to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not so described or filed as required.

(l) Since the dates as of which information is given in
the Registration Statement and the Prospectus, except as
<PAGE> 12
12

otherwise stated therein or contemplated thereby, there has not been
(a) any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Fund or (b) any transaction entered into by the Fund, other than in
the ordinary course of business, that is material to the Fund.

(m) Each of this Agreement, the International
Underwriting Agreement, and the Fund Agreements has been approved by
the initial sole shareholder of the Fund and the Board of Directors of
the Fund to the extent and in the manner required by the 1940 Act.

(n) The Fund maintains insurance of the types and at the
levels required by the 1940 Act.

(o) Price Waterhouse LLP, the accountants who audited the
statement of assets and liabilities included in the Registration
Statement and the Prospectus are independent public accountants with
respect to the Fund as required by the Act.

(p) The statement of assets and liabilities set forth in
the Registration Statement and the Prospectus (and any amendment or
supplement thereto), presents fairly in all material respects, the
financial position of the Fund as of the date indicated in conformity
with generally accepted accounting principles.

(q) The information set forth in the Prospectus under the
caption "Summary of Expenses" has been prepared in accordance with the
requirements of Form N-2 and to the extent estimated or projected,
such estimates or projections are fairly determined and reasonably
based.

(r) The Fund has the license to use, for so long as the
Investment Manager or an affiliate of the Investment Manager is the
investment manager of the Fund, adequate trademarks, service marks and
trade names necessary to conduct its business as described in the
Registration Statement and Prospectus, and the Fund has not received
any notice of infringement of or conflict with asserted rights of
others with respect to any trademarks, service marks or trade names
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially adversely affect the
conduct of the business, operations, financial condition or income of
the Fund.

(s) The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in
such a manner as to comply with the requirements of Subchapter M and
intends to qualify as a regulated investment company under Subchapter
M of the Code.
<PAGE> 13
13

(t) The Shares have been approved for listing subject to
official notice of issuance, on the New York Stock Exchange.

(u) The advertising and sales literature approved by the
Fund for use in connection with the public offering and sale of the
Shares pursuant to Rule 482 under the rules and regulations under the
Acts and filed by the Fund with the NASD for review in accordance with
Rule 497(i) under the rules and regulations under the Acts (an
"Omitting Prospectus") complies in all material respects with the
requirements of the Acts, and does not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, such
circumstances including the fact that in accordance with Rule 482
certain information included in the Prospectus has been omitted from
advertising and sales literature.

(v) The advertising and sales literature, if any,
approved by the Fund for use in connection with the public offering
and sale of the Shares pursuant to Rule 134 under the rules and
regulations under the Act and filed by the Fund with the NASD for
review complies in all material respects with the requirements of the
Acts.

9. Representations and Warranties of the Investment Manager.
The Investment Manager represents and warrants to each U.S. Underwriter that:

(a) The Investment Manager is a duly organized, validly
existing corporation in good standing under the laws of the
Commonwealth of Massachusetts and has the corporate power and
authority to own, lease and operate its properties and to carry on its
business as described in the Registration Statement and the Prospectus
and is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of
its business or its ownership or leasing of property requires such
qualification except where the failure to be so qualified would not
have a material adverse effect on the Investment Manager.

(b) The Investment Manager is duly registered with the
Commission as an investment adviser under the Advisers Act of 1940, as
amended (the "Advisers Act") and is not prohibited by the Advisers Act
or the 1940 Act from acting under this Agreement, the International
Underwriting Agreement, the Management Agreement or the Advisory
Agreement as contemplated by the Registration Statement and the
Prospectus; and is in compliance in all material respects with all
applicable laws, rules, regulations, orders and similar requirements
and no order of suspension
<PAGE> 14
14

or revocation, of such registration has been issued or proceedings
therefore initiated or threatened by the Commission.

(c) The description of the Investment Manager in the
Prospectus is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading.

(d) The Investment Manager has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement, the Management
Agreement and the Advisory Agreement, respectively.

(e) This Agreement, the International Underwriting
Agreement, the Management Agreement and the Advisory Agreement have
each been duly authorized by all requisite corporate action on the
part of the Investment Manager and have been validly executed and duly
delivered by the Investment Manager, and each complies in all material
respects with all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties thereto,
each of the Management Agreement and the Advisory Agreement
constitutes a valid and binding agreement of the Investment Manager
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement, the Management
Agreement and the Advisory Agreement, compliance by the Investment
Manager with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not (A) violate the articles of incorporation or by-laws of the
Investment Manager, or (B) conflict with or constitute a breach of any
of the terms or provisions of, or a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Investment Manager pursuant to any contract,
agreement, note, bond, debenture, mortgage, lease, indenture or other
instrument to which the Investment Manager is a party or by which the
Investment Manager's property is bound, except where such breach or
conflict would not have a material adverse effect on the Investment
Manager, or (C) violate or conflict with any statutes, laws,
regulations or rulings to which the Investment Manager or any of its
property may be subject or any judgment, injunction, decree or order
of any court or
<PAGE> 15
15

governmental agency or authority entered in any proceeding to which
the Investment Manager was or is now a party or by which the
Investment Manager or any of its property is bound, except where such
violation or conflict would not have a material adverse effect on the
Investment Manager, or (D) require any consent, approval,
authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental
body (except such as have been duly obtained and such as may be
required under the securities or Blue Sky laws of those United States
and Canadian jurisdictions in which U.S. Shares will be offered or
sold).

(g) There are no legal or governmental proceedings
pending to which the Investment Manager is a party or to which any of
its property is subject, which could reasonably be expected to have a
material adverse effect on the business or financial position of the
Fund or the Investment Manager, or which questions the performance by
the Investment Manager under this Agreement, the International
Underwriting Agreement, the Management Agreement or the Advisory
Agreement and, to the best of the Investment Manager's knowledge, no
such proceedings are threatened or contemplated.

(h) The Investment Manager has the financial resources
available to it reasonably necessary for the performance of it
services and obligations as contemplated in the Prospectus.

10. Representations and Warranties of the Investment Adviser.
The Investment Adviser represents and warrants to each U.S. Underwriter that:

(a) The Investment Adviser is a duly organized, validly
existing corporation in good standing under the laws of Bermuda and
has the corporate power and authority to own, lease and operate its
properties and the authority to carry on its business as described in
the Registration Statement and the Prospectus and is duly qualified
and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification
except where the failure to be so qualified would not have a material
adverse effect on the Investment Adviser.

material respects with all applicable laws, rules, regulations, orders
and similar requirements and no order of suspension or revocation of
such registration has been issued or proceedings therefor initiated or
threatened by the Commission.

(c) The description of the Investment Adviser in the
Prospectus is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading.

(d) The Investment Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement, the Advisory
Agreement and the Sub-Advisory Agreement, respectively.

(e) This Agreement, the International Underwriting
Agreement, the Advisory Agreement and the Sub-Advisory Agreement have
each been duly authorized by all requisite corporate action on the
part of the Investment Adviser and have been validly executed and duly
delivered by the Investment Adviser, and each complies in all material
respects with all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties thereto,
each of the Advisory Agreement and the Sub-Advisory Agreement
constitutes a valid and binding agreement of the Investment Adviser
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement, the Advisory
Agreement and the Sub-Advisory Agreement, compliance by the Investment
Adviser with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not (A) violate the articles of incorporation or by-laws of the
Investment Adviser, or (B) conflict with or constitute a breach of any
of the terms or provisions of, or a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Investment Adviser pursuant to any contract,
agreement, note, bond, debenture, mortgage, lease, indenture or other
instrument to which the Investment Adviser is a party or by which the
Investment Adviser's property is bound, except where such breach or
conflict would not have a material adverse effect on the Investment
Adviser, or (C) violate or conflict with any statutes, laws,
regulations or rulings to which the
<PAGE> 17
17

Investment Adviser or any of its property may be subject or any
judgment, injunction, decree or order of any court or governmental
agency or authority entered in any proceeding to which the Investment
Adviser was or is now a party or by which the Investment Adviser or
any of its property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment Adviser, or
(D) require any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body (except such as have
been duly obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian jurisdictions in
which U.S. Shares will be offered or sold).

(g) There are no legal or governmental proceedings
pending to which the Investment Adviser is a party or to which its
property is the subject, which could reasonably be expected to have a
material adverse effect on the business or financial position of the
Fund or the Investment Adviser, or which questions the performance by
the Investment Adviser under this Agreement, the International
Underwriting Agreement, the Advisory Agreement or the Sub-Advisory
Agreement and, to the best of the Investment Adviser's knowledge, no
such proceedings are threatened or contemplated.

(h) The Investment Adviser has the financial resources
available to it reasonably necessary for the performance of it
services and obligations as contemplated in the Prospectus.

11. Representations and Warranties of the Sub-Adviser. The
Sub-Adviser represents and warrants to each U.S. Underwriter that:

(a) The Sub-Adviser is a duly organized, validly existing
corporation in good standing under the laws of Japan and has the
corporate power and authority to own, lease and operate its properties
and the authority to carry on its business as described in the
Registration Statement and the Prospectus and is duly qualified and is
in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification except where the
failure to be so qualified would not have a material adverse effect on
the Sub-Adviser.

Prospectus; and is in compliance in all material respects with all
applicable laws, rules, regulations, orders and similar requirements
and no order of suspension or revocation of such registration has been
issued or proceedings therefor initiated or threatened by the
Commission.

(c) The description of the Sub-Adviser in the Prospectus
is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading.

(d) The Sub-Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement and the
Sub-Advisory Agreement, respectively.

(e) This Agreement, the International Underwriting
Agreement and the Sub-Advisory Agreement have each been duly
authorized by all requisite corporate action on the part of the
Sub-Adviser and have been validly executed and duly delivered by the
Sub-Adviser, and each complies in all material respects with all
applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, the Sub-Advisory
Agreement constitutes a valid and binding agreement of the Sub-
Adviser enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement and the Sub-
Advisory Agreement, compliance by the Sub-Adviser with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Sub-Adviser, or (B) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Sub-Adviser pursuant to
any contract, agreement, note, bond, debenture, mortgage, lease,
indenture or other instrument to which the Sub-Adviser is a party or
by which the Sub-Adviser's property is bound, except where such breach
or conflict would not have a material adverse effect on the
Sub-Adviser, or (C) violate or conflict with any statutes, laws,
regulations or rulings to which the Sub-Adviser or any of its property
may be subject or any judgment, injunction, decree or order of any
court or governmental agency or
<PAGE> 19
19

authority entered in any proceeding to which the Sub-Adviser was or is
now a party or by which the Sub-Adviser or any of its property is
bound, except where such violation or conflict would not have a
material adverse effect on the Sub-Adviser, or (D) require any
consent, approval, authorization or other order of or registration or
filing with, any court, regulatory body, administrative agency or
other governmental body (except such as have been duly obtained and
such as may be required under the securities or Blue Sky laws of those
United States and Canadian jurisdictions in which U.S. Shares will be
offered or sold).

(g) There are no legal or governmental proceedings pending to
which the Sub-Adviser is a party or to which its property is the
subject, which could reasonably be expected to have a material adverse
effect on the business or financial position of the Fund or the
Sub-Adviser, or which questions the performance by the Sub-Adviser
under this Agreement, the International Underwriting Agreement or the
Sub-Advisory Agreement and, to the best of the Sub-Adviser's
knowledge, no such proceedings are threatened or contemplated.

(h) The Sub-Adviser has the financial resources available
to it reasonably necessary for the performance of it services and
obligations as contemplated in the Prospectus.

12. Indemnification. (a) The Fund, the Investment Manager,
the Investment Adviser and the Sub-Adviser, jointly and severally, agree to
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages, liabilities,
judgments or expenses (including reasonable legal and other expenses incurred
in connection with any action, suit or proceeding or any claim asserted) caused
by any untrue statement or alleged untrue statement of a material fact
contained in (i) the Registration Statement, (ii) the Prospectus and the
Offering Circular (each as amended or supplemented if the Fund shall have
furnished any amendments or supplements thereto), (iii) any preliminary
prospectus or preliminary offering circular, (iv) any Omitting Prospectus, or
(v) any advertising or sales materials approved by the Fund for use by the
Underwriters in connection with the offering of the Shares, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any U.S. Underwriters furnished in
writing to the Fund by or on behalf of any U.S. Underwriter expressly for use
therein.
<PAGE> 20
20

(b) In case any action shall be brought against any U.S.
Underwriter or any person controlling such U.S. Underwriter, based upon any
preliminary prospectus or preliminary offering circular, the Registration
Statement, the Prospectus, the Offering Circular or any amendment or supplement
to the foregoing documents and with respect to which indemnity may be sought
against the Fund, the Investment Manager, the Investment Adviser or the
Sub-Adviser, such U.S. Underwriter shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying party") in writing and
the indemnifying party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses. Any U.S. Underwriter shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such U.S. Underwriter or such controlling person unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense and employ counsel or (iii) the named parties to any such action
(including any impleaded parties) include both such U.S. Underwriter or such
controlling person and the indemnifying party and such U.S. Underwriter or such
controlling person shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such U.S. Underwriter or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all such U.S.
Underwriters and controlling persons, which firm shall be designated in writing
by you and that all such fees and expenses shall be reimbursed as they are
incurred). None of the Fund, the Investment Manager, the Investment Adviser or
the Sub-Adviser shall be liable for any settlement of any such action effected
without the prior written consent of such indemnifying party but if settled
with the prior written consent of such indemnifying party, or if there be a
final judgment for the plaintiff in any such action or proceeding, such
indemnifying party agrees to indemnify and hold harmless any U.S. Underwriter
and any such controlling person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 10
business days after receipt by such
<PAGE> 21
21

indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is,
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.

(c) Each U.S. Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Fund, its directors, and its
officers who sign the Registration Statement, each person, if any, who controls
the Fund within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, the Investment Manager, the Investment Adviser and the
Sub-Adviser, to the same extent as the foregoing indemnity from the Fund, the
Investment Manager, the Investment Adviser and the Sub-Adviser to each U.S.
Underwriter but only with reference to information relating to any U.S.
Underwriter furnished to the Fund in writing by or on behalf of any U.S.
Underwriter through you expressly for use in the Registration Statement, the
Prospectus, the Offering Circular or any preliminary prospectus or preliminary
offering circular. In case any action shall be brought against the Fund, any
of its directors and any such officer or any person controlling the Fund, the
Investment Manager, Investment Adviser or the Sub-Adviser based on the
Registration Statement, the Prospectus, the Offering Circular or any
preliminary prospectus or preliminary offering circular and in respect of which
indemnity may be sought against any U.S. Underwriter, the U.S. Underwriter
shall have the rights and duties given to the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser (except that if the Fund, the Investment
Adviser, the Investment Manager and the Sub-Adviser shall have assumed the
defense thereof, such U.S. Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such U.S.
Underwriter), and the Fund, its directors, and any such officers, the
Investment Manager, Investment Adviser and the Sub-Adviser, shall have the
rights and duties given to the U.S. Underwriter, by Section 11(a) hereof.

hand from the offering of the U.S. Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser on the one hand and the U.S.
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Fund, the Investment Manager, the Investment Adviser and the Sub-Adviser on
the one hand and the U.S. Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the U.S. Offering (before
deducting expenses) received by the Fund determined based upon the amount of
proceeds relating to the U.S. Offering and the total underwriting discounts and
commissions received by the U.S. Underwriters, bear to the total price to the
public of the U.S. Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Fund, the Investment
Manager, the Investment Adviser, the Sub-Adviser and the U.S. Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Fund, the Investment Adviser, the
Investment Manager, the Sub-Adviser or the U.S. Underwriters and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

The Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 12(d) were determined by pro
rata allocation (even if the U.S. Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 12, no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the U.S. Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such U.S. Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute
<PAGE> 23
23

pursuant to this Section 12(d) are several in proportion to the respective
number of U.S. Shares purchased by each of the U.S. Underwriters hereunder and
not joint.

(e) The Fund, the Investment Manager, the Investment
Adviser and the Sub-Adviser hereby designate the Investment Manager, 82
Devonshire Street, Boston, Massachusetts 02109, a Massachusetts corporation, as
their authorized agent, upon which process may be served in any action, suit or
proceeding which may be instituted in any state or federal court in the State
of New York by any U.S. Underwriter or person controlling a U.S. Underwriter
asserting a claim for indemnification or contribution under or pursuant to this
Section 12, and the Fund, the Investment Manager, the Investment Adviser and
the Sub-Adviser will accept the jurisdiction of such court in such action, and
waive, to the fullest extent permitted by applicable law, any defense based
upon lack of personal jurisdiction or venue. A copy of any such process shall
be sent or given to the Fund, the Investment Manager, the Investment Adviser
and the Sub-Adviser at the address for notices specified in Section 15 hereof.
The Fund, the Investment Manager, the Investment Adviser and the Sub-Adviser
hereby irrevocably consent to the jurisdiction of the United States District
Court for the Southern District of New York and/or the New York State courts in
connection with any legal action against the Fund and/or the Investment Manager
and/or Investment Adviser and/or the Sub-Adviser hereunder.

13. Conditions of U.S. Underwriters' Obligations. The
several obligations of the U.S. Underwriters to purchase the U.S. Firm Shares
under this Agreement are subject to the satisfaction of each of the following
conditions:

(a) All the representations and warranties of the Fund
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.

(b) The Registration Statement shall have become
effective not later than 5:00 P.M., New York City time, on the date of
this Agreement or at such later date and time as you may approve in
writing, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission.

(c) Since the date of the statement of assets and
liabilities included in the Registration Statement and the Prospectus,
there shall not have been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of the Fund; on the Closing Date you shall have received a
certificate
<PAGE> 24
24

dated the Closing Date, signed by J. Gary Burkhead or Gary L. French,
in their capacities as the Senior Vice President and Treasurer of the
Fund, confirming the matters set forth in paragraphs (a), (b), and (c)
of this Section 13.

(d) All the representations and warranties of the
Investment Manager, Investment Adviser and the Sub-Adviser contained
in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date and
you shall have received a certificate from each of the Investment
Manager, the Investment Adviser and the Sub-Adviser to such effect,
dated the Closing Date, signed by the respective President and Chief
Financial Officer of each of the Investment Manager, Investment
Adviser and the Sub-Adviser.

(e) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the U.S. Underwriters),
dated the Closing Date, of Rogers & Wells, counsel for the Fund, to
the effect that:

(i) The Fund has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Maryland.

(ii) The Fund has the corporate power to own, lease
and operate its properties and the authority required to
carry on its business as described in the Registration
Statement and Prospectus and to issue and sell the Shares as
contemplated in this Agreement and the International
Underwriting Agreement.

(iii) The Fund is duly qualified and is in good
standing as a foreign corporation authorized to do business
in each jurisdiction in the United States in which the nature
of its business or its ownership or leasing of property
requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
Fund; and the Fund has no subsidiaries.

(iv) The Fund is duly registered with the Commission
under the 1940 Act as a closed-end, non-diversified,
management investment company and the operations of the Fund,
as described in the Registration Statement and the Prospectus,
are in compliance in all material respects with all applicable
United States laws, rules, regulations, orders and similar
requirements and no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated
or threatened by the Commission.
<PAGE> 25
25

(v) The Fund has full corporate power and authority
to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement and the
Fund Agreements.

(vi) The Fund is not in violation of its charter or
by-laws or in default in the performance of any obligation,
agreement, covenant or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in
any other contract, agreement, mortgage, lease, indenture or
instrument material to the conduct of the business of the
Fund, to which the Fund is a party or by which it or its
property is bound.

(vii) This Agreement, the International Underwriting
Agreement and the Fund Agreements have each been duly
authorized by all requisite corporate action on the part of
the Fund and have been validly executed and delivered by the
Fund, and each complies in all material respects with all
applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties
thereto with respect to the Fund Agreements, each of the Fund
Agreements constitutes a valid and binding agreement of the
Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

(viii) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement and the
Fund Agreements, compliance by the Fund with all the
provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A)
violate the articles of incorporation or by-laws of the Fund,
or (B) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Fund pursuant to any contract,
agreement, note, bond, debenture, mortgage, lease, indenture
or other instrument to which the Fund is a party or by which
the Fund's property is bound, or (C) violate or conflict with
any United States statutes, laws, regulations or rulings to
which the Fund or any of its property may be subject or any
judgment, injunction, decree or order of any United States
court or governmental agency or authority entered in any
proceeding to which the Fund or any of its property is bound,
or (D) require any
<PAGE> 26
26

consent, approval, authorization or other order of or
registration or filing with, any United States court,
regulatory body, administrative agency or other United States
governmental body (except such as have been duly obtained,
such as are pending as disclosed in the Prospectus, and such
as may be required under the securities or Blue Sky laws of
those United States and Canadian jurisdictions in which U.S.
Shares will be offered or sold).

(ix) Each of this Agreement, the International
Underwriting Agreement and the Fund Agreements has been
approved by the initial sole shareholder of the Fund and the
Board of Directors of the Fund to the extent and in the manner
required by the 1940 Act.

(x) All of the outstanding shares of capital stock
of the Fund have been duly authorized and validly issued and
are fully paid and non-assessable with no personal liability
attaching to the ownership thereof and are not subject to any
preemptive or similar rights; and the Shares to be issued and
sold by the Fund hereunder and under the International
Underwriting Agreement have been duly authorized and, when
issued and delivered to the Underwriters against payment
therefor as provided by this Agreement and the International
Underwriting Agreement, will be validly issued, fully paid and
non-assessable with no personal liability attaching to
ownership thereof, and the issuance of such Shares will not be
subject to any preemptive or similar rights; and no holder of
any security of the Fund has any right to require the
registration of shares of Common Stock or any other security
of the Fund.

(xi) The authorized, issued and outstanding stock of the
Fund conforms in all material respects to the description
thereof contained in the Registration Statement and
Prospectus.

(xii) After due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to
which the Fund is a party or of which its property is the
subject, which could reasonably be expected to have a material
adverse effect on the business or financial position of the
Fund or which questions the performance by the Fund of this
Agreement, the International Underwriting Agreement and the
Fund Agreements. Such counsel does not know of any contract
or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not so described
or filed as required.
<PAGE> 27
27

(xiii) The Registration Statement has become effective
under the Acts, no stop order suspending its effectiveness has
been issued and no proceedings for that purpose are, to the
knowledge of such counsel, pending before or contemplated by
the Commission.

(xiv) The statements under the captions "Management of
the Fund", "Portfolio Transactions", "Dividends and
Distributions; Dividend Reinvestment and Cash Purchase Plan",
"Taxation" (to the extent that it constitutes matters of U.S.
law), "Description of Capital Stock" and "Underwriting" in the
Prospectus and Item 29 of Part C of the Registration Statement
insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal
matters, documents and proceedings.

(xv) The investment policies and restrictions described in
the Prospectus under the captions "Investment Objective and
Policies--Other Investments--Shares of Other Investment
Funds", "Additional Investment Activities" and the
restrictions contained in paragraph (2) and "Affiliated
Financial Institution Transactions" under the caption
"Investment Restrictions" comply in all material respects with
the requirements of the 1940 Act.

(xvi) (1) The Registration Statement and the Prospectus and
any supplement or amendment thereto (except for financial
statements as to which no opinion need be expressed) comply as
to form in all material respects with the Acts, and (2) such
counsel believes that (except for financial statements, as
aforesaid) the Registration Statement and the Prospectus
included therein at the time the Registration Statement became
effective did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or
supplemented, if applicable (except for financial statements,
as aforesaid) does not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

they were made, not misleading, such circumstances including the fact
that in accordance with Rule 482 certain information included in the
Prospectus has been omitted from advertising and sales literature.

(xviii) The advertising and sales literature, if any,
approved by the Fund for use in connection with the public offering
and sale of the Shares pursuant to Rule 134 under the rules and
regulations under the Act and filed by the Fund with the NASD for
review complies in all material respects with the requirements of the
Acts.

In giving such opinion with respect to the matters covered by clause
(xvi) such counsel may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification
except as specified.

(f) An opinion, dated at the Closing Date, of Arthur S.
Loring, Senior Vice President and General Counsel, counsel for the
Investment Manager, in form and substance satisfactory to counsel for
the U.S. Underwriters, to the effect that:

(i) The Investment Manager is a duly organized,
validly existing corporation in good standing under the laws
of the Commonwealth of Massachusetts and has the corporate
power and authority to own, lease and operate its properties
and to carry on its business as described in the Registration
Statement and the Prospectus.

(ii) The Investment Manager is duly qualified and is
in good standing as a foreign corporation authorized to do
business in each United States jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification except where the failure to be so
qualified would not have a material adverse effect on the
Investment Manager.

(iii) The Investment Manager is duly registered with
the Commission as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the 1940 Act
from performing its obligations under this Agreement, the
International Underwriting Agreement, the Management Agreement
or the Advisory Agreement as contemplated by the Registration
Statement and the Prospectus; and no order of suspension or
revocation of such registration has been issued or proceedings
therefor initiated or to such counsel's knowledge threatened
by the Commission.
<PAGE> 29
29

(iv) Such counsel believes that the description of the
Investment Manager in the Prospectus, as amended or
supplemented, if applicable, is true and correct and does not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.

(v) The Investment Manager has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement, the
Management Agreement and the Advisory Agreement, respectively.

(vi) This Agreement, the International Underwriting
Agreement, the Management Agreement and the Advisory
Agreement have each been duly authorized by all requisite
corporate action on the part of the Investment Manager and
have been validly executed and delivered by the Investment
Manager, and each complies in all material respects with all
applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties
thereto, each of the Management Agreement and the Advisory
Agreement constitutes a valid and binding agreement of the
Investment Manager enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.

(vii) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement, the
Management Agreement and the Advisory Agreement, compliance by
the Investment Manager with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Investment Manager, or (B)
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any
property or assets of the Investment Manager pursuant to any
contract, agreement, note, bond, debenture, mortgage, lease,
indenture or other instrument to which the Investment Manager
is a party or by which the Investment Manager's property is
bound except where such breach or conflict would not have a
material adverse effect of the Investment Manager, or (C)
violate or conflict with any United States statutes, laws,
regulations or rulings to which the Investment Manager or any
of its property may be
<PAGE> 30
30

subject or any judgment, injunction, decree or order of any
United States court or governmental agency or authority
entered in any proceeding to which the Investment Manager was
or is now a party or by which the Investment Manager or any of
its property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment
Manager, or (D) require any consent, approval, authorization
or other order of or registration or filing with, any United
States court, regulatory body, administrative agency or other
United States governmental body (except such as have been duly
obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian
jurisdictions in which U.S. Shares will be offered or sold).

(viii) After due inquiry, such counsel does not know of
any legal or governmental proceedings pending to which the
Investment Manager is a party or to which any of its property
is the subject, which could reasonably be expected to have a
material adverse effect on the business or financial position
of Fund or the Investment Manager, or which questions the
performance by the Investment Manager of its obligations under
this Agreement, the International Underwriting Agreement, the
Management Agreement or the Advisory Agreement and, to the
best of such counsel's knowledge after reasonable inquiry, no
such proceedings are threatened or contemplated.

(g) An opinion, dated at the Closing Date, of appropriate
counsel or counsels for the Investment Adviser reasonably satisfactory
to the U.S. Underwriters, in form and substance satisfactory to
counsel for the U.S. Underwriters, to the effect that:

(i) The Investment Adviser is a duly organized,
validly existing in good standing under the laws of Bermuda
and has the corporate power and authority to own, lease and
operate its properties and authority to carry on its business
as described in the Registration Statement and the Prospectus.

(ii) The Investment Adviser is duly qualified and is in
good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification except where the failure to be so qualified
would not have a material adverse effect on the Investment
Adviser.

(iii) The Investment Adviser is duly registered
with the Commission as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act
<PAGE> 31
31

or the 1940 Act from performing its obligations under this
Agreement, the International Underwriting Agreement, the
Advisory Agreement or the Sub-Advisory Agreement as
contemplated by the Registration Statement and the Prospectus;
and no order of suspension or revocation of such registration
has been issued or proceedings therefor initiated or
threatened by the Commission.

(iv) Such counsel believes that the description of the
Investment Adviser in the Prospectus, as amended or
supplemented, if applicable, is true and correct and does not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.

(v) The Investment Adviser has full corporate power
and authority to enter into and perform its obligations under
this Agreement, the International Underwriting Agreement, the
Advisory Agreement and the Sub-Advisory Agreement,
respectively.

(vi) This Agreement, the International Underwriting
Agreement, the Advisory Agreement and the Sub-Advisory
Agreement have each been duly authorized by all requisite
corporate action on the part of the Investment Adviser and
have been validly executed and duly delivered by the
Investment Adviser, and each complies in all material respects
with all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties
thereto, each of the Advisory Agreement and the Sub-Advisory
Agreement constitutes a valid and binding agreement of the
Investment Adviser enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.

(vii) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement, the
Advisory Agreement and the Sub-Advisory Agreement, compliance
by the Investment Adviser with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Investment Adviser, or (B)
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, or result in the creation
or imposition of any lien, charge or
<PAGE> 32
32

encumbrance upon any property or assets of the Investment
Adviser pursuant to any contract, agreement, note, bond,
debenture, mortgage, lease, indenture or other instrument to
which the Investment Adviser is a party or by which the
Investment Adviser's property is bound except where such
breach or conflict would not have a material adverse effect on
the Investment Adviser, or (C) violate or conflict with any
United States, Bermuda or Hong Kong statutes, laws,
regulations or rulings to which the Investment Adviser or any
of its property may be subject or any judgment, injunction,
decree or order of any United States, Bermuda or Hong Kong
court or governmental agency or authority entered in any
proceeding to which the Investment Adviser was or is now a
party or by which the Investment Adviser or any of its
property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment
Adviser, or (D) require any consent, approval, authorization
or other order of or registration or filing with, any United
States, Bermuda or Hong Kong court, regulatory body,
administrative agency or other governmental body (except such
as have been duly obtained and such as may be required under
the securities or Blue Sky laws of those United States and
Canadian jurisdictions in which U.S. Shares will be offered or
sold).

(viii) After due inquiry, such counsel does not know of any
legal or governmental proceedings pending to which the
Investment Adviser is a party or to which its property is the
subject which could reasonably be expected to have a material
adverse effect on the business or financial position of the
Fund or the Investment Adviser, questions the performance by
the Investment Adviser of its obligations under this
Agreement, the International Underwriting Agreement, or the
Advisory Agreement and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated.

(h) An opinion, dated at the Closing Date, of appropriate
counsel or counsels for the Sub-Adviser reasonably satisfactory to the
Underwriters, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:

(i) The Sub-Adviser is a duly organized, validly
existing in good standing under the laws of Japan and has the
corporate power and authority to own, lease and operate its
properties and authority to carry on its business as described
in the Registration Statement and the Prospectus.
<PAGE> 33
33

(ii) The Sub-Adviser is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification
except where the failure to be so qualified would not have a
material adverse effect on the Sub-Adviser.

(iii) The Sub-Adviser is duly registered with the
Commission as an investment adviser under the Advisers Act and
is not prohibited by the Advisers Act or the 1940 Act from
acting under this Agreement, the International Underwriting
Agreement, or the Sub-Advisory Agreement as contemplated by
the Registration Statement and the Prospectus; and no order of
suspension or revocation of such registration has been issued
or proceedings therefor initiated or threatened by the
Commission.

(iv) Such counsel believes that the description of the
Sub-Adviser in the Prospectus, as amended or supplemented, if
applicable, is true and correct and does not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein not misleading.

(v) The Sub-Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the International Underwriting Agreement, and the
Sub-Advisory Agreement, respectively.

(vi) This Agreement, the International Underwriting
Agreement, and the Sub-Advisory Agreement have each been duly
authorized by all requisite corporate action on the part of
the Sub-Adviser and have been validly executed and duly
delivered by the Sub-Adviser, and each complies in all
material respects with all applicable provisions of the 1940
Act. Assuming due authorization, execution and delivery by
the other parties thereto, the Sub-Advisory Agreement
constitutes a valid and binding agreement of the Sub-Adviser
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

(vii) The execution, delivery and performance of this
Agreement, the International Underwriting Agreement, and the
Sub- Advisory Agreement, compliance
<PAGE> 34
34

by the Sub-Adviser with all the provisions hereof and thereof
and the consummation of the transactions contemplated
hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Sub-Adviser, or (B) conflict
with or constitute a breach of any of the terms or provisions
of, or a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Sub-Adviser pursuant to any
contract, agreement, note, bond, debenture, mortgage, lease,
indenture or other instrument to which the Sub-Adviser is a
party or by which the Sub-Adviser's property is bound except
where such breach or conflict would not have a material
adverse effect on the Sub-Adviser, or (C) violate or conflict
with any United States of Japanese statutes, laws, regulations
or rulings to which the Sub-Adviser or any of its property may
be subject or any judgment, injunction, decree or order of any
United States or Japanese court or governmental agency or
authority entered in any proceeding to which the Sub-Adviser
was or is now a party or by which the Sub-Adviser or any of
its property is bound, except where such violation or conflict
would not have a material adverse effect on the Sub-Adviser,
or (D) require any consent, approval, authorization or other
order of or registration or filing with, any United States or
Japanese court, regulatory body, administrative agency or
other governmental body (except such as have been duly
obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian
jurisdictions in which U.S. Shares will be offered or sold).

(viii) After due inquiry, such counsel does not know of any
legal or governmental proceedings pending to which the Sub-
Adviser is a party or to which its property is the subject
which could reasonably be expected to have a material adverse
effect on the business or financial position of the Fund or
the Sub-Adviser, questions the performance by the Sub-Adviser
under this Agreement, the International Underwriting
Agreement, or the Sub-Advisory Agreement and, to the best of
such counsel's knowledge, no such proceedings are threatened
or contemplated.

(i) An opinion, dated as of Closing Time, of Shin & Kim,
Korean counsel for the Fund, in form and substance satisfactory to
counsel for the U.S. Underwriters to the effect that:

been obtained and are in full force and effect and all
conditions of which have been fully satisfied, there are no
other consents, certificates, approvals, licenses,
authorizations or orders of any court or governmental
authority or agency required by any party to any of this
Agreement, the International Underwriting Agreement, the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement or the Custodian Agreement from any governmental or
other regulatory authorities, stock exchanges or securities
business associations in or of Korea in connection with the
execution, delivery or performance of any of this Agreement,
the International Underwriting Agreement, the Management
Agreement, the Advisory Agreement, the Sub-Advisory Agreement
or the Custodian Agreement in the manner contemplated herein
or therein, or of the issue and sale of the Shares in the
manner contemplated in the Prospectus or the conduct of the
business of the Fund as described in the Prospectus.

(ii) The U.S.-Korea Tax Treaty is applicable to the Fund
if and so long as the Fund operates in the manner described in
the Prospectus.

(iii) The information in the Prospectus under the
headings, "Summary", "The Republic of Korea", "The Securities
Markets of Korea", "Risk Factors and Special Considerations"
and "Taxation", insofar as they relate to matters of law or
regulations of Korea or legal conclusions based thereon, has
been reviewed by such counsel and (a) is a fair and accurate
description of the laws of Korea or legal conclusions
thereunder applicable to the Fund and the operation of its
business as described in the Prospectus and (b) at the time
the Registration Statement became effective and at Closing
Time, such information did not contain any untrue statement of
material fact or omit to state a material fact necessary to
make the statements therein not misleading.

(iv) No stamp duty or other documentary tax is payable in
Korea in respect of the execution, delivery or performance of
this Agreement, the International Underwriting Agreement, the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement or the Custodian Agreement when executed and
delivered outside of Korea; under current laws and
regulations, no stamp duty or other documentary tax will be
charged on, and no other deduction will be made by any court
in Korea from, the amount awarded in any judgment rendered in
respect of any of the agreements referred to in this
paragraph.
<PAGE> 36
36

(v) The choice of the laws of the State of New York to
govern this Agreement and the International Underwriting
Agreement and of the Commonwealth of Massachusetts to govern
the Management Agreement, the Advisory Agreement, the Sub-
Advisory Agreement and the Custodian Agreement is in each case
a valid choice of law under the laws of Korea and accordingly
would be applied by the courts of Korea if any such agreement
or any claim made thereunder is or are brought before such
court upon proof of the relevant provisions of United States
laws and provided that such provisions are not contrary to the
public policy of Korea.

(vi) To the best knowledge of such counsel, there is in
Korea no pending or threatened action, suit, investigation or
proceeding before any court or governmental agency, authority
or body or any arbitrator involving or affecting the Fund or
questioning the validity of any of this Agreement, the
International Underwriting Agreement, the Management
Agreement, the Advisory Agreement, the Sub-Advisory Agreement
or the Custodian Agreement.

(vii) It is not necessary, by reason of the entry into or
performance of this Agreement, the International Underwriting
Agreement, the Management Agreement, the Advisory Agreement,
the Sub-Advisory Agreement or the Custodian Agreement that any
of the parties thereto be licensed or qualified or otherwise
authorized to do business in Korea and the entry into or
performance of such agreement by any such party will not, to
the best of its knowledge, violate any applicable law, rule or
regulation of Korea or any government or any agency thereof,
in each case so long as such parties enter into and perform
such agreements outside of Korea.

(j) You shall have received on the Closing Date an opinion,
dated the Closing Date, of Simpson Thacher & Bartlett, counsel for the
Underwriters, as to certain of the matters referred to in clauses (i),
(iv), (vii), (x), (xiii), (xiv) (but only with respect to the
statements under the captions "Description of Capital Stock" and
"Underwriting") and (xvi) of paragraph (e). In giving such opinion
with respect to the matters covered by clause (xvii) such counsel may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.

The opinions of counsel described in paragraphs (e) through
(i) above shall be rendered to you at the request of the
<PAGE> 37
37

Fund, and shall so state therein. In giving their opinions, such counsel may
rely, among other things, as to matters involving the laws of the State of
Maryland, upon the opinion of Piper & Marbury. Such counsel also may rely, (i)
as to the qualification of the Fund to do business in any state or
jurisdiction, upon certificates of appropriate government officials, and (ii)
as to matters of fact, upon certificates and written statements of officers and
employees of and accountants for the Fund and of public officials.

(k) You shall have received a letter on and as of the
Closing Date, in form and substance satisfactory to you, from Price
Waterhouse LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Price Waterhouse
LLP on the date of this Agreement.

(l) The Fund shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Fund at
or prior to the Closing Date.

The several obligations of the U.S. Underwriters to purchase
Additional U.S. Shares hereunder are subject to the satisfaction of the
conditions in paragraphs (a) through (l) above, except that the certificates
called for in paragraphs (c) and (d), the opinions called for in paragraphs (e)
though (i) and the letter called for in paragraph (k) shall be revised to
reflect the sale of the Additional U.S. Shares and dated the Option Closing
Date.

14. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) execution of this
Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission.

financial markets of the United States, Korea or elsewhere that, in your
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Korea Stock Exchange, or the NASDAQ National Market System or limitation on
prices for securities on any such exchange or National Market System, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of the Fund, (v) the declaration
of a banking moratorium by either federal, New York State or Korean authorities
and (vi) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your opinion has a
material adverse effect on the financial market in the United States or Korea.

