Fidelity Japan OTC&Regional Mkts Fd
20 December 1999
FIDELITY JAPAN OTC & REGIONAL MARKETS FUND LIMITED
RECOMMENDED PROPOSALS FOR THE RECONSTRUCTION
OF THE COMPANY AS AN OPEN ENDED FUND
Key features
- Proposed reconstruction of Fidelity Japan OTC & Regional Markets Fund
Limited to provide Shareholders with the opportunity to roll over their
investment into an open ended fund with a similar investment policy -
the Fidelity Funds Emerging Japan Fund, a new sub-fund of Fidelity Funds
SICAV.
- Shareholders can roll all or part of their investment into the Emerging
Japan Sub-fund or elect for shares in the Fidelity Funds US Dollar Cash
Fund, an existing sub-fund of Fidelity Funds SICAV, which can be redeemed
for cash.
- These proposals enable Shareholders to retain an ongoing exposure to the
Japan OTC Market through an open ended fund or to realise their investment
for cash at a price based upon NAV per Share.
- A Circular will be sent to Shareholders shortly outlining these proposals
in full.
Enquiries:
Alex Hammond-Chambers Chairman, Fidelity Japan OTC & 0131 222 9430
Regional Markets Fund Limited
Barbara Powley Fidelity International Limited 01737 836 883
Nicholas Gold ING Barings Limited 0171 767 1000
William Marle
Expected Key Dates:
2000
Latest date for receipt of Forms of
Election from Shareholders Saturday, 29th January
First Extraordinary General Meeting Monday, 31st January
Second Extraordinary General Meeting Friday, 10th March
Payments made under the Redemption Option no later than Friday, 17th March
FIDELITY JAPAN OTC & REGIONAL MARKETS FUND LIMITED
('the Fund' or 'the Company')
RECOMMENDED PROPOSALS FOR THE RECONSTRUCTION
OF THE COMPANY AS AN OPEN ENDED FUND
Introduction
The Company was incorporated in the Cayman Islands on 1st March, 1990 and
is a closed ended investment company listed on the London Stock Exchange.
At the time of incorporation the Directors intended that the future of the
Company should be reviewed after ten years and that proposals for either
the continuation of the Company as a closed ended investment company, its
conversion into an open ended investment company, or its winding-up should
be submitted for the approval of the Shareholders at that time.
The Directors have accordingly reviewed the future of the Company and have
concluded that the interests of the Company and the Shareholders would be
best served if the Company is reconstructed in a manner that allows those
Shareholders who so wish to retain an investment with the same fund manager
and no material change to the investment policy while at the same time
enabling other Shareholders to realise some or all of their investment.
The reconstruction will provide Shareholders with the chance to retain an
equity exposure to the Japan OTC Market through converting their holding in
the Company into a holding in the Emerging Japan Sub-fund, a new sub-fund
being established by Fidelity Funds SICAV to invest in the Japanese OTC
Market, the TSE Mothers Market and other similar markets for emerging
Japanese companies and/or to convert into a holding in the US Dollar Sub-
fund, a sub-fund of Fidelity Funds SICAV investing principally in US Dollar
denominated debt securities and money market instruments.
Shareholders who elect for the US Dollar Sub-fund may also choose, if they
wish, for any or all of the shares they receive to be redeemed for cash at
the net asset value per share on the business day following the date the
proposals become effective (the 'Effective Date').
The proposals are expected, subject to the approval of Shareholders, to
become effective on 10th March, 2000.
The Proposals
The proposals provide for the Company to be put into members' voluntary
liquidation and for the division of the Company's assets (after taking
account of, inter alia, the expenses of the Scheme and the assets to be
retained by the Liquidators to meet the liabilities of the Company) between
two sub-funds of Fidelity Funds SICAV:
- the Emerging Japan Sub-fund, which is a new open ended sub-fund of
Fidelity Funds SICAV that is being established with a similar
investment objective to the Company; and
- a US Dollar Sub-fund of Fidelity Funds SICAV, whose aim is to provide
investors with a relatively high and regular income, where both
capital security and high liquidity are prime considerations, from a
professionally managed portfolio of debt securities and other assets,
with the opportunity to achieve the objective of regular income and
high liquidity.
Shareholders who wish will be able to redeem some or all of their shares
in the US Dollar Sub-fund for cash by electing for the Redemption Option.
Benefits to Shareholders
The proposals include a number of features:
(a) Shareholders wishing to retain an equity exposure to the Japan OTC
Market may elect to invest in the Emerging Japan Sub-fund which will
have substantially the same investment objective, and the same
investment manager, as Fidelity Japan OTC & Regional Markets Fund
Limited and which, as an open-ended investment company, permits
redemption of shares at the option of the investor and at a price close
to the net asset value. If the Japan Smaller Companies Sub-fund Option
applies (as described below), Shareholders may, nevertheless, retain an
equity exposure to smaller Japanese companies.
(b) The US Dollar Sub-fund represents a readily realisable cash