If this Agreement is terminated pursuant to this Section 14,
(or the International Underwriting Agreement is terminated pursuant to Section
14 thereof) each of the parties hereto will pay its own expenses, and the
agreements contained in Section 12 shall survive such termination.

If on the Closing Date or on an Option Closing Date, as the
case may be, any one or more of the U.S. Underwriters shall fail or refuse to
purchase the U.S. Firm Shares or Additional U.S. Shares, as the case may be,
which it or they have agreed to purchase hereunder on such date and the
aggregate number of U.S. Firm Shares or Additional U.S. Shares, as the case may
be, which such defaulting U.S. Underwriter or U.S. Underwriters, as the case
may be, agreed but failed or refused to purchase is not more than one-tenth of
the total number of U.S. Shares to be purchased on such date by all U.S.
Underwriters, then (i) if on the Closing Date, each non-defaulting U.S.
Underwriter shall be obligated severally, in the proportion which the number of
U.S. Firm Shares set forth opposite its name in Schedule I bears to the total
number of U.S. Firm Shares which all the non-defaulting U.S. Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the U.S. Firm Shares which such defaulting U.S. Underwriter or U.S.
Underwriters, as the case may be, agreed but failed or refused to purchase on
such date or (ii) if on an Option Closing Date, each non-defaulting U.S.
Underwriter shall be obligated, severally, in the proportion in which the
number of U.S. Firm Shares set forth opposite its name in Schedule I bears to
the total number of U.S. Firm Shares which all the non-defaulting U.S.
Underwriters have agreed to purchase, or in such other proportion as you may
specify, to purchase the Additional U.S. Shares; provided that in no event
shall the number of U.S. Firm Shares or Additional U.S. Shares, as the case may
be, which any U.S. Underwriter has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this
<PAGE> 39
39

Section 14 by an amount in excess of one-ninth of such number of U.S. Firm
Shares or Additional U.S. Shares, as the case may be, without the written
consent of such U.S. Underwriter. If on the Closing Date or on an Option
Closing Date, as the case may be, any U.S. Underwriter or U.S. Underwriters
shall fail or refuse to purchase U.S. Firm Shares, or Additional U.S. Shares,
as the case may be, and the aggregate number of U.S. Firm Shares or Additional
U.S. Shares, as the case may be, with respect to which such default occurs is
more than one-tenth of the aggregate number of U.S. Shares to be purchased on
such date by all U.S. Underwriters and arrangements satisfactory to you and the
Fund for purchase of such U.S. Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting U.S. Underwriter and the Fund. In any such case which does not
result in termination of this Agreement, either you or the Fund shall have the
right to postpone the Closing Date or the Option Closing Date, as the case may
be, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and the Prospectus or any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting U.S. Underwriter from liability in
respect of any default of any such U.S. Underwriter under this Agreement.

15. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows: (a) if to the Fund,
to Fidelity Advisor Korea Fund, Inc., 82 Devonshire Street, Boston,
Massachusetts 02109, Attention: Arthur Loring, Esq., (b) if to any Underwriter
or to you, to you c/o Baring Securities, Inc., 667 Madison Avenue, New York,
New York 10021, Attention: Mr. Andrew Norris, or in any case to such other
address as the person to be notified may have requested in writing.

The respective indemnities, contribution agreements,
representations, warranties and other statements of the Fund, its officers and
directors, the Investment Manager, the Investment Adviser, and the Sub-Adviser
and of the several U.S. Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the U.S. Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any U.S. Underwriter or by or on behalf of the Fund, the officers or directors
of the Fund, the Investment Manager, the Investment Adviser or the Sub-Adviser
(ii) acceptance of the U.S. Shares and payment for them hereunder and (iii)
termination of this Agreement.

If this Agreement shall be terminated by the U.S. Underwriters
because of any failure or refusal on the part of the Fund, the Investment
Manager, the Investment Adviser or the Sub-Adviser to comply with the terms or
to fulfill any of the conditions of this Agreement, each of the Fund, the
Investment Manager, the Investment Adviser and the Sub-Adviser, jointly and
<PAGE> 40
40

severally, agree to reimburse the several U.S. Underwriters for all
out-of-pocket expenses (including the fees and disbursements of counsel)
reasonably incurred by them.

Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Fund, the
Investment Manager, the Investment Adviser, the Sub-Adviser and the U.S.
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the U.S. Shares from any of the several U.S. Underwriters merely because
of such purchase.

This Agreement shall be governed and construed in accordance
with the laws of the State of New York.

This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
<PAGE> 41
41

Please confirm that the foregoing correctly sets forth the
agreement among the Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser and the several U.S. Underwriters.

Very truly yours,

FIDELITY ADVISOR KOREA FUND,
INC.

By
----------------------------
Title:

FIDELITY MANAGEMENT & RESEARCH
COMPANY

By
----------------------------
Title:

FIDELITY INTERNATIONAL
INVESTMENT ADVISORS

By
----------------------------
Title:

FIDELITY INVESTMENTS JAPAN LIMITED

By
----------------------------
Title:

Acting severally on behalf of
themselves and the several
U.S. Underwriters named in
Schedule I hereto

By: BARING SECURITIES INC.

By
--------------------------
Name:
Title:
<PAGE> 42
SCHEDULE I

Number of
U.S. Firm Shares
U.S. Underwriters to be Purchased
- -------------------- ----------------
<S> <C>
Baring Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . . . . .
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . . . . . . . . . . . . . . .
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
================
</TABLE>
<PAGE> 43
SCHEDULE II

Formulas for Calculation
of Sales Incentive Fee

If the Underwriter has sold between 250,000 and 1,499,999 Shares, inclusive:

Number of Shares
which have been x $15.00 x 0.15%
credited to the
Underwriter

If the Underwriter has sold between 1,500,000 and 3,499,999 Shares, inclusive:

Number of Shares
which have been x $15.00 x 0.25%
credited to the
Underwriter

If the Underwriter has sold 3,500,000 or more Shares:

Number of Shares
which have been x $15.00 x 0.30%
credited to the
Underwriter

<PAGE> 1

DRAFT 10/21/94

___________ Shares

FIDELITY ADVISOR
KOREA FUND, INC.

Common Stock

INTERNATIONAL UNDERWRITING AGREEMENT
------------------------------------

October __, 1994

BARING BROTHERS & CO., LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LUCKY SECURITIES INTERNATIONAL LTD.
SSANGYONG SECURITIES EUROPE LIMITED
COWEN & COMPANY
KDB SECURITIES CO., LTD.
As representatives of the
several underwriters
named in Schedule I hereto
c/o Baring Brothers & Co., Limited
1 America Square
London EC3N 2LT, England

Dear Sirs:

Fidelity Advisor Korea Fund, Inc., a Maryland corporation (the
"Fund"), Fidelity Management & Research Company, a Massachusetts corporation
(the "Investment Manager"), Fidelity International Investment Advisors, a
Bermuda corporation (the "Investment Adviser") and Fidelity Investments Japan
Limited, a Japanese corporation (the "Sub-Adviser"), each confirms that the
Fund proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "International Managers") an aggregate of _________ shares of its
Common Stock, par value $0.001 per share ("Common Stock") for offer and sale to
non-U.S. and non-Canadian investors outside the United States and Canada. The
____________ shares of Common Stock to be issued and sold by the Fund are
hereinafter called the International Shares.

It is understood that the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser are concurrently entering into an
agreement dated the date hereof (the "U.S. Underwriting Agreement") providing
for the offering by the Fund of __________ shares of Common Stock (the "U.S.
Firm Shares") through arrangements with certain underwriters in the United
States (the "U.S. Underwriters") for which Baring Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Dillon, Read & Co. Inc., Cowen &
Company, Legg Mason Wood Walker, Incorporated, Rauscher Pierce Refsnes, Inc.
and Raymond James &
<PAGE> 2
2
Associates, Inc. are acting as representatives (the "U.S.
Representatives") and the grant by the Fund to the U.S. Underwriters of an
option to purchase all or any part of the U.S. Underwriters' pro rata portion
of the option shares (the "Additional U.S. Shares") to cover over-allotments.

It is understood that the Fund is not obligated to sell, and
the International Managers are not obligated to purchase, any International
Shares unless all of the U.S. Firm Shares are contemporaneously purchased by
the U.S. Underwriters. The International Managers and the U.S. Underwriters
are hereinafter collectively called the "Underwriters". The International
Shares and the U.S. Firm Shares are hereinafter collectively called the "Firm
Shares", the U.S. Firm Shares and the Additional U.S. Shares are hereinafter
called the "U.S. Shares" and the International Shares and the U.S. Shares are
hereinafter collectively called the "Shares".

The Fund understands that the International Managers and the
U.S. Underwriters will concurrently enter into an Agreement Between the U.S.
Underwriters and International Managers of even date herewith (the "Agreement
Between") providing for the coordination of certain transactions among the
International Managers and the U.S. Underwriters under your direction. Baring
Securities Inc. and Donaldson, Lufkin & Jenrette Securities Corporation are the
Global Coordinators of the Offerings.

The Fund also has prepared an offering circular relating to
the International Shares which may be amended. The offering circular in the
form first used to confirm sales of International Shares is hereinafter
referred to as the Offering Circular.
<PAGE> 3
3

2. Agreements to Sell and Purchase. The Fund hereby agrees
to issue and sell the International Shares to the several International
Managers and each of the International Managers, upon the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, agrees, severally and not jointly, to purchase from the
Fund at a price per share of $__ (the "Purchase Price"), the respective number
of International Shares set forth opposite the name of such International
Manager in Schedule I hereto.

The Fund hereby agrees that it will not, for a period of 180
days following the date the Registration Statement becomes effective, without
the prior written consent of Baring Brothers & Co., Limited, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, any shares
of Common Stock (other than pursuant to the Fund's Dividend Reinvestment and
Cash Purchase Plan).

3. Terms of Public Offering. The Fund is advised by you that
the International Managers propose to make a public offering of their
respective portions of the International Shares upon the terms set forth in the
Offering Circular.

4. Delivery and Payment. Delivery to the International
Managers of and payment for the International Shares shall be made at 10:00
A.M., New York City time, on the fifth business day (the "Closing Date")
following the date of the initial public offering, at the office of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017. The
Closing Date and the location of delivery of and the form of payment for the
International Shares may be varied by agreement between you and the Fund.

Certificates for the International Shares shall be registered
in such names and issued in such denominations as you shall request in writing
not later than two-full business days prior to the Closing Date. Such
certificates shall be made available to you for inspection not later than 9:30
A.M., New York City time, on the business day next preceding the Closing Date.
Certificates in definitive form evidencing the International Shares shall be
delivered to you on the Closing Date with any transfer taxes thereon duly paid
by the Fund, for the respective accounts of the several International Managers,
against payment of the Purchase Price therefor by certified or official bank
checks payable in New York Clearing House (next day) funds to the order of the
Fund.

5. Agreements of the Fund. The Fund agrees with you:

(a) At any time during the period specified in paragraph
(c), to advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of the application for and the issuance of any
order exempting the Fund from any provisions of the 1940 Act, (ii) of
the
<PAGE> 4
4

initiation of any proceeding for the suspension of qualification of
the Shares for offering or sale in any jurisdiction, (iii) of the
happening of any event during the period referred to in paragraph (c)
below which makes any statement of a material fact made in the
Offering Circular untrue or which requires the making of any additions
to or changes in the Offering Circular in order to make the statements
therein not misleading.

(b) During the period specified in paragraph (c), not
make any amendment or supplement to the Offering Circular of which you
shall not previously have been advised or to which you shall
reasonably object.

(c) From time to time for such period as in the opinion
of counsel for the International Managers an offering circular or
prospectus is required by law to be delivered in connection with sales
by an International Manager or a dealer, to furnish to each
International Manager and dealer as many copies of the Offering
Circular and the Prospectus (and of any amendment or supplement to the
Offering Circular or the Prospectus) as such International Manager or
dealer may reasonably request.

(d) If during the period specified in paragraph (c)
any event shall occur as a result of which, in the opinion of counsel
for the International Managers it becomes necessary to amend or
supplement the Offering Circular in order to make the statements
therein, in the light of the circumstances when the Offering Circular
is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Circular to comply with any
applicable law, forthwith to prepare an appropriate amendment or
supplement to the Offering Circular so that the statements in the
Offering Circular, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or
so that the Offering Circular will comply with law, and to furnish to
each International Manager and to such dealers as you shall specify,
such number of copies thereof as such International Manager or dealers
may reasonably request.

(e) The Fund will make generally available to its
security holders as soon as reasonably practicable an earnings
statement which need not be audited covering a period of at least
twelve months after the date hereof and to advise you in writing when
such statement has been so made available.

(f) To furnish to you as soon as available a copy of each
report or other publicly available information of the Fund mailed to
the holders of Common Stock and such other publicly available
information concerning the Fund as you may reasonably request.
<PAGE> 5
5

(g) To pay all costs, expenses, fees and taxes incident
to (i) the preparation, printing and distribution of the Offering
Circular (including financial statements and exhibits), each
preliminary offering circular and all amendments and supplements to
any of them prior to or during the period specified in paragraph (c),
(ii) the printing and delivery of this Agreement, the U.S.
Underwriting Agreement, the Agreement Between and all other
agreements, memoranda, correspondence and other documents printed and
delivered in connection with the offering of the International Shares
(including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iii) filings
and clearance with the National Association of Securities Dealers,
Inc. in connection with the offering, (iv) the listing of the Shares
on the New York Stock Exchange (the "NYSE"), (v) the preparation,
printing and distribution of advertising and sales material used in
connection with the offering of the Shares, including the expenses of
printing and delivery to the Underwriters of any Omitting Prospectus
(as defined below) and the costs of preparing, printing and
distributing "internal use only" materials prepared on behalf of the
Fund and not distributed to the public, (vi) furnishing such copies of
the Offering Circular and all amendments and supplements thereto as
may be requested for use in connection with the offering or sale of
the International Shares by the International Managers or by dealers
to whom International Shares may be sold and such copies of the
Prospectus and all amendments and supplements thereto as may be
requested for use in any resales of the Shares into the United States
and (vii) the performance by the Fund of its other obligations under
this Agreement. In the event the transactions contemplated herein are
not consummated, the Investment Manager will pay all the costs,
expenses, fees and taxes set forth above that the Fund would have paid
if such transactions were consummated.

(h) To apply the net proceeds from the sale of the Shares
in accordance with the description set forth in the Offering Circular
under "Use of Proceeds".

(i) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Fund prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the International Shares.

(j) To use its best efforts to maintain its qualification
as a regulated investment company under Subchapter M of the U.S.
Internal Revenue Code of 1986, as amended ("Subchapter M").
<PAGE> 6
6

6. Agreement of the Investment Manager, Investment Adviser
and the Sub-Adviser. Each of the Investment Manager, the Investment Adviser
and the Sub-Adviser agrees with you that for a period of 180 days from the date
of the Offering Circular, not to act, without your prior written consent, as
investment adviser to any other newly formed or existing closed-end investment
company registered under the 1940 Act investing 65% or more of its total assets
in securities of Korean Issuers (as defined in the Offering Circular).

7. Agreement of the Investment Manager. The Investment
Manager agrees to pay each of the International Managers a sales incentive fee
equal to 0.15% of all Shares such International Manager sells if it sells
between 250,000 Shares and 1,499,999 Shares, inclusive, 0.25% of all Shares
such International Manager if it sells between 1,500,000 Shares and 3,499,999
Shares, inclusive, and 0.30% of all Shares such International Manager sells if
it sells 3,500,000 or more Shares computed according to the formulas set forth
in Schedule II hereto. Such sales incentive fee will be paid at the highest
rate achieved in respect of all Shares sold by such International Manager. The
sales incentive fee shall be payable on the Closing Date.

(a) The Fund is a duly organized, validly existing
corporation in good standing under the laws of the State of Maryland
and has the corporate power to own, lease and operate its properties
and the authority required to carry on its business as described in
the Offering Circular and to issue and sell the Shares as contemplated
in this Agreement and the U.S. Underwriting Agreement, and is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the Fund. The Fund has no
subsidiaries.

(b) The Fund is duly registered with the Commission under
the 1940 Act as a closed-end, non-diversified management investment
company and the operations of the Fund, as described in the Offering
Circular, are in compliance in all material respects with all
applicable laws, rules, regulations, orders and similar requirements
and no order of suspension or revocation of such registration has been
issued or proceedings therefor initiated or threatened by the
Commission.
<PAGE> 7
7

(c) All of the outstanding shares of capital stock of the
Fund have been duly authorized and validly issued and are fully paid
and non-assessable with no personal liability attaching to the
ownership thereof and are not subject to any preemptive or similar
rights; and the Shares to be issued and sold by the Fund hereunder and
under the U.S. Underwriting Agreement, have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor
as provided by this Agreement and the U.S. Underwriting Agreement,
will be validly issued, fully paid and non-assessable with no personal
liability attaching to ownership thereof, and the issuance of such
Shares will not be subject to any preemptive or similar rights; the
Fund has not granted to any person any right to require registration
of shares of Common Stock or any other security of the Fund.

(d) The authorized, issued and outstanding capital stock
of the Fund conforms in all material respects to the description
thereof contained in the Offering Circular.

(e) The Fund has full corporate power and authority to
enter into and perform its obligations under this Agreement, the U.S.
Underwriting Agreement, the Investment Management Agreement between
the Fund and the Investment Manager (the "Management Agreement"), the
Investment Advisory Agreement among the Fund, the Investment Manager
and the Investment Adviser (the "Advisory Agreement"), the
Sub-Advisory Agreement among the Fund, the Investment Adviser and the
Sub-Adviser (the "Sub-Advisory Agreement"), the Custodial Services
Agreement between the Fund and The Chase Manhattan Bank, N.A. (the
"Custodian Agreement"), the Sub-Custodian Agreement among the Fund,
The Chase Manhattan Bank, N.A. and The Hong Kong and Shanghai Banking
Corporation (the "Sub-Custodian Agreement") and the Transfer Agency
Services Agreement between the Fund and State Street Bank and Trust
Company (the "Transfer Agency Agreement") (the Management Agreement,
the Advisory Agreement, the Sub-Advisory Agreement, the Custodian
Agreement, the Sub-Custodian Agreement and the Transfer Agency
Agreement are collectively referred to herein as the "Fund
Agreements").

(f) The Fund is not in violation of its charter or
by-laws or in default in the performance of any obligation, agreement,
covenant or condition contained in any bond, debenture, note or any
other evidence of indebtedness or contained in any other contract,
agreement, mortgage, lease, indenture or instrument material to the
conduct of the business of the Fund, to which the Fund is a party or
by which it or its property is bound.

(g) This Agreement, the U.S. Underwriting Agreement and
the Fund Agreements have each been duly authorized by all requisite
corporate action on the part of the Fund and have been validly
executed and delivered by the Fund and
<PAGE> 8
8

each complies in all material respects with all applicable provisions
of the 1940 Act. Assuming due authorization, execution and delivery
by the other parties thereto, each of the Fund Agreements constitutes
a valid and binding agreement of the Fund, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

(h) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement and the Fund Agreements,
compliance by the Fund with all the provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby
will not (A) violate the articles of incorporation or by-laws of the
Fund, or (B) conflict with or constitute a breach of any of the terms
or provisions of or a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Fund, pursuant to any contract, agreement, note, bond,
debenture, mortgage, lease, indenture or other instrument to which the
Fund is a party or by which the Fund's property is bound, or (C)
violate or conflict with any statutes, laws, regulations or rulings to
which the Fund or any of its property may be subject or any judgment,
injunction, decree or order of any court or governmental agency or
authority entered in any proceeding to which the Fund was or is now a
party or by which the Fund or any of its property is bound, or (D)
require any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body (except such as have
been duly obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian jurisdictions in
which the U.S. Shares will be offered or sold).

(i) There are no legal or governmental proceedings
pending to which the Fund is a party or of which any of its property
is the subject, which could reasonably be expected to have a material
adverse effect on the business or financial position of the Fund or
which questions the performance by the Fund of this Agreement, the
U.S. Underwriting Agreement or the Fund Agreements and, to the best of
the Fund's knowledge, no such proceedings are threatened or
contemplated. There is no contract or document of a character
required under the Acts to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not so described or filed as required.
<PAGE> 9
9

(j) Since the dates as of which information is given in
the Offering Circular, except as otherwise stated therein or
contemplated thereby, there has not been (a) any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Fund or (b) any transaction
entered into by the Fund, other than in the ordinary course of
business, that is material to the Fund.

(k) Each of this Agreement, the U.S. Underwriting
Agreement and the Fund Agreements has been approved by the initial
sole shareholder of the Fund and the Board of Directors of the Fund to
the extent and in the manner required by the 1940 Act.

(l) The Fund maintains insurance of the types and at the
levels required by the 1940 Act.

(m) Price Waterhouse LLP, the accountants who audited the
statement of assets and liabilities included in the Registration
Statement, the Prospectus and the Offering Circular are independent
public accountants with respect to the Fund as required by the Act.

(n) The statement of assets and liabilities set forth in
the Offering Circular (and any amendment or supplement thereto),
presents fairly in all material respects, the financial position of
the Fund as of the date indicated in conformity with generally
accepted accounting principles.

(o) The Fund has the license to use, for so long as the
Investment Manager or an affiliate of the Investment Manager is the
investment manager of the Fund, adequate trademarks, service marks and
trade names necessary to conduct its business as described in the
Offering Circular, and the Fund has not received any notice of
infringement of or conflict with asserted rights of others with
respect to any trademarks, service marks or trade names which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would materially adversely affect the conduct of the
business, operations, financial condition or income of the Fund.

(p) The Fund intends to direct the investment of the
proceeds of the offering described in the Offering Circular in such a
manner as to comply with the requirements of Subchapter M and intends
to qualify as a regulated investment company under Subchapter M of the
Code.

(q) The Shares have been approved for listing subject to
official notice of issuance, on the New York Stock Exchange.
<PAGE> 10
10

(r) The advertising and sales literature approved by the
Fund for use in connection with the public offering and sale of the
Shares pursuant to Rule 482 under the rules and regulations under the
Acts and filed by the Fund with the NASD for review in accordance with
Rule 497(i) under the rules and regulations under the Acts (an
"Omitting Prospectus") complies in all material respects with the
requirements of the Acts, and does not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, such
circumstances including the fact that in accordance with Rule 482
certain information included in the Prospectus has been omitted from
advertising and sales literature.

(s) The advertising and sales literature, if any,
approved by the Fund for use in connection with the public offering
and sale of the Shares pursuant to Rule 134 under the rules and
regulations under the Act and filed by the Fund with the NASD for
review complies in all material respects with the requirements of the
Acts.

9. Representations and Warranties of the Investment Manager.
The Investment Manager represents and warrants to each International Manager
that:

(a) The Investment Manager is a duly organized, validly
existing corporation in good standing under the laws of the
Commonwealth of Massachusetts and has the corporate power and
authority to own, lease and operate its properties and to carry on its
business as described in the Offering Circular and is duly qualified
and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification
except where the failure to be so qualified would not have a material
adverse effect on the Investment Manager.

(b) The Investment Manager is duly registered with the
Commission as an investment adviser under the Advisers Act of 1940, as
amended (the "Advisers Act") and is not prohibited by the Advisers Act
or the 1940 Act from acting under this Agreement, the U.S.
Underwriting Agreement, the Management Agreement or the Advisory
Agreement as contemplated by the Offering Circular; and is in
compliance in all material respects with all applicable laws, rules,
regulations, orders and similar requirements and no order of
suspension or revocation, of such registration has been issued or
proceedings therefore initiated or threatened by the Commission.

(c) The description of the Investment Manager in the
Offering Circular is true and correct and does not contain
<PAGE> 11
11

any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading.

(d) The Investment Manager has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the U.S. Underwriting Agreement, the Management Agreement
and the Advisory Agreement, respectively.

(e) This Agreement, the U.S. Underwriting Agreement, the
Management Agreement and the Advisory Agreement have each been duly
authorized by all requisite corporate action on the part of the
Investment Manager and have been validly executed and duly delivered
by the Investment Manager, and each complies in all material respects
with all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties thereto,
each of the Management Agreement and the Advisory Agreement
constitutes a valid and binding agreement of the Investment Manager
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement, the Management Agreement
and the Advisory Agreement, compliance by the Investment Manager with
all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A) violate the
articles of incorporation or by-laws of the Investment Manager, or (B)
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Investment Manager pursuant to any contract, agreement, note, bond,
debenture, mortgage, lease, indenture or other instrument to which the
Investment Manager is a party or by which the Investment Manager's
property is bound, except where such breach or conflict would not have
a material adverse effect on the Investment Manager, or (C) violate or
conflict with any statutes, laws, regulations or rulings to which the
Investment Manager or any of its property may be subject or any
judgment, injunction, decree or order of any court or governmental
agency or authority entered in any proceeding to which the Investment
Manager was or is now a party or by which the Investment Manager or
any of its property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment Manager, or
(D) require any consent, approval, authorization or other
<PAGE> 12
12

order of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body (except such as have
been duly obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian jurisdictions in
which the U.S. Shares will be offered or sold).

(g) There are no legal or governmental proceedings
pending to which the Investment Manager is a party or to which any of
its property is subject, which could reasonably be expected to have a
material adverse effect on the business or financial position of the
Fund or the Investment Manager, or which questions the performance by
the Investment Manager under this Agreement, the U.S. Underwriting
Agreement, the Management Agreement or the Advisory Agreement and, to
the best of the Investment Manager's knowledge, no such proceedings
are threatened or contemplated.

(h) The Investment Manager has the financial resources
available to it reasonably necessary for the performance of it
services and obligations as contemplated in the Offering Circular.

10. Representations and Warranties of the Investment Adviser.
The Investment Adviser represents and warrants to each International Manager
that:

(a) The Investment Adviser is a duly organized, validly
existing corporation in good standing under the laws of Bermuda and
has the corporate power and authority to own, lease and operate its
properties and the authority to carry on its business as described in
the Offering Circular and is duly qualified and is in good standing as
a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of
property requires such qualification except where the failure to be so
qualified would not have a material adverse effect on the Investment
Adviser.

(b) The Investment Adviser is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act or the 1940 Act from acting under this
Agreement, the U.S. Underwriting Agreement, the Advisory Agreement or
the Sub-Advisory Agreement as contemplated by the Offering Circular;
and is in compliance in all material respects with all applicable
laws, rules, regulations, orders and similar requirements and no order
of suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.

(c) The description of the Investment Adviser in the
Offering Circular is true and correct and does not contain
<PAGE> 13
13

any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading.

(d) The Investment Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the U.S. Underwriting Agreement, the Advisory Agreement and
the Sub-Advisory Agreement, respectively.

(e) This Agreement, the U.S. Underwriting Agreement, the
Advisory Agreement and the Sub-Advisory Agreement have each been duly
authorized by all requisite corporate action on the part of the
Investment Adviser and have been validly executed and duly delivered
by the Investment Adviser, and each complies in all material respects
with all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties thereto,
each of the Advisory Agreement and the Sub-Advisory Agreement
constitutes a valid and binding agreement of the Investment Adviser
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement, the Advisory Agreement and
the Sub-Advisory Agreement, compliance by the Investment Adviser with
all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A) violate the
articles of incorporation or by-laws of the Investment Adviser, or (B)
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Investment Adviser pursuant to any contract, agreement, note, bond,
debenture, mortgage, lease, indenture or other instrument to which the
Investment Adviser is a party or by which the Investment Adviser's
property is bound, except where such breach or conflict would not have
a material adverse effect on the Investment Adviser, or (C) violate or
conflict with any statutes, laws, regulations or rulings to which the
Investment Adviser or any of its property may be subject or any
judgment, injunction, decree or order of any court or governmental
agency or authority entered in any proceeding to which the Investment
Adviser was or is now a party or by which the Investment Adviser or
any of its property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment Adviser, or
(D) require any consent, approval, authorization or other
<PAGE> 14
14

(g) There are no legal or governmental proceedings
pending to which the Investment Adviser is a party or to which its
property is the subject, which could reasonably be expected to have a
material adverse effect on the business or financial position of the
Fund or the Investment Adviser, or which questions the performance by
the Investment Adviser under this Agreement, the U.S. Underwriting
Agreement, the Advisory Agreement or the Sub-Advisory Agreement and,
to the best of the Investment Adviser's knowledge, no such proceedings
are threatened or contemplated.

(h) The Investment Adviser has the financial resources
available to it reasonably necessary for the performance of it
services and obligations as contemplated in the Offering Circular.

11. Representations and Warranties of the Sub-Adviser. The
Sub-Adviser represents and warrants to each International Manager that:

(a) The Sub-Adviser is a duly organized, validly existing
corporation in good standing under the laws of Japan and has the
corporate power and authority to own, lease and operate its properties
and the authority to carry on its business as described in the
Offering Circular and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification except where the failure to be so
qualified would not have a material adverse effect on the Sub-Adviser.

(b) The Sub-Adviser is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act or the 1940 Act from acting under this
Agreement, the U.S. Underwriting Agreement or the Sub-Advisory
Agreement as contemplated by the Offering Circular; and is in
compliance in all material respects with all applicable laws, rules,
regulations, orders and similar requirements and no order of
suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.

(c) The description of the Sub-Adviser in the Offering
Circular is true and correct and does not contain any untrue statement
of a material fact or omit to state any material
<PAGE> 15
15

fact required to be stated therein or necessary in order to make the
statements therein not misleading.

(d) The Sub-Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the U.S. Underwriting Agreement and the Sub-Advisory
Agreement, respectively.

(e) This Agreement, the U.S. Underwriting Agreement and
the Sub-Advisory Agreement have each been duly authorized by all
requisite corporate action on the part of the Sub-Adviser and have
been validly executed and duly delivered by the Sub-Adviser, and each
complies in all material respects with all applicable provisions of
the 1940 Act. Assuming due authorization, execution and delivery by
the other parties thereto and subject to registration of the Sub-
Adviser under the Advisers Act, the Sub-Advisory Agreement constitutes
a valid and binding agreement of the Sub-Adviser enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.

(f) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement and the Sub- Advisory
Agreement, compliance by the Sub-Adviser with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Sub- Adviser, or (B) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Sub-Adviser pursuant to
any contract, agreement, note, bond, debenture, mortgage, lease,
indenture or other instrument to which the Sub-Adviser is a party or
by which the Sub-Adviser's property is bound, except where such breach
or conflict would not have a material adverse effect on the
Sub-Adviser, or (C) violate or conflict with any statutes, laws,
regulations or rulings to which the Sub-Adviser or any of its property
may be subject or any judgment, injunction, decree or order of any
court or governmental agency or authority entered in any proceeding to
which the Sub-Adviser was or is now a party or by which the
Sub-Adviser or any of its property is bound, except where such
violation or conflict would not have a material adverse effect on the
Sub- Adviser, or (D) require any consent, approval, authorization or
other order of or registration or filing with, any court, regulatory
body, administrative agency or other governmental body (except such as
have been duly obtained and such as may be required under the
securities or
<PAGE> 16
16

Blue Sky laws of those United States and Canadian jurisdictions in
which the U.S. Shares will be offered or sold).

(g) There are no legal or governmental proceedings
pending to which the Sub-Adviser is a party or to which its property
is the subject, which could reasonably be expected to have a material
adverse effect on the business or financial position of the Fund or the
Sub-Adviser, or which questions the performance by the Sub-Adviser
under this Agreement, the U.S. Underwriting Agreement or the
Sub-Advisory Agreement and, to the best of the Sub-Adviser's
knowledge, no such proceedings are threatened or contemplated.

(h) The Sub-Adviser has the financial resources available
to it reasonably necessary for the performance of it services and
obligations as contemplated in the Offering Circular.

12. Indemnification. (a) The Fund, the Investment Manager,
the Investment Adviser and the Sub-Adviser, jointly and severally, agree to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities, judgments or expenses (including reasonable legal and other
expenses incurred in connection with any action, suit or proceeding or any
claim asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in (i) the Registration Statement, (ii) the Prospectus
or the Offering Circular (each as amended or supplemented if the Fund shall
have furnished any amendments or supplements thereto), (iii) any preliminary
prospectus or preliminary offering circular, (iv) any Omitting Prospectus, or
(v) any advertising or sales materials approved by the Fund for use by the
Underwriters in connection with the offering of the Shares, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any International Managers
furnished in writing to the Fund by or on behalf of any International Manager
expressly for use therein.

(b) In case any action shall be brought against any
International Manager or any person controlling such International Manager,
based upon any preliminary prospectus or preliminary offering circular, the
Prospectus, the Offering Circular, the Registration Statement or any amendments
or supplements to the foregoing documents and with respect to which indemnity
may be sought against the Fund, the Investment Manager,
<PAGE> 17
17

the Investment Adviser or the Sub-Adviser, such International Manager shall
promptly notify the parties against whom indemnification is being sought (the
"indemnifying party") in writing and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses. Any International
Manager shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such International Manager or such controlling
person unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both such
International Manager or such controlling person and the indemnifying party and
such International Manager or such controlling person shall have been advised
by such counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the indemnifying
party (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of such International Manager or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such International Managers and controlling persons, which firm shall be
designated in writing by you and that all such fees and expenses shall be
reimbursed as they are incurred). None of the Fund, the Investment Manager,
the Investment Adviser or the Sub-Adviser shall be liable for any settlement of
any such action effected without the prior written consent of such indemnifying
party but if settled with the prior written consent of such indemnifying party,
or if there be a final judgment for the plaintiff in any such action or
proceeding, such indemnifying party agrees to indemnify and hold harmless any
International Manager and any such controlling person from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of
<PAGE> 18
18

which any indemnified party is, or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.

(c) Each International Manager agrees, severally and not
jointly, to indemnify and hold harmless the Fund, its directors, and its
officers who sign the Registration Statement, each person, if any, who controls
the Fund within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, the Investment Manager, the Investment Adviser and the
Sub-Adviser, to the same extent as the foregoing indemnity from the Fund, the
Investment Manager, the Investment Adviser and the Sub-Adviser to each
International Manager but only with reference to information relating to any
International Manager furnished to the Fund in writing by or on behalf of any
International Manager through you expressly for use in the Registration
Statement, Prospectus, Offering Circular or any preliminary prospectus or
preliminary offering circular. In case any action shall be brought against the
Fund, any of its directors and any such officer or any person controlling the
Fund, the Investment Manager, Investment Adviser or the Sub- Adviser based on
the Registration Statement, Prospectus, Offering Circular or any preliminary
prospectus or preliminary offering circular and in respect of which indemnity
may be sought against any International Manager, the International Manager
shall have the rights and duties given to the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser (except that if the Fund, the Investment
Manager, the Investment Adviser and the Sub-Adviser shall have assumed the
defense thereof, such International Manager shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
International Manager), and the Fund, its directors, and any such officers, the
Investment Manager, Investment Adviser and the Sub-Adviser, shall have the
rights and duties given to the International Manager, by Section 12(a) hereof.

(d) If the indemnification provided for in this Section
12 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund, the
Investment Manager, Investment Adviser and the Sub-Adviser on the one hand and
the International Managers on the other hand from the offering of the
International Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Fund, the Investment
<PAGE> 19
19

Manager, the Investment Adviser and the Sub-Adviser on the one hand and the
International Managers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Fund, the Investment Manager, the Investment
Adviser and the Sub- Adviser on the one hand and the International Managers on
the other shall be deemed to be in the same proportion as the total net
proceeds from the International Offering (before deducting expenses) received
by the Fund determined based upon the amount of proceeds relating to the
International Offering and the total underwriting discounts and commissions
received by the International Managers, bear to the total price to the public
of the Shares, in each case as set forth on the cover of the Offering Circular.
The relative fault of the Fund, the Investment Manager, the Investment Adviser,
the Sub-Adviser and the International Managers shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser or the International Managers and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser and the International Managers agree that it would not be just and
equitable if contribution pursuant to this Section 12(d) were determined by pro
rata allocation (even if the International Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 12, no
International Manager shall be required to contribute any amount in excess of
the amount by which the total price at which the International Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such International Manager has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The International Managers' obligations to contribute
pursuant to this Section 12(d) are several in proportion to the respective
number of Shares purchased by each of the International Managers hereunder and
not joint.
<PAGE> 20
20

(e) The Fund, the Investment Manager, the Investment
Adviser and the Sub-Adviser, hereby designate the Investment Manager, 82
Devonshire Street, Boston, Massachusetts 02109, a Massachusetts corporation, as
their authorized agent, upon which process may be served in any action, suit or
proceeding which may be instituted in any state or federal court in the State
of New York by any International Manager or person controlling an International
Manager asserting a claim for indemnification or contribution under or pursuant
to this Section 12, and the Fund, the Investment Manager, the Investment
Adviser and the Sub-Adviser will accept the jurisdiction of such court in such
action, and waives, to the fullest extent permitted by applicable law, any
defense based upon lack of personal jurisdiction or venue. A copy of any such
process shall be sent or given to the Fund, the Investment Manager, the
Investment Adviser and the Sub-Adviser at the address for notices specified in
Section 15 hereof. The Fund, the Investment Manager, Investment Adviser and
the Sub-Adviser hereby irrevocably consent to the jurisdiction of the United
States District Court for the Southern District of New York and/or the New York
State courts in connection with any legal action against the Fund and/or the
Investment Manager and/or Investment Adviser and/or the Sub-Adviser hereunder.

13. Conditions of International Managers' Obligations.
The several obligations of the International Managers to purchase the
International Shares under this Agreement are subject to the satisfaction of
each of the following conditions:

(b) Since the date of the statement of assets and
liabilities included in the Offering Circular, there shall not have
been any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, affairs or business prospects, whether
or not arising in the ordinary course of business, of the Fund; on the
Closing Date you shall have received a certificate dated the Closing
Date, signed by J. Gary Burkhead or Gary L. French, in their
capacities as the Senior Vice President and Treasurer of the Fund,
confirming the matters set forth in paragraphs (a), (b), and (c) of
this Section 13.

(c) All the representations and warranties of the
Investment Manager, Investment Adviser and the Sub-Adviser contained
in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date and
you shall have received a certificate from each of the Investment
Manager, the Investment Adviser and the Sub-Adviser to such effect,
dated the Closing Date, signed by the respective President and
<PAGE> 21
21

Chief Financial Officer of each of the Investment Manager,
Investment Adviser and the Sub-Adviser.

(d) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the International
Managers), dated the Closing Date, of Rogers & Wells, counsel for the
Fund, to the effect that:

(i) The Fund has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Maryland.

(ii) The Fund has the corporate power to own,
lease and operate its properties and the authority required to
carry on its business as described in the Offering Circular
and to issue and sell the Shares as contemplated in this
Agreement and the U.S. Underwriting Agreement.

(iii) The Fund is duly qualified and is in good
standing as a foreign corporation authorized to do business in
each jurisdiction in the United States in which the nature of
its business or its ownership or leasing of property requires
such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Fund; and the Fund has no subsidiaries.

(iv) The Fund is duly registered with the
Commission under the 1940 Act as a closed-end, non-
diversified, management investment company and the operations
of the Fund, as described in the Offering Circular, are in
compliance in all material respects with all applicable United
States laws, rules, regulations, orders and similar
requirements and no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated
or threatened by the Commission.

(v) The Fund has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the U.S. Underwriting Agreement and the Fund
Agreements.

(vi) The Fund is not in violation of its charter
or by-laws or in default in the performance of any obligation,
agreement, covenant or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in
any other contract, agreement, mortgage, lease, indenture or
instrument material to the conduct of the business of the
Fund, to which the Fund is a party or by which it or its
property is bound.
<PAGE> 22
22

(vii) This Agreement, the U.S. Underwriting
Agreement and the Fund Agreements have each been duly
authorized by all requisite corporate action on the part of
the Fund and have been validly executed and delivered by the
Fund, and each complies in all material respects with all
applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties
thereto with respect to the Fund Agreements, each of the Fund
Agreements constitutes a valid and binding agreement of the
Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

(viii) The execution, delivery and performance of
this Agreement, the U.S. Underwriting Agreement and the Fund
Agreements, compliance by the Fund with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) violate the
articles of incorporation or by-laws of the Fund, or (B)
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any
property or assets of the Fund pursuant to any contract,
agreement, note, bond, debenture, mortgage, lease, indenture
or other instrument to which the Fund is a party or by which
the Fund's property is bound, or (C) violate or conflict with
any United States statutes, laws, regulations or rulings to
which the Fund or any of its property may be subject or any
judgment, injunction, decree or order of any United States
court or governmental agency or authority entered in any
proceeding to which the Fund or any of its property is bound,
or (D) require any consent, approval, authorization or other
order of or registration or filing with, any United States
court, regulatory body, administrative agency or other United
States governmental body (except such as have been duly
obtained and such as may be required under the securities or
Blue Sky laws of those United States and Canadian
jurisdictions in which the U.S. Shares will be offered or
sold).

(ix) Each of this Agreement, the U.S. Underwriting
Agreement and the Fund Agreements has been approved by the
initial sole shareholder of the Fund and the Board of
Directors of the Fund to the extent and in the manner required
by the 1940 Act.
<PAGE> 23
23

(x) All of the outstanding shares of capital
stock of the Fund have been duly authorized and validly issued
and are fully paid and non-assessable with no personal
liability attaching to the ownership thereof and are not
subject to any preemptive or similar rights; and the Shares to
be issued and sold by the Fund hereunder and under the U.S.
Underwriting Agreement have been duly authorized and, when
issued and delivered to the Underwriters against payment
therefor as provided by this Agreement and the U.S.
Underwriting Agreement, will be validly issued, fully paid and
non-assessable with no personal liability attaching to
ownership thereof, and the issuance of such Shares will not be
subject to any preemptive or similar rights; and no holder of
any security of the Fund has any right to require the
registration of shares of Common Stock or any other security
of the Fund.

(xi) The authorized, issued and outstanding stock
of the Fund conforms in all material respects to the
description thereof contained in the Offering Circular.

(xii) After due inquiry, such counsel does not know
of any legal or governmental proceedings pending or threatened
to which the Fund is a party or of which its property is the
subject, which could reasonably be expected to have a material
adverse effect on the business or financial position of the
Fund or which questions the performance by the Fund of this
Agreement, the U.S. Underwriting Agreement or the Fund
Agreements. Such counsel does not know of any contract or
document of a character required to be described in the
Offering Circular.

(xiii) The statements under the captions "Management
of the Fund", "Portfolio Transactions", "Dividends and
Distributions; Dividend Reinvestment and Cash Purchase Plan",
"Taxation" (to the extent that it constitutes matters of U.S.
law), "Description of Capital Stock" and "Underwriting" in the
Offering Circular insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings.

(xiv) The investment policies and restrictions
described in the Offering Circular under the captions
"Investment Objective and Policies--Other Investments--Shares
of Other Investment Funds", "Additional Investment Activities"
and the restrictions contained in paragraph (2) and
"Affiliated Financial Institution Transactions" under the
caption "Investment
<PAGE> 24
24

Restrictions" comply in all material respects with the
requirements of the 1940 Act.

(xv) No registration under the Act of the
International Shares initially being offered or sold by the
International Underwriters in the International Offering is
required in connection with the offer and sale of the
International Shares in the manner contemplated by this
Agreement, the Agreement Between and the Offering Circular (it
being noted that the International Shares have been registered
under the Act for sale or resale from time to time in the
United States).

(xvi) (1) The Registration Statement, Prospectus
and any supplements or amendments thereto (except for
financial statements as to which no opinion need be expressed)
comply as to form in all material respects with the Acts, and
(2) such counsel believes that (except for financial
statements, as aforesaid) the Registration Statement and
Prospectus included therein at the time the Registration
Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and that the Prospectus and
Offering Circular, each as amended or supplemented, if
applicable (except for financial statements, as aforesaid) do
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.

(xvii) The Omitting Prospectus complies in all
material respects with the requirements of the Acts, and does
not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, such
circumstances including the fact that in accordance with Rule
482 certain information included in the Prospectus has been
omitted from advertising and sales literature.

(xviii) The advertising and sales literature, if any,
approved by the Fund for use in connection with the public
offering and sale of the Shares pursuant to Rule 134 under the
rules and regulations under the Act and filed by the Fund with
the NASD for review complies in all material respects with the
requirements of the Acts.
<PAGE> 25
25

In giving such opinion with respect to the matters covered by
clause (xvi) such counsel may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement,
Prospectus and Offering Circular and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification except as specified.

In giving such opinion with respect to the matters covered by
clause (xv) such counsel may state that they have assumed (a) that the offer
and sale of the International Shares will be conducted solely in the manner
contemplated by this Agreement, the Agreement Between and the Offering Circular
and (b) the accuracy of the respective representations and warranties of the
Fund and the International Managers, and compliance with their respective
covenants and agreements, set forth in this Agreement and the Agreement
Between.

(e) An opinion, dated at the Closing Date, of Arthur S.
Loring, Senior Vice President and General Counsel, counsel for the
Investment Manager, in form and substance satisfactory to counsel for
the International Managers, to the effect that:

(iii) The Investment Manager is duly registered
with the Commission as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the
1940 Act from performing its obligations under this Agreement,
the U.S. Underwriting Agreement, the Management Agreement or
the Advisory Agreement as contemplated by the Offering
Circular; and no order of suspension or revocation of such
registration has been issued or proceedings therefor
initiated or to such counsel's knowledge threatened by the
Commission.

(iv) Such counsel believes that the description of
the Investment Manager in the Offering Circular, as amended or
supplemented, if applicable, is true and correct and does not
contain any untrue statement of a
<PAGE> 26
26

material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein not misleading.

(v) The Investment Manager has full corporate
power and authority to enter into and perform its obligations
under this Agreement, the U.S. Underwriting Agreement, the
Management Agreement and the Advisory Agreement, respectively.

(vi) This Agreement, the U.S. Underwriting
Agreement, the Management Agreement and the Advisory Agreement
have each been duly authorized by all requisite corporate
action on the part of the Investment Manager and have been
validly executed and delivered by the Investment Manager and
each complies in all material respects with all applicable
provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each of
the Management Agreement and the Advisory Agreement
constitutes a valid and binding agreement of the Investment
Manager enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

(vii) The execution, delivery and performance of
this Agreement, the U.S. Underwriting Agreement, the
Management Agreement and the Advisory Agreement, compliance by
the Investment Manager with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (A) violate the articles of
incorporation or by-laws of the Investment Manager, or (B)
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any
property or assets of the Investment Manager pursuant to any
contract, agreement, note, bond, debenture, mortgage, lease,
indenture or other instrument to which the Investment Manager
is a party or by which the Investment Manager's property is
bound except where such breach or conflict would not have a
material adverse effect of the Investment Manager, or (C)
violate or conflict with any United States statutes, laws,
regulations or rulings to which the Investment Manager or any
of its property may be subject or any judgment, injunction,
decree or order of any United States court or governmental
agency or authority entered in any proceeding to which the
Investment Manager was or is now a party or by which the
<PAGE> 27
27

Investment Manager or any of its property is bound, except
where such violation or conflict would not have a material
adverse effect on the Investment Manager, or (D) require any
consent, approval, authorization or other order of or
registration or filing with, any United States court,
regulatory body, administrative agency or other United States
governmental body (except such as have been duly obtained and
such as may be required under the securities or Blue Sky laws
of those United States and Canadian jurisdictions in which the
U.S. Shares will be offered or sold).

(viii) After due inquiry, such counsel does not know of
any legal or governmental proceedings pending to which the
Investment Manager is a party or to which any of its property
is the subject, which could reasonably be expected to have a
material adverse effect on the business or financial position
of Fund or the Investment Manager, or which questions the
performance by the Investment Manager of its obligations under
this Agreement, the U.S. Underwriting Agreement, the
Management Agreement or the Advisory Agreement and, to the
best of such counsel's knowledge after reasonable inquiry, no
such proceedings are threatened or contemplated.

(f) An opinion, dated at the Closing Date, of appropriate
counsel or counsels for the Investment Adviser reasonably satisfactory
to the International Managers, in form and substance satisfactory to
counsel for the International Managers, to the effect that:

(iii) The Investment Adviser is duly registered
with the Commission as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the
1940 Act from performing its obligations under this Agreement,
the U.S. Underwriting Agreement, the Advisory Agreement or the
Sub-Advisory Agreement as contemplated by the Offering
Circular; and no order of
<PAGE> 28
28

suspension or revocation of such registration has been issued
or proceedings therefor initiated or threatened by the
Commission.

(iv) Such counsel believes that the description of the
Investment Adviser in the Offering Circular, as amended or
supplemented, if applicable, is true and correct and does not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.

(v) The Investment Adviser has full corporate power
and authority to enter into and perform its obligations under
this Agreement, the U.S. Underwriting Agreement, the Advisory
Agreement and the Sub-Advisory Agreement, respectively.

(vi) This Agreement, the U.S. Underwriting Agreement, the
Advisory Agreement and the Sub-Advisory Agreement have each
been duly authorized by all requisite corporate action on the
part of the Investment Adviser and have been validly executed
and duly delivered by the Investment Adviser, and each
complies in all material respects with all applicable
provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each of
the Advisory Agreement and the Sub-Advisory Agreement
constitutes a valid and binding agreement of the Investment
Adviser enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

(vii) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement, the Advisory
Agreement and the Sub-Advisory Agreement, compliance by the
Investment Adviser with all the provisions hereof and thereof
and the consummation of the transactions contemplated hereby
and thereby will not (A) violate the articles of incorporation
or by-laws of the Investment Adviser, or (B) conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Investment Adviser pursuant to any contract, agreement, note,
bond, debenture, mortgage, lease, indenture or other
instrument to which the Investment Adviser is a party or by
which the Investment Adviser's property is bound except where
<PAGE> 29
29

such breach or conflict would not have a material adverse
effect on the Investment Adviser, or (C) violate or conflict
with any United States, Bermuda or Hong Kong statutes, laws,
regulations or rulings to which the Investment Adviser or any
of its property may be subject or any judgment, injunction,
decree or order of any United States, Bermuda or Hong Kong
court or governmental agency or authority entered in any
proceeding to which the Investment Adviser was or is now a
party or by which the Investment Adviser or any of its
property is bound, except where such violation or conflict
would not have a material adverse effect on the Investment
Adviser, or (D) require any consent, approval, authorization
or other order of or registration or filing with, any United
States, Bermuda or Hong Kong court, regulatory body,
administrative agency or other governmental body (except such
as have been duly obtained and such as may be required under
the securities or Blue Sky laws of those United States and
Canadian jurisdictions in which the U.S. Shares will be
offered or sold).

(viii) After due inquiry, such counsel does not know of
any legal or governmental proceedings pending to which the
Investment Adviser is a party or to which its property is the
subject which could reasonably be expected to have a material
adverse effect on the business or financial position of the
Fund or the Investment Adviser, questions the performance by
the Investment Adviser of its obligations under this
Agreement, the U.S. Underwriting Agreement or the Advisory
Agreement and, to the best of such counsel's knowledge, no
such proceedings are threatened.

(g) An opinion, dated at the Closing Date, of appropriate
counsel or counsels for the Sub-Adviser reasonably satisfactory to the
International Managers, in form and substance satisfactory to counsel
for the International Managers, to the effect that:

(iii) The Sub-Adviser is duly registered with the
Commission as an investment adviser under the Advisers Act and
is not prohibited by the Advisers Act or the 1940 Act from
acting under this Agreement, the U.S. Underwriting Agreement
or the Sub-Advisory Agreement as contemplated by the Offering
Circular; and no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated
or threatened by the Commission.

(iv) Such counsel believes that the description of the
Sub-Adviser in the Offering Circular, as amended or
supplemented, if applicable, is true and correct and does not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.

(v) The Sub-Adviser has full corporate power and
authority to enter into and perform its obligations under this
Agreement, the U.S. Underwriting Agreement and the
Sub-Advisory Agreement, respectively.

(vi) This Agreement, the U.S. Underwriting Agreement and
the Sub-Advisory Agreement have each been duly authorized by
all requisite corporate action on the part of the Sub-Adviser
and have been validly executed and duly delivered by the
Sub-Adviser, and each complies in all material respects with
all applicable provisions of the 1940 Act. Assuming due
authorization, execution and delivery by the other parties
thereto, the Sub-Advisory Agreement constitutes a valid and
binding agreement of the Sub-Adviser enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.

(vii) The execution, delivery and performance of this
Agreement, the U.S. Underwriting Agreement and the Sub-
Advisory Agreement, compliance by the Sub-Adviser with all the
provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A)
violate the articles of incorporation or by-laws of the
Sub-Adviser, or (B) conflict with or constitute a breach of
any of the terms or provisions of, or a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Sub-Adviser
pursuant to any contract, agreement, note, bond, debenture,
mortgage, lease, indenture or other
<PAGE> 31
31

instrument to which the Sub-Adviser is a party or by which the
Sub-Adviser's property is bound except where such breach or
conflict would not have a material adverse effect on the
Sub-Adviser, or (C) violate or conflict with any United States
of Japanese statutes, laws, regulations or rulings to which
the Sub-Adviser or any of its property may be subject or any
judgment, injunction, decree or order of any United States or
Japanese court or governmental agency or authority entered in
any proceeding to which the Sub-Adviser was or is now a party
or by which the Sub- Adviser or any of its property is bound,
except where such violation or conflict would not have a
material adverse effect on the Sub-Adviser, or (D) require any
consent, approval, authorization or other order of or
registration or filing with, any United States or Japanese
court, regulatory body, administrative agency or other
governmental body (except such as have been duly obtained and
such as may be required under the securities or Blue Sky laws
of those United States and Canadian jurisdictions in which the
U.S. Shares will be offered or sold).

(viii) After due inquiry, such counsel does not know of any
legal or governmental proceedings pending to which the
Sub-Adviser is a party or to which its property is the subject
which could reasonably be expected to have a material adverse
effect on the business or financial position of the Fund or
the Sub-Adviser, questions the performance by the Sub-Adviser
under this Agreement, the U.S. Underwriting Agreement or the
Sub-Advisory Agreement and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated.

(h) An opinion, dated as of Closing Time, of Shin & Kim,
Korean counsel for the Fund, in form and substance satisfactory to
counsel for the International Managers to the effect that:

(i) Except for such consents, certificates,
approvals, licenses, authorizations and orders of any court or
governmental authority or agency as shall be specified in such
counsel's opinion, all of which have been obtained and are in
full force and effect and all conditions of which have been
fully satisfied, there are no other consents, certificates,
approvals, licenses, authorizations or orders of any court or
governmental authority or agency required by any part to any
of this Agreement, the U.S. Underwriting Agreement, the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement or the Custodian Agreement from any governmental or
other regulatory authorities, stock exchanges or securities
business
<PAGE> 32
32

associations in or of Korea in connection with the execution,
delivery or performance of any of this Agreement, the U.S.
Underwriting Agreement, the Management Agreement, the Advisory
Agreement, the Sub-Advisory Agreement or the Custodian
Agreement in the manner contemplated herein or therein, or of
the issue and sale of the Shares in the manner contemplated in
the Offering Circular or the conduct of the business of the
Fund as described in the Offering Circular.

(ii) The U.S.-Korea Tax Treaty is applicable to the Fund
if and so long as the Fund operates in the manner described in
the Offering Circular.

(iii) The information in the Offering Circular under the
headings "Summary", "The Republic of Korea Countries", "The
Securities Markets of Korea", "Risk Factors and Special
Considerations", "Taxation", insofar as they relate to matters
of law or regulations of Korea or legal conclusions based
thereon, has been reviewed by such counsel and is a fair and
accurate description of the laws of Korea or legal conclusions
thereunder applicable to the Fund and the operation of its
business as described in the Offering Circular.

(iv) No stamp duty or other documentary tax is payable in
Korea in respect of the execution, delivery or performance of
this Agreement, the U.S. Underwriting Agreement, the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement or the Custodian Agreement when executed and
delivered outside of Korea; under current laws and
regulations, no stamp duty or other documentary tax will be
charged on, and no other deduction will be made by any court
in Korea from, the amount awarded in any judgment rendered in
respect of any of the agreements referred to in this
paragraph.

(v) The choice of the laws of the State of New York
to govern this Agreement and the U.S. Underwriting Agreement
and of the Commonwealth of Massachusetts to govern the
Management Agreement, the Advisory Agreement, the Sub-Advisory
Agreement and the Custodian Agreement is in each case a valid
choice of law under the laws of Korea and accordingly would be
applied by the courts of Korea if any such agreement or any
claim made thereunder is or are brought before such court upon
proof of the relevant provisions of United States laws and
provided that such provisions are not contrary to the public
policy of Korea.

arbitrator involving or affecting the Fund or questioning the
validity of any of this Agreement, the U.S. Underwriting
Agreement, the Management Agreement, the Advisory Agreement,
the Sub-Advisory Agreement or the Custodian Agreement.

(vii) It is not necessary, by reason of the entry into or
performance of this Agreement, the U.S. Underwriting
Agreement, the Management Agreement, the Advisory Agreement,
the Sub-Advisory Agreement or the Custodian Agreement that any
of the parties thereto be licensed or qualified or otherwise
authorized to do business in Korea and the entry into or
performance of such agreement by any such party will not, to
the best of its knowledge, violate any applicable law, rule or
regulation of Korea or any government or any agency thereof,
in each case so long as such parties enter into and perform
such agreements outside of Korea.

(i) You shall have received on the Closing Date an opinion,
dated the Closing Date, of Simpson Thacher & Bartlett, counsel for the
International Managers, as to certain of the matters referred to in
clauses (i), (iv), (vii), (x), (xiii), (xiv) (but only with respect to
the statements under the captions "Description of Capital Stock" and
"Underwriting") and (xvi) of the paragraph (e). In giving such
opinion with respect to the matters covered by clause (xvii) such
counsel may state that their opinion and belief are based upon their
participation in the preparation of the Offering Circular and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.

The opinions of counsel described in paragraphs (e) through
(i) above shall be rendered to you at the request of the Fund, and shall so
state therein. In giving their opinions, such counsel may rely, among other
things, as to matters involving the laws of the State of Maryland, upon the
opinion of Piper & Marbury. Such counsel also may rely, (i) as to the
qualification of the Fund to do business in any state or jurisdiction, upon
certificates of appropriate government officials, and (ii) as to matters of
fact, upon certificates and written statements of officers and employees of and
accountants for the Fund and of public officials.

(j) You shall have received a letter on and as of the
Closing Date, in form and substance satisfactory to you, from Price
Waterhouse LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Offering Circular and substantially in the form and substance of
the letter delivered to you by Price Waterhouse LLP on the date of
this Agreement.
<PAGE> 34
34

(k) The Fund shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Fund at
or prior to the Closing Date.

14. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) the execution of this
Agreement and (ii) the effectiveness of the U.S. Underwriting Agreement.

This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Fund if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Offering Circular, any adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, of the
Fund, the Investment Manager, the Investment Adviser or the Sub-Adviser or the
earnings, affairs, or business prospects of the Fund, the Investment Manager,
the Investment Adviser or the Sub-Adviser, whether or not arising in the
ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Offering Circular, (ii) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States, Korea or elsewhere
that, in your judgment, is material and adverse and would, in your judgment,
make it impracticable to market the Shares on the terms and in the manner
contemplated in the Offering Circular, (iii) the suspension or material
limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Korea Stock Exchange, or the NASDAQ National
Market System or limitation on prices for securities on any such exchange or
National Market System, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Fund, (v) the declaration of a banking moratorium by either
federal, New York State or Korean authorities and (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States or Korea.

If this Agreement is terminated pursuant to this Section 14
(or the U.S. Underwriting Agreement is terminated pursuant to Section 14
thereof), each of the parties hereto will pay its own expenses, and the
agreements contained in Section 12 shall survive such termination.

If on the Closing Date any one or more of the International
Managers shall fail or refuse to purchase the International Shares which it or
they have agreed to purchase
<PAGE> 35
35

hereunder on such date and the aggregate number of International Shares which
such defaulting International Manager or International Managers, as the case
may be, agreed but failed or refused to purchase is not more than one-tenth of
the total number of Shares to be purchased on such date by all International
Managers, on the Closing Date, each non-defaulting International Manager shall
be obligated severally, in the proportion which the number of International
Firm Shares set forth opposite its name in Schedule I bears to the total number
of Shares which all the non-defaulting International Managers have agreed to
purchase, or in such other proportion as you may specify, to purchase the
International Firm Shares which such defaulting International Manager or
International Managers, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of
International Shares, which any International Manager has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 14 by an
amount in excess of one-ninth of such number of International Shares without
the written consent of such International Manager. If on the Closing Date, any
International Manager or International Managers shall fail or refuse to
purchase International Shares, with respect to which such default occurs is
more than one-tenth of the aggregate number of International Shares to be
purchased on such date by all International Managers and arrangements
satisfactory to you and the Fund for purchase of such International Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting International Manager and
the Fund. In any such case which does not result in termination of this
Agreement, either you or the Fund shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Offering Circular or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting International Manager from liability in respect of any
default of any such International Manager under this Agreement.

15. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows: (a) if to the Fund,
to Fidelity Advisor Korea Fund, Inc., 82 Devonshire Street, Boston,
Massachusetts 02109, Attention: Arthur Loring, Esq., (b) if to any
International Manager or to you, to you c/o Baring Securities, Inc., 667
Madison Avenue, New York, New York, Attention: Mr. Andrew Norris, or in any
case to such other address as the person to be notified may have requested in
writing.

The respective indemnities, contribution agreements,
representations, warranties and other statements of the Fund, its officers and
directors, the Investment Manager and the Investment Adviser, the Sub-Adviser
and of the several International Managers set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
<PAGE> 36
36

delivery of and payment for the International Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any International Manager or by or on behalf of the Fund, the officers or
directors of the Fund, the Investment Manager, or the Investment Adviser or the
Sub-Adviser (ii) acceptance of the International Shares and payment for them
hereunder and (iii) termination of this Agreement.

If this Agreement shall be terminated by the International
Managers because of any failure or refusal on the part of the Fund, the
Investment Manager, the Investment Adviser or the Sub-Adviser to comply with
the terms or to fulfill any of the conditions of this Agreement, each of the
Fund, the Investment Manager, the Investment Adviser and the Sub-Adviser,
jointly and severally, agree to reimburse the several International Managers
for all out-of-pocket expenses (including the fees and disbursements of
counsel) reasonably incurred by them.

Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Fund, the
Investment Manager, the Investment Adviser, the Sub-Adviser and the
International Managers, any controlling persons referred to herein and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
a purchaser of any of the International Shares from any of the several
International Managers merely because of such purchase.

This Agreement shall be governed and construed in accordance
with the laws of the State of New York.

This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
<PAGE> 37
37

Please confirm that the foregoing correctly sets forth the
agreement among the Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser and the several International Managers.

Very truly yours,

FIDELITY ADVISOR KOREA
FUND, INC.

By
----------------------------
Title:

FIDELITY MANAGEMENT & RESEARCH
COMPANY

By
----------------------------
Title:

FIDELITY INTERNATIONAL
INVESTMENT ADVISORS

By
----------------------------
Title:

FIDELITY INVESTMENTS JAPAN
LIMITED

By
----------------------------
Title:
<PAGE> 38
38

BARING BROTHERS & CO., LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LUCKY SECURITIES INTERNATIONAL LTD.
SSANGYONG SECURITIES EUROPE LIMITED
COWEN & COMPANY
KDB SECURITIES CO., LTD.

Acting severally on behalf of
themselves and the several
International Managers named in
Schedule I hereto

By: BARING BROTHERS & CO., LIMITED

By
--------------------------
Name:
Title:
<PAGE> 39
SCHEDULE I

<TABLE>
<CAPTION>
Number of
International Shares
International Managers to be Purchased
- ---------------------- -------------------
<S> <C>
Baring Brothers & Co., Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . . . . . .
Lucky Securities International Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SsangYong Securities Europe Limited . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
KDB Securities Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
===================
</TABLE>
<PAGE> 40
SCHEDULE II

Formulas for Calculation
of Sales Incentive Fee

If the Underwriter has sold between 250,000 and 1,499,999 Shares, inclusive:

Number of Shares
which have been x $15.00 x 0.15%
credited to the
Underwriter

If the Underwriter has sold between 1,500,000 and 3,499,999 Shares, inclusive:

Number of Shares
which have been x $15.00 x 0.25%
credited to the
Underwriter

If the Underwriter has sold 3,500,000 or more Shares:

Number of Shares
which have been x $15.00 x 0.30%
credited to the
Underwriter

<PAGE> 1

AGREEMENT AMONG U.S. UNDERWRITERS
---------------------------------

October ___, 1994

BARING SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DILLON, READ & CO. INC.
COWEN & COMPANY
LEGG MASON WOOD WALKER, INCORPORATED
RAUSCHER PIERCE REFSNES, INC.
RAYMOND JAMES & ASSOCIATES, INC.
As U.S. Representatives of the
Several U.S. Underwriters
c/o Baring Securities Inc.
667 Madison Avenue
New York, New York 10021

Dear Sirs:

We understand that Fidelity Advisor Korea Fund, Inc., a
Maryland corporation (the "Fund"), Fidelity Management & Research Company, a
Massachusetts corporation (the "Investment Manager"), Fidelity International
Investment Advisers, a Bermuda corporation (the "Investment Adviser"), and
Fidelity Investments Japan Limited, a Japanese corporation (the "Sub-Adviser")
confirm that the Fund proposes to issue and sell to the several Underwriters
(as defined below) an aggregate of _________ shares of its Common Stock, par
value $0.001 per share pursuant to (i) an underwriting agreement (the "U.S.
Underwriting Agreement"), with you as representatives (the "U.S.
Representatives") of the U.S. Underwriters named in Schedule I thereto (the
"U.S. Underwriters"), and an underwriting agreement (the "International
Underwriting Agreement") with Baring Brothers & Co., Limited, Donaldson, Lufkin
& Jenrette Securities Corporation, Cowen & Company, Lucky Securities
International Ltd. and SsangYong Securities Europe Limited, as representatives
(the "International Representatives") of the international managers named in
Schedule I thereto (the "International Managers"). The U.S. Underwriters and
the International Managers are hereinafter collectively referred to as the
Underwriters. The U.S. Underwriting Agreement and International Underwriting
Agreement are hereinafter collectively referred to as the Underwriting
Agreements. The _________ shares of Common Stock to be issued and sold by the
Fund are hereinafter called the Firm Shares.

Of such Firm Shares, _______ Firm Shares (the "U.S. Firm
Shares") are to be offered by the U.S. Underwriters in the
<PAGE> 2
2

United States and Canada (the "U.S. Firm Shares") and _________ Firm Shares are
to be offered to non-U.S. and non-Canadian investors outside the United States
and Canada by the International Managers (the "International Shares").

In addition, the several U.S. Underwriters will have options to
purchase from the Fund up to an additional _________ shares (the "Additional
Shares") to provide for over-allotments. The term "U.S. Shares" shall mean the
U.S. Firm Shares and the Additional Shares. The U.S. Shares and the
International Shares are hereinafter collectively referred to as the Shares.

1. Registration Statement. We confirm that we have examined
the registration statement on Form N-2 (Nos. 33-81186 and 811-8608) relating to
the Shares as amended to the date of this Agreement and we are familiar with
the terms of the securities to be offered and the other terms of the offering
which are to be reflected in the proposed amendment to the registration
statement (or, if the registration statement has become effective under the
U.S. Securities Act of 1933, as amended (the "Act"), which are deemed to be
included in the registration statement pursuant to Rule 430A under said Act).
The registration statement contains a prospectus to be used in connection with
the offering and sale of the U.S. Shares in the United States and Canada to
United States and Canadian Persons. The registration statement as amended at
the time when it becomes effective, including the information (if any) deemed
to be a part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act), is hereinafter referred to as the
Registration Statement; and the U.S. prospectus in the form first used to
confirm sales of U.S. Shares is hereinafter referred to as the Prospectus.

2. U.S. Underwriting Agreement and Agreement Between U.S.
Underwriters and International Managers. We authorize you to execute and
deliver the U.S. Underwriting Agreement and the Agreement Between U.S.
Underwriters and International Managers on our behalf in substantially the
forms of Exhibits A and B hereto, respectively, and to make representations and
agreements on our behalf as set forth therein. We will be bound by all terms
of the U.S. Underwriting Agreement and the Agreement Between U.S. Underwriters
and International Managers as executed. We understand that, subject to the
conditions of the Agreement Between U.S. Underwriters and International
Managers the several U.S. Underwriters, including ourselves, could become
obligated to purchase Shares from or sell Shares to the International Managers.
The term "original underwriting commitment", as used in this Agreement with
respect to any U.S. Underwriters, shall refer to the number of Shares set forth
opposite such U.S. Underwriters's name in Schedule I to the U.S. Underwriting
Agreement plus any Shares which such U.S. Underwriter may become obligated to
purchase pursuant to the provisions of Section 12 of the U.S. Underwriting
Agreement or Section 9 hereof. The ratio which such original underwriting
<PAGE> 3
3

commitment of any U.S. Underwriter bears to the total number of U.S. Firm
Shares is referred to in this Agreement as the U.S. underwriting proportion of
such U.S. Underwriter.

3. Authorization Under U.S. Underwriting Agreement and
Agreement Between U.S. Underwriters and International Managers. You are also
authorized in your sole discretion to take the following action with respect to
the U.S. Underwriting Agreement and the Agreement Between U.S. Underwriters and
International Managers:

(a) To postpone the Closing Date (as such term is defined in
the U.S. Underwriting Agreement) or to extend any other time or date
specified in the U.S. Underwriting Agreement.

(b) To exercise any right of cancellation or termination.

(c) To arrange for the purchase by other persons (including
yourselves or any other U.S. Underwriters) of any of the Shares not
taken up by any defaulting U.S. Underwriter or by the other U.S.
Underwriters as provided in the U.S. Underwriting Agreement.

(d) To give notice on our behalf of the determination to
purchase any Additional Shares.

(e) To consent to any other additions to, changes in or
waivers of provisions of the U.S. Underwriting Agreement and the
Agreement Between U.S. Underwriters and International Managers, and to
take such other action in connection with the offering of the Shares,
as may seem advisable to you in respect thereof.

(f) To determine whether to purchase, and, if such
determination is made, to purchase, any Shares for the account of the
U.S. Underwriters pursuant to the Agreement Between U.S. Underwriters
and International Managers and to determine whether to sell, and, if
such determination is made, to sell, Shares for the account of the
U.S. Underwriters pursuant to such Agreement. You will advise us
promptly as to the number of Shares purchased pursuant to such
Agreement that we shall retain for direct sale.

4. Method of Offering. We authorize you, as U.S.
Representatives of the several U.S. Underwriters, to manage the underwriting
and the offering of the Shares and to take such action in connection therewith
and in connection with the purchase, carrying and resale of the Shares,
including without limitation the following, as you in your sole discretion deem
appropriate or desirable:
<PAGE> 4
4

(a) To determine the time of the initial offering of the U.S.
Shares, the initial offering price of the U.S. Shares and the
Underwriters' gross spread and whether to purchase any Additional
Shares and the amount, if any, of Additional Shares to be so
purchased.

(b) To make any changes in the public offering price or other
terms of the offering.

(c) To make changes in those who are to be U.S. Underwriters
and in the respective numbers of the U.S. Firm Shares to be purchased
by them, provided that our original underwriting commitment shall not
be changed without our consent.

(d) To determine all matters relating to advertising and
communications with dealers or others.

(e) To reserve for sale and to sell to institutions or other
retail purchasers, for our account, such of our Shares (including any
Shares purchased from the International Managers pursuant to the
Agreement Between U.S. Underwriters and International Managers) as you
may determine; provided, however, that such reservations and sales
shall be made for the respective accounts of the several U.S.
Underwriters as nearly as practicable in their respective U.S.
underwriting proportions, except for such sales for the account of a
particular U.S. Underwriters designated by such a purchaser.

(f) To reserve for sale and to sell to dealers, for our
account, such of our Shares (including any Shares purchased from the
International Managers pursuant to the Agreement Between U.S.
Underwriters and International Managers) as you may determine;
provided, however, that such dealers shall be actually engaged in the
investment banking or securities business and shall be (a) members in
good standing of the NASD, (b) banks as defined in Section 3(a)(12) of
the Securities Exchange Act or 1934, as amended ("Banks") that are not
members of the NASD, or (c) foreign banks, brokers, dealers or other
institutions not eligible for membership in the NASD. If such dealers
are members, they agree that in making sales of Shares they will
comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Section 24 of Article III of the Rules of Fair
Practice. If they are not NASD members, they agree to comply as
though they were members with such Interpretation and Sections 8, 24
and 36 of Article III of the Rules of Fair Practice. If they are such
foreign banks, brokers, dealers or other institutions, they agree not
to offer or sell any Shares in the United States of America except
through the Representatives and in making sales of Shares they agree
to comply with Section 25 of
<PAGE> 5
5

Article III of the NASD's Rules of Fair Practice as it applies to
nonmember brokers or dealers in a foreign country. If they are such
foreign banks, they represent that, unless Baring Securities Inc. is
otherwise notified in writing prior to the date hereof, they are not
entities covered in (i), (ii) or (iii) of the last paragraph of
Section 5. If they are Banks, in connection with the public offering
of any Shares that do not constitute "exempted securities" within the
meaning of Section 3(a)(12) of the U.S. Securities Exchange Act of
1934, as amended (the "Exchange Act") they agree that they will not
purchase any Shares at a discount from the offering price from any
Underwriter or dealer or otherwise accept any selling concession to
dealers, discount or other allowance from any Underwriter or dealer,
which in any such case is not permitted under the NASD's Rules of Fair
Practice and they agree to comply with Section 25 of Article III of
the NASD's Rule of Fair Practice as though they were members.

(g) To apportion such sales to dealers among the U.S.
Underwriters as nearly as practicable in the ratio that Shares
(including any Shares purchased from the International Managers
pursuant to the Agreement Between U.S. Underwriters and International
Managers) of each U.S. Underwriter so reserved bears to the total
amount of Shares (including any Shares purchased from the
International Managers pursuant to the Agreement Between U.S.
Underwriters and International Managers) of all U.S. Underwriters so
reserved; provided, however, that if such ratio is to be revised by
reason of the release of Shares for direct sale as hereinafter
provided, sales may be apportioned by you from day to day on the basis
of the ratio existing at the end of the preceding day.

(h) To fix the concessions to dealers and the reallowance to
dealers and, after the initial offering of the U.S. Shares, to make
changes in the concessions and reallowance.

(i) At any time with respect to unsold Shares retained by us
(including any Shares purchased from the International Managers
pursuant to the Agreement Between U.S. Underwriters and International
Managers): (A) to reserve any of such Shares for sale by you for our
account or (B) to purchase any of such Shares which in your opinion
are needed to enable you to make deliveries for the accounts of the
several U.S. Underwriters pursuant to this Agreement. Such purchases
may be made at the public offering price or, at your option, at such
price less all or any part of the concession to dealers.

We understand that you will advise us when the Shares are
released for sale and of the amount of Shares sold or reserved for sale for our
account. We shall retain for direct
<PAGE> 6
6

sale any Shares purchased by us (including any Shares purchased from the
International Managers pursuant to the Agreement Between U.S. Underwriters and
International Managers) and not so sold or reserved. Direct sales will be made
in accordance with the terms of offering set forth in the Prospectus. With
your consent, we may obtain release from you for direct sale of any Shares held
by you for sale pursuant to subparagraphs (e) and (f) above but not sold and
paid for. To the extent Shares so released had been reserved for sale to
dealers, the amount of Shares reserved for our account for sale to dealers
shall be correspondingly reduced. We will advise you from time to time, at
your request, of the amount of Shares retained by us which remain unsold and of
the amount of Shares remaining unsold which were delivered to us pursuant to
the last paragraph of this Section 4.

We agree that without your consent we will not sell to any
account over which we exercise discretionary authority any of the Shares.

5. Trading Authorizations. We authorize Baring Securities
Inc., during the term of this Agreement relating to the offering of the Shares
in its discretion:

(a) To make purchases and sales of Shares, any securities of
the Fund of the same class and series as the Shares, any securities
into which the Shares are convertible or for which the Shares are
exchangeable and any other securities of the Fund, in the open market
or otherwise (in addition to purchases and sales made under the
authority of Section 4 and under the authority of the Agreement
Between U.S. Underwriters and International Managers), either for long
or short account, on such terms and at such prices as it may
determine.

(b) In arranging for sales of the Shares pursuant to Section
4, to over-allot, and to make purchases for the purpose of covering
any over-allotment so made.

It is understood that, in connection with the offering of the
Shares, Baring Securities Inc. may have made purchases of any such securities
for stabilizing purposes prior to the time when we became one of the
Underwriters and we agree that any such securities so purchased shall be
treated as having been purchased pursuant to the foregoing authorization.

All such purchases and sales and over-allotments shall be made
for the respective accounts of the several U.S. Underwriters and the several
International Managers as set forth in the Agreement Between U.S. Underwriters
and International Managers; provided, however, that at no time shall our net
commitment resulting from such purchases and sales, either for long or short
account, or pursuant to such over-allotments, exceed 15% of our original
underwriting commitment and provided,
<PAGE> 7
7

further, that in determining our net commitment for short account there shall
be subtracted the maximum amount of Additional Shares which we are entitled to
purchase. We agree to take up at cost on demand any securities so purchased
for our account and to deliver on demand any securities so sold or so
over-allotted for our account. Without limiting the generality of the
foregoing, Baring Securities Inc. may buy or take over for the respective
accounts of the several Underwriters, all in the proportion and within the
limits set forth, at the price at which reserved, any of the Shares reserved
for sale by it but not sold and paid for, for such purposes as it may
determine, including, but not limited to, the covering of over-allotments and
short sales.

If Baring Securities Inc. engages in any stabilization
transaction pursuant to this Section, it will notify us promptly of the date
and time of the first stabilizing purchase and the date and time of termination
of stabilization. Baring Securities Inc. shall prepare and maintain such
records as are required to be maintained by it as manager pursuant to Rule
17a-2 under the Exchange Act.

6. Limitation on Transactions by Underwriters. We agree that
we will not, without the advance approval of Baring Securities Inc., buy, sell,
deal or trade in (i) any Common Stock, (ii) any security of the Fund
convertible into Common Stock or (iii) any right or option to acquire or sell
Common Stock or any security of the Fund convertible into Common Stock, for our
own account or for the account of a customer, except:

(a) as provided for in this Agreement, the U.S. Underwriting
Agreement or the Agreement Between U.S. Underwriters and International
Managers;

(b) that we may convert any security of the Fund convertible
into Common Stock owned by us and sell the Common Stock acquired upon
such conversion and that we may deliver Common Stock owned by us upon
the exercise of any option written by us as permitted by the
provisions set forth herein;

(c) in brokerage transactions on unsolicited orders which
have not resulted from activities on our part in connection with the
solicitation of purchases and which are executed by us in the ordinary
course of our brokerage business; and

(d) that on or after the date of the initial public offering
of the Shares, we may execute covered writing transactions in options
to acquire Common Stock, when such transactions are covered by Shares,
for the accounts of customers.
<PAGE> 8
8

An opening uncovered writing transaction in options to acquire
Common Stock for our account or for the account of a customer shall be deemed,
for purposes of this Section 7, to be a sale of Common Stock which is not
unsolicited. The term "opening uncovered writing transaction in options to
acquire" as used above means a transaction where the seller intends to become a
writer of an option to purchase any Common Stock which he does not own. An
opening uncovered purchase transaction in options to sell Common Stock for our
account or for the account of a customer shall be deemed, for purposes of this
paragraph, to be a sale of Common Stock which is not unsolicited. The term
"opening uncovered purchase transaction in options to sell" as used above means
a transaction where the purchaser intends to become an owner of an option to
sell Common Stock which he does not own.

We represent that we have not participated in any transaction
prohibited by the preceding paragraphs of this Section 7 and that we have at
all times complied with and will at all times comply with the provisions of
Rule 10b-6 under the Exchange Act of the Commission applicable to the offering
of the Shares.

We may, with your prior consent, make purchases of the Shares
from and sales to other Underwriters at the public offering price, less all or
any part of the concession to dealers.

7. Delivery and Payment. At or before 10:00 A.M., New York
City time on the Closing Date, we will deliver to you at the office of Baring
Securities Inc., 667 Madison Avenue, New York, New York 10021, a certified or
official bank check, payable in New York Clearing House funds, payable to the
order of Baring Securities Inc. or otherwise as you may direct, for (i) an
amount equal to the offering price less the selling concession to dealers in
respect of the Shares to be purchased by us, or (ii) an amount equal to the
offering price less the selling concession in respect of such of the Shares to
be purchased by us as shall have been retained by or released to us for direct
sale or (iii) the amount set forth or indicated in a telex to us, as you shall
direct. You shall use such funds to make payment on our behalf to the Fund of
the purchase price for our Shares. Any balance shall be held by you for our
account. If you have not received our funds as requested, you may in your
discretion make any such payment on our behalf and we will promptly deliver
funds to you in the amount so requested. Any such payment by you will not
relieve us from any of our obligations under this Agreement, the U.S.
Underwriting Agreement or the Agreement Between U.S. Underwriters and
International Managers. Unless we promptly give you written instructions
otherwise, if transactions in the Shares may be settled through the facilities
of The Depository Trust Company, payment for and delivery of Shares purchased
by us will be made through such facilities, if we are a member, or, if we are
not a
<PAGE> 9
9

member, settlement may be made through our ordinary correspondent who is a
member.

We authorize you, in carrying out the provisions of this
Agreement, in your discretion, to arrange loans for the account of one or more
of the U.S. Underwriters, severally and not jointly, to advance your funds for
our account, charging current interest rates, to execute notes or other
instruments in connection therewith, and to hold or pledge as security therefor
all or any part of the Shares which you may be holding for our account. Any
lender is hereby authorized to accept your instructions with respect to such
loans, and we authorize you to execute and deliver notes or other instruments
in connection therewith.

You shall promptly remit to us or credit to our account (i)
the proceeds of any loan taken down on our behalf and (ii) upon payment to you
for any Shares sold for our account, an amount equal either to the purchase
price paid by us or the price received by you therefor, as you may determine.
We authorize you to receive payment of the commission or other compensation for
our account.

We authorize you to take delivery of certificates for our
Shares, registered as you may direct in order to facilitate deliveries, and to
deliver any Shares reserved for us against sales. You will deliver to us
certificates for our unreserved Shares and certificates for our reserved but
unsold Shares as soon as practicable after the termination of the provisions
referred to in Section 10.

8. Blue Sky Qualification. Upon request, you will inform us
as to the jurisdictions in which you have been advised by counsel that the
Shares have been registered or qualified for sale under the respective
securities or Blue Sky laws, but you do not assume any responsibility or
obligation as to our right to sell the Shares in any jurisdiction.

You are authorized to file or cause to be filed a Further
State Notice with the Department of State of New York.

9. Indemnification and Certain Claims. Each U.S.
Underwriter, including yourselves, agrees to indemnify and hold harmless each
of the other U.S. Underwriters and each person, if
<PAGE> 10
10

any, who controls any other U.S. Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act and to reimburse their expenses,
all to the extent, if any, and upon the terms that we agree to indemnify and
hold harmless the Fund, its directors, its officers who sign the Registration
Statement, each person, if any who controls the Fund within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, the Investment
Manager, the Investment Adviser and the Sub-Adviser and to reimburse their
expenses, as set forth in the U.S. Underwriting Agreement.

We agree that in respect of any matters connected with or
action taken by you pursuant to this Agreement or the Agreement Between U.S.
Underwriters and International Managers you shall act only as agents of the
U.S. Underwriters and you shall be under no liability to us in any such respect
or in respect of the form of, or the statements contained in, or the validity
of, any preliminary prospectus or the Registration Statement or the Prospectus,
or any amendments or supplements to any of them, or for any report or other
filing made by you for us on our behalf under this Agreement or the Agreement
Between U.S. Underwriters and International Managers, except for want of good
faith and for obligations expressly assumed by you herein and no obligations on
your part will be implied or inferred from confirmation or acceptance of this
Agreement or the Agreement Between U.S. Underwriters and International
Managers.

We will pay our proportionate share (based on our U.S.
underwriting proportion) of (a) all expenses incurred by you in investigating
or defending against any claim or proceeding which is asserted or instituted by
any party (including any governmental or regulatory body) other than an
Underwriter based upon the claim that the Underwriters constitute an
association, unincorporated business or other separate entity, or relating to
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or any preliminary prospectus and (b) any liability incurred by you in
respect of any such claim or proceeding, whether such liability shall be the
result of a judgment or as a result of any settlement agreed to by you, other
than any such liability as to which you actually receive indemnity pursuant to
the first paragraph of this Section 7, Section 3 of the Agreement Between U.S.
Underwriters and International Managers or pursuant to this Section 10 or
indemnity or contribution pursuant to the U.S. Underwriting Agreement.

10. Termination and Settlement. This Agreement shall
terminate (i) on the thirtieth business day after the initial offering of the
Shares, (ii) on such earlier date as you may determine or (iii) on the
termination of the U.S. Underwriting Agreement if the U.S. Underwriting
Agreement shall be terminated as permitted by its terms; provided that the U.S.
Representatives may in their discretion extend this Agreement for a further
period or periods not exceeding an aggregate, of
<PAGE> 11
11

30 days. You may at your discretion, on notice to us prior to the termination
of this Agreement, terminate or suspend the effectiveness of Sections 4, 6 and
7 hereof or any part of them or alter any of the terms or conditions of
offering determined pursuant to Section 4 hereof. No termination or suspension
pursuant to this Section shall affect your authority under Section 6 hereof to
cover any short position under this Agreement.

Upon termination of this Agreement, all authorizations, rights
and obligations hereunder shall cease, except (i) the mutual obligations to
settle accounts hereunder, (ii) our obligation to pay any transfer taxes which
may be assessed and paid on account of any sales hereunder for our account,
(iii) our obligations with respect to purchases which may be made by you from
time to time thereafter to cover any short position incurred under this
Agreement, (iv) our agreements contained in the first and third paragraphs of
Section 10 hereof and (v) the obligations of any defaulting U.S. Underwriter,
all of which shall continue until fully discharged.

The accounts arising pursuant to this Agreement shall be
settled and paid as soon as practicable after termination, except that you may
reserve such amount as you deem advisable to cover any additional contingent
expenses.

You are authorized at any time:

(a) To make partial distributions of credit balances or call
for the payment of debit balances.

(b) To determine the amounts to be paid to or by us, which
determination will be final and conclusive.

(c) As compensation for your services in connection with this
Agreement, to charge our account and pay to yourselves, when final
accounting is made, an amount per U.S. Share to be determined by you
(not to exceed 25% of the U.S. Underwriters' gross spread per U.S.
Share) for each U.S. Share which we have agreed or shall become
committed to purchase from the Fund.

(d) To charge our account with (i) all transfer taxes on
sales made for our account and (ii) our U.S. underwriting proportion
of all expenses (other than transfer taxes) incurred by you, as U.S.
Representatives of the several U.S. Underwriters, in connection with
the transactions contemplated by this Agreement.

(e) To hold any of our funds at any time in your hands with
your general funds without accountability for interest.

11. Default by U.S. Underwriters. Default by any
<PAGE> 12
12

U.S. Underwriter in respect of its obligations hereunder or under the U.S.
Underwriting Agreement shall not release us from any of our obligations or in
any way affect the liability of such defaulting U.S. Underwriter to the other
U.S. Underwriters or International Managers, for damages resulting from such
default. If one or more U.S. Underwriters or International Managers default
under the Underwriting Agreements, you may (but shall not be obligated to)
arrange for the purchase by others, which may include yourselves or other
non-defaulting U.S. Underwriters or International Managers, of all or a portion
of the Shares not taken up by the defaulting U.S. Underwriters or International
Managers.

If such arrangements are made, the respective numbers of
Shares to be purchased by the non-defaulting U.S. Underwriters and the amounts
of Shares to be purchased by non-defaulting International Managers shall be
taken as the basis for all rights and obligations hereunder; but this shall not
in any way affect the liability of any defaulting U.S. Underwriters to the
other U.S. Underwriters or International Managers for damages resulting from
its default, nor shall any such default relieve any other U.S. Underwriter of
any of its obligations hereunder, under the U.S. Underwriting Agreement or
under the Agreement Between U.S. Underwriters and International Managers except
as herein or therein provided. In addition, in the event of default by one or
more Underwriters in respect of their obligations under the Underwriting
Agreements to purchase the Shares agreed to be purchased by them thereunder
and, to the extent that arrangements shall not have been made by you for any
person to assume the obligations of such defaulting Underwriter or
Underwriters, we agree to assume our proportionate share, based upon the
proportion which the number of U.S. Shares set forth opposite our name in
Schedule I to the U.S. Underwriting Agreement bears to the aggregate number of
Shares set forth opposite the names of all non-defaulting Underwriters (subject
to the limitations contained in the Underwriting Agreements), without relieving
such defaulting Underwriter of its liability therefor.

In the event that any U.S. Underwriter shall default in its
obligations (i) pursuant to Section 3(f) or Section 6, (ii) to pay amounts owed
by it pursuant to Section 11 or (iii) pursuant to the first or third Paragraph
of Section 10, we will assume our proportionate share (determined on the basis
of the U.S. underwriting proportions of the non-defaulting U.S. Underwriters)
of such obligations, but no such assumption shall affect any obligation of any
defaulting U.S. Underwriter.

12. Distribution of Prospectuses. We are familiar with Act
Release No. 4968 and Rule 15c2-8 under the Exchange Act, relating to the
distribution of preliminary and final prospectuses, and we confirm that we will
comply therewith, to the extent applicable, in connection with the sale of the
Shares. You shall cause to be made available to us, to the
<PAGE> 13
13

extent made available to you by the Fund, such number of copies of the
Prospectus as we may reasonably request for purposes contemplated by the Act,
the Exchange Act and the rules and regulations thereunder.

If the offering is subject to the 48-hour prospectus delivery
requirement set forth in Rule 15c2-8(b), we confirm that we have delivered (or
we will deliver) a copy of the preliminary prospectus to all persons to whom we
expect to confirm a sale of Shares and that such delivery was effected (or will
be effected) at least 48 hours prior to the mailing of such confirmations of
sale.

We will keep an accurate record of the names and addresses of
all persons to whom we give copies of the Registration Statement, the
Prospectus or any preliminary prospectus (or any amendment or supplement
thereto), and, when furnished with any subsequent amendment to the Registration
Statement, any subsequent prospectus or any memorandum outlining changes in the
Registration Statement or any prospectus, we will, upon your request, promptly
forward copies thereof to such persons.

13. Miscellaneous. Nothing in this Agreement shall
constitute us partners with you or with the other U.S. Underwriters or with
the International Managers and the obligations of ourselves and of each of the
other U.S. Underwriters are several and not joint. Each U.S. Underwriter
elects to be excluded from the application of Subchapter K, Chapter 1, Subtitle
A, of the Internal Revenue Code of 1986. Default by any U.S. Underwriter with
respect to the U.S. Underwriting Agreement shall not release us from any of our
obligations thereunder or hereunder.

Any action to be taken by the U.S. Representatives under this
Agreement may be taken by Baring Securities Inc.

Unless we have promptly notified you in writing otherwise, our
name as it should appear in the Prospectus and our address are set forth below.

Any notice from you to us shall be deemed to have been given
if mailed, telegraphed or hand delivered, or telephoned and subsequently
confirmed in writing, to our address appearing below.

We confirm that we are (a) a member in good standing of the
NASD, (b) a Bank that is not a member of the NASD, or (c) a foreign bank,
broker, dealer or other institution not eligible for membership in the NASD.
If we are such a member, we agree that in making sales of Shares we will comply
with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation with Respect to Free-Riding and Withholding and Section
24 of Article III of the Rules of Fair
<PAGE> 14
14

Practice. If we are not a NASD member, we agree to comply as though we were a
member with such Interpretation and Sections 8, 24 and 36 of Article III of the
Rules of Fair Practice.

If we are a foreign bank, broker, dealer or other institution
and we are not registered as a broker-dealer under Section 15 of the Exchange
Act, we agree that while we are acting as an Underwriter in respect of the
Shares and in any event during the term of this Agreement with respect to the
offering of the Shares, we will not directly or indirectly effect in, or with
persons who are nationals or residents of, the United States any transactions
(except for the purchases provided for in the Underwriting Agreement and
transactions contemplated by Sections 4, 6 and 7 hereof) in (i) Shares, or (ii)
Common Stock of the Fund that may be exchanged for or converted into Common
Stock. We agree to comply with Section 25 of Article III of the NASD's Rules
of Fair Practice as it applies to a nonmember broker or dealer in a foreign
country. We agree that in selling Shares pursuant to any offering (which
agreement shall also be for the benefit of the Fund or other seller of such
Shares) we will comply with all applicable laws, rules and regulations,
including the applicable provisions of the Act and the Exchange Act, the
applicable rules and regulations of the Commission thereunder, the applicable
rules and regulations of any securities exchange having jurisdiction over the
offering and the applicable laws and regulations of any applicable regulatory
body.

If we are a foreign bank or dealer, we represent that in
connection with sales and offers to sell Shares made by us outside the United
States (a) we will not offer or sell any Shares in any jurisdiction except in
compliance with applicable laws and (b) we will either furnish to each person
to whom any such sale or offer is made a copy of the then current preliminary
prospectus, if any, or of the Prospectus (as then amended or supplemented), as
the case may be, or inform such person that such preliminary prospectus, if
any, or Prospectus will be available upon request. Any, offering material in
addition to the then current preliminary prospectus or the Prospectus furnished
by us to any person in connection with any offers or sales referred to in the
preceding sentence (i) shall be prepared and so furnished at our sole risk and
expense and (ii) shall not contain information relating to the Shares or the
Fund which is inconsistent in any respect with the information contained in the
then current preliminary prospectus, if any, or in the Prospectus (as then
amended or supplemented), as the case may be. It is understood that no action
has been taken by you or the Fund or any seller of the Shares to permit a
public offering in any jurisdiction other than the United States where action
would be required for such purpose.

We also confirm that our commitment to purchase Shares
pursuant to the U.S. Underwriting Agreement or the Agreement Between U.S.
Underwriters and International Managers will not
<PAGE> 15
15

result in a violation of Rule 15c3-1 under the Exchange Act or of any similar
provisions of any applicable rules of any securities exchange to which we are
subject or of any restriction imposed upon us by any such exchange or any
governmental authority.

We agree that we will notify you immediately of any
development before the termination of this Agreement with respect to the
offering of the Shares which makes untrue or incomplete any information that we
have given or are deemed to have given in response to the Underwriters'
Questionnaire.

This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE> 16
16

This Agreement is being executed by us and delivered to you in
duplicate. Please indicate your receipt of identical agreements from each of
the other U.S. Underwriters by confirming this Agreement, whereupon it shall
constitute a binding agreement between us.

Very truly yours,

U.S. Underwriters

--------------------------------
(As attorney-in-fact for each of
the several U.S. Underwriters
named in Schedule I of the
U.S. Underwriting Agreement)

Acknowledged and Accepted
as of the date first above
mentioned

As U.S. Representatives
of the several U.S. Underwriters

By: BARING SECURITIES INC.

By:
--------------------------

<PAGE> 1

October , 1994

Baring Securities Inc.
667 Madison Avenue
New York, New York 10021

Attention: Syndicate Department

Dear Sirs:

U.S. SELLING AGREEMENT

In connection with the proposed public offering in the United
States by Fidelity Advisor Korea Fund, Inc. (the "Company") of Common Stock,
$.001 par value, which public offering is to be underwritten by you and by
other Underwriters represented by you, Donaldson, Lufkin & Jenrette Securities
Corporation, Dillon, Read & Co. Inc., Legg Mason Wood Walker, Incorporated,
Rauscher Pierce Refsnes, Inc. and Raymond James & Associates, Inc., we may be
offered the right to purchase a portion of such securities, as principal, from
you and from such other Underwriters. Annex 1 to this letter sets forth the
general terms and conditions applicable to any such purchases where you are
responsible for reservations of securities for sale to dealers and expressly
inform us that such terms and conditions shall be applicable to any such
purchases where you are responsible for reservations of securities for sale to
dealers and expressly inform us that such terms and conditions shall be
applicable to such transactions by dealers. Our acceptance of any reservation
of any such securities shall constitute acceptance of and agreement to such
terms and conditions, together with and subject to any additional or
supplementary terms and conditions communicated to us in connection with any
specific transaction, and shall constitute a binding agreement between
ourselves and the several Underwriters of such securities.

In addition, the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. require that you obtain our agreement
to comply with certain of such Rules as a condition to the allowance by you of
certain concessions or portions thereof, whether or not you are responsible for
reservations for sale of securities to dealers. Accordingly, the provisions of
Paragraph 12 of the general terms and conditions attached as Annex 1 to this
letter shall be deemed to apply to purchases from you of securities which are
part of a "fixed price offering" within the meaning of such Rules.

<PAGE> 2
2

We acknowledge the foregoing procedure by signing this letter.

Very truly yours,

By:
---------------------------
Name:
Title:

<PAGE> 3

Annex 1

GENERAL TERMS AND CONDITIONS OF
DEALERS' PARTICIPATION IN UNDERWRITTEN PUBLIC OFFERINGS
MANAGED BY BARING SECURITIES INC.

1. GENERAL. In connection with public offerings of
securities ("Securities") underwritten by underwriters ("Underwriters")
represented by Baring Securities Inc. alone or in conjunction with other firms
("Representatives"), the Underwriters may severally offer to one or more
securities dealers ("Dealers") the right to purchase, as principals, from the
Underwriters a portion of the Securities, subject to the receipt and acceptance
thereof by the Underwriters and subject to the terms and conditions set forth
(a) herein, (b) in the prospectus relating to the offering of the Securities
and (c) in any letter and/or telegram sent to Dealers in connection with an
offer to Dealers; provided, however, that the terms and conditions herein set
forth shall be applicable only to offerings where Baring Securities Inc. is
responsible for reservations of Securities for sale to Dealers and have
expressly informed Dealers that such terms and conditions shall be applicable.

2. BASIS OF OFFER. The offer to Dealers is to be made on the
basis of a reservation of Securities and an allotment against subscriptions as
set forth in the letter and/or telegram referred to in clause (c) of Paragraph
1 hereof. Dealers to whom an offer is to be made will be notified by telegram
of the method and terms of offering, the time of the release of Securities for
sale to the public, the initial public offering price, the selling concession,
the portion of the selling concession allowable to certain Dealers (the
"Reallowance"), the time at which books will be opened, the amount, if any, of
Securities reserved for purchase by Dealers, and the period of such reservation
(the "Invitation"). Subscriptions may be closed at any time without notice,
and the right is reserved to reject any subscription in whole or in part, but
notification of allotments against and rejections of subscriptions will be made
as promptly as practicable.

3. OFFERING MATERIALS. (a) You understand if registration
of the offer and sale of the Securities as contemplated by the Underwriting
Agreement is required under the Securities Act of 1933, as amended (the "Act"),
the Representatives will, at your request, make available to you, as soon as
practicable after sufficient quantities thereof are made available to them by
the Company, copies of the prospectus or supplemented prospectus (excluding any
documents incorporated by reference therein) to be used in connection with the
offering of the Securities in such number as you may reasonably request. As
used herein "Prospectus" means the form of prospectus (including any
supplements and any documents incorporated by reference therein) authorized for
use in connection with such offering.

<PAGE> 4
2

(b) You understand that if the offer and sale of the
Securities are exempt from the registration requirements of the Act, no
registration statement will be filed with the Securities and Exchange
Commission (the "Commission"). In such case, the Representatives will, at your
request, make available to you, as soon as practicable after sufficient
quantities thereof are made available to them by the Company, copies in such
number as you may reasonably request of any final offering circular or other
offering materials to be used in connection with the offering of the
Securities. As used herein, "Offering Circular" means the offering circular or
other offering materials, as it or they may be amended or supplemented,
authorized for use in connection with such offering. The Prospectus or
Offering Circular, as the case may be, relating to an offering of Securities is
herein referred to as the "Offering Document".

(c) You agree that in purchasing Securities you will rely
upon no statement whatsoever, written or oral, other than the statements in the
Offering Document delivered to you by the Representatives and any documents
incorporated by reference therein. You understand that you are not authorized
to give any information or make any representation not contained in the
Offering Document or in any document incorporated by reference therein, in
connection with the offering of the Securities. Your purchase of Securities
shall constitute our agreement that, if requested by the Representatives, you
will furnish a copy of any amendment or supplement to any preliminary or final
Offering Document to each person to whom you have furnished a previous
preliminary or final Offering Document. Your purchase of Securities registered
under the Act shall constitute our confirmation that you have delivered, and
your agreement that you will deliver, all preliminary and final Prospectuses
required for compliance with Rule 15c2-8 (or any successor provision) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Your
purchase of securities exempt from registration under the Act shall constitute
(i) your confirmation that you have delivered, and your agreement that you will
deliver, all preliminary and final Offering Circulars required for compliance
with the applicable Federal and state laws and the applicable rules and
regulations of any regulatory body promulgated thereunder governing the use and
distribution of offering circulars by underwriters, and (ii) to the extent
consistent with such laws, rules and regulations, your confirmation that you
have delivered and your agreement that you will deliver all preliminary and
final Offering Circulars that would be required if Rule 15c2-8 (or any
successor provision) under the Exchange Act applied to such offering.

4. OFFERING OF THE SECURITIES. (a) The offering of the
Securities is made subject to the conditions referred to in the Offering
Document and to the terms and conditions set forth in this Agreement. After
the public offering of the Securities has commenced, we may change the public
offering price, the selling concession and the reallowance to dealers. Any of
the

<PAGE> 5
3

Securities purchased by you pursuant to this Agreement are to be reoffered by
you, subject to their receipt and acceptance by the Representatives, to the
public at the initial public offering price, subject to the terms of this
Agreement and the Offering Document. Except as otherwise provided herein, the
Securities shall not be offered or sold by you below the initial public
offering price before the termination of the effectiveness of this Agreement
with respect to the offering of such Securities, except that a reallowance from
the initial public offering price of not in excess of the amount set forth in
the Invitation may be allowed to any Dealer that (i) agrees that such amount is
to be retained and not reallowed in whole or in part, (ii) makes the
representations contained in Section 11, and (iii) unless the Securities are
"exempted securities" as defined in Section 3(a)(12) of the Exchange Act, is
not a "bank" as defined in Section 3(a)(6) of the Exchange Act (a "Bank").

(b) The Representatives as such, and with the
Representatives' consent, any Underwriter may buy Securities from, or sell
Securities to, any of the Dealers or any of the Underwriters, and any Dealer
may buy Securities from, or sell Securities to, any other Dealer or
Underwriter, at the initial public offering price less all or any part of the
concession to Dealers.

(c) If you have received or been credited with the Dealers'
concession as to any Securities purchased by you pursuant to this Agreement,
which, prior to the later of (i) the termination of the effectiveness of this
Agreement with respect to the offering of such Securities and (ii) the covering
by the Representatives of any short position created by the Representatives in
connection with the offering of such Securities, the Representatives may have
purchased or contracted to purchase for the account of any Underwriter (whether
such Securities have been sold or loaned by you), then you agree to pay the
Representatives on demand for the accounts of the several Underwriters an
amount equal to the Dealers' concession and, in addition, the Representatives
may charge you with any broker's commission and transfer tax paid in connection
with such purchase or contract to purchase. Securities delivered on such
repurchases need not be the identical Securities originally purchased. With
respect to any such repurchased Securities as to which you have not yet
received or been credited with the Dealers' concession, you shall be
responsible for any such broker's commission and transfer tax and the
Representatives shall not be obligated to pay any Dealers' concession as to
such Securities.

(d) No expenses shall be charged to Dealers. A single
transfer tax upon the sale of the Securities by the respective Underwriters to
you will be paid by such Underwriters when such Securities are delivered to
you. However, you shall pay any transfer tax on sales of Securities by you and
shall pay your proportionate share of any transfer tax or other tax (other than

<PAGE> 6
4

the single transfer tax described above) in the event that any such tax shall
from time to time be assessed against us and other Dealers as a group or
otherwise.

5. DELIVERY AND PAYMENT. Unless advised otherwise,
Securities purchased by you hereunder shall be paid for in full at the public
offering price, or, if so advised by the Representatives, at the public
offering price less the Dealers' concession, at the offices of Baring
Securities Inc., 667 Madison Avenue, New York, New York 10021, at such time and
on such day as the Representatives advise, by certified or official bank check
payable in New York Clearing House funds to the order of Baring Securities Inc.
against delivery of the Securities. If you are called upon to pay the public
offering price for the Securities purchased by you, the applicable concession
will be paid to you upon termination of this Agreement with respect to the
offering of such Securities.

Each Dealer which is a member of The Depository Trust Company
authorizes Baring Securities Inc., in its discretion, to arrange for delivery
of Securities to such Dealer and for payment therefore by and to such Dealer
through the facilities of The Depository Trust Company.

6. SELLING REPRESENTATIONS. You represent and agree that,
except for (x) sales between the U.S. Underwriters and the International
Managers pursuant to the Agreement Between U.S. Underwriters and International
Managers and (y) stabilization transactions contemplated in Section 7 hereof
conducted through the U.S. Representatives as part of the distribution of the
Shares, (a) you are not purchasing any of the Securities for the account of
anyone other than a United States or Canadian Person (as defined below) and (b)
you have not offered or sold, and will not offer or sell, resell or deliver,
directly or indirectly, any of the Securities or distribute any prospectus
relating to the Securities outside the United States or Canada or to anyone
other than a United States or Canadian Person, and any Dealer to whom you may
sell any of the Securities will represent that it is not purchasing any of the
Securities for the account of anyone other than a United States or Canadian
Person and will agree that it will not offer or resell such Securities,
directly or indirectly, outside the United States or Canada or to anyone other
than a United States or Canadian Person or to any other Dealer who does not so
represent and agree.

"United States or Canadian Person" shall mean any individual
who is resident in the United States or Canada, or any corporation, pension,
profit-sharing or other trust or other entity organized under or governed by
the laws of the United States or Canada or of any political subdivision thereof
(other than the foreign branch of any United States or Canadian Person), and
shall include any United States or Canadian branch of a person other than a
United States or Canadian Person. "United States" shall mean the United States
of America (including the

<PAGE> 7
5

District of Columbia), its territories, its possessions and all areas subject
to its jurisdiction.

You represent that you have not offered or sold, and agree not
to offer or sell, any Securities, directly or indirectly, in Canada in
contravention of the securities laws of Canada or any province or territory
thereof and, without limiting the generality of the foregoing, represent that
any offer of Shares in Canada will be made only pursuant to an exemption from
the requirement to file a prospectus in the province or territory of Canada in
which such offer is made. You further agree to send to any Dealer who
purchases from you any of the Securities a notice stating in substance that, by
purchasing such Securities, such Dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of
such Securities in Canada or to, or for the benefit of, any resident of Canada
in contravention of the securities laws of Canada or any province or territory
thereof and that any offer of Shares in Canada will be made only pursuant to an
exemption from the requirement to file a prospectus in the province of Canada
in which such offer is made, and that such Dealer will deliver to any other
Dealer to whom it sells any of such Securities a notice containing
substantially the same statement as is contained in this sentence.

7. STABILIZATION AND OVER-ALLOTMENT. The Representatives
may, with respect to any offering of Securities, be authorized to over-allot,
to purchase and sell Securities for long or short account and to stabilize or
maintain the market price of the Securities. You agree that upon the
Representatives' request at any time and from time to time prior to the
termination of the effectiveness of this Agreement with respect to an offering
of Securities, you will report the amount of Securities purchased by you
pursuant to such offering which then remain unsold by you and will, upon the
Representatives' request at any such time sell to the Representatives for the
account of one or more Underwriters such amount of such unsold Securities as
the Representatives may designate at the initial public offering price less an
amount to be determined by the Representatives not in excess of the Dealers'
concession.

8. OPEN MARKET TRANSACTIONS. Unless the Securities are
"exempted securities" as defined in Section 3(a)(12) of the Exchange Act, you
agree not to bid for, purchase, attempt to induce others to purchase, or sell,
directly or indirectly, any Securities, any other securities of the Company of
the same class and series as the Securities and any other securities of the
Company which the Representatives may designate, except as brokers pursuant to
unsolicited orders and as otherwise provided in this Agreement. If the
Securities are or include common stock or securities convertible into common
stock and the Securities are not "exempted securities" as defined in Section
3(a)(12) of the Exchange Act, you also agree not to effect or attempt to induce
others to effect, directly or indirectly, any transactions

<PAGE> 8
6

in or relating to put or call options on any stock of the Company, except to
the extent permitted by Rule 10b-6 under the Exchange Act as interpreted by the
Commission.

9. NET CAPITAL. You represent that the incurrence by you of
your obligations hereunder in connection with the offering of the Securities
will not place you in violation of Rule 15c3-1 under the Exchange Act, if such
requirements are applicable to you, or, if you are a financial institution
subject to regulation by the Board of Governors of the Federal Reserve System,
the Comptroller of the Currency or the Federal Deposit Insurance Corporation,
will not place you in violation of the capital requirements of such regulator
or any other regulator to which you are subject.

10. BLUE SKY AND OTHER QUALIFICATIONS. It is understood and
agreed that the Representatives assume no responsibility or obligation with
respect to the right of any Dealer or other person to sell the Securities in
any jurisdiction, notwithstanding any information the Representatives may
furnish in that connection.

11. TERMINATION. The provisions of Paragraph 3 hereof shall
terminate in respect of any offering of Securities at the close of business on
the forty-fifth full business day after the Securities are released by the
Representatives for sale to the public, unless extended by the Representatives
to not later than the close of business on the fifteenth full business day
thereafter, but may be terminated by the Representatives at any time by
telegraphic notice sent to Dealers. Notwithstanding any distribution and
settlement of accounts, Dealers shall be liable for their proper proportion of
any transfer tax or other liability which may be asserted against the
Representatives or any of the Underwriters or Dealers based upon the claim that
the Dealers, or any other of them, constitute a partnership, an association, an
unincorporated business or other separate entity.

12. NASD REPRESENTATIONS. You represent that you are (a) a
member in good standing of the NASD, (b) a Bank that is not a member of the
NASD, or (c) a foreign bank, broker, dealer or other institution not eligible
for membership in the NASD. If you are such a member, you agree that in making
sales of Securities you will comply with all applicable rules of the NASD,
including, without limitation, the NASD's Interpretation with Respect to
Free-Riding and Withholding and Section 24 of Article III of the Rules of Fair
Practice. If you are not a NASD member, you agree to comply as though you were
a member with such Interpretation and Sections 8, 24 and 36 of Article III of
the Rules of Fair Practice. If you are such a foreign bank, broker, dealer or
other institution, you agree not to offer or sell any Securities in the United
States of America except through the Representatives and in making sales of
Securities you agree to comply with Section 25 of Article III of the NASD's
Rules of Fair Practice as it applies to a nonmember broker or dealer in a

<PAGE> 9
7

foreign country. If you are such a foreign bank, you represent that, unless
Baring Securities Inc. is otherwise notified in writing prior to the date
hereof, you are not an entity covered in (i), (ii) or (iii) of the last
paragraph of Section 5. If you are a Bank, in connection with the public
offering of any Securities that do not constitute "exempted securities" within
the meaning of Section 3(a)(12) of the Exchange Act you agree that you will not
purchase any Securities at a discount from the offering price from any
Underwriter or Dealer or otherwise accept any selling concession to Dealers,
discount or other allowance from any Underwriter or Dealer, which in any such
case is not permitted under the NASD's Rules of Fair Practice and you agree to
comply with Section 25 of Article III of the NASD's Rule of Fair Practice as
though you were a member. You agree that in selling Securities pursuant to any
offering (which agreement shall also be for the benefit of the Company or other
seller of such Securities) you will comply with all applicable laws, rules and
regulations, including the applicable provisions of the Act and the Exchange
Act, the applicable rules and regulations of the Commission thereunder, the
applicable rules and regulations of any securities exchange having jurisdiction
over the offering and in the case of an offering referred to in Section 4(b)
hereof the applicable laws and regulations of any applicable regulatory body.

13. MISCELLANEOUS. (a) The Representatives are acting as
representatives of each of the Underwriters in all matters connected with the
offering of the Securities and with the Underwriters' purchase of the
Securities. Any action to be taken, authority that may be exercised or
determination to be made by the Representatives hereunder may be taken,
exercised or made by Baring Securities Inc. on behalf of all Representatives.
The rights and liabilities of each Underwriter of Securities and each Dealer
shall be several and not joint.

(b) The Representatives, as such, shall have full authority
to take such action as they may deem advisable in all matters pertaining to the
offering of the Securities or arising under this Agreement. The
Representatives will have no liability to any Dealer for any act or omission
except for obligations expressly assumed by the Representatives herein, and no
obligations on the part of the Representatives will be implied hereby or
inferred herefrom.

(c) You understand and agree that you are to act as principal
in purchasing Securities and you are not authorized to act as agent for the
Company, any selling securityholder or any of the Underwriters in offering the
Securities to the public or otherwise.

<PAGE> 10
8

Dealers, the Underwriters or the Representatives. If the Dealers among
themselves or with the Underwriters or the Representatives are deemed to
constitute a partnership for Federal income tax purposes, then each Dealer
elects to be excluded from the application of Subchapter K, Chapter 1, Subtitle
A, of the Internal Revenue Code of 1986, as amended, and agrees not to take any
position inconsistent with such election. The Representatives are authorized,
in their discretion, to execute on behalf of the Dealer such evidence of such
election as may be required by the Internal Revenue Service.

(e) Neither the Representatives nor any Underwriter shall
be under any liability (except for their own want of good faith) for or in
respect of the validity or value of, or title to, any Securities; the form of,
or the statements contained in, or the validity of, the registration statement,
any preliminary prospectus, the prospectus, or any amendment or supplement
thereto, any document which may be incorporated by reference therein, or any
letters or instruments executed by or on behalf of the issuer or seller of the
Securities or others; the form or validity of the agreement for the purchase of
the Securities, the Agreement Among U.S. Underwriters or the instrument
containing the terms and conditions of the Securities; the delivery of the
Securities; the performance by the issuer or seller of the Securities or others
of any agreement on its or their part; the qualifications of the Securities for
sale or the legality of the Securities for investment under the laws of any
jurisdiction; or any matter in connection with any of the foregoing; provided,
however, that nothing in this paragraph shall be deemed to relieve the
Representatives or any Underwriter from any liability imposed by the Securities
Act of 1933, as amended.

(f) Dealers, by their participation, represent that
neither they nor any of their directors, officers, partners or "persons
associated with" them (as defined in the By-Laws of the NASD) nor, to their
knowledge, any "related person" (as defined by the NASD in its Interpretation
with respect to the Review of Corporate Financing, as amended) has participated
or intends to participate in any transaction or dealing as to which documents
or information are required to be filed with the NASD pursuant to such
Interpretation or its Statement of Policy Concerning Venture Capital and Other
Investments, as amended, and as to which such documents or information have not
been so filed in a timely manner.

The arrangements of which these terms and conditions form a
part shall be construed in accordance with the laws of the State of New York.

Dated: October , 1994

<PAGE> 1

AGREEMENT AMONG INTERNATIONAL MANAGERS
--------------------------------------

October ___, 1994

BARING BROTHERS & Co., LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LUCKY SECURITIES INTERNATIONAL LTD.
SSANGYONG SECURITIES EUROPE LIMITED
As International Representatives of the
Several International Managers
c/o Baring Brothers & Co., Limited
1 America Square
London EC2 2LT

Dear Sirs:

We understand that Fidelity Advisor Korea Fund Inc., a
Maryland corporation (the "Fund"), Fidelity Management & Research Company, a
Massachusetts corporation (the "Investment Manager"), Fidelity International
Investment Advisers, a Bermuda corporation (the "Investment Adviser"), and
Fidelity Investments Japan Limited, a Japanese corporation (the "Sub-Adviser")
confirm that the Fund proposes to issue and sell to the several Underwriters
(as defined below) an aggregate of __________ shares of its Common Stock, par
value $0.001 per share pursuant to an underwriting agreement (the
"International Underwriting Agreement"), with you as representatives (the
"International Representatives") of the international managers named in
Schedule I thereto (the "International Managers"), and an underwriting
agreement (the "U.S. Underwriting Agreement") with Baring Securities Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation, Dillon, Read & Co., Inc.,
Legg Mason Wood Walker, Incorporated, Rauscher Pierce Refsnes, Inc. and Raymond
James & Associates, Inc. as representatives (the "U.S. Representatives") of the
U.S. underwriters named in Schedule I thereto (the "U.S. Underwriters"). The
International Managers and the U.S. Underwriters are hereinafter collectively
referred to as the Underwriters. The International Underwriting Agreement and
the U.S. Underwriting Agreement are hereinafter collectively referred to as the
Underwriting Agreements. The __________ shares of Common Stock to be issued
and sold by the Fund are hereinafter called the Firm Shares.

Of such Firm Shares, __________ Firm Shares are to be offered
to non-U.S. and non-Canadian Persons outside the United States and Canada by
the International Managers (the "International Shares") and __________ Firm
Shares are to be

<PAGE> 2
2

offered by the U.S. Underwriters in the United States and Canada (the "U.S.
Firm Shares").

In addition, the several U.S. Underwriters will have options
to purchase from the Fund up to an additional __________ shares (the
"Additional Shares") to provide for over-allotments. The term "U.S. Shares"
shall mean the U.S. Firm Shares and the Additional Shares. The U.S. Shares and
the International Shares are hereinafter collectively referred to as the
Shares.

1. Offering Circular. We confirm that we have examined the
offering circular relating to the International Shares as amended to the date
of this Agreement and we are familiar with the terms of the securities to be
offered and the other terms of the offering which are reflected in the offering
circular. The offering circular is to be used in connection with the offering
and sale of the International Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The offering circular
in the form first used to confirm sales of International Shares is hereinafter
referred to as the Offering Circular.

2. International Underwriting Agreement and Agreement Between
U.S. Underwriters and International Managers. We authorize you to execute and
deliver the International Underwriting Agreement and the Agreement Between U.S.
Underwriters and International Managers on our behalf in substantially the
forms of Exhibits A and B hereto, respectively, and to make representations and
agreements on our behalf as set forth therein. We will be bound by all terms
of the International Underwriting Agreement and the Agreement Between U.S.
Underwriters and International Managers as executed. We understand that,
subject to the conditions of the Agreement Between U.S. Underwriters and
International Managers the several International Managers, including ourselves,
could become obligated to purchase Shares from or sell Shares to the U.S.
Underwriters. The term "original underwriting commitment", as used in this
Agreement with respect to any International Manager, shall refer to the number
of Shares set forth opposite such International Manager's name in Schedule I to
the International Underwriting Agreement plus any Shares which such
International Manager may become obligated to purchase pursuant to the
provisions of Section 12 of the International Underwriting Agreement or Section
9 hereof. The ratio which such original underwriting commitment of any
International Manager bears to the total number of International Shares is
referred to in this Agreement as the international underwriting proportion of
such International Manager.

3. Authorization Under International Underwriting Agreement
and Agreement Between U.S. Underwriters and International Managers. You are
also authorized in your sole discretion to take the following action with
respect to the

<PAGE> 3
3

International Underwriting Agreement and the Agreement Between U.S.
Underwriters and International Managers:

(a) To postpone the Closing Date (as such term is defined in
the International Underwriting Agreement) or to extend any other time
or date specified in the International Underwriting Agreement.

(b) To exercise any right of cancellation or termination.

(c) To arrange for the purchase by other persons (including
yourselves or any other International Managers) of any of the Shares
not taken up by any defaulting International Managers or by the other
International Managers as provided in of the International
Underwriting Agreement.

(d) To consent to any other additions to, changes in or
waivers of provisions of the International Underwriting Agreement and
the Agreement Between U.S. Underwriters and International Managers,
and to take such other action in connection with the offering of the
Shares, as may seem advisable to you in respect thereof.

(e) To determine whether to purchase, and, if such
determination is made, to purchase, any Shares for the account of the
International Managers pursuant to the Agreement Between U.S.
Underwriters and International Managers and to determine whether to
sell, and, if such determination is made, to sell, Shares for the
account of the International Managers pursuant to such Agreement. You
will advise us promptly as to the number of Shares purchased pursuant
to such Agreement that we shall retain for direct sale.

4. Method of Offering. We authorize you, as International
Representatives of the several International Managers, to manage the
underwriting and the offering of the International Shares and to take such
action in connection therewith and in connection with the purchase, carrying
and resale of the International Shares, including without limitation the
following, as you in your sole discretion deem appropriate or desirable:

(a) To determine the time of the initial offering of the
International Shares, the initial offering price of the International
Shares and the International Managers' gross spread.

(b) To make any changes in the public offering price or other
terms of the offering.

<PAGE> 4
4

(c) To make changes in those who are to be International
Managers and in the respective numbers of the International Shares to
be purchased by them, provided that our original underwriting
commitment shall not be changed without our consent.

(d) To determine all matters relating to advertising and
communications with dealers or others.

(e) To reserve for sale and to sell to institutions or other
retail purchasers, for our account, such of our Shares (including any
Shares purchased from the U.S. Underwriters pursuant to the Agreement
Between the U.S. Underwriters and International Managers) as you may
determine; provided, however, that such reservations and sales shall
be made for the respective accounts of the several International
Managers as nearly as practicable in their respective international
underwriting proportions, except for such sales for the account of a
particular International Manager designated by such a purchaser.

(f) To reserve for sale and to sell to dealers, for our
account, such of our Shares (including any Shares purchased from the
U.S. Underwriters pursuant to the Agreement Between the U.S.
Underwriters and International Managers) as you may determine;
provided, however, that such dealers shall be actually engaged in the
investment banking or securities business and shall be (a) members in
good standing of the NASD, (b) banks as defined in Section 3(a)(12) of
the Securities Exchange Act or 1934, as amended ("Banks") that are not
members of the NASD, or (c) foreign banks, brokers, dealers or other
institutions not eligible for membership in the NASD. If such dealers
are members, they agree that in making sales of Shares they will
comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Section 24 of Article III of the Rules of Fair
Practice. If they are not NASD members, they agree to comply as
though they were members with such Interpretation and Sections 8, 24
and 36 of Article III of the Rules of Fair Practice. If they are such
foreign banks, brokers, dealers or other institutions, they agree not
to offer or sell any Shares in the United States of America except
through the Representatives and in making sales of Shares they agree
to comply with Section 25 of Article III of the NASD's Rules of Fair
Practice as it applies to nonmember brokers or dealers in a foreign
country. If they are such foreign banks, they represent that, unless
Baring Brothers & Co., Limited is otherwise notified in writing prior
to the date hereof, they are not entities covered in (i), (ii) or
(iii) of the last paragraph of Section 5. If they are Banks, in
connection with the public offering of any Shares that do not
constitute "exempted securities" within the meaning of

<PAGE> 5
5

Section 3(a)(12) of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act") they agree that they will not purchase
any Shares at a discount from the offering price from any Underwriter
or dealer or otherwise accept any selling concession to dealers,
discount or other allowance from any Underwriter or dealer, which in
any such case is not permitted under the NASD's Rules of Fair Practice
and they agree to comply with Section 25 of Article III of the NASD's
Rule of Fair Practice as though they were members; provided, further
that such sales shall be made pursuant to dealer agreements
substantially in the form set forth as Exhibit B hereto.

(g) To apportion such sales to dealers among the
International Managers as nearly as practicable in the ratio that
Shares (including any Shares purchased from the U.S. Underwriters
pursuant to the Agreement Between the U.S. Underwriters and
International Managers) of each International Manager so reserved
bears to the total amount of Shares (including any Shares purchased
from the U.S. Underwriters pursuant to the Agreement Between the U.S.
Underwriters and International Managers) of all International Managers
so reserved; provided, however, that if such ratio is to be revised by
reason of the release of Shares for direct sale as hereinafter
provided, sales may be apportioned by you from day to day on the basis
of the ratio existing at the end of the preceding day.

(h) To fix the concessions to dealers and the reallowance to
dealers and, after the initial offering of the International Shares,
to make changes in the concessions and reallowance.

(i) At any time with respect to unsold Shares retained by us
(including any Shares purchased from the U.S. Underwriters pursuant
to the Agreement Between the U.S. Underwriters and International
Managers): (A) to reserve any of such Shares for sale by you for our
account or (B) to purchase any of such Shares which in your opinion
are needed to enable you to make deliveries for the accounts of the
several International Managers pursuant to this Agreement. Such
purchases may be made at the public offering price or, at your option,
at such price less all or any part of the concession to dealers.

We understand that you will advise us when the International
Shares are released for sale and of the amount of Shares sold or reserved for
sale for our account. We shall retain for direct sale any Shares purchased by
us (including any Shares purchased from the U.S. Underwriters pursuant to the
Agreement Between the U.S. Underwriters and International Managers) and not so
sold or reserved. Direct sales will be made in accordance with the terms of
offering set forth in the Prospectus. With your consent, we may obtain release
from you

<PAGE> 6
6

for direct sale of any Shares held by you for sale pursuant to subparagraphs
(e) and (f) above but not sold and paid for. To the extent Shares so released
had been reserved for sale to dealers, the amount of Shares reserved for our
account for sale to dealers shall be correspondingly reduced. We will advise
you from time to time, at your request, of the amount of Shares retained by us
which remain unsold and of the amount of Shares remaining unsold which were
delivered to us pursuant to the last paragraph of Section 5.

We agree that without your consent we will not sell to any
account over which we exercise discretionary authority any of the Shares.

5. Trading Authorizations. We confirm that, pursuant to the
Agreement Between U.S. Underwriters and International Managers, the
International Managers are authorizing Baring Securities Inc. to make purchases
and sales of Common Stock for the accounts of the several Underwriters,
including the International Managers, in the open market or otherwise, for long
or short account, on such terms as they shall deem advisable and to over-allot
in arranging sales. Any shares of Common Stock that may have been purchased by
Baring Securities Inc. for stabilizing purposes in connection with the offering
of the Shares prior to the execution of this Agreement and the Agreement
Between U.S. Underwriters and International Managers shall be treated as having
been purchased pursuant to this paragraph and the Agreement Between U.S.
Underwriters and International Managers for the accounts of the several
Underwriters. We authorize Baring Securities Inc. to over-allot in arranging
sales of the Shares and to make purchases for the purpose of covering any
over-allotments so made. We recognize that the International Primary Marketing
Association (IPMA) limits will not be complied with in connection with
stabilization losses and expenses. Subject to the provisions of the Agreement
Between U.S. Underwriters and International Managers, all such purchases, sales
and over-allotments for the International Managers as a group shall be made for
the respective accounts of the several International Managers as nearly as
practicable in their respective international underwriting proportions;
provided that at no time shall our net commitment pursuant to the foregoing
authorization and resulting from purchases and sales pursuant to the Agreement
Between U.S. Underwriters and International Managers, either for long or short
account, exceed 15% of our original underwriting commitment. We agree to take
up at cost on demand any shares of Common Stock so purchased for our account
and to deliver on demand any shares so sold or so over-allotted for our
account. Without limiting the generality of the foregoing, Baring Securities
Inc. may buy or take over for the respective accounts of the several
International Managers, all in the proportion and within the limits set forth,
at the price at which reserved, any of the Shares reserved for sale by it but
not sold and paid for,

<PAGE> 7
7

for such purposes as it may determine, including, but not limited to, the
covering of over-allotments and short sales.

Baring Brothers & Co., Limited agrees to notify us of the date
of termination of stabilization.

If, prior to the termination of this Agreement (or prior to
such earlier date as the International Representatives may have determined),
Baring Brothers & Co., Limited purchases or contracts to purchase any of the
Shares sold directly by us, in its discretion Baring Brothers & Co., Limited
may (i) sell for our account the Shares so purchased and debit or credit our
account for the loss or profit resulting from such sale, (ii) charge our
account with an amount equal to the concession to dealers with respect thereto
and credit such amount against the cost thereof or (iii) require us to purchase
such Shares at a price equal to the total cost of such purchase including
commissions and transfer taxes on redelivery. Certificates for the Shares
delivered on such repurchase need not be identical to the certificates for the
Shares so purchased by Baring Securities Inc.

6. Delivery and Payment. At or before 10:00 A.M., New York
City time on the Closing Date, we will deliver to you at the office of Baring
Securities Inc., 667 Madison Avenue, New York, New York 10021, a certified or
official bank check, payable in New York Clearing House funds, payable to the
order of Baring Securities Inc. or otherwise as you may direct, for (i) an
amount equal to the offering price less the selling concession to dealers in
respect of the Shares to be purchased by us, or (ii) an amount equal to the
offering price less the selling concession in respect of such of the Shares to
be purchased by us as shall have been retained by or released to us for direct
sale or (iii) the amount set forth or indicated in a telex to us, as you shall
direct. You shall use such funds to make payment on our behalf to the Fund of
the purchase price for our Shares. Any balance shall be held by you for our
account. If you have not received our funds as requested, you may in your
discretion make any such payment on our behalf and we will promptly deliver
funds to you in the amount so requested. Any such payment by you will not
relieve us from any of our obligations under this Agreement, the Agreement
Between U.S. Underwriters and International Managers or under the International
Underwriting Agreement. Unless we promptly give you written instructions
otherwise, if transactions in the Shares may be settled through the facilities
of The Depository Trust Company, payment for and delivery of Shares purchased
by us will be made through such facilities, if we are a member, or, if we are
not a member, settlement may be made through our ordinary correspondent who is
a member.

We authorize you, in carrying out the provisions of this
Agreement, in your discretion, to arrange loans for the account of one or more
International Managers, severally and not

<PAGE> 8
8

jointly, to advance your funds for our account, charging current interest
rates, to execute notes or other instruments in connection therewith, and to
hold or pledge as security therefor all or any part of the Shares which you may
be holding for our account. Any lender is hereby authorized to accept your
instructions with respect to such loans, and we authorize you to execute and
deliver notes or other instruments in connection therewith.

Certificates for all other Shares which you then hold for our
account shall be delivered to us upon termination of this Agreement, or prior
thereto in your discretion, and certificates for any such Shares may at any
time be delivered to us for carrying purposes only, subject to redelivery upon
demand. If, upon termination of this Agreement, the aggregate of (i)
International Shares which remain unsold, (ii) any Shares purchased for the
accounts of the International Managers pursuant to the Agreement Between U.S.
Underwriters and International Managers which remain unsold and (iii) any
securities of the Fund that are held by you for the accounts of the several
International Managers pursuant to the provision of Section 5 hereof represents
not more than 15% of the International Shares, Baring Securities Inc. may, in
its discretion, sell such securities at such prices as it may determine.

7. Indemnification and Certain Claims. Each International
Manager, including yourselves, agrees to indemnify and hold harmless each of
the other Underwriters and each person, if any, who controls any other
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934 (the "Exchange Act") and to reimburse their
expenses, all to the extent, if any, and upon the terms that we agree to
indemnify and hold harmless the Fund, its directors, its officers, each person,
if any who controls the Fund within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, the Investment Manager, the Investment Adviser
and

<PAGE> 9
9

the Sub-Adviser and to reimburse their expenses, as set forth in the
Underwriting Agreements.

We agree that in respect of any matters connected with or
action taken by you pursuant to this Agreement or the Agreement Between U.S.
Underwriters and International Managers you shall act only as agents of the
International Managers and you shall be under no liability to us in any such
respect or in respect of the form of, or the statements contained in, or the
validity of, any preliminary offering circular or the Offering Circular, or any
amendments or supplements to any of them, or for any report or other filing
made by you for us on our behalf under this Agreement or the Agreement Between
U.S. Underwriters and International Managers, except for want of good faith and
for obligations expressly assumed by you herein and no obligations on your part
will be implied or inferred from confirmation or acceptance of this Agreement
or the Agreement Between U.S. Underwriters and International Managers.

We will pay our proportionate share (based on our
international underwriting proportion) of (a) all expenses incurred by you in
investigating or defending against any claim or proceeding which is asserted or
instituted by any party (including any governmental or regulatory body) other
than an Underwriter based upon the claim that the Underwriters constitute an
association, unincorporated business or other separate entity, or relating to
the Offering Circular (or any amendment or supplement thereto) or any
preliminary offering circular and (b) any liability incurred by you in respect
of any such claim or proceeding, whether such liability shall be the result of
a judgment or as a result of any settlement agreed to by you, other than any
such liability as to which you actually receive indemnity pursuant to the first
paragraph of this Section 7, Section 3 of the Agreement Between U.S.
Underwriters and International Managers or pursuant to this Section 10 or
indemnity of contribution pursuant to the International Underwriting Agreement.

8. Termination and Settlement. This Agreement shall
terminate (i) on the thirtieth business day after the initial offering of the
Shares, (ii) on such earlier date as you may determine or (iii) on the
termination of the International Underwriting Agreement if the International
Underwriting Agreement shall be terminated as permitted by its terms; provided
that the International Representatives may in their discretion extend this
Agreement for a further period or periods not exceeding an aggregate of 30
days. You may at your discretion, on notice to us prior to the termination of
this agreement, terminate or suspend the effectiveness of Sections 4 and 5
hereof or any part of them or alter any of the terms or conditions of offering
determined pursuant to Section 4 hereof. No termination or suspension pursuant
to this Section shall affect your authority under Section 5 hereof to cover any
short position under this Agreement.

<PAGE> 10
10

Upon termination of this Agreement, all authorizations, rights
and obligations hereunder shall cease, except (i) the mutual obligations to
settle accounts hereunder, (ii) our obligation to pay any transfer taxes which
may be assessed and paid on account of any sales hereunder for our account,
(iii) our obligations with respect to purchases which may be made by you from
time to time thereafter to cover any short position incurred under this
Agreement, (iv) our agreements contained in the first and third paragraphs of
Section 7 hereof and (v) the obligations of any defaulting International
Manager, all of which shall continue until fully discharged.

You are authorized at any time:

(a) To make partial distributions of credit balances or call
for the payment of debit balances.

(b) To determine the amounts to be paid to or by us, which
determination will be final and conclusive.

(c) As compensation for your services in connection with this
Agreement, to charge our account and pay to yourselves, when final
accounting is made, an amount per International Share to be determined
by you (not to exceed 25% of the International Managers' gross spread
per International Share) for each International Share which we have
agreed or shall become committed to purchase from the Fund.

(d) To charge our account with (i) all transfer taxes on
sales made for our account and (ii) our international underwriting
proportion of all expenses (other than transfer taxes) incurred by
you, as International Representatives of the several International
Managers, in connection with the transactions contemplated by this
Agreement.

(e) To hold any of our funds at any time in your hands with
your general funds without accountability for interest.

9. Default by Underwriters. Default by any Underwriter in
respect of its obligations hereunder or under the Underwriting Agreement shall
not release us from any of our obligations or in any way affect the liability
of such defaulting Underwriter to the other Underwriters for damages resulting
from such default. If one or more Underwriters default under the Underwriting
Agreement, you may (but shall not

<PAGE> 11
11

be obligated to) arrange for the purchase by others, which may include
yourselves or other non-defaulting Underwriters, of all or a portion of the
Shares not taken up by the defaulting Underwriters.

If such arrangements are made, the respective numbers of
Shares to be purchased by the non-defaulting International Managers and the
amounts of Shares to be purchased by others, if any, shall be taken as the
basis for all rights and obligations hereunder; but this shall not in any way
affect the liability of any defaulting International Manager to the other
International Managers for damages resulting from its default, nor shall any
such default relieve any other International Manager of any of its obligations
hereunder or under the Underwriting Agreement except as herein or therein
provided. In addition, in the event of default by one or more Underwriters in
respect of their obligations under the Underwriting Agreement to purchase the
Shares agreed to be purchased by them thereunder and, to the extent that
arrangements shall not have been made by you for any person to assume the
obligations of such defaulting Underwriter or Underwriters, we agree to assume
our proportionate share, based upon the proportion which the number of
International Shares set forth opposite our name in Schedule II to the
Underwriting Agreement bears to the aggregate number of Firm Shares set forth
opposite the names of all non-defaulting Underwriters (subject to the
limitations contained in the Underwriting Agreement), without relieving such
defaulting Underwriter of its liability therefor.

In the event that any International Manager shall default in
its obligations (i) pursuant to Section 3(e) or Section 5, (ii) to pay amounts
owed by it pursuant to Section 8 or (iii) pursuant to the first or third
Paragraph of Section 7, we will assume our proportionate share (determined on
the basis of the international underwriting proportions of the non-defaulting
International Managers) of such obligations, but no such assumption shall
affect any obligation of any defaulting International Manager.

10. Distribution of Offering Circular. We are familiar with
the applicable laws, rules and regulations governing the use and distribution
of offering circulars by underwriters, and we confirm that we will comply
therewith, to the extent applicable. You shall cause to be made available to
us, to the extent made available to you by the Fund, such number of copies of
the Offering Circular as we may reasonably request for purposes contemplated by
such laws, rules and regulations.

To the extent consistent with such laws, rule and regulations,
we confirm that we have delivered and agree that we will deliver all
preliminary offering circulars and final Offering Circulars that would be
required if Rule 15c2-8 (or any successor provision) under the Exchange Act
applied to such offering.

<PAGE> 12
12

We will keep an accurate record of the names and addresses of
all persons to whom we give copies of the Offering Circular or any preliminary
offering circular (or any amendment or supplement thereto), and, when furnished
with any subsequent offering circular, we will, upon your request, promptly
forward copies thereof to such persons.

11. Miscellaneous. Nothing in this Agreement shall
constitute us partners with you or with the other International Managers or
with the U.S. Underwriters and the obligations of ourselves and of each of the
other International Managers are several and not joint. Each International
Manager elects to be excluded from the application of Subchapter K, Chapter 1,
Subtitle A, of the Internal Revenue Code of 1986. Default by any International
Manager with respect to the Underwriting Agreement shall not release us from
any of our obligations thereunder or hereunder.

Any notice from you to us shall be deemed to have been given
if mailed, telegraphed or hand delivered, or telephoned and subsequently
confirmed in writing, to our address stated in the International Managers'
Questionnaire which we have furnished to you.

<PAGE> 13
13

the Act and the Exchange Act, the applicable rules and regulations of the
Commission thereunder, the applicable rules and regulations of any securities
exchange having jurisdiction over the offering and the applicable laws and
regulations of any applicable regulatory body.

We confirm that our commitment to purchase Shares pursuant to
the International Underwriting Agreement or the Agreement Between U.S.
Underwriters and International Managers will not result in a violation of any
applicable rules of any securities exchange to which we are subject or of any
restriction imposed upon us by any such exchange or any governmental authority.

This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

<PAGE> 14
14

This Agreement is being executed by us and delivered to you in
duplicate. Please indicate your receipt of identical agreements from each of
the other International Managers by confirming this Agreement, whereupon it
shall constitute a binding agreement between us.

Very truly yours,

International Manager

--------------------------------
(As attorney-in-fact for each of
the several International
Managers named in Schedule I
of the International Underwriting
Agreement)

Acknowledged and Accepted
as of the date first above
mentioned

BARING BROTHERS & CO., LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LUCKY SECURITIES INTERNATIONAL LTD.
SSANGYONG SECURITIES EUROPE LIMITED

As International Representatives
of the several International Managers

By: BARING BROTHERS & CO., LIMITED

By:
---------------------------

<PAGE> 1

October , 1994

Baring Brothers & Co., Limited
1 America Square
London EC3N 2LT, England

Attention: Syndicate Department

Dear Sirs:

INTERNATIONAL SELLING AGREEMENT

In connection with the proposed public offering to non-U.S.
and non-Canadian investors outside the United States and Canada by Fidelity
Advisor Korea Fund, Inc. (the "Company") of Common Stock, $.001 par value,
which public offering is to be underwritten by you and by other Underwriters
represented by you, Donaldson, Lufkin & Jenrette Securities Corporation, Lucky
Securities International Ltd. and SsangYong Securities Europe Limited, we may
be offered the right to purchase a portion of such securities, as principal,
from you and from such other International Managers. Annex 1 to this letter
sets forth the general terms and conditions applicable to any such purchases
where you are responsible for reservations of securities for sale to dealers
and expressly inform us that such terms and conditions shall be applicable to
any such purchases where you are responsible for reservations of securities for
sale to dealers and expressly inform us that such terms and conditions shall be
applicable to such transactions by dealers. Our acceptance of any reservation
of any such securities shall constitute acceptance of and agreement to such
terms and conditions, together with and subject to any additional or
supplementary terms and conditions communicated to us in connection with any
specific transaction, and shall constitute a binding agreement between
ourselves and the several Underwriters of such securities.

In addition, the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. require that you obtain our agreement
to comply with certain of such Rules as a condition to the allowance by you of
certain concessions or portions thereof, whether or not you are responsible for
reservations for sale of securities to dealers. Accordingly, the provisions of
Paragraph 10 of the general terms and conditions attached as Annex 1 to this
letter shall be deemed to apply to purchases from you of securities which are
part of a "fixed price offering" within the meaning of such Rules.

<PAGE> 2
2

We acknowledge the foregoing procedure by signing this letter.

Very truly yours,

By:
---------------------------
Name:
Title:

<PAGE> 3
DRAFT 9/26/94

Annex 1

GENERAL TERMS AND CONDITIONS OF
DEALERS' PARTICIPATION IN UNDERWRITTEN PUBLIC OFFERINGS
MANAGED BY BARING BROTHERS & CO., LIMITED

1. GENERAL. In connection with public offerings of
securities ("Securities") underwritten by underwriters ("Underwriters")
represented by Baring Brothers & Co., Limited alone or in conjunction with
other firms ("Representatives"), the Underwriters may severally offer to one or
more securities dealers ("Dealers") the right to purchase, as principals, from
the Underwriters a portion of the Securities, subject to the receipt and
acceptance thereof by the Underwriters and subject to the terms and conditions
set forth (a) herein, (b) in the prospectus relating to the offering of the
Securities and (c) in any letter and/or telegram sent to Dealers in connection
with an offer to Dealers; provided, however, that the terms and conditions
herein set forth shall be applicable only to offerings where Baring Brothers &
Co., Limited is responsible for reservations of Securities for sale to Dealers
and have expressly informed Dealers that such terms and conditions shall be
applicable.

<PAGE> 4
2

(c) You agree that in purchasing Securities you will rely
upon no statement whatsoever, written or oral, other than the statements in the
Offering Document delivered to you by the Representatives and any documents
incorporated by reference therein. You understand that you are not authorized
to give any information or make any representation not contained in the
Offering Document or in any document incorporated by reference therein, in
connection with the offering of the Securities. Your purchase of Securities
shall constitute our agreement that, if requested by the Representatives, you
will furnish a copy of any amendment or supplement to any preliminary or final
Offering Document to each person to whom you have furnished a previous
preliminary or final Offering Document. Your purchase of Securities registered
under the Act shall constitute our confirmation that you have delivered, and
your agreement that you will deliver, all preliminary and final Prospectuses
required for compliance with Rule 15c2-8 (or any successor provision) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Your
purchase of securities exempt from registration under the Act shall constitute
(i) your confirmation that you have delivered, and your agreement that you will
deliver, all preliminary and final Offering Circulars required for compliance
with the applicable laws and the applicable rules and regulations of any
regulatory body promulgated thereunder governing the use and distribution of
offering circulars by underwriters, and (ii) to the extent consistent with such
laws, rules and regulations, your confirmation that you have delivered and your
agreement that you will deliver all preliminary and final Offering Circulars
that would be required if Rule 15c2-8 (or any successor provision) under the
Exchange Act applied to such offering.

<PAGE> 5
3

reoffered by you, subject to their receipt and acceptance by the
Representatives, to the public at the initial public offering price, subject to
the terms of this Agreement and the Offering Document. Except as otherwise
provided herein, the Securities shall not be offered or sold by you below the
initial public offering price before the termination of the effectiveness of
this Agreement with respect to the offering of such Securities, except that a
reallowance from the initial public offering price of not in excess of the
amount set forth in the Invitation may be allowed to any Dealer that (i) agrees
that such amount is to be retained and not reallowed in whole or in part, (ii)
makes the representations contained in Section 11, and (iii) unless the
Securities are "exempted securities" as defined in Section 3(a)(12) of the
Exchange Act, is not a "bank" as defined in Section 3(a)(6) of the Exchange Act
(a "Bank").

<PAGE> 6
4

such tax shall from time to time be assessed against us and other Dealers as a
group or otherwise.

5. DELIVERY AND PAYMENT. Unless advised otherwise,
Securities purchased by you hereunder shall be paid for in full at the public
offering price, or, if so advised by the Representatives, at the public
offering price less the Dealers' concession, at the offices of Baring Brothers
& Co., Limited, 667 Madison Avenue, New York, New York 10021, at such time and
on such day as the Representatives advise, by certified or official bank check
payable in New York Clearing House funds to the order of Baring Securities Inc.
against delivery of the Securities. If you are called upon to pay the public
offering price for the Securities purchased by you, the applicable concession
will be paid to you upon termination of this Agreement with respect to the
offering of such Securities.

Each Dealer which is a member of The Depository Trust Company
authorizes Baring Brothers & Co., Limited, in its discretion, to arrange for
delivery of Securities to such Dealer and for payment therefore by and to such
Dealer through the facilities of The Depository Trust Company.

6. SELLING REPRESENTATIONS. You represent and agree that,
except for (x) sales between the U.S. Underwriters and the International
Managers pursuant to the Agreement Between U.S. Underwriters and International
Managers and (y) stabilization transactions contemplated in Section 7 hereof
conducted through the U.S. Representatives as part of the distribution of the
Shares, (a) we are not purchasing and have not purchased and will not purchase
any of the Shares for the account of any United States or Canadian Person and
(b) we have not offered or sold, and will not offer or sell, resell or deliver,
directly or indirectly, any of the Shares or distribute any prospectus relating
to the Shares, in the United States or Canada or to any United States or
Canadian Person and any dealer to whom we may sell any of the Shares will
represent that it is not purchasing any of the Shares for the account of any
United States or Canadian Person and will agree that it will not offer or
resell such Shares directly or indirectly in the United States or Canada or to
any United States or Canadian Person or to any other dealer who does not so
represent and agree.

<PAGE> 7
5

this paragraph shall terminate upon the earlier of (a) notice from you to such
effect and (b) 45 days after the date of the initial offering of the Shares,
unless you have given notice that the distribution of the Shares has not yet
been completed. If such latter notice is given, the agreement set forth in
this paragraph shall survive until the earlier of (x) the notice of termination
referred to in (a) above and (y) 45 days after the date of any notice that the
distribution of the Shares has not yet been completed.

We further represent that we have not offered or sold, and
agree not to offer or sell, resell or deliver, directly or indirectly, in Japan
or to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or
sales to Japanese International Managers or dealers and except pursuant to an
exemption from the registration requirements of the Securities and Exchange Law
of Japan and otherwise in compliance with applicable provisions of Japanese
law. We further agree to send to any dealer who purchases from us any of such
Shares a notice stating in substance that, by purchasing such Shares, such
dealer represents and agrees that it has not offered or sold, and will not
offer or sell, any of such Shares, directly or indirectly, in Japan or to or
for the account of any resident thereof except pursuant to an exemption from
the registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such Shares a
notice containing substantially the same statement as is contained in this
sentence.

We further represent and agree that (i) we have not offered or
sold and will not offer or sell any Shares in the United Kingdom by means of
any document any Shares other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent (other than in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985 of Great Britain); (ii) we have complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by us in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) we have only issued or passed on and
will only issue or pass on in the United Kingdom any document received by us in
connection with the issue of the Shares, other than any document which consists
of or of part of listing particulars, supplementary listing particulars or any
other document required or permitted to be published by listing rules under
Part IV of the Financial Services Act 1986, to any person of a kind described
in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1988, or to any person to whom the document may otherwise
lawfully be issued or passed on.

<PAGE> 8
6

9. TERMINATION. The provisions of Paragraph 3 hereof shall
terminate in respect of any offering of Securities at the close of business on
the forty-fifth full business day after the Securities are released by the
Representatives for sale to the public, unless extended by the Representatives
to not later than the close of business on the fifteenth full business day
thereafter, but may be terminated by the Representatives at any time by
telegraphic notice sent to Dealers. Notwithstanding any distribution and
settlement of accounts, Dealers shall be liable for their proper proportion of
any transfer tax or other liability which may be asserted against the
Representatives or any of the Underwriters or Dealers based upon the claim that
the Dealers, or any other of them, constitute a partnership, an association, an
unincorporated business or other separate entity.

10. NASD REPRESENTATIONS. You represent that you are (a) a
member in good standing of the NASD, (b) a Bank that is not a member of the
NASD, or (c) a foreign bank, broker, dealer or other institution not eligible
for membership in the NASD. If you are such a member, you agree that in making
sales of Securities you will comply with all applicable rules of the NASD,

<PAGE> 9
7

including, without limitation, the NASD's Interpretation with Respect to
Free-Riding and Withholding and Section 24 of Article III of the Rules of Fair
Practice. If you are not a NASD member, you agree to comply as though you were
a member with such Interpretation and Sections 8, 24 and 36 of Article III of
the Rules of Fair Practice. If you are such a foreign bank, broker, dealer or
other institution, you agree not to offer or sell any Securities in the United
States of America except through the Representatives and in making sales of
Securities you agree to comply with Section 25 of Article III of the NASD's
Rules of Fair Practice as it applies to a nonmember broker or dealer in a
foreign country. If you are such a foreign bank, you represent that, unless
Baring Brothers & Co., Limited is otherwise notified in writing prior to the
date hereof, you are not an entity covered in (i), (ii) or (iii) of the last
paragraph of Section 5. If you are a Bank, in connection with the public
offering of any Securities that do not constitute "exempted securities" within
the meaning of Section 3(a)(12) of the Exchange Act you agree that you will not
purchase any Securities at a discount from the offering price from any
Underwriter or Dealer or otherwise accept any selling concession to Dealers,
discount or other allowance from any Underwriter or Dealer, which in any such
case is not permitted under the NASD's Rules of Fair Practice and you agree to
comply with Section 25 of Article III of the NASD's Rule of Fair Practice as
though you were a member. You agree that in selling Securities pursuant to any
offering (which agreement shall also be for the benefit of the Company or other
seller of such Securities) you will comply with all applicable laws, rules and
regulations, including the applicable provisions of the Act and the Exchange
Act, the applicable rules and regulations of the Commission thereunder, the
applicable rules and regulations of any securities exchange having jurisdiction
over the offering and in the case of an offering referred to in Section 4(b)
hereof the applicable laws and regulations of any applicable regulatory body.

11. MISCELLANEOUS. (a) The Representatives are acting as
representatives of each of the Underwriters in all matters connected with the
offering of the Securities and with the Underwriters' purchase of the
Securities. Any action to be taken, authority that may be exercised or
determination to be made by the Representatives hereunder may be taken,
exercised or made by Baring Brothers & Co., Limited on behalf of all
Representatives. The rights and liabilities of each Underwriter of Securities
and each Dealer shall be several and not joint.

<PAGE> 10
8

(d) Nothing herein contained shall constitute us an
association, or partners, with the other Dealers, the Underwriters or
Representatives, or, except as otherwise provided herein, render us liable for
the obligations of any other Dealers, the Underwriters or the Representatives.
If the Dealers among themselves or with the Underwriters or the Representatives
are deemed to constitute a partnership for Federal income tax purposes, then
each Dealer elects to be excluded from the application of Subchapter K, Chapter
1, Subtitle A, of the Internal Revenue Code of 1986, as amended, and agrees not
to take any position inconsistent with such election. The Representatives are
authorized, in their discretion, to execute on behalf of the Dealer such
evidence of such election as may be required by the Internal Revenue Service.

(e) Neither the Representatives nor any Underwriter shall
be under any liability (except for their own want of good faith) for or in
respect of the validity or value of, or title to, any Securities; the form of,
or the statements contained in, or the validity of, any registration statement,
any preliminary prospectus, the prospectus, preliminary offering circular, the
offering circular, or any amendment or supplement thereto, any document which
may be incorporated by reference therein, or any letters or instruments
executed by or on behalf of the issuer or seller of the Securities or others;
the form or validity of the agreement for the purchase of the Securities, the
Agreement Among International Managers or the instrument containing the terms
and conditions of the Securities; the delivery of the Securities; the
performance by the issuer or seller of the Securities or others of any
agreement on its or their part; the qualifications of the Securities for sale
or the legality of the Securities for investment under the laws of any
jurisdiction; or any matter in connection with any of the foregoing; provided,
however, that nothing in this paragraph shall be deemed to relieve the
Representatives or any Underwriter from any liability imposed by the Securities
Act of 1933, as amended.

<PAGE> 11
9

documents or information have not been so filed in a timely manner.

The arrangements of which these terms and conditions form a
part shall be construed in accordance with the laws of the State of New York.

Dated: October , 1994

<PAGE> 1
DRAFT 10/19/94

AGREEMENT BETWEEN U.S. UNDERWRITERS AND
INTERNATIONAL MANAGERS
---------------------------------------

October ___, 1994

To each of the Underwriters named in
Schedule I to each of the Underwriting
Agreements referred to below.

Dear Sirs:

We understand that Fidelity Advisor Korea Fund, Inc. (the
"Fund"), Fidelity Management & Research Company (the "Investment Manager"),
Fidelity International Investment Advisers (the "Investment Adviser") and
Fidelity Investments Japan Limited (the "Sub-Adviser"), confirm that the Fund
has entered into an underwriting agreement (the "U.S. Underwriting Agreement")
with Baring Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Dillon, Read & Co. Inc., Legg Mason Wood Walker, Incorporated,
Rauscher Pierce Refsnes, Inc. and Raymond James & Associates, Inc., as
representatives (the "U.S. Representatives") of the U.S. underwriters named in
Schedule I thereto (the "U.S. Underwriters") and (ii) an underwriting agreement
(the "International Underwriting Agreement") with Baring Brothers & Co.,
Limited, Donaldson, Lufkin & Jenrette Securities Corporation, Lucky Securities
International Ltd. and SsangYong Securities Europe Limited, as representatives
(the "International Representatives") of the international managers named in
Schedule I thereto (the "International Managers" and, together with the U.S.
Underwriters, the "Underwriters"), pursuant to which the several Underwriters
have agreed to purchase from the Fund an aggregate of ____________ shares of
Common Stock, par value $0.001 per share of the Fund ("Common Stock"). In
addition, the Fund has granted the U.S. Underwriters options to purchase up to
_______ additional shares of Common Stock (the "Additional Shares"). The U.S.
Underwriting Agreement and the International Underwriting Agreement are
collectively referred to herein as the Underwriting Agreements. All shares of
Common Stock to be purchased by the U.S. Underwriters, including any Additional
Shares, and the International Managers under the Underwriting Agreements are
herein referred to as the U.S. Shares and the International Shares,
respectively. The U.S. Shares and the International Shares are collectively
referred to herein as the Shares.

1. The U.S. Underwriters, acting through the U.S.
Representatives and the International Managers, acting through the
International Representatives, agree that, in order to

<PAGE> 2
2

provide an orderly marketing effort for the offering, they will consult with
each other as to the availability of the Shares for sale to the public, from
time to time, until the earlier of (a) notice from the U.S. Representatives to
the U.S. Underwriters of the completion of the distribution of the U.S. Shares
and (b) notice from the International Representatives to the International
Managers of the completion of the distribution of the International Shares.
From time to time as mutually agreed among the U.S. Underwriters and the
International Managers, acting through the U.S. Representatives and the
International Representatives, respectively, the Underwriters may purchase and
sell among each other such number of Shares to be purchased pursuant to the
Underwriting Agreements as may be so mutually agreed.

Unless otherwise determined by mutual agreement of the
Representatives, the price and currency of settlement of any Shares so
purchased or sold shall be the public offering price, in U.S. dollars, less an
amount not greater than the concession to dealers. Settlement with respect to
any Shares transferred hereunder prior to the Closing Date (as defined in the
Underwriting Agreements) shall be made on the Closing Date, and in the case of
purchases and sales made thereafter, as promptly as practicable but in no event
later than five business days after the transfer date. Certificates
representing the Shares so purchased shall be delivered on the respective
settlement dates. The liability of the Underwriters under the Underwriting
Agreements for payment of the purchase price of the Shares purchased thereunder
shall not be affected by the provisions of this Agreement.

The obligations of each U.S. Underwriter in respect of any
purchase or sale of Shares under this Section 1 by the U.S. Underwriters shall
be pro rata in accordance with the proportion of the total number of U.S.
Shares that such U.S. Underwriter is obligated to purchase from the Fund
pursuant to the U.S. Underwriting Agreement. The obligations of each
International Manager in respect of any purchase or sale of Shares under this
Section 1 by the International Managers shall be pro rata in accordance with
the proportion of the total number of International Shares that such
International Manager is obligated to purchase from the Fund pursuant to the
International Underwriting Agreement.

2. Each of the Underwriters represents that it is (i) a
member in good standing of the U.S. National Association of Securities Dealers,
Inc. (the "NASD") (ii) a bank that is not a member of the NASD, or (iii) a
foreign bank, broker, dealer or other institution not eligible for membership
in the NASD. In making sales of Shares, if it is such a member, such
Underwriter agrees to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice.
If such Underwriter is

<PAGE> 3
3

not a member of the NASD, it agrees to comply with such Interpretation and
Sections 8, 24 and 36 of such Article as though it were such a member. If such
Underwriter is a foreign bank, broker, dealer or other institution not eligible
for membership, it agrees not to offer or sell any Shares in the United States
except through the U.S. Representatives and in making such sales of Shares it
agrees to comply with Section 25 of such Article as it applies to a nonmember
broker or dealer in a foreign country.

3. Each U.S. Underwriter represents and agrees that, except
for (x) sales between the U.S. Underwriters and the International Managers
pursuant to Section 1 of this Agreement and (y) stabilization transactions
contemplated in Section 4 hereof conducted through the U.S. Representatives as
part of the distribution of the Shares, (a) it is not purchasing any of the
Shares for the account of anyone other than a United States or Canadian Person
(as defined below) and (b) it has not offered or sold, and will not offer or
sell, resell or deliver, directly or indirectly, any of the Shares or
distribute any prospectus relating to the U.S. Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person,
and any dealer to whom it may sell any of the Shares will represent that it is
not purchasing any of the Shares for the account of anyone other than a United
States or Canadian Person and will agree that it will not offer or resell such
Shares, directly or indirectly, outside the United States or Canada or to
anyone other than a United States or Canadian Person or to any other dealer who
does not so represent and agree.

Each International Manager represents and agrees that, except
for (x) sales between the U.S. Underwriters and the International Managers
pursuant to section 1 of this Agreement and (y) stabilization transactions,
contemplated in Section 4 of this Agreement, conducted through the U.S.
Representatives as part of the distribution of the Shares, (a) it is not
purchasing any of the Shares for the account of any United States or Canadian
Person and (b) it has not offered or sold, and will not offer or sell, resell
or deliver, directly or indirectly, any of the Shares or distribute any
offering circular relating to the International Shares in the United States or
Canada or to any United States, or Canadian Person, and any dealer to whom it
may sell any of the International Shares will represent that it is not
purchasing any of the International Shares for the account of any United States
or Canadian Person and will agree that it will not offer or resell such
International Shares, directly or indirectly, in the United States or Canada or
to any United States or Canadian Person or to any other dealer who does not so
represent and agree.

With respect to any Underwriter which is both a U.S.
Underwriter and an International Manager, the foregoing representations and
agreements (i) made by it in its capacity as a U.S. Underwriter shall apply
only to Shares purchased by it in

<PAGE> 4
4

its capacity as a U.S. Underwriter, (ii) made by it in its capacity as an
International Manager shall apply only to Shares purchased by it in its
capacity as an International Manager and (iii) shall not restrict its ability
to distribute either any prospectus relating to the U.S. Shares to any United
States or Canadian Person or any offering circular relating to the
International Shares to any non-United States or non-Canadian Person. "United
States or Canadian Person" shall mean any individual who is resident in the
United States or Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under or governed by the laws of the United
States or Canada or of any political subdivision thereof (other than the
foreign branch of any United States or Canadian Person), and shall include any
United States or Canadian branch of a person other than a United States or
Canadian Person. "United States" shall mean the United States of America
(including the District of Columbia), its territories, its possessions and all
areas subject to its jurisdiction.

The agreements of the Underwriters set forth in the first and
second paragraphs of this Section 3 shall terminate upon the earlier of (a) the
mutual agreement of the U.S. Representatives and the International
Representatives and (b) 30 days after the date hereof, unless the U.S.
Representatives or the International Representatives shall have given notice to
the other to the effect that the distribution of the Shares by the U.S.
Underwriters or the International Managers, as the case may be, has not yet
been completed. If such notice is given, the agreements set forth in such
preceding paragraphs shall survive until the earlier of (x) the mutual
agreement referred to in the preceding sentence and (y) 30 days after the date
of any such notice.

Each U.S. Underwriter represents that it has not offered or
sold, and agrees not to offer or sell, resell or deliver, any Shares, directly
or indirectly, in Canada in contravention of the securities laws of Canada or
any province or territory thereof and, without limiting the generality of the
foregoing, represents that any offer of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made. Each U.S.
Underwriter further agrees to send to any dealer who purchases from it any of
the Shares a notice stating in substance that, by purchasing such Shares, such
dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in Canada or to, or
for the benefit of, any resident of Canada in contravention of the securities
laws of Canada or any province or territory thereof and that any offer of
Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province of Canada in which such offer
is made, and that such dealer will deliver to any other dealer to whom it sells
any of such Shares a notice containing substantially the same statement as is
contained in this sentence.

<PAGE> 5
5

The Underwriters understand that no action has been or will be
taken in any jurisdiction by the Underwriters or the Fund that would permit a
public offering of the Shares, or possession or distribution of the Prospectus
(as defined in the U.S. Underwriting Agreement) or Offering Circular (as
defined in the International Underwriting Agreement), in preliminary or final
form, in any jurisdiction where, or in any circumstances in which, action for
that purpose is required, other than the United States.

Each International Manager agrees that it will comply with all
applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers,
sells or delivers Shares (including, without limitation, any applicable
requirements relating to the delivery of the offering circular, in preliminary
or final form), in each case at its own expense. In connection with sales of
and offers to sell Shares made by it, such International Manager will either
furnish to each person to whom any such sale or offer is made a copy of the
then current offering circular (in preliminary or final form and as then
amended or supplemented if the Fund shall have furnished any amendments or
supplements thereto), or inform such person that such offering circular, in
preliminary or final form, will be made available upon request. Any offering
material in addition to the offering circular furnished by us to any person in
connection with any offers or sales referred to in the preceding sentence (i)
shall be prepared and so furnished at our sole risk and expense and (ii) shall
not contain any information relating to the Shares or the Fund which is
inconsistent in any respect with the information contained in the offering
circular (as then amended or supplemented).

Each International Manager further represents that it has not
offered or sold, and agrees not to offer or sell, resell or deliver, directly
or indirectly, in Japan or to or for the benefit of any resident thereof, any
of the Shares acquired in connection with the distribution contemplated hereby,
except for offers or sales to Japanese International Managers and except
pursuant to an exemption from the registration requirements of the Securities
and Exchange Law of Japan and otherwise in compliance with applicable
provisions of Japanese law. Each International Manager further agrees to send
to any dealer who purchases from it any of the Shares a notice stating in
substance that, by purchasing such Shares, such dealer represents and agrees
that it has not offered or sold; and will not offer or sell, any of such
Shares, directly or indirectly, in Japan or to or for the account of any
resident thereof except pursuant to an exemption from the registration
requirements of the Securities and Exchange Law of Japan and otherwise in
compliance with applicable provisions of Japanese law, and that such dealer
will send to any other dealer to whom it sells any of such Shares a notice
containing substantially the same statement as is contained in this sentence.

<PAGE> 6
6

Each International Manager further represents and agrees that
(i) it has not offered or sold and will not offer or sell any Shares in the
United Kingdom by means of any document any Shares other than to persons whose
ordinary business it is to buy or sell shares or debentures, whether as
principal or agent (other than in circumstances which do not constitute an
offer to the public within the meaning of the Companies Act 1985 of Great
Britain); (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Shares in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Shares to any person of a kind described in Article 9(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988, or to
any person to whom the document may otherwise lawfully be issued or passed on.

Each International Manager agrees to indemnify and hold
harmless the Fund, the Investment Manager, the Investment Adviser, the
Sub-Adviser, each Underwriter and each person controlling the Fund or any
Underwriter from and against any and all losses, claims, damages and
liabilities (including fees and disbursements of counsel) arising from any
breach by it of any of the provisions of paragraphs six, seven, eight and nine
of this Section 3.

4. The overall direction and planning of the stabilization
transactions contemplated herein shall be the responsibility of the U.S.
Representatives and the International Representatives, who will consult with
one another on a continual basis so that such stabilization transactions shall
be conducted in accordance with such direction and planning as is mutually
agreed upon.

All stabilization transactions shall be conducted only by
Baring Securities Inc. and shall be conducted in compliance with any applicable
laws and regulations. Baring Securities Inc. agrees to notify the Underwriters
of the date of termination of stabilization.

The International Primary Marketing Association (IPMA) limits
will not be complied with in connection with stabilization losses and expenses.
All stabilization transactions, wherever executed, shall be for the respective
accounts of the several Underwriters and shall be allocated among the U.S.
Underwriters and the International Managers in the respective proportions that
the number of U.S. Shares and International Shares purchased pursuant to the
Underwriting Agreements (including, with respect to the U.S. Underwriters, the
Additional Shares to the extent the over-allotment options are exercised by the
U.S. Underwriters) bear to the total number of Shares purchased under the
Underwriting Agreements. In no event shall the net commitment of any
Underwriter resulting from such stabilization transactions,

<PAGE> 7
7

the over-allotments referred to in Section 5, and purchases and sales pursuant
to Section 1 of this Agreement, for either long or short account, exceed 15% of
the original underwriting commitment of such Underwriter under the Underwriting
Agreements; provided that, in determining the net commitment of any U.S.
Underwriter for short account, there shall be subtracted the maximum number of
Additional Shares which such Underwriter is entitled to purchase under the U.S.
Underwriting Agreement.

Each U.S. Underwriter agrees that it will not offer or sell,
directly or indirectly, Shares to any person at less than the public offering
price, other than to (i) the International Managers pursuant to Section 1
hereof or (ii) other U.S. Underwriters or to dealers who have entered into the
U.S. Selling Agreement with Baring Securities Inc. and who have received a
pricing wire from the U.S. Representatives with respect to this offering that,
among other things, sets forth such dealer's agreement that it is not
purchasing Shares for the account of any persons other than United States or
Canadian Persons and that it will not offer or resell Shares outside the United
States and Canada. Such sales to U.S. dealers and other U.S. Underwriters
shall be made at a price that is not below the public offering price less the
maximum permissible reallowance to be specified in the Prospectus. Each U.S.
Underwriter agrees that prior to offering Shares to any dealer at the public
offering price less the reallowance, it will either ascertain that such dealer
has entered into such U.S. Selling Agreement and received such a pricing wire
or make arrangements to ensure that such dealer will enter into such U.S.
Selling Agreement and receive such a pricing wire.

Each International Manager represents that it has not offered
or sold, and agrees that it will not offer or sell, directly or indirectly,
Shares to any person at less than the offering price, other than to (i) U.S.
Underwriters pursuant to Section 1 hereof or (ii) other International Managers
or to dealers who have entered into the International Selling Agreement (the
"International Dealers") with the International Representatives in the form of
Exhibit C to the Agreement Among International Managers. Such sales to
International Dealers and other International Managers shall be made in
conformity with the provisions of Section 2 and at a price that is not below
the public offering price less the maximum permissible reallowance to be
specified in the Offering Circular. Each International Manager agrees that
prior to offering Shares to any dealer at the public offering price less the
reallowance, it will either ascertain that such dealer has entered into the
International Selling Agreement or make arrangements to assure that such dealer
will enter into the International Selling Agreement.

The agreements of the Underwriters set forth in the foregoing
two paragraphs shall terminate upon the earlier of (a) the mutual agreement of
the U.S. Representatives and the International Representatives and (b) 30 days
after the date

<PAGE> 8
8

hereof, unless the U.S. Representatives or the International Representatives
shall have given notice to the other to the effect that the distribution of the
Shares by the U.S. Underwriters or the International Managers, as the case may
be, has not yet been completed. If such notice is given, the agreements set
forth in such preceding paragraphs shall survive until the earlier of (x) the
mutual agreement referred to in the preceding sentence and (y) 30 days after
the date of any such notice.

Each Underwriter agrees that it will not, without the advance
approval of the U.S. Representatives and the International Representatives,
respectively, buy, sell, deal or trade in (i) any Common Stock, (ii) any
security of the Fund convertible into Common Stock or (iii) any right or option
to acquire or sell Common Stock or any security of the Fund convertible into
Common Stock, for its own account or for the account of a customer, except (a)
as provided in the Agreement Among International Managers, the Agreement Among
U.S. Underwriters, this Agreement or in the Underwriting Agreements, (b) that
it may convert any security of the Fund convertible into Common Stock owned by
it and sell the Common Stock acquired upon such conversion and that it may
deliver Common Stock owned by it upon the exercise of any option written by it
as permitted by the provisions set forth herein, (c) in brokerage transactions
on unsolicited orders which have not resulted from activities on its part in
connection with the solicitation of purchases and which are executed by it in
the ordinary course of its brokerage business and (d) that on or after the date
of the initial public offering of the Shares, it may execute covered writing
transactions in options to acquire Common Stock, when such transactions are
covered by Shares, for the accounts of customers.

An opening uncovered writing transaction in options to acquire
Common Stock for an Underwriter's account or for the account of a customer
shall be deemed, for purposes of this Section 4, to be a sale of Common Stock
which is not unsolicited. The term "opening uncovered writing transaction in
options to acquire" as used above means a transaction in which the seller
intends to become a writer of an option to purchase Common Stock which he does
not own. An opening uncovered purchase transaction in options to sell Common
Stock for an Underwriter's account or for the account of a customer shall be
deemed, for purposes of this Section 4, to be a sale of Common Stock which is
not unsolicited. The term "opening uncovered purchase transaction in options
to sell" as used above means a transaction where the purchaser intends to
become an owner of an option to sell Common Stock which he does not own.

Each Underwriter represents that it has not participated,
since it was invited to participate in the offering of the Shares, in any
transaction prohibited by this Section 4 and that it has at all times complied
and agrees that it will at

<PAGE> 9
9

all times comply with the provisions of Rule 10b-6 and 10b-7 under the U.S.
Securities Exchange Act of 1934, as amended, applicable to this offering.

5. The U.S. Representatives and the International
Representatives shall have responsibility with respect to any action which the
U.S. Underwriters or the International Managers, as the case may be, may take
to make over-allotments in arranging for sales of Shares.

The U.S. Underwriters and the International Managers shall be
solely responsible for profits and losses arising from any action taken by
them, respectively, in respect to over-allotments in arranging for the sale of
Shares.

6. All expenses which constitute expenses of the underwriting
and distribution of the Shares shall be allocated among the U.S. Underwriters
and the International Managers in the respective proportions that the number of
U.S. Shares and International Shares purchased by the U.S. Underwriters and
International Managers under the Underwriting Agreements (including, with
respect to the U.S. Underwriters, the Additional Shares to the extent the
over-allotment options are exercised by the U.S. Underwriters) bear to the
total number of Shares purchased under the Underwriting Agreements. Reimbursed
expenses, if any, received by the U.S. Underwriters or the International
Managers from the Fund shall be allocated among the U.S. Underwriters and the
International Managers in the manner set forth in the preceding sentence. The
financial consequences of any default by an Underwriter under Section 1 hereof
shall be deemed to be a syndicate expense of the syndicate concerned but shall
not relieve such Underwriter from liability for such default.

7. Changes in the offering price and in the concessions and
reallowances to dealers will be made only upon the mutual agreement of the
Underwriters, acting through the U.S. Representatives and the International
Representatives, during the period referred to in the first sentence of Section
1 hereof. No such change shall be made in the offerings by the U.S.
Underwriters or International Managers without the same change being
concurrently made in the other offerings.

8. The Underwriters will keep one another fully informed of
the progress of the offering of the Shares.

The agreements of the Underwriters contained in Section 2, the
fifth through tenth paragraphs of Section 3, the last paragraph of Section 4
and Section 5 and Section 6 shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any termination of
the Underwriting Agreements, (iii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Fund, its officers or

<PAGE> 10
10

directors or any other person controlling the Fund or by or on behalf of the
Investment Manager, the Investment Adviser or the Sub- Adviser or any other
person controlling such the Investment Manager or the Investment Adviser and
(iv) acceptance of and payment for any Shares.

9. This Agreement may be signed in counterparts, which
together shall constitute one and the same instrument.

This Agreement shall be governed and construed in all respects
in accordance with the laws of the State of New York.

<PAGE> 11
11

IN WITNESS WHEREOF, this Agreement has been executed as of the
date and year first above written by the undersigned for themselves and for the
Underwriters as set forth above.

BARING SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DILLON, READ & CO. INC.
COWEN & COMPANY
LEGG MASON WOOD WALKER,
INCORPORATED
RAUSCHER PIERCE REFSNES, INC.
RAYMOND JAMES & ASSOCIATES, INC.
Acting severally on behalf of
themselves and the several
U.S. Underwriters referred
to herein.

By: BARING SECURITIES INC.

By:
-----------------------------
Title:

BARING BROTHERS & CO., LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LUCKY SECURITIES INTERNATIONAL LTD.
SSANGYONG SECURITIES EUROPE LIMITED
Acting on behalf of themselves
and the several International
Managers referred to herein.

By: BARING BROTHERS & CO., LIMITED

By:
-----------------------------
Title:

<PAGE> 12
[ROGERS AND WELLS LETTERHEAD]

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, Massachusetts 02109

Ladies and Gentlemen:

We have acted as counsel for Fidelity Advisor Korea Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the organization of the
Fund, its registration as a closed-end investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act of a Registration Statement
on Form N-2 (the "Registration Statement") relating to the proposed public
offering by the Fund of up to shares of common stock, par
value $0.001 per share (the "Shares") of the Fund.

In so acting, we have examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, documents, certificates and other instruments as in our judgment are
necessary or appropriate to enable us to render the opinions expressed below.
As to matters governed by the laws of the State of Maryland, we have relied on
the opinion of Messrs. Piper & Marbury attached hereto.

Based upon the foregoing, and on such examination of law as we have
deemed necessary, we are of the opinion that:

1. The Fund has been duly incorporated and is validly existing
in good standing under the laws of the State of Maryland.

2. When the Shares have been offered and sold as contemplated in
the Registration Statement and in accordance
<PAGE> 13
Fidelity Advisor Korea
Fund, Inc. 2 October , 1994

with the terms of the U.S. Underwriting Agreement and the International
Underwriting Agreement, each filed as an Exhibit to the Registration Statement,
the Shares will be validly issued, fully paid and non-assessable.

We consent to the filing of this opinion with the Securities and
Exchange Commission as an Exhibit to the Registration Statement and to the
reference to this firm under the heading "Legal Matters" in the form of
prospectus contained therein. In giving this consent, we do not admit that we
are within the category of persons whose consent is required under Section 7 of
the 1933 Act or the rules and regulations of the Securities and Exchange
Commission thereunder.

Very truly yours,

ROGERS & WELLS
<PAGE> 14

[SHIN AND KIM LETTERHEAD]

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, MA 02109
U.S.A.

RE: FIDELITY ADVISOR KOREA FUND, INC.
SEC FILE NO. 33-81186
---------------------------------

Ladies and Gentlemen:

We have acted as Korean counsel to Fidelity Advisor Korea Fund, Inc. in
connection with the preparation and filing of a registration statement on Form
N-2 (the "Registration Statement") relating to the offering of up to
shares of common stock.

As such counsel, it is our opinion that the conclusions based on Korean
tax law expressed under the heading "Taxation-Korean Taxes" in the Prospectus
(the "Prospectus") contained in the Registration Statement are true and
correct.

We consent to the use of this letter as an exhibit to the Registration
Statement and to the reference to us in the Prospectus under the section
captioned "Legal Matters". In giving our consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission thereunder.

Sincerely yours,

/s/ SHIN & KIM

Shin & Kim
<PAGE> 15

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Pre-Effective Amendment No. 3 to the registration statement (Securities Act of
1933 No. 33-81186 and Investment Company Act of 1940 No. 811-8608) on Form N-2
of Fidelity Advisor Korea Fund, Inc. of our report dated October 21, 1994,
relating to the financial statement of Fidelity Advisor Korea Fund, Inc. which
appears in such Prospectus.

PRICE WATERHOUSE LLP
Boston, Massachusetts
October 21, 1994
<PAGE> 16

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, Massachusetts 02109

Ladies and Gentlemen:

Fidelity Management & Research Company ("FMR") agrees to purchase 7,093
shares of Common Stock, par value $.001 per share (the "Shares"), of Fidelity
Advisor Korea Fund, Inc. (the "Fund") at a price of $14.10 per share. FMR
shall tender to the Fund the amount of $100,011 in full payment for the Shares.

FMR represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof, and that
FMR has no present intention to redeem or dispose of any of the Shares.

Very truly yours,

FIDELITY MANAGEMENT & RESEARCH
COMPANY

-------------------------------
By: Gary L. French
Title: Vice President

<PAGE> 1

CUSTODIAN AGREEMENT

Dated as of: _______, 1994

Between

Fidelity Advisor Korea Fund, Inc.

and

The Chase Manhattan Bank, N.A.
<PAGE> 2
TABLE OF CONTENTS

ARTICLE Page
- ------- ----
<S> <C> <C>
I. APPOINTMENT OF CUSTODIAN 1

II. POWERS AND DUTIES OF CUSTODIAN 1

2.01 Safekeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.02 Manner of Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.03 Security Purchases . . . . . . . . .. . . . . . . . . . . . . . . . 2
2.04 Exchanges of Securities . . . . . . . . . . . . . . . . . . . . . . 3
2.05 Sales of Securities . . . . . . . . . . . . . . . . . . . . . . . . 3
2.06 Depositary Receipts . . . . . . . . . . . . . . . . . . . . . . . . 4
2.07 Exercise of Rights; Tender Offers . . . . . . . . . . . . . . . . . 4
2.08 Stock Dividends, Rights, Etc. . . . . . . . . . . . . . . . . . . . 4
2.09 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Interest Bearing Deposits . . . . . . . . . . . . . . . . . . . . . . 5
2.13 Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . 6
2.14 Securities Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.15 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 Dividends, Distributions and Redemptions . . . . . . . . . . . . . . 7
2.17 Proceeds from Shares Sold . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Proxies, Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . 8
2.19 Bills and Other Disbursements . . . . . . . . . . . . . . . . . . . . 8
2.20 Nondiscretionary Functions . . . . . . . . . . . . . . . . . . . . . 8
2.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.22 Deposit of Fund Assets in Securities Systems . . . . . . . . . . . . 9
2.23 Other Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.24 Establishment of Segregated Account . . . . . . . . . . . . . . . . . 10
2.25 Custodian's Books and Records . . . . . . . . . . . . . . . . . . . . 10
2.26 Opinion of Fund's Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.27 Reports of Independent Certified Public Accountants . . . . . . . . . 11
2.28 Overdraft Facility . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS 12

3.01 Proper Instructions and Special Instructions . . . . . . . . . 12
3.02 Authorized Persons . . . . . . . . . . . . . . . . . . . . . . . 13
3.03 Persons Having Access to Assets of the Fund . . . . . . . . . . 13
3.04 Actions of the Custodian Based on Proper Instructions and
Special Instructions . . . . . . . . . . . . . . . . . . . . 13

IV. SUBCUSTODIANS 14

4.01 Domestic Subcustodians . . . . . . . . . . . . . . . . . . . . . 14
4.02 Foreign Subcustodians and Interim Subcustodians . . . . . . . . 14
4.03 Special Subcustodians . . . . . . . . . . . . . . . . . . . . . 15
4.04 Termination of a Subcustodian . . . . . . . . . . . . . . . . . 15
4.05 Certification Regarding Foreign Subcustodians . . . . . . . . . 16

V. STANDARD OF CARE; INDEMNIFICATION 16

5.01 Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . 16
5.02 Liability of Custodian for Actions of Other Persons . . . . . . 17
5.03 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 18
5.04 Investment Limitations . . . . . . . . . . . . . . . . . . . . . 19
5.05 Fund's Right to Proceed . . . . . . . . . . . . . . . . . . . . 19

VI. COMPENSATION 20

VII. TERMINATION 20

7.01 Termination of Agreement . . . . . . . . . . . . . . . . . . . . 20

VIII. DEFINED TERMS 21

IX. MISCELLANEOUS 21

9.01 Execution of Documents, Etc . . . . . . . . . . . . . . . . . . 21
9.02 Representative Capacity; Nonrecourse Obligations . . . . . . . . 22
9.03 Several Obligations of the Fund . . . . . . . . . . . . . . . . 22
9.04 Representations and Warranties . . . . . . . . . . . . . . . . . 22
9.05 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 24
9.06 Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . 24
9.07 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.08 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.13 Confidentiality; Survival of Obligations . . . . . . . . . . . . 25
</TABLE>

<PAGE> 4

APPENDICES

Appendix "A" - List of Foreign Subcustodians
and Special Subcustodians

Appendix "B" - Procedures Relating to
Custodian's Security Interest

<PAGE> 5
CUSTODIAN AGREEMENT

AGREEMENT made as of the ___ day of _______, 1994 between Fidelity
Advisor Korea Fund, Inc. (the "Fund") and The Chase Manhattan Bank, N.A. (the
"Custodian").

W I T N E S S E T H

WHEREAS, the Fund desires to appoint the Custodian as custodian in
accordance with the provisions of the Investment Company Act of 1940 (the "1940
Act") and the rules and regulations thereunder, under the terms and conditions
set forth in this Agreement, and the Custodian has agreed so to act as
custodian.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

ARTICLE I
APPOINTMENT OF CUSTODIAN

The Fund hereby employs and appoints the Custodian as a custodian,
subject to the terms and provisions of this Agreement. The Fund shall deliver
to the Custodian, or shall cause to be delivered to the Custodian, cash,
securities and other assets owned by the Fund from time to time during the term
of this Agreement.

ARTICLE II
POWERS AND DUTIES OF CUSTODIAN

As custodian, the Custodian shall have and perform the powers and duties
set forth in this Article II. Pursuant to and in accordance with Article IV
hereof, the Custodian may appoint one or more Subcustodians (as hereinafter
defined) to exercise the powers and perform the duties of the Custodian set
forth in this Article II and references to the Custodian in this Article II
shall include any Subcustodian so appointed.

Section 2.01. Safekeeping. The Custodian shall keep safely all cash,
securities and other assets of the Fund delivered to the Custodian, and the
Custodian shall, from time to time, accept delivery of cash, securities and
other assets for safekeeping.

Section 2.02. Manner of Holding Securities.

(a) The Custodian shall at all times hold securities of the
Fund either: (i) by physical possession of the share certificates or other
instruments representing such securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of Section 2.22 below.

(b) The Custodian shall at all times hold registered
securities of the Fund in the name of the Custodian, the Fund or a nominee of
either of them, unless specifically directed by Proper Instructions to hold
such registered securities in so-called street name; provided that, in any
event, all such securities and other assets shall be held in an account of the
Custodian containing only assets of

<PAGE> 6

the Fund, or only assets held by Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian shall
indicate at all times the Fund or other customer for which such securities and
other assets are held in such account and the respective interests therein.

Section 2.03. Security Purchases. Upon receipt of Proper Instructions
(as hereinafter defined), the Custodian shall pay for and receive securities
purchased for the account of the Fund, provided that payment shall be made by
Custodian only upon receipt of the securities: (a) by the Custodian; (b) by a
clearing corporation of a national securities exchange of which the Custodian
is a member; or (c) by a Securities System. Notwithstanding the foregoing,
upon receipt of Proper Instructions: (i) in the case of a repurchase
agreement , the Custodian may release funds to a Securities System prior to the
receipt of advice from the Securities System that the securities underlying
such repurchase agreement have been transferred by book-entry into the
Account (as hereinafter defined) maintained with such Securities System by the
Custodian, provided that the Custodian's instructions to the Securities system
require that the Securities System may make payment of such funds to the other
party to the repurchase agreement only upon transfer by book-entry of the
securities underlying the repurchase agreement into the Account; (ii) in the
case of time deposits, call account deposits, currency deposits, and other
deposits, foreign exchange transactions, futures contracts or options, pursuant
to Sections 2.09, 2.10, 2.12 and 2.13 hereof, the Custodian may make payment
therefor before receipt of an advice or confirmation evidencing said deposit or
entry into such transaction; (iii) in the case of the purchase of securities,
the settlement of which occurs outside of the United States of America, the
Custodian may make payment therefor and receive delivery of such securities in
accordance with local custom and practice generally accepted by Institutional
Clients (as hereinafter defined) in the country in which the settlement occurs,
but in all events subject to the standard of care set forth in Article V
hereof; and (iv) in the case of the purchase of securities in which, in
accordance with standard industry custom and practice generally accepted by
Institutional Clients with respect to such securities, the receipt of such
securities and the payment therefor take place in different countries, the
Custodian may receive delivery of such securities and make payment therefor in
accordance with standard industry custom and practice for such securities
generally accepted by Institutional Clients, but in all events subject to the
standard of care set forth in Article V hereof. For purposes of this Agreement,
an "Institutional Client" shall mean a major commercial bank, corporation,
insurance company, or substantially similar institution, which, as a
substantial part of its business operations, purchases or sells securities and
makes use of custodial services.

Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for the
account of the Fund for other securities in connection with any reorganization,
recapitalization, split-up of shares, change of par value, conversion or other
event relating to the securities or the issuer of such securities, and shall
deposit any such securities in accordance with the terms of any reorganization
or protective plan. The Custodian shall, without receiving Proper
Instructions: surrender securities in temporary form for definitive
securities; surrender securities for transfer into the name of the Custodian,
the Fund or a nominee of either of them, as permitted by Section 2.02(b); and
surrender securities for a different number of certificates or instruments
representing the same number of shares or same principal amount of
indebtedness, provided that the securities to be issued will be delivered to
the Custodian or a nominee of the Custodian.

Section 2.05. Sales of Securities. Upon receipt of Proper Instructions,
the Custodian shall make delivery of securities which have been sold for the
account of the Fund, but only against payment therefor in the form of: (a)
cash, certified check, bank cashier's check, bank credit, or bank wire

2
<PAGE> 7

transfer; (b) credit to the account of the custodian with a clearing
corporation of a national securities exchange of which the Custodian is a
member; or (c) credit to the Account of the Custodian with a Securities System,
in accordance with the provisions of Section 2.22 hereof. Notwithstanding the
foregoing: (i) in the case of the sale of securities, the settlement of which
occurs outside of the United States of America, such securities shall be
delivered and paid for in accordance with local custom and practice generally
accepted by Institutional Clients in the country in which the settlement
occurs, but in all events subject to the standard of care set forth in Article
V hereof; (ii) in the case of the sale of securities in which, in accordance
with standard industry custom and practice generally accepted by Institutional
Clients with respect to such securities, the delivery of such securities and
receipt of payment therefor take place in different countries, the Custodian
may deliver such securities and receive payment therefor in accordance with
standard industry custom and practice for such securities generally accepted by
Institutional Clients, but in all events subject to the standard of care set
forth in Article V hereof; and (iii) in the case of securities held in physical
form, such securities shall be delivered and paid for in accordance with
"street delivery custom" to a broker or its clearing agent, against delivery to
the Custodian of a receipt for such securities, provided that the Custodian
shall have taken reasonable steps to ensure prompt collection of the payment
for, or the return of, such securities by the broker or its clearing agent, and
provided further that the Custodian shall not be responsible for the selection
of or the failure or inability to perform of such broker or its clearing agent.

Section 2.06. Depositary Receipts. Upon receipt of Proper Instructions,
the Custodian shall surrender securities to the depositary used for such
securities by an issuer of American Depositary Receipts or Global Depositary
Receipts (hereinafter referred to, collectively, as "ADRs"), against a written
receipt therefor adequately describing such securities and written evidence
satisfactory to the Custodian that the depositary has acknowledged receipt of
instructions to issue ADRs with respect to such securities in the name of the
Custodian or a nominee of the Custodian, for delivery to the Custodian at such
place as the Custodian may from time to time designate. Upon receipt of
Proper Instructions, the Custodian shall surrender ADRs to the issuer thereof,
against a written receipt therefor adequately describing the ADRs surrendered
and written evidence satisfactory to the Custodian that the issuer of the ADRs
has acknowledged receipt of instructions to cause its depository to deliver
the securities underlying such ADRs to the Custodian.

Section 2.07. Exercise of Rights; Tender Offers. Upon receipt of
Proper Instructions, the Custodian shall: (a) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof, or to the agent
of such issuer or trustee, for the purpose of exercise or sale, provided that
the new securities, cash or other assets, if any, acquired as a result of such
actions are to be delivered to the Custodian; and (b) deposit securities upon
invitations for tenders thereof, provided that the consideration for such
securities is to be paid or delivered to the Custodian, or the tendered
securities are to be returned to the Custodian. Notwithstanding any provision
of this Agreement to the contrary, the Custodian shall take all necessary
action, unless otherwise directed to the contrary in Proper Instructions, to
comply with the terms of all mandatory or compulsory exchanges, calls, tenders,
redemptions, or similar rights of security ownership, and shall promptly
notify the Fund of such action in writing by facsimile transmission or in such
other manner as the Fund and Custodian may agree in writing.

Section 2.08. Stock Dividends, Rights, Etc. The Custodian shall
receive and collect all stock dividends, rights and other items of like nature
and, upon receipt of Proper Instructions, take action with respect to the same
as directed in such Proper Instructions.

3
<PAGE> 8
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian, any
registered broker-dealer and, if necessary, the Fund relating to compliance
with the rules of the Options Clearing Corporation or of any registered
national securities exchange or similar organization(s), the Custodian shall:
(a) receive and retain confirmations or other documents, if any, evidencing
the purchase or writing of an option on a security or securities index by the
Fund; (b) deposit and maintain in a segregated account, securities (either
physically or by book-entry in a Securities System), cash or other assets; and
(c) pay, release and/or transfer such securities, cash or other assets in
accordance with notices or other communications evidencing the expiration,
termination or exercise of such options furnished by the Options Clearing
Corporation, the securities or options exchange on which such options are
traded, or such other organization as may be responsible for handling such
option transactions. The Fund and the broker-dealer shall be responsible for
the sufficiency of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract.

Section 2.10. Futures Contracts. Upon receipt of Proper Instructions,
or pursuant to the provisions of any futures margin procedural agreement among
the Fund, the Custodian and any futures commission merchant (a "Procedural
Agreement"), the Custodian shall: (a) receive and retain confirmations, if
any, evidencing the purchase or sale of a futures contract or an option on a
futures contract by the Fund; (b) deposit and maintain in a segregated account,
cash, securities and other assets designated as initial, maintenance or
variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written by the Fund, in accordance with the provisions of
any Procedural Agreement designed to comply with the rules of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s),
regarding such margin deposits; and (c) release assets from and/or transfer
assets into such margin accounts only in accordance with any such Procedural
Agreements. The Fund and such futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in compliance with
applicable margin maintenance requirements and the performance of any futures
contract or option on a futures contract in accordance with its terms.

Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of the Fund to lenders or their agents, or
otherwise establish a segregated account as agreed to by the Fund and the
Custodian, as collateral for borrowings effected by the Fund, provided that
such borrowed money is payable by the lender (a) to or upon the Custodian's
order, as Custodian for the Fund, and (b) concurrently with delivery of such
securities.

Section 2.12. Interest Bearing Deposits.

Upon receipt of Proper Instructions directing the Custodian to purchase
interest bearing fixed term and call deposits (hereinafter referred to
collectively, as "Interest Bearing Deposits") for the account of the Fund, the
Custodian shall purchase such Interest Bearing Deposits in the name of the
Fund with such banks or trust companies (including the Custodian, any
Subcustodian or any subsidiary or affiliate of the Custodian) (hereinafter
referred to as "Banking Institutions") and in such amounts as the Fund may
direct pursuant to Proper Instructions. Such Interest Bearing Deposits may be
denominated in U.S. Dollars or other currencies, as the Fund may determine and
direct pursuant to Proper Instructions. The Custodian shall include in its
records with respect to the assets of the Fund appropriate notation as to the
amount and currency of each such Interest Bearing Bank Deposit, the

4
<PAGE> 9
accepting Banking Institution and all other appropriate details, and shall
retain such forms of advice or receipt evidencing such account, if any, as may
be forwarded to the Custodian by the Banking Institution. The responsibilities
of the Custodian to the Fund for Interest Bearing Deposits accepted on the
Custodian's books in the United States shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
accepted on the Custodian's books, (a) the Custodian shall be responsible for
the collection of income as set forth in Section 2.15 and the transmission of
cash and instructions to and from such accounts; and (b) the Custodian shall
have no duty with respect to the selection of the Banking Institution or, so
long as the Custodian acts in accordance with Proper Instructions, for the
failure of such Banking Institution to pay upon demand. Upon receipt of Proper
Instructions, the Custodian shall take such reasonable actions as the Fund
deems necessary or appropriate to cause each such Interest Bearing Deposit
Account to be insured to the maximum extent possible by all applicable deposit
insurers including, without limitation, the Federal Deposit Insurance
Corporation.

Section 2.13. Foreign Exchange Transactions

(a) Foreign Exchange Transactions Other than as Principal. Upon
receipt of Proper Instructions, the Custodian shall settle foreign exchange
contracts or options to purchase and sell foreign currencies for spot and
future delivery on behalf of and for the account of the Fund with such
currency brokers or Banking Institutions as the Fund may determine and direct
pursuant to Proper Instructions. The Custodian shall be responsible for the
transmission of cash and instructions to and from the currency broker or
Banking Institution with which the contract or option is made, the safekeeping
of all certificates and other documents and agreements evidencing or relating
to such foreign exchange transactions and the maintenance of proper records as
set forth in Section 2.25. The Custodian shall have no duty with respect to
the selection of the currency brokers or Banking Institutions with which the
Fund deals or, so long as the Custodian acts in accordance with Proper
Instructions, for the failure of such brokers or Banking Institutions to comply
with the terms of any contract or option.

(b) Foreign Exchange Contracts as Principal. The Custodian shall
not be obligated to enter into foreign exchange transactions as principal.
However, if the Custodian has made available to the Fund its services as a
principal in foreign exchange transactions, upon receipt of Proper
Instructions, the Custodian shall enter into foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
on behalf of and for the account of the Fund with the Custodian as principal.
The Custodian shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or Banking
Institutions to comply with the terms of any contract or option.

(c) Payments. Notwithstanding anything to the contrary contained
herein, upon receipt of Proper Instructions the Custodian may, in connection
with a foreign exchange contract, make free outgoing payments of cash in the
form of U.S. Dollars or foreign currency prior to receipt of confirmation of
such foreign exchange contract or confirmation that the countervalue currency
completing such contract has been delivered or received.

Section 2.14. Securities Loans. Upon receipt of Proper Instructions,
the Custodian shall, in connection with loans of securities by the Fund,
deliver securities of the Fund to the borrower thereof prior to receipt of the
collateral, if any, for such borrowing; provided that, in cases of loans of
securities secured by cash collateral, the Custodian's instructions to the
Securities System shall require

5
<PAGE> 10

that the Securities System deliver the securities of the Fund to the borrower
thereof only upon receipt of the collateral for such borrowing.

Section 2.15. Collections. The Custodian shall, and shall cause any
Subcustodian to: (a) collect amounts due and payable to the Fund with respect
to portfolio securities and other assets of the Fund; (b) promptly credit to
the account of the Fund all income and other payments relating to portfolio
securities and other assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and the Fund; (c) promptly endorse and deliver any instruments
required to effect such collections; and (d) promptly execute ownership and
other certificates and affidavits for all federal, state and foreign tax
purposes in connection with receipt of income or other payments with respect
to portfolio securities and other assets of the Fund, or in connection with
the transfer of such securities or other assets; provided, however, that with
respect to Fund securities registered in so-called street name, the Custodian
shall use its best efforts to collect amounts due and payable to the Fund.
The Custodian shall promptly notify the Fund in writing by facsimile
transmission or in such other manner as the Fund and Custodian may agree in
writing if any amount payable with respect to portfolio securities or other
assets of the Fund is not received by the Custodian when due. The Custodian
shall not be responsible for the collection of amounts due and payable with
respect to portfolio securities or other assets that are in default.

Section 2.16. Dividends, Distributions and Redemptions. The Custodian
shall promptly release funds or securities: (a) upon receipt of Proper
Instructions, to one or more Distribution Accounts designated by the Fund in
such Proper Instructions; or (b) upon receipt of Special Instructions, as
otherwise directed by the Fund, for the purpose of the payment of dividends
or other distributions to shareholders of the Fund, and payment to shareholders
who have requested repurchase or redemption of their shares of the Fund
(collectively, the "Shares"). For purposes of this Agreement, a "Distribution
Account" shall mean an account established at a Banking Institution designated
by the Fund in Special Instructions.

Section 2.17. Proceeds from Shares Sold. The Custodian shall receive
funds representing cash payments received for Shares issued or sold from time
to time by the Fund, and shall promptly credit such funds to the account(s) of
the applicable Fund). The Custodian shall promptly notify the Fund of
Custodian's receipt of cash in payment for Shares issued by the Fund by
facsimile transmission or in such other manner as the Fund and Custodian may
agree in writing. Upon receipt of Proper Instructions, the Custodian shall:
(a) deliver all federal funds received by the Custodian in payment for Shares
in payment for such investments as may be set forth in such Proper Instructions
and at a time agreed upon between the Custodian and the Fund; and (b) make
federal funds available to the Fund as of specified times agreed upon from time
to time by the Fund and the Custodian, in the amount of checks received in
payment for Shares which are deposited to the accounts of the Fund.

Section 2.18. Proxies, Notices, Etc. The Custodian shall deliver to
the Fund, in the most expeditious manner practicable, all forms of proxies,
all notices of meetings, and any other notices or announcements affecting or
relating to securities owned by the Fund that are received by the Custodian,
any Subcustodian, or any nominee of either of them, and, upon receipt of
Proper Instructions, the Custodian shall execute and deliver, or cause such
Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Proper
Instructions, neither the Custodian nor any Subcustodian or nominee shall vote
upon any such

<PAGE> 11

securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.

Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, all bills,
statements, or other obligations of the Fund.

Section 2.20. Nondiscretionary Functions. The Custodian shall attend
to all nondiscretionary details in connection with the sale, exchange,
substitution, purchase, transfer or other dealings with securities or other
assets of the Fund held by the Custodian, except as otherwise directed from
time to time pursuant to Proper Instructions.

Section 2.21. Bank Accounts

(a) Accounts with the Custodian and any Subcustodians. The Custodian
shall open and operate a bank account or accounts (hereinafter referred to
collectively, as "Bank Accounts") on the books of the Custodian or any
Subcustodian provided that such account(s) shall be in the name of the
Custodian or a nominee of the Custodian, for the account of the Fund, and shall
be subject only to the draft or order of the Custodian; provided however, that
such Bank Accounts in countries other than the United States may be held in an
account of the Custodian containing only assets held by the Custodian as a
fiduciary or custodian for customers, and provided further, that the records of
the Custodian shall indicate at all times the Fund or other customer for which
such securities and other assets are held in such account and the respective
interests therein. Such Bank Accounts may be denominated in either U.S.
Dollars or other currencies. The responsibilities of the Custodian to the Fund
for deposits accepted on the Custodian's books in the United States shall be
that of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to the Fund for deposits accepted on any Subcustodian's books shall
be governed by the provisions of Section 5.02.

(b) Accounts With Other Banking Institutions. The Custodian may
open and operate Bank Accounts on behalf of the Fund, in the name of the
Custodian or a nominee of the Custodian, at a Banking Institution other than
the Custodian or any Subcustodian, provided that such account(s) shall be
in the name of the Custodian or a nominee of the Custodian, for the account of
the Fund, and shall be subject only to the draft or order of the Custodian;
provided however, that such Bank Accounts may be held in an account of the
Custodian containing only assets held by the Custodian as a fiduciary or
custodian for customers, and provided further, that the records of the
Custodian shall indicate at all times the Fund or other customer for which such
securities and other assets are held in such account and the respective
interests therein. Such Bank Accounts may be denominated in either U.S.
Dollars or other currencies. Subject to the provisions of Section 5.01(a), the
Custodian shall be responsible for the selection of the Banking Institution and
for the failure of such Banking Institution to pay according to the terms of
the deposit.

(c) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such reasonable actions as the Fund deems necessary or
appropriate to cause each deposit account established by the Custodian
pursuant to this Section 2.21 to be insured to the maximum extent possible by
all applicable deposit insurers including, without limitation, the Federal
Deposit Insurance Corporation.

7
<PAGE> 12

Section 2.22. Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by the
Fund in: (a) The Depository Trust Company; (b) the Participants Trust Company;
(c) any book-entry system as provided in (i) Subpart O of Treasury Circular No.
300, 31 CFR 306.115, (ii) Subpart B of Treasury Circular Public Debt Series No.
27-76, 31 CFR 350.2, or (iii) the book-entry regulations of federal agencies
substantially in the form of 31 CFR 306.115; or (d) any other domestic clearing
agency registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 (or as may otherwise be
authorized by the Securities and Exchange Commission to serve in the capacity
of depository or clearing agent for the securities or other assets of
investment companies) which acts as a securities depository and the use of
which the Fund has previously approved by Special Instructions (as hereinafter
defined) (each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:

(A) The Custodian may deposit and/or maintain securities
held hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the Securities System
which Account shall not contain any assets of the Custodian other than assets
held as a fiduciary, custodian, or otherwise for customers.

(B) The books and records of the Custodian shall at all
times identify those securities belonging to the Fund which are maintained in
a Securities System.

(C) The Custodian shall pay for securities purchased for
the account of the Fund only upon (w) receipt of advice from the Securities
System that such securities have been transferred to the Account of the
Custodian, and (x) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund only upon (y)
receipt of advice from the Securities System that payment for such securities
has been transferred to the Account of the Custodian, and (z) the making of an
entry on the records of the Custodian to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the Securities System
relating to transfers of securities for the account of the Fund shall identify
the Fund and shall be maintained for the Fund by the Custodian. The Custodian
shall deliver to the Fund on the next succeeding business day daily transaction
reports which shall include each day's transactions in the Securities System
for the account of the Fund. Such transaction reports shall be delivered to
the Fund or any agent designated by the Fund pursuant to Proper Instructions,
by computer or in such other manner as the Fund and Custodian may agree in
writing.

(D) The Custodian shall, if requested by the Fund pursuant
to Proper Instructions, provide the Fund with all reports obtained by the
Custodian or any Subcustodian with respect to a Securities System's accounting
system, internal accounting control and procedures for safeguarding securities
deposited in the Securities System.

(E) Upon receipt of Special Instructions, the Custodian
shall terminate the use of any Securities System (except the federal book-entry
system) on behalf of any Fund as promptly as practicable and shall take all
actions reasonably practicable to safeguard the securities of the Fund
maintained with such Securities System.

Section 2.23. Other Transfers. Upon receipt of Special Instructions,
the Custodian shall make such other dispositions of securities, funds or other
property of the Fund in a manner or for purposes

8
<PAGE> 13

other than as expressly set forth in this Agreement, provided that the Special
Instructions relating to such disposition shall include a statement of the
purpose for which the delivery is to be made, the amount of funds and/or
securities to be delivered, and the name of the person or persons to whom
delivery is to be made, and shall otherwise comply with the provisions of
Sections 3.01 and 3.03 hereof.

Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or securities or other assets
of the Fund, including securities maintained by the Custodian in a Securities
System pursuant to Section 2.22 hereof, said account or accounts to be
maintained: (a) for the purposes set forth in Sections 2.09, 2.10 and 2.11
hereof; (b) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the SEC relating to the maintenance of segregated accounts by
registered investment companies; or (c) for such other purposes as set forth,
from time to time, in Special Instructions.

Section 2.25. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by the Fund in the preparation of
reports to Fund shareholders and others, audits of accounts, and other
ministerial matters of like nature. The Custodian shall maintain complete and
accurate records with respect to securities and other assets held for the
accounts of the Fund as required by the rules and regulations of the SEC
applicable to investment companies registered under the 1940 Act, including:
(a) journals or other records of original entry containing a detailed and
itemized daily record of all receipts and deliveries of securities (including
certificate and transaction identification numbers, if any), and all receipts
and disbursements of cash; (b) ledgers or other records reflecting (i)
securities in transfer, (ii) securities in physical possession, (iii)
securities borrowed, loaned or collateralizing obligations of the Fund, (iv)
monies borrowed and monies loaned (together with a record of the collateral
therefor and substitutions of such collateral), and (v) dividends and interest
received; and (c) cancelled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Fund as the Fund shall
reasonably request. All such books and records maintained by the Custodian
shall be maintained in a form acceptable to the Fund and in compliance with the
rules and regulations of the SEC, including, but not limited to, books and
records required to be maintained by Section 31(a) of the 1940 Act and the
rules and regulations from time to time adopted thereunder. All books and
records maintained by the Custodian pursuant to this Agreement shall at all
times be the property of the Fund and shall be available during normal business
hours for inspection and use by the Fund and its agents, including, without
limitation, its independent certified public accountants. Notwithstanding the
preceding sentence, the Fund shall not take any actions or cause the Custodian
to take any actions which would cause, either directly or indirectly, the
Custodian to violate any applicable laws, regulations or orders.

Section 2.26. Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as the Fund
may request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Fund's Form N-2
and the Fund's Form N-SAR or other periodic reports to the SEC and with respect
to any other requirements of the SEC.

Section 2.27. Reports by Independent Certified Public Accountants. At
the request of the Fund, the Custodian shall deliver to the Fund a written
report prepared by the Custodian's independent certified public accountants
with respect to the services provided by the Custodian under this

9
<PAGE> 14

Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, securities
and other assets, including cash, securities and other assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
the Fund and as may reasonably be obtained by the Custodian.

Section 2.28. Overdraft Facility. In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the Custodian on
behalf of the Fund, the Custodian may, in its discretion, provide an overdraft
(an "Overdraft") to the Fund on behalf of the Fund, in an amount sufficient to
allow the completion of such payment. Any Overdraft provided hereunder: (a)
shall be payable on the next Business Day, unless otherwise agreed by the Fund
and the Custodian; and (b) shall accrue interest from the date of the Overdraft
to the date of payment in full by the Fund on behalf of the Fund at a rate
agreed upon in writing, from time to time, by the Custodian and the Fund. The
Custodian and the Fund acknowledge that the purpose of such Overdrafts is to
temporarily finance the purchase or sale of securities for prompt delivery in
accordance with the terms hereof, or to meet emergency expenses not reasonably
foreseeable by the Fund. The Custodian shall promptly notify the Fund in
writing (an "Overdraft Notice") of any Overdraft by facsimile transmission or
in such other manner as the Fund and the Custodian may agree in writing. At
the request of the Custodian, the Fund, shall pledge, assign and grant to the
Custodian a security interest in certain specified securities of the Fund, as
security for Overdrafts provided to the Fund, under the terms and conditions
set forth in Appendix "B" attached hereto.

ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS

Section 3.01. Proper Instructions and Special Instructions.

(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including, without
limitation, facsimile transmission) request, direction, instruction or
certification signed or initialed by or on behalf of the Fund by one or more
Authorized Persons (as hereinafter defined); (ii) a telephonic or other oral
communication by one or more Authorized Persons; or (iii) a communication
effected directly between an electro-mechanical or electronic device or system
(including, without limitation, computers) by or on behalf of the Fund by one
or more Authorized Persons; provided, however, that communications of the types
described in clauses (ii) and (iii) above purporting to be given by an
Authorized Person shall be considered Proper Instructions only if the Custodian
reasonably believes such communications to have been given by an Authorized
Person with respect to the transaction involved. Proper Instructions in the
form of oral communications shall be confirmed by the Fund by tested telex or
in writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions prior to the Custodian's receipt of such
confirmation. The Fund and the Custodian are hereby authorized to record any
and all telephonic or other oral instructions communicated to the Custodian.
Proper Instructions may relate to specific transactions or to types or classes
of transactions, and may be in the form of standing instructions.

(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or confirmed in
writing by the Treasurer or any Assistant Treasurer of the

10
<PAGE> 15

Fund or any other person designated by the Treasurer of the Fund in writing,
which countersignature or confirmation shall be (i) included on the same
instrument containing the Proper Instructions or on a separate instrument
relating thereto, and (ii) delivered by hand, by facsimile transmission, or in
such other manner as the Fund and the Custodian agree in writing.

(c) Address for Proper Instructions and Special Instructions.
Proper Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number agreed upon
from time to time by the Custodian and the Fund.

Section 3.02. Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the Fund shall
deliver to the Custodian, duly certified as appropriate by a Treasurer or
Assistant Treasurer of the Fund, a certificate setting forth: (a) the names,
titles, signatures and scope of authority of all persons authorized to give
Proper Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund (collectively, the "Authorized
Persons" and individually, an "Authorized Person"); and (b) the names, titles
and signatures of those persons authorized to issue Special Instructions. Such
certificate may be accepted and relied upon by the Custodian as conclusive
evidence of the facts set forth therein and shall be considered to be in full
force and effect until delivery to the Custodian of a similar certificate to
the contrary. Upon delivery of a certificate which deletes the name(s) of a
person previously authorized to give Proper Instructions or to issue Special
Instructions, such persons shall no longer be considered an Authorized Person
or authorized to issue Special Instructions.

Section 3.03. Persons Having Access to Assets of the Fund .
Notwithstanding anything to the contrary contained in this Agreement, no
Authorized Person, Trustee, officer, employee or agent of the Fund shall have
physical access to the assets of the Fund held by the Custodian nor shall the
Custodian deliver any assets of the Fund for delivery to an account of such
person; provided, however, that nothing in this Section 3.03 shall prohibit (a)
any Authorized Person from giving Proper Instructions, or any person authorized
to issue Special Instructions from issuing Special Instructions, so long as
such action does not result in delivery of or access to assets of any Fund
prohibited by this Section 3.03; or (b) the Fund's independent certified public
accountants from examining or reviewing the assets of the Fund held by the
Custodian. The Fund shall deliver to the Custodian a written certificate
identifying such Authorized Persons, Trustees, officers, employees and agents
of the Fund.

Section 3.04. Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian acts in
accordance with (a) Proper Instructions or Special Instructions, as the case
may be, and (b) the terms of this Agreement, the Custodian shall not be
responsible for the title, validity or genuineness of any property, or evidence
of title thereof, received by it or delivered by it pursuant to this Agreement.

ARTICLE IV
SUBCUSTODIANS

The Custodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Interim Subcustodians and Special Subcustodians to act
on behalf of the Fund. (For purposes of this Agreement, all duly appointed
Domestic Subcustodians, Foreign Subcustodians, Interim Subcustodians, and
Special Subcustodians are hereinafter referred to collectively, as
"Subcustodians.")

11
<PAGE> 16
Section 4.01. Domestic Subcustodians. The Custodian may, at any time
and from time to time, appoint any bank as defined in Section 2(a)(5) of the
1940 Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act as a subcustodian for
purposes of holding cash, securities and other assets of the Fund and
performing other functions of the Custodian within the United States (a
"Domestic Subcustodian"); provided, that, the Custodian shall notify the Fund
in writing of the identity and qualifications of any proposed Domestic
Subcustodian at least thirty (30) days prior to appointment of such Domestic
Subcustodian, and the Fund may, in its sole discretion, by written notice to
the Custodian executed by an Authorized Person disapprove of the appointment of
such Domestic Subcustodian. If following notice by the Custodian to the Fund
regarding appointment of a Domestic Subcustodian and the expiration of thirty
(30) days after the date of such notice, the Fund shall have failed to notify
the Custodian of its disapproval thereof, the Custodian may, in its discretion,
appoint such proposed Domestic Subcustodian as its subcustodian.

Section 4.02. Foreign Subcustodians and Interim Subcustodians.

(a) Foreign Subcustodians. The Custodian may, at any time and from
time to time, appoint: (i) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Section 17(f) of the
1940 Act and the rules and regulations thereunder or by order of the Securities
and Exchange Commission exempted therefrom, or (ii) any bank as defined in
Section 2(a)(5) of the 1940 Act meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations thereunder to act
on behalf of the Fund as a subcustodian for purposes of holding cash,
securities and other assets of the Fund and performing other functions of the
Custodian in countries other than the United States of America (a "Foreign
Subcustodian"); provided, that, prior to the appointment of any Foreign
Subcustodian, the Custodian shall have obtained written confirmation of the
approval of the Board of Directors or other governing body or entity of the
Fund (which approval may be withheld in the sole discretion of such Board of
Directors or other governing body or entity) with respect to (i) the identity
and qualifications of any proposed Foreign Subcustodian, (ii) the country or
countries in which, and the securities depositories or clearing agencies, if
any, through which, any proposed Foreign Subcustodian is authorized to hold
securities and other assets of the Fund, and (iii) the form and terms of the
subcustodian agreement to be entered into between such proposed Foreign
Subcustodian and the Custodian. Each such duly approved Foreign Subcustodian
and the countries where and the securities depositories and clearing agencies
through which they may hold securities and other assets of the Fund shall be
listed on Appendix "A" attached hereto, as it may be amended, from time to
time, in accordance with the provisions of Section 9.05(c) hereof. The Fund
shall be responsible for informing the Custodian sufficiently in advance of a
proposed investment which is to be held in a country in which no Foreign
Subcustodian is authorized to act, in order that there shall be sufficient time
for the Custodian to effect the appropriate arrangements with a proposed
foreign subcustodian, including obtaining approval as provided in this Section
4.02(a). The Custodian shall not amend any subcustodian agreement entered into
with a Foreign Subcustodian, or agree to change or permit any changes
thereunder, or waive any rights under such agreement, which materially affect
the Fund's rights or the Foreign Subcustodian's obligations or duties to the
Fund under such agreement, except upon prior approval pursuant to Special
Instructions.

(b) Interim Subcustodians. Notwithstanding the foregoing, in the
event that the Fund shall invest in a security or other asset to be held in a
country in which no Foreign Subcustodian is authorized to act, the Custodian
shall promptly notify the Fund in writing by facsimile transmission or in such
other manner as the Fund and Custodian shall agree in writing of the
unavailability of an

12
<PAGE> 17

approved Foreign Subcustodian in such country; and the Custodian shall, upon
receipt of Special Instructions, appoint any Person designated by the Fund in
such Special Instructions to hold such security or other asset. (Any Person
appointed as a subcustodian pursuant to this Section 4.02(b) is hereinafter
referred to as an "Interim Subcustodian.")

Section 4.03. Special Subcustodians. Upon receipt of Special
Instructions, the Custodian shall, on behalf of the Fund, appoint one or
more banks, trust companies or other entities designated in such Special
Instructions to act as a subcustodian for purposes of: (i) effecting
third-party repurchase transactions with banks, brokers, dealers or other
entities through the use of a common custodian or subcustodian; (ii)
establishing a joint trading account for the Fund and other registered
management investment companies for which Fidelity Management & Research
Company serves as investment adviser, through which the Fund and such other
investment companies shall collectively participate in certain repurchase
transactions; (iii) providing depository and clearing agency services with
respect to certain variable rate demand note securities; and (iv) effecting any
other transactions designated by the Fund in Special Instructions. (Each such
designated subcustodian is hereinafter referred to as a "Special
Subcustodian.") Each such duly appointed Special Subcustodian shall be listed
on Appendix "A" attached hereto, as it may be amended from time to time in
accordance with the provisions of Section 9.05(c) hereof. In connection with
the appointment of any Special Subcustodian, the Custodian shall enter into a
subcustodian agreement with the Special Subcustodian in form and substance
approved by the Fund, provided that such agreement shall in all events comply
with the provisions of the 1940 Act and the rules and regulations thereunder
and the terms and provisions of this Agreement. The Custodian shall not amend
any subcustodian agreement entered into with a Special Subcustodian, or agree
to change or permit any changes thereunder, or waive any rights under such
agreement, except upon prior approval pursuant to Special Instructions.

Section 4.04. Termination of a Subcustodian. The Custodian shall (i)
cause each Domestic Subcustodian and Foreign Subcustodian to, and (ii) use its
best efforts to cause each Interim Subcustodian and Special Subcustodian to,
perform all of its obligations in accordance with the terms and conditions of
the subcustodian agreement between the Custodian and such Subcustodian. In
the event that the Custodian is unable to cause such Subcustodian to fully
perform its obligations thereunder, the Custodian shall forthwith, upon the
receipt of Special Instructions, terminate such Subcustodian with respect to
the Fund and, if necessary or desirable, appoint a replacement Subcustodian in
accordance with the provisions of Section 4.01 or Section 4.02, as the case
may be. In addition to the foregoing, the Custodian (A) may, at any time in
its discretion, upon written notification to the Fund, terminate any Domestic
Subcustodian, Foreign Subcustodian or Interim Subcustodian, and (B) shall,
upon receipt of Special Instructions, terminate any Subcustodian with respect
to the Fund, in accordance with the termination provisions under the
applicable subcustodian agreement.

Section 4.05. Certification Regarding Foreign Subcustodians. Upon
request of the Fund, the Custodian shall deliver to the Fund a certificate
stating: (i) the identity of each Foreign Subcustodian then acting on behalf
of the Custodian; (ii) the countries in which and the securities depositories
and clearing agents through which each such Foreign Subcustodian is then
holding cash, securities and other assets of any Fund; and (iii) such other
information as may be requested by the Fund to ensure compliance with Rule
17f-5 under the 1940 Act.

13
<PAGE> 18

ARTICLE V
STANDARD OF CARE; INDEMNIFICATION

Section 5.01. Standard of Care.

(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and obligations
under this Agreement, and shall be liable to the Fund for all loss, damage and
expense suffered or incurred by the Fund resulting from the failure of the
Custodian to exercise such reasonable care and diligence.

(b) Actions Prohibited by Applicable Law, Etc. In no event shall
the Custodian incur liability hereunder if the Custodian or any Subcustodian
or Securities System, or any subcustodian, securities depository or securities
system utilized by any such Subcustodian, or any nominee of the Custodian or
any Subcustodian (individually, a "Person") is prevented, forbidden or delayed
from performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed, by reason of: (i) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent jurisdiction; or
(ii) any act of God or war or other similar circumstance beyond the control of
the Custodian, unless, in each case, such delay or nonperformance is caused by
(A) the negligence, misfeasance or misconduct of the applicable Person, or (B)
a malfunction or failure of equipment operated or utilized by the applicable
Person other than a malfunction or failure beyond such Person's control and
which could not reasonably be anticipated and/or prevented by such Person.

(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Fund, (i) the Custodian
shall, (ii) the Custodian shall cause any applicable Domestic Subcustodian or
Foreign Subcustodian to, and (iii) the Custodian shall use its best efforts to
cause any applicable Interim Subcustodian or Special Subcustodian to, use all
commercially reasonable efforts and take all reasonable steps under the
circumstances to mitigate the effects of such event and to avoid continuing
harm to the Fund.

(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be without
liability for any action reasonably taken or omitted in good faith pursuant to
the advice of (i) counsel for the Fund, or (ii) at the expense of the
Custodian, such other counsel as the Fund and the Custodian may agree upon;
provided, however, with respect to the performance of any action or omission of
any action upon such advice, the Custodian shall be required to conform to the
standard of care set forth in Section 5.01(a).

(e) Expenses of the Fund. In addition to the liability of the
Custodian under this Article V, the Custodian shall be liable to the Fund for
all reasonable costs and expenses incurred by the Fund in connection with any
claim by the Fund against the Custodian arising from the obligations of the
Custodian hereunder including, without limitation, all reasonable attorneys'
fees and expenses incurred by the Fund in asserting any such claim, and all
expenses incurred by the Fund in connection with any investigations, lawsuits or
proceedings relating to such claim; provided, that the Fund has recovered from
the Custodian for such claim.

14
<PAGE> 19

(f) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by the Fund,
insofar as such loss, damage or expense arises from the performance of
the Custodian's duties hereunder by reason of the Custodian's reliance upon
records that were maintained for the Fund by entities other than the Custodian
prior to the Custodian's employment hereunder.

Section 5.02. Liability of Custodian for Actions of Other Persons.

(a) Domestic Subcustodians and Foreign Subcustodians. The Custodian
shall be liable for the actions or omissions of any Domestic Subcustodian or
any Foreign Subcustodian to the same extent as if such action or omission were
performed by the Custodian itself. In the event of any loss, damage or expense
suffered or incurred by the Fund caused by or resulting from the actions or
omissions of any Domestic Subcustodian or Foreign Subcustodian for which the
Custodian would otherwise be liable, the Custodian shall promptly reimburse the
Fund in the amount of any such loss, damage or expense.

(b) Interim Subcustodians. Notwithstanding the provisions of
Section 5.01 to the contrary, the Custodian shall not be liable to the Fund
for any loss, damage or expense suffered or incurred by the Fund resulting
from the actions or omissions of an Interim Subcustodian unless such loss,
damage or expense is caused by, or results from, the negligence, misfeasance or
misconduct of the Custodian; provided, however, in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to enforce
such rights as it may have against such Interim Subcustodian to protect the
interests of the Fund.

(c) Special Subcustodians. Notwithstanding the provisions of
Section 5.01 to the contrary and except as otherwise provided in any
subcustodian agreement to which the Custodian, the Fund and any Special
Subcustodian are parties, the Custodian shall not be liable to the Fund for any
loss, damage or expense suffered or incurred by the Fund resulting from the
actions or omissions of a Special Subcustodian, unless such loss, damage or
expense is caused by, or results from, the negligence, misfeasance or
misconduct of the Custodian; provided, however, that in the event of any such
loss, damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against any Special Subcustodian to protect
the interests of the Fund.

(d) Securities Systems. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to the Fund for any
loss, damage or expense suffered or incurred by the Fund resulting from the
use by the Custodian of a Securities System, unless such loss, damage or
expense is caused by, or results from, the negligence, misfeasance or
misconduct of the Custodian; provided, however, that in the event of any such
loss, damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against the Securities System to protect the
interests of the Fund.

(e) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian
in connection with the fulfillment of its obligations under this Section 5.02;
provided, however, that such reimbursement shall not apply to expenses
occasioned by or resulting from the negligence, misfeasance or misconduct of
the Custodian.

15
<PAGE> 20

Section 5.03. Indemnification.

(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, the Fund agrees to indemnify and hold harmless the
Custodian and its nominees from all loss, damage and expense (including
reasonable attorneys' fees) suffered or incurred by the Custodian or its
nominee caused by or arising from actions taken by the Custodian in the
performance of its duties and obligations under this Agreement; provided,
however, that such indemnity shall not apply to loss, damage and expense
occasioned by or resulting from the negligence, misfeasance or misconduct of
the Custodian or its nominee. In addition, the Fund agrees to indemnify any
Person against any liability incurred by reason of taxes assessed to such
Person, or other loss, damage or expenses incurred by such Person, resulting
from the fact that securities and other property of the Fund are registered in
the name of such Person; provided, however, that in no event shall such
indemnification be applicable to income, franchise or similar taxes which may
be imposed or assessed against any Person.

(b) Notice of Litigation, Right to Prosecute, Etc. The Fund shall
not be liable for indemnification under this Section 5.03 unless a Person shall
have promptly notified the Fund in writing of the commencement of any
litigation or proceeding brought against such Person in respect of which
indemnity may be sought under this Section 5.03. With respect to claims in
such litigation or proceedings for which indemnity by the Fund may be sought
and subject to applicable law and the ruling of any court of competent
jurisdiction, the Fund shall be entitled to participate in any such litigation
or proceeding and, after written notice from the Fund to any Person, the Fund
may assume the defense of such litigation or proceeding with counsel of its
choice at its own expense in respect of that portion of the litigation for
which the Fund may be subject to an indemnification obligation; provided,
however, a Person shall be entitled to participate in (but not control) at its
own cost and expense, the defense of any such litigation or proceeding if the
Fund has not acknowledged in writing its obligation to indemnify the Person
with respect to such litigation or proceeding. If the Fund is not permitted to
participate or control such litigation or proceeding under applicable law or by
a ruling of a court of competent jurisdiction, such Person shall reasonably
prosecute such litigation or proceeding. A Person shall not consent to the
entry of any judgment or enter into any settlement in any such litigation or
proceeding without providing the Fund with adequate notice of any such
settlement or judgment, and without the Fund's prior written consent. All
Persons shall submit written evidence to the Fund with respect to any cost or
expense for which they are seeking indemnification in such form and detail as
the Fund may reasonably request.

Section 5.04. Investment Limitations. If the Custodian has otherwise
complied with the terms and conditions of this Agreement in
performing its duties generally, and more particularly in connection with the
purchase, sale or exchange of securities made by or for the Fund, the Custodian
shall not be liable to the Fund and the Fund agrees to indemnify the Custodian
and its nominees, for any loss, damage or expense suffered or incurred by the
Custodian and its nominees arising out of any violation of any investment or
other limitation to which the Fund is subject.

Section 5.05. Fund's Right to Proceed. Notwithstanding anything to
the contrary contained herein, the Fund shall have, at its election upon
reasonable notice to the Custodian, the right to enforce, to the extent
permitted by any applicable agreement and applicable law, the Custodian's
rights against any Subcustodian, Securities System, or other Person for loss,
damage or expense caused the Fund by such Subcustodian, Securities System, or
other Person, and shall be entitled to enforce the rights of the Custodian with
respect to any claim against such Subcustodian, Securities System or other
Person, which the Custodian may have as a consequence of any such loss, damage
or expense, if and to the

16
<PAGE> 21
extent that the Fund has not been made whole for any such loss or damage. If
the Custodian makes the Fund whole for any such loss or damage, the Custodian
shall retain the ability to enforce its rights directly against such
Subcustodian, Securities System or other Person. Upon the Fund's election to
enforce any rights of the Custodian under this Section 5.05, the Fund shall
reasonably prosecute all actions and proceedings directly relating to the
rights of the Custodian in respect of the loss, damage or expense incurred by
the Fund; provided that, so long as the Fund has acknowledged in writing its
obligation to indemnify the Custodian under Section 5.03 hereof with respect to
such claim, the Fund shall retain the right to settle, compromise and/or
terminate any action or proceeding in respect of the loss, damage or expense
incurred by the Fund without the Custodian's consent and provided further, that
if the Fund has not made an acknowledgement of its obligation to indemnify, the
Fund shall not settle, compromise or terminate any such action or proceeding
without the written consent of the Custodian, which consent shall not be
unreasonably withheld or delayed. The Custodian agrees to cooperate with the
Fund and take all actions reasonably requested by the Fund in connection with
the Fund's enforcement of any rights of the Custodian. The Fund agrees to
reimburse the Custodian for all reasonable out-of- pocket expenses incurred by
the Custodian in connection with the fulfillment of its obligations under this
Section 5.05 provided, however, that such reimbursement shall not apply to
expenses occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian.

ARTICLE VI
COMPENSATION

The Fund shall compensate the Custodian in an amount, and at such times,
as may be agreed upon in writing, from time to time, by the Custodian and the
Fund.

ARTICLE VII
TERMINATION

Section 7.01. Termination of Agreement. This Agreement shall continue
in full force and effect until the first to occur of: (a) termination by the
Custodian by an instrument in writing delivered or mailed to the Fund, such
termination to take effect not sooner than ninety (90) days after the date of
such delivery; (b) termination by the Fund by an instrument in writing
delivered or mailed to the Custodian, such termination to take effect not
sooner than thirty (30) days after the date of such delivery; or (c)
termination by the Fund by written notice delivered to the Custodian, based
upon the Fund's determination that there is a reasonable basis to conclude that
the Custodian is insolvent or that the financial condition of the Custodian is
deteriorating in any material respect, in which case termination shall take
effect upon the Custodian's receipt of such notice or at such later time as the
Fund shall designate. In the event of termination pursuant to this Section
7.01, the Fund shall make payment of all accrued fees and unreimbursed expenses
within a reasonable time following termination and delivery of a statement to
the Fund setting forth such fees and expenses. The Fund shall identify in any
notice of termination a successor custodian to which the cash, securities and
other assets of the Fund shall, upon termination of this Agreement, be
delivered. In the event that no written notice designating a successor
custodian shall have been delivered to the Custodian on or before the date when
termination of this Agreement shall become effective, the Custodian may deliver
to a bank or trust company doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities and other assets held by the Custodian and all instruments held by
the Custodian relative thereto and all other property held by it under this
Agreement. Thereafter, such bank or trust company shall be the successor of
the Custodian under this Agreement. In the event that securities and other

17
<PAGE> 22

assets remain in the possession of the Custodian after the date of termination
hereof owing to failure of the Fund to appoint a successor custodian, the
Custodian shall be entitled to compensation for its services in accordance with
the fee schedule most recently in effect, for such period as the Custodian
retains possession of such securities and other assets, and the provisions of
this Agreement relating to the duties and obligations of the Custodian and the
Fund shall remain in full force and effect. In the event of the appointment of
a successor custodian, it is agreed that the cash, securities and other
property owned by the Fund and held by the Custodian, any Subcustodian or
nominee shall be delivered to the successor custodian; and the Custodian agrees
to cooperate with the Fund in the execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.

ARTICLE VIII
DEFINED TERMS

The following terms are defined in the following sections:
<TABLE>
<CAPTION>

Term Section
- ---- -------
<S> <C>
Account . . . . . . . . . . . . . . . . . . . . . . . . 2.22
ADRs . . . . . . . . . . . . . . . . . . . . . . . . . 2.06
Authorized Person(s) . . . . . . . . . . . . . . . . . 3.02
Banking Institution . . . . . . . . . . . . . . . . . . 2.12(a)
Business Day . . . . . . . . . . . . . . . . . . . . . Appendix "B"
Bank Accounts . . . . . . . . . . . . . . . . . . . . . 2.21
Distribution Account . . . . . . . . . . . . . . . . . 2.16
Domestic Subcustodian . . . . . . . . . . . . . . . . . 4.01
Foreign Subcustodian . . . . . . . . . . . . . . . . . 4.02(a)
Institutional Client . . . . . . . . . . . . . . . . . 2.03
Interim Subcustodian . . . . . . . . . . . . . . . . . 4.02(b)
Overdraft . . . . . . . . . . . . . . . . . . . . . . . 2.28
Overdraft Notice . . . . . . . . . . . . . . . . . . . 2.28
Person . . . . . . . . . . . . . . . . . . . . . . . . 5.01(b)
Procedural Agreement . . . . . . . . . . . . . . . . . 2.10
Proper Instructions . . . . . . . . . . . . . . . . . . 3.01(a)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22
Securities System . . . . . . . . . . . . . . . . . . . 2.22
Shares . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Special Instructions . . . . . . . . . . . . . . . . . 3.01(b)
Special Subcustodian . . . . . . . . . . . . . . . . . 4.03
Subcustodian . . . . . . . . . . . . . . . . . . . . . Article IV
1940 Act . . . . . . . . . . . . . . . . . . . . . . . Preamble
</TABLE>

18
<PAGE> 23

ARTICLE IX
MISCELLANEOUS

Section 9.01. Execution of Documents, Etc.

(a) Actions by the Fund. Upon request, the Fund shall execute
and deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection with
the performance by the Custodian or any Subcustodian of their respective
obligations under this Agreement or any applicable subcustodian agreement,
provided that the exercise by the Custodian or any Subcustodian of any such
rights shall in all events be in compliance with the terms of this Agreement.

(b) Actions by Custodian. Upon receipt of Proper
Instructions, the Custodian shall execute and deliver to the Fund or to such
other parties as the Fund may designate in such Proper Instructions, all such
documents, instruments or agreements as may be reasonable and necessary or
desirable in order to effectuate any of the transactions contemplated hereby.

Section 9.02. Representative Capacity; Nonrecourse Obligations. A COPY OF
THE ARTICLES OF INCORPORATION OF THE FUND IS ON FILE WITH THE SECRETARY OF THE
STATE OF THE FUND'S FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT
IS NOT EXECUTED ON BEHALF OF THE DIRECTORS OF THE FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE DIRECTORS,
OFFICERS, SHAREHOLDERS OR PARTNERS OF THE FUND INDIVIDUALLY, BUT ARE BINDING
ONLY UPON THE ASSETS AND PROPERTY OF THE FUND. THE CUSTODIAN AGREES THAT NO
SHAREHOLDER, DIRECTOR, OFFICER OR PARTNER OF THE FUND MAY BE HELD PERSONALLY
LIABLE OR RESPONSIBLE FOR ANY OBLIGATIONS OF THE FUND ARISING OUT OF THIS
AGREEMENT.

Section 9.03. Several Obligations of the Fund. WITH RESPECT TO ANY
OBLIGATIONS OF THE FUND ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE OBLIGATIONS ARISING UNDER SECTIONS 2.28, 5.03, 5.05 and ARTICLE
VI HEREOF, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR SATISFACTION OF ANY
OBLIGATION SOLELY TO THE ASSETS AND PROPERTY OF THE FUND TO WHICH SUCH
OBLIGATION RELATES AS THOUGH THE FUND HAD SEPARATELY CONTRACTED WITH THE
CUSTODIAN BY SEPARATE WRITTEN INSTRUMENT.

Section 9.04. Representations and Warranties.

(a) Representations and Warranties of the Fund. The Fund hereby
represents and warrants that each of the following shall be true, correct and
complete at all times during the term of this Agreement: (i) the Fund is duly
organized under the laws of its jurisdiction of organization and is registered
as an closed-end management investment company under the 1940 Act; and (ii) the
execution, delivery and performance by the Fund of this Agreement are (w)
within its power, (x) have been duly authorized by all necessary action, and
(y) will not (A) contribute to or result in a breach of

19
<PAGE> 24
or default under or conflict with any existing law, order, regulation or ruling
of any governmental or regulatory agency or authority, or (B) violate any
provision of the Fund's corporate charter or other organizational document, or
bylaws, or any amendment thereof or any provision of its most recent
Prospectus.

(b) Representations and Warranties of the Custodian. The
Custodian hereby represents and warrants that each of the following shall be
true, correct and complete at all times during the term of this Agreement: (i)
the Custodian is duly organized under the laws of its jurisdiction of
organization and qualifies to act as a custodian to closed-end management
investment companies under the provisions of the 1940 Act; and (ii) the
execution, delivery and performance by the Custodian of this Agreement are (w)
within its power, (x) have been duly authorized by all necessary action, and
(y) will not (A) contribute to or result in a breach of or default under or
conflict with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the
Custodian's corporate charter, or other organizational document, or bylaws, or
any amendment thereof.

Section 9.05. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and accordingly, supersedes as of the effective date of this
Agreement any custodian agreement heretofore in effect between the Fund and the
Custodian.

Section 9.06. Waivers and Amendments. No provision of this Agreement may
be waived, amended or terminated except by a statement in writing signed by the
party against which enforcement of such waiver, amendment or termination is
sought; provided, however: (a) Appendix "A" listing Foreign Subcustodians and
Special Subcustodians approved by the Fund may be amended from time to time to
add or delete one or more Foreign Subcustodians or Special Subcustodians by the
Fund's execution and delivery to the Custodian of an amended Appendix "A", in
which case such amendment shall take effect immediately upon execution by the
Custodian; and (b) Appendix "B" setting forth the procedures relating to the
Custodian's security interest may be amended only by an instrument in writing
executed by the Fund and the Custodian.

Section 9.07. Interpretation. In connection with the operation of this
Agreement, the Custodian and the Fund may agree in writing from time to time on
such provisions interpretative of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. No interpretative or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.

Section 9.08. Captions. Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the parties
hereto.

Section 9.09. Governing Law. Insofar as any question or dispute may arise
in connection with the custodianship of foreign securities pursuant to an
agreement with a Foreign Subcustodian that is governed by the laws of the State
of New York, the provisions of this Agreement shall be construed in accordance
with and governed by the laws of the State of New York, provided that in all
other instances this Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Massachusetts, in each case without
giving effect to principles of conflicts of law.

20
<PAGE> 25

Section 9.10. Notices. Except in the case of Proper Instructions or
Special Instructions, notices and other writings contemplated by this Agreement
shall be delivered by hand or by facsimile transmission (provided that in the
case of delivery by facsimile transmission, notice shall also be mailed postage
prepaid to the parties at the following addresses:

(a) If to the Fund:

c/o Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Gary L. French
Telephone: (617) 570-6556
Telefax: (617) 742-1231

(b) If to the Custodian:

Global Securities Services
Financial Institutions Markets
1211 Avenue of the Americas, 39th Floor
New York, NY 10036
Attn: Division Exc.
Telephone: (212) 789-4141
Telefax: (212) 789-4181

or to such other address as either party may have designated in writing to the
other party hereto.

Section 9.11. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that, subject to the provisions of Section
7.01 hereof, neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
party.

Section 9.12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties.

Section 9.13. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and conditions of
this Agreement and all information provided by each party to the other
regarding its business and operations. All confidential information provided
by a party hereto shall be used by any other party hereto solely for the
purpose of rendering services pursuant to this Agreement and, except as may be
required in carrying out this Agreement, shall not be disclosed to any third
party without the prior consent of such providing party. The foregoing shall
not be applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach of this
Agreement, or that is required to be disclosed by

21
<PAGE> 26

any bank examiner of the Custodian or any Subcustodian, any auditor of the
parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation. The provisions of this Section 9.12 and Sections
9.01, 9.02, 9.03, 9.07, Section 2.28, Section 3.04, Section 7.01, Article V and
Article VI hereof and any other rights or obligations incurred or accrued by
any party hereto prior to termination of this Agreement shall survive any
termination of this Agreement.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.

Fidelity Advisor KOREA FUND, INC. The Chase Manhattan Bank, N.A. Fund, Inc.
By: ______________________ By: _______________________
Name: ______________________ Name: _______________________
Title: ______________________ Title:_______________________

22
<PAGE> 27

APPENDIX "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
Fidelity Advisor Korea FUND, inc.
and The Chase Manhattan Bank, N.A.

Dated as of ______, 1994

The following is a list of Foreign Subcustodians and Special Subcustodians
under the Custodian Agreement dated as of ________, 1994:

A. Special Subcustodians: None.

Hongkong & Shanghai Banking Corp. Ltd., Seoul

<PAGE> 28

B. Foreign Subcustodians:

Country Subcustodian Depository

Fidelity Advisor Korea
Fund, Inc.

By: ____________________

Name: ____________________

Title:____________________

<PAGE> 29

APPENDIX "B" TO THE
CUSTODIAN AGREEMENT BETWEEN

Fidelity Advisor Korea Fund, inc.
and The Chase Manhattan Bank, N.A.

Dated as of ________, 1994

PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST

As security for any Overdrafts (as defined in the Custodian Agreement) of
the Fund, the Fund shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms, circumstances
and conditions set forth in this Appendix "B".

Section 1. Defined Terms. As used in this Appendix "B" the following
terms shall have the following respective meanings:

(a) "Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which the Custodian is closed for business.

(b) "Collateral" shall mean the securities having a fair market value
(as determined in accordance with the procedures set forth in the prospectus
for the Fund) equal to the aggregate of all Overdraft Obligations of the Fund:
(i) identified in any Pledge Certificate executed on behalf of the Fund; or
(ii) designated by the Custodian for the Fund pursuant to Section 3 of this
Appendix B. Such securities shall consist of marketable securities held by
the Custodian on behalf of the Fund or, if no such marketable securities are
held by the Custodian on behalf of the Fund, such other securities designated
by the Fund in the applicable Pledge Certificate or by the Custodian pursuant
to Section 3 of this Appendix B.

(c) "Overdraft Obligations" shall mean the amount of any outstanding
Overdraft(s) provided by the Custodian to the Fund together with all accrued
interest thereon.

(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached to this Appendix "B" as Schedule 1 executed by a duly authorized
officer of the Fund and delivered by the Fund to the Custodian by facsimile
transmission or in such other manner as the Fund and the Custodian may agree
in writing.

(e) "Release Certificate" shall mean a Release Certificate in the form
attached to this Appendix "C" as Schedule 2 executed by a duly authorized
officer of the Custodian and delivered by the Custodian to the Fund by
facsimile transmission or in such other manner as the Fund and the Custodian
may agree in writing.

(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by
facsimile transmission or in such other manner as the Fund and the Custodian
shall agree in writing.

Section 2. Pledge of Collateral. To the extent that any Overdraft
Obligations of the Fund are not satisfied within one (1) Business Day after
receipt by the Fund of a Written Notice requesting security for such

<PAGE> 30

Overdraft Obligation and stating the amount of such Overdraft Obligation, the
Fund shall pledge, assign and grant to the Custodian a first priority security
interest, by delivering to the Custodian, a Pledge Certificate executed by the
Fund describing the applicable Collateral. Such Written Notice may, in the
discretion of the Custodian, be included within or accompany the Overdraft
Notice relating to the applicable Overdraft Obligations.

Section 3. Failure to Pledge Collateral. In the event that the Fund shall
fail: (a) to pay the Overdraft Obligation described in such Written Notice;
(b) to deliver to the Custodian a Pledge Certificate pursuant to Section 2; or
(c) to identify substitute securities pursuant to Section 6 upon the sale or
maturity of any securities identified as Collateral, the Custodian may, by
Written Notice to the Fund specify Collateral which shall secure the
applicable Overdraft Obligation. The Fund hereby pledges, assigns and grants
to the Custodian a first priority security interest in any and all Collateral
specified in such Written Notice; provided that such pledge, assignment and
grant of security shall be deemed to be effective only upon receipt by the
Fund of such Written Notice.

Section 4. Delivery of Additional Collateral. If at any time the
Custodian shall notify the Fund by Written Notice that the fair market
value of the Collateral securing any Overdraft Obligation is less than the
amount of such Overdraft Obligation, the Fund shall deliver to the Custodian,
within one (1) Business Day following the Fund's receipt of such Written
Notice, an additional Pledge Certificate describing additional Collateral. If
the Fund shall fail to deliver such additional Pledge Certificate, the
Custodian may specify Collateral which shall secure the unsecured amount of the
applicable Overdraft Obligation in accordance with Section 3 of this Appendix
B.

Section 5. Release of Collateral. Upon payment by the Fund of any
Overdraft Obligation secured by the pledge of Collateral, the Custodian
shall promptly deliver to the Fund a Release Certificate pursuant to which the
Custodian shall release Collateral from the lien under the applicable Pledge
Certificate or Written Notice pursuant to Section 3 having a fair market value
equal to the amount paid by the Fund on account of such Overdraft Obligation.
In addition, if at any time the Fund shall notify the Custodian by Written
Notice that the Fund desires that specified Collateral be released and: (a)
that the fair market value of the Collateral securing any Overdraft Obligation
shall exceed the amount of such Overdraft Obligation; or (b) that the Fund has
delivered a Pledge Certificate substituting Collateral for such Overdraft
Obligation, the Custodian shall deliver to the Fund, within one (1) Business
Day following the Custodian's receipt of such Written Notice, a Release
Certificate relating to the Collateral specified in such Written Notice.

Section 6. Substitution of Collateral. The Fund may substitute
securities for any securities identified as Collateral by delivery to the
Custodian of a Pledge Certificate executed by the Fund, indicating the
securities pledged as Collateral.

Section 7. Security for Fund Overdraft Obligations. The pledge of
Collateral by the Fund shall secure only the Overdraft Obligations of
the Fund. In no event shall the pledge of Collateral by one Fund be deemed or
considered to be security for the Overdraft Obligations of any other Fund.

Section 8. Custodian's Remedies. Upon (a) the Fund's failure to pay
any Overdraft Obligation of the Fund within thirty (30) days after receipt by
the Fund of a Written Notice demanding security therefore, and (b) one (1)
Business Day's prior Written Notice to the Fund, the Custodian may elect to
enforce its security interest in the Collateral securing such Overdraft
Obligation, by taking title to (at the then prevailing fair market value), or
selling in a commercially reasonable manner, so much of the Collateral as shall
be required to pay such Overdraft Obligation in full. Notwithstanding the
provisions of any applicable law, including, without

<PAGE> 31

limitation, the Uniform Commercial Code, the remedy set forth in the preceding
sentence shall be the only right or remedy to which the Custodian is entitled
with respect to the pledge and security interest granted pursuant to any Pledge
Certificate or Section 3, without limiting the foregoing, the Custodian hereby
waives and relinquishes all contractual and common law rights of set off to
which it may now or hereafter be or become entitled with respect to any
obligations of the Fund to the Custodian arising under this Appendix B to the
Agreement.

IN WITNESS WHEREOF, each of the parties has caused this Appendix to be
executed in its name and behalf on the day and year first above written.

Fidelity Advisor Korea Fund, Inc. The Chase Manhattan Bank, N.A.

By:_____________________________ By:___________________________
Name:___________________________ Name:_________________________
Title:__________________________ Title:________________________

<PAGE> 32

SCHEDULE 1
TO
APPENDIX "B"
PLEDGE CERTIFICATE

This Pledge Certificate is delivered pursuant to the Custodian Agreement
dated as of March 19, 1994 (the "Agreement"), between Fidelity Advisor Korea
Fund, Inc. (the "Fund") and The Chase Manhattan Bank, N.A. (the "Custodian").
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Agreement. Pursuant to [Section 2 or Section
4] of Appendix "B" attached to the Agreement, the Fund hereby pledges, assigns
and grants to the Custodian a first priority security interest in the
securities listed on Exhibit "A" attached to this Pledge Certificate
(collectively, the "Pledged Securities"). Upon delivery of this Pledge
Certificate, the Pledged Securities shall constitute Collateral, and shall
secure all Overdraft Obligations of the Fund described in that certain Written
Notice dated_________, 19___, delivered by the Custodian to the Fund. The
pledge, assignment and grant of security in the Pledged Securities hereunder
shall be subject in all respect to the terms and conditions of the Agreement,
including, without limitation, Sections 7 and 8 of Appendix "B" attached
thereto.

IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to be executed
in its name, on behalf of the Fund this__________day of 19___.

Fidelity Advisor Korea Fund., Inc.

By: ____________________________

Name: ____________________________

Title:____________________________

<PAGE> 33
EXHIBIT "A"
TO
PLEDGE CERTIFICATE

Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
- ------ -------- ----------------- ---------
<S> <C> <C> <C>

</TABLE>
<PAGE> 34
SCHEDULE 2
TO
APPENDIX "B"

RELEASE CERTIFICATE

This Release Certificate is delivered pursuant to the Custodian
Agreement dated as of March 19, 1994 (the "Agreement"), between Fidelity
Advisor Korea Fund, Inc. (the "Fund") and The Chase Manhattan Bank, N.A. (the
"Custodian"). Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Agreement. Pursuant to Section 5
of Appendix "B" attached to the Agreement, the Custodian hereby releases the
securities listed on Exhibit "A" attached to this Release Certificate from the
lien under the (Pledge Certificate dated ,19 or the Written Notice
delivered pursuant to Section 3 of Appendix "B" dated , 19 ).

IN WITNESS WHEREOF, the Custodian has caused this Release Certificate
to be executed in its name and on its behalf this ____ day of 19__.

The Chase Manhattan Bank, N.A.

By: _______________________
Name: _______________________
Title: _______________________

<PAGE> 35
EXHIBIT "A"
TO
RELEASE CERTIFICATE

Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
- ------ -------- ----------------- ---------
<S> <C> <C> <C>

</TABLE>

<PAGE> 1
TRANSFER AGENCY AND SERVICE AGREEMENT

between

FIDELITY ADVISOR KOREA FUND, INC.

and

STATE STREET BANK AND TRUST COMPANY
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Terms of Appointment; Duties of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3. Representations and Warranties of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . 3

4. Representations and Warranties of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . 3

5. Data Access and Proprietary Information . . . . . . . . . . . . . . . . . . . . . . . . . . 4

6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

7. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

8. Covenants of the Fund and the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

11. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

13. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

14. Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

15. Merger of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the day of , 1994, by and between FIDELITY
ADVISOR KOREA FUND, INC., a Maryland corporation, having its principal office
and place of business at 82 Devonshire Street, Boston, Massachusetts 02109,
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").

WHEREAS, the Fund desires to appoint the Bank as its transfer agent, dividend
disbursing agent, custodian of certain retirement plans and agent in connection
with certain other activities, and the Bank desires to accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

1. Terms of Appointment; Duties of the Bank

1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and
issued shares of its common stock, ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection
with any dividend reinvestment plan as set out in the prospectus of
the Fund, corresponding to the date of this Agreement.

1.2 The Bank agrees that it will perform the following services:

(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:

(i) Issue and record the appropriate number of Shares as
authorized and hold such Shares in the appropriate
Shareholder account;

(ii) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;

(iii) Execute transactions directly with broker-dealers
authorized by the Fund who shall thereby be deemed
to be acting on behalf of the Fund.

(iv) Prepare and transmit payment for dividends and
distributions declared by the Fund;

(v) Act as agent for Shareholders pursuant to the
dividend reinvestment and cash purchase plan as
amended from time to time in accordance with
the terms of the

1
<PAGE> 4
agreement to be entered into between
the Shareholders and the Bank.

(vi) Issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at
its option, may issue replacement certificates in
place of mutilated stock certificated upon
presentation thereof and without such indemnity;

(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall:
(i) perform all the customary services of a registrar,
transfer agent, dividend disbursing agent, custodian of
certain retirement plans and agent of the dividend
reinvestment and cash purchase plan as described in Article 1
consistent with those requirements in effect as at the date of
this Agreement. The detailed definition, frequency,
limitations and associated costs (if any) set out in the
attached fee schedule, include but not limited to:
maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, mailing Shareholder reports to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by
federal authorities for all registered Shareholders.

(c) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in
writing between the Fund and the Bank.

2. Fees and Expenses

2.1 For the performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached
hereto. Such fees and out-of-pocket expenses and advances identified
under Section 2.2 below may be changed from time to time subject to
mutual written agreement between the Fund and the Bank.

2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees
to reimburse the Bank at such rate as may be agreed to from time to
time for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred
by the Bank for the items set out in the fee schedule attached
hereto. In addition, any other expenses incurred by the Bank at the
request or with the consent of the

2
<PAGE> 5
Fund, will be reimbursed by the Fund.

3. Representations and Warranties of the Bank

The Bank represents and warrants to the Fund that:

3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.

3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.

3.3 It is registered as a transfer agent under the Securities Exchange
Act of 1934, as amended.

3.4 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.

3.5 All requisite corporate proceedings have been taken to authorized it
to enter into and perform this Agreement.

3.6 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.

4. Representations and Warranties of the Fund

The Fund represents and warrants to the Bank that:

4.1 It is a corporation duly organized and existing and in good standing
under the laws of Maryland.

4.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.

4.3 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.

4.4 It is a closed-end, non-diversified investment company registered
under the Investment Company Act of 1940, as amended.

4.5 To the extent required by federal securities laws a registration
statement under the Securities Act of 1933 has been filed with the
Securities and Exchange Commission, and appropriate state securities
law filings have been or will be made with respect to all Shares of
the Fund being offered for sale; information to the contrary will
result in immediate notification to the Bank.

4.6 It shall make all required filings under federal and state securities
laws.

3
<PAGE> 6
5. Data Access and Proprietary Information

5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of
the Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to
treat all Proprietary Information as proprietary to the Bank and
further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Fund agrees for itself and its
employees and agents:

(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;

(b) to refrain form copying or duplicating in any way the
Proprietary Information;

(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and disposed of such information in accordance with the
Bank's instructions;

(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;

(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;

(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.

Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 5. The obligations of
this Section shall survive any earlier termination of this Agreement.

Each Data Entry Service shall be approved by the Fund prior to the
Bank's reliance on data provided by such service in the

4
<PAGE> 7
performance of the Bank's duties hereunder.

5.2 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank
may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Fund agrees
to make no claim against the Bank arising out of the contents of such
third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES
EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, (such transactions
constituting a "COEFI"), then in such event the Bank shall be
entitled to rely on the validity and authenticity of such instruction
without undertaking any further inquiry as long as such instruction
is undertaken in conformity with security procedures established by
the Bank from time to time.

6. Indemnification

6.1 The Bank shall not be responsible for, and the Fund shall indemnify
and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses
and liability arising out of or attributable to:

(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that
such actions are taken in good faith and without negligence or
willful misconduct.

(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or
warranty of the Fund hereunder.

(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf of
the Fund including but not limited to any previous transfer
agent or registrar.

5
<PAGE> 8
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any Proper Instructions or requests of the
Fund. Proper Instructions shall mean instructions received
from an individual duly authorized by the Fund in writing,
facsimile or in such other manner as may be agreed to from
time to time.

(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop order
or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.

6.2 At any time the Bank may apply to any officer of the Fund for Proper
Instructions, and may consult with legal counsel approved by the Fund
with respect to any matter arising in connection with the services to
be performed by the Bank under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and shall be indemnified
by the Fund for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel. The Bank, its
agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the
Fund, reasonably believed to be genuine and to have been signed by
the proper person or persons, or upon any instruction, information,
data, records or documents provided the Bank or its agents or
subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt
of written notice thereof from the Fund.

6.3 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify the Bank, the Bank shall promptly
notify the Fund of such assertion, and shall keep the Fund advised
with respect to all developments concerning such claim. The Fund
shall have the option to participate with the Bank in the defense of
such claim or to defend against said claim in its own name or in the
name of the Bank. The Bank shall in no case confess any claim or
make any compromise in any case in which the Fund may be required to
indemnify the Bank except with the Fund's prior written consent.

7. Standard of Care

The Bank shall at all times act in good faith and agrees to use due
care in the performance of its services under this Agreement, but
assumes no responsibility and shall not be liable for loss or damage
unless such loss or damage is caused by its negligence, bad faith, or
willful misconduct or that of its

6
<PAGE> 9
employees.

8. Covenants of the Fund and the Bank

8.1 The Fund shall promptly furnish to the Bank the following:

(a) A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.

(b) A copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.

8.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices.

8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940,
as amended, and the Rules thereunder, the Bank agrees that all such
records prepared or maintained by the Bank relating to the services
to be performed by the Bank hereunder are the property of the Fund
and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.

8.4 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out
of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required
by law.

8.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an authorized officer of the
Fund as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person whenever it is advised
by its counsel that it may be held liable for the failure to exhibit
the Shareholder records to such person.

9. Termination of Agreement

9.1 This Agreement may be terminated (1) by the Bank upon one hundred
twenty (120) days written notice to the Fund or (2) by the Fund upon
sixty (60) days written notice to the Bank.

7
<PAGE> 10
9.2 Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund.

10. Assignment

10.1 Except as provided in Section 10.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party.

10.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

10.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc. a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"),
(ii) a BFDS subsidiary duly registered as a transfer agent pursuant
to Section 17A(c)(1), (iii) a legally qualified BFDS affiliate or
(iv) an employee of any of the foregoing entities; provided, however,
that the Bank shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and
omissions.

11. Amendment

This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution
of the Board of Directors of the Fund.

12. Massachusetts Law to Apply

This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth
of Massachusetts.

13. Force Majeure

In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes.

14. Consequential Damages

Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this

8
<PAGE> 11
Agreement or for any consequential damages arising out of any act or
failure to act hereunder.

15. Merger of Agreement

This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.

16. Counterparts

This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

9
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

FIDELITY ADVISORS KOREA FUND, INC.

BY:_______________________________________________________

ATTEST:

__________________________________________________________

STATE STREET BANK AND TRUST COMPANY

BY:_______________________________________________________
Executive Vice President

ATTEST:

__________________________________________________________

<PAGE> 1

ADMINISTRATION AGREEMENT
between
FIDELITY ADVISOR KOREA FUND, INC.
and
FIDELITY SERVICE CO.

AGREEMENT dated as of _____, 1994 between Fidelity Advisor Korea Fund,
Inc., a Maryland corporation (the "Fund"), and FMR Corp., a Massachusetts
corporation, acting through its Fidelity Service Co. (the "Administrator")
division.

WHEREAS, the Fund wishes to employ the services of the Administrator,
with such assistance from the Administrator's affiliated companies as the
latter may provide; and

WHEREAS, the Administrator wishes to provide such services under the
conditions set forth below.

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund and the Administrator agree as follows:

1. Appointment. The Fund hereby appoints and employs the Administrator
and the Administrator accepts the appointment as agent to perform the services
described herein.

2. Fund Administration. Subject to the direction and control of the
Board of Directors of the Fund, the Administrator shall assist in supervising
aspects of the Fund's operation not otherwise supervised by the Fund's
investment manager, investment adviser, sub-investment adviser, transfer agent,
custodian, auditors, counsel or other agents.

To the extent not otherwise the responsibility of, or provided by, the
Fund or other agents of the Fund, the Administrator shall provide: (i) office
space, equipment and facilities (which may be the Administrator's or its
affiliates) for performing administrative services hereunder; (ii)
non-investment related statistical and research data and such other reports,
evaluations, and information as the Fund may request from time to time; (iii)
internal clerical and accounting services; and (iv) stationery and office
supplies. The Administrator shall prepare: (i) to the extent requested by the
Fund, the Fund's Prospectus and Annual and Semi-Annual Reports to Shareholders;
(ii) for execution and filing all federal and state tax returns and required
filings with the Securities and Exchange Commission and state Blue Sky
authorities; and (iii) applications and filings in connection with required
fidelity bonds and other insurances, including directors' and officers'
insurance, as requested by the Fund. The Administrator shall also: (i) keep
and maintain the financial accounts and records of the Fund; and (ii) generally
assist as requested from time to time by the Fund's investment manager, in
other aspects of the Fund's operations, as appropriate, including monitoring
performance of the Fund's other agents.
<PAGE> 2
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act of 1940 (the "1940 Act"), the Administrator hereby agrees that all
records which it maintains with respect to the Fund are the property of the
Fund, and further agrees to surrender promptly to the Fund any of such records
upon the Fund's request. Administrator further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records subject to Rule
31a-1 under the 1940 Act that are maintained by the Administrator.

3. Fund Accounting; Securities Lending, and Trading Desk Services. The
Administrator shall perform the obligations and the services set forth in the
attached schedules upon the terms and conditions hereinafter set forth. The
Administrator shall be responsible for performing as agent, as of the date of
this Agreement, the services described in the following schedules attached
hereto and made a part hereof, as said schedules may be amended from time to
time:

Schedule A: Agent for pricing and bookkeeping.

Schedule B: Agent for securities lending transactions.

Schedule C: Agent for portfolio executions.

Operating procedures and standards to be followed for each function may
be established from time to time by agreement between the Fund and the
Administrator. The above schedules may be amended or deleted, or additional
schedules may be included, as deemed necessary from time to time by agreement
between the Fund and the Administrator. Deletion of any schedule shall be in
accordance with the termination provisions of Paragraph 13 of this Agreement.
Each schedule and any amendments thereto shall be dated and signed by the
parties to this Agreement.

4. Audits, Inspections and Visits. The Administrator shall make
available during regular business hours all records and other data created and
maintained hereunder for reasonable audit and inspection by the Fund, any agent
or person designated by the Fund, or any regulatory agency having authority
over the Fund. Upon reasonable notice by the Fund, the Administrator shall
make available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for reasonable
visits by the Fund, any agent or person designated by the Fund, or any
regulatory agency having authority over the Fund.

5. Appointment of Agents. The Administrator, at its expense, may at any
time or times in its discretion appoint (and may at any time remove) one or
more other parties as Agent to perform any or all of the services specified
hereunder and to carry out such provisions of this Agreement as the
Administrator may from time to time direct; provided, however, that the
appointment of any such Agent shall not relieve the Administrator of any of its
responsibilities or liabilities hereunder.

6. Use of the Administrator's Name. The Fund shall not use the name of
the Administrator in any Prospectus, sales literature or other material
relating to the Fund in a manner not consented to prior to use; provided,
however, that the Administrator shall approve all uses of its name which merely
refer in accurate terms to its appointments, duties or fees hereunder or which
are required by the Securities and Exchange Commission or a state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.

-2-

<PAGE> 3
7. Use of Fund's Name. The Administrator shall not use the name of the
Fund or material relating to the Fund on any forms (including any checks, bank
drafts or bank statements) for other than internal use in a manner not
consented to prior to use, provided, however, that the Fund shall approve all
uses of its name which merely refer in accurate terms to the appointment of the
Administrator hereunder or which are required by the Securities and Exchange
Commission or a state securities commission; and further, provided that in no
event shall such approval be unreasonably withheld.

8. Security. The Administrator represents and warrants that, to the
best of its knowledge, the various procedures and systems which the
Administrator has implemented with regard to the safeguarding from loss or
damage attributable to fire, theft or any other cause (including provision for
twenty-four hours a day restricted access) of the Fund's blank checks,
certificates, records and other data and the Administrator's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate, and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The Administrator shall review such systems and
procedures on a periodic basis and the Fund shall have access to review these
systems and procedures.

9. Insurance. The Administrator shall maintain or shall arrange for
its agents to maintain insurance of the types and in the amounts deemed by it
to be appropriate and shall notify the Fund should any of its insurance
coverage be changed for any reason. Such notification shall include the date
of change and the reason or reasons therefor. The Administrator shall notify
the Fund of any material claims against the Administrator, whether or not they
may be covered by insurance, and shall notify the Fund from time to time as may
be appropriate of the total outstanding claims made by the Administrator under
its insurance coverage. Nothing in this Agreement shall be construed to
relieve an insurer of any obligation to pay claims to the Fund, the
Administrator its agents or other insured party which would otherwise be a
covered claim in the absence of any provision of this Agreement.

10. Indemnification.

A. The Fund shall indemnify and hold the Administrator harmless
against any losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from:

(1) any claim, demand, action or suit brought by any person
other than the Fund, including by a shareholder, which names the
Administrator or its agents and/or the Fund as a party and is
not based on and does not result from the Administrator's
willful misfeasance, bad faith or negligence or reckless
disregard of duties of the Administrator or its agents, and
arises out of or in connection with the performance hereunder;
or

(2) any claim, demand, action or suit (except to the extent
contributed to by the Administrator's willful misfeasance, bad
faith or negligence or reckless disregard of duties) which
results from the negligence of the Fund, or from the
Administrator's acting upon any instruction(s) reasonably
believed by it to have been executed or communicated by any
person duly authorized by the Fund, or as a result of the
Administrator's acting in reliance upon advice reasonably
believed by the Administrator

-3-
<PAGE> 4
or its agents to have been given by counsel for the Fund, or as
a result of the Administrator's or its agents acting in reliance
upon any instrument or stock certificate reasonably believed by
it to have been genuine and signed, countersigned or executed by
the proper person.

B. The Administrator shall indemnify and hold the Fund harmless
against any losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from
any claim, demand, action or suit brought by any person other
than the Administrator, which names the Fund and/or the
Administrator as a party and is based upon and arises out of the
Administrator's willful misfeasance, bad faith or negligence or
reckless disregard of duties in connection with its performance
hereunder.

In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the "Indemnified
Party") shall inform the other party (the "Indemnifying Party") of the relevant
facts known to the Indemnified Party concerning the matter in question. The
Indemnified Party shall use reasonable care to identify and promptly to notify
the Indemnifying Party concerning any matter which presents, or appears likely
to present, a claim for indemnification. The Indemnifying Party shall have the
election of defending the Indemnified Party against any claim which may be the
subject of indemnification or of holding the Indemnified Party harmless
hereunder. In the event the Indemnifying Party so elects, it will so notify
the Indemnified Party and thereupon the Indemnifying Party shall take over
defense of the claim and, if so requested by the Indemnifying Party, the
Indemnified Party shall incur no further legal or other expenses related
thereto for which it shall be entitled to indemnity or to being held harmless
hereunder; provided, however, that nothing herein shall prevent the Indemnified
Party from retaining counsel at its own expense to defend any claim. Except
with the Indemnifying Party's prior written consent, the Indemnified Party
shall in no event confess any claim or make any compromise in any matter in
which the Indemnifying Party will be asked to indemnify or hold the Indemnified
Party harmless hereunder.

11. Acts of God, etc. The Administrator shall not be liable for delays
or errors occurring by reason of circumstances beyond its control, including
but not limited to acts of civil or military authority, national emergencies,
work stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot,
or failure of communication equipment of common carriers or power supply. In
the event of equipment breakdowns beyond its control, the Administrator shall,
at no additional expense to the Fund, take reasonable steps to minimize the
service interruptions and mitigate their effects but shall have no liability
with respect thereto. The Administrator shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment.

12. Amendments. The Administrator and the Fund shall regularly consult
with each other regarding the Administrator's performance of its obligations
and its compensation hereunder. In connection therewith, the Fund shall submit
to the Administrator at a reasonable time in advance of filing with the
Securities and Exchange Commission copies of any amended or supplemented
registration statements (including exhibits) under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and, a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or the services offered by the
Fund. Any change in such material which would require any change in the
Administrator's

-4-
<PAGE> 5
obligations hereunder shall be subject to the Administrator's approval, which
shall not be unreasonably withheld. In the event that a change in such
documents or in the procedures contained therein materially increases the cost
to the Administrator of performing its obligations hereunder, the Administrator
shall be entitled to receive reasonable compensation therefor.

13. Duration, Termination, etc. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally, but
only by written instrument which shall make specific reference to this
Agreement and which shall be signed by the party against which enforcement of
such change, waiver, discharge or termination is sought.

This Agreement shall continue in effect until ________, 1995 and
indefinitely thereafter so long as such continuance is approved at least
annually by vote of the Fund's Board of Directors; provided, however, that this
Agreement may be terminated at any time by six months' written notice given by
the Administrator to the Fund or six months' written notice given by the Fund
to the Administrator; and provided further that this Agreement may be
terminated immediately at any time for cause either by the Fund or by the
Administrator in the event that such cause remains unremedied for a reasonable
period of time not to exceed ninety days after receipt of written specification
of such cause. Any such termination shall not affect the rights and
obligations of the parties under paragraph 10 hereof.

Upon the termination hereof, the Fund shall pay to the Administrator
such compensation as may be due for the period prior to the date of such
termination. In the event that the Fund designates a successor to any of the
Administrator's obligations hereunder, the Administrator shall, at the expense
and direction of the Fund, transfer to such successor all relevant books,
records and other data established or maintained by the Administrator
hereunder. To the extent that the Administrator incurs expenses related to a
transfer of responsibilities to a successor, the Administrator shall be
entitled to be reimbursed for such expenses, including any out-of-pocket
expenses reasonably incurred by the Administrator in connection with the
transfer.

14. Fees. As compensation for the services, facilities and personnel
which the Administrator is to provide or cause to be provided, the Fund shall,
beginning with its commencement of operations, pay to the Administrator an
annual fee, which shall be computed and accrued daily and paid in arrears on
the first business day of every month, at the annual rate of .20% of the
average net assets of the Fund.

For the purpose of determining fees payable to the Administrator, the
value of the net assets of the Fund shall be computed in the manner described
in the Fund's Prospectus. The fee for any partial month under this Agreement
shall be calculated on a proportional basis.

The services of the Administrator provided hereunder are not to be
deemed exclusive and the Administrator shall be free to render similar services
to others and engage in other activities. The Administrator or its affiliates
shall be free to enter other agreements with the Fund for providing additional
services to the Fund which are not covered by this Agreement, and to receive
additional compensation for such services.

15. Expenses. The Administrator shall bear all expenses in connection
with its performance of services hereunder. The Fund will pay, or contract
with persons not parties to this Agreement to pay for, all its expenses other
than those expressly stated to be payable by the Administrator hereunder, which
expenses payable by the Fund shall include, without limitation, (i) interest
and taxes; (ii) brokerage commissions and other costs in connection with the
purchase or sale of securities and other

-5-
<PAGE> 6
investment instruments; (iii) fees and expenses of the Fund's Directors other
than those who are "interested" persons of the Fund, the Investment Manager, or
the Administrator; (iv) legal and audit expenses (other than services provided
by the Administrator); (v) custodian, pricing and bookkeeping, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Fund's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Fund; (viii) all
other expenses incidental to holding meetings of the Fund's shareholders,
including proxy solicitations therefor; (ix) expenses of typesetting
Prospectuses and supplements thereto; (x) expenses of printing and mailing any
notice to existing shareholders; (xi) 50% of the insurance premiums for
fidelity bonds and other coverage to the extent approved by the Board of
Directors; (xii) association membership dues authorized by the Board of
Directors; and (xiii) such nonrecurring or extraordinary expenses as may arise,
including those relating to actions, suits, or proceedings to which the Fund is
a party or to which the Fund's assets are subject and the legal obligation
which the Fund may have to indemnify the Fund's Directors and officers with
respect thereto.

The Administrator has no obligation to reimburse the Fund for (or to
have deducted from its fees) any Fund expense in excess of expense limitations,
if any, imposed by state securities authorities having jurisdiction over the
Fund.

16. Proprietary and Confidential Information. Administrator agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund
and prior, present or potential shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld and will be deemed granted where Administrator may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund. The Fund agrees that any information obtained by the
Administrator, or an affiliate, independently and not from the Fund, shall not
be deemed to be confidential and proprietary.

17. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof. The captions in this
Agreement are included for convenience of reference only and in no way define
or delimit any of the provisions hereof or otherwise affect their construction
or effect. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.

-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.

FIDELITY SERVICE CO.,
a division of FMR CORP.

By: __________________________

Title: _______________________

FIDELITY ADVISOR KOREA
FUND, INC.

By: __________________________

Title: _______________________

-7-

<PAGE> 1
[ROGERS AND WELLS LETTERHEAD]

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, Massachusetts 02109

Ladies and Gentlemen:

Based upon the foregoing, and on such examination of law as we have
deemed necessary, we are of the opinion that:

1. The Fund has been duly incorporated and is validly existing
in good standing under the laws of the State of Maryland.

2. When the Shares have been offered and sold as contemplated in
the Registration Statement and in accordance
<PAGE> 2
Fidelity Advisor Korea
Fund, Inc. 2 October , 1994

Very truly yours,

ROGERS & WELLS

<PAGE> 1

[PIPER & MARBURY LETTERHEAD]

October 24, 1994

Rogers & Wells
200 Park Avenue
New York, New York 10166

Re: Fidelity Advisor Korea Fund, Inc.

Dear Sirs:

We have acted as Maryland counsel to Fidelity Adivsor Korea Fund, Inc.,
a Maryland corporation (the "Company"), in connection with the Company's
Registration Statement on Form N-2, including all amendments or supplements
thereto, filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act ot 1933, as amended (the "Act"), and the Investment
Company Act of 1940, as amended (File Nos. 33-81186 and 811-8608) and the
issuance of shares of the Company's Common Stock, par value of $0.001 per share
(the "Shares"), pursuant to the Registration Statement.

In this capacity, we have examined the Company's charter and by-laws, the
proceedings of the Board of Directors of the Company relating to the issuance
of the Shares and such other statutes, certificates, instruments and documents
relating to the Company and matters of law as we have deemed necessary to the
issuance of this opinion. In such examination, we have assumed the genuineness
of all signatures, the conformity of final documents in all material respects
to the versions thereof submitted to us in draft form, the authenticity of all
documents submitted to us as originals, and the conformity with originals of
all documents submitted to us as copies.

Based upon the foregoing, and limited in all respects to applicable
Maryland law, we are of the opinion and advise you that:

1. The Company has been duly incorporated and is validily existing as a
corporation under the laws of the State of Maryland.

<PAGE> 2
PIPER & MARBURY
Rogers & Wells
October 24, 1994
Page 2

2. The Shares to be issued by the Company pursuant to the Registration
Statement have been duly authorized and, when issued as contemplated in the
Registration Statement, will be validly issued, fully paid and nonassessable.

You may rely upon this opinion in rendering your opinion to the Company
which is to be filed as an exhibit to the Registration Statement. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving our consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
Rules and Regulations of the Commission thereunder.

Very truly yours,

PIPER & MARBURY

<PAGE> 1

[SHIN AND KIM LETTERHEAD]

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, MA 02109
U.S.A.

RE: FIDELITY ADVISOR KOREA FUND, INC.
SEC FILE NO. 33-81186
---------------------------------

Ladies and Gentlemen:

Sincerely yours,

/s/ SHIN & KIM

Shin & Kim

<PAGE> 1

CONSENT OF INDEPENDENT ACCOUNTANTS

PRICE WATERHOUSE LLP
Boston, Massachusetts
October 21, 1994

<PAGE> 1

October , 1994

Fidelity Advisor Korea Fund, Inc.
82 Devonshire Street
Boston, Massachusetts 02109

Ladies and Gentlemen:

Very truly yours,

FIDELITY MANAGEMENT & RESEARCH
COMPANY

-------------------------------
By: Gary L. French
Title: Vice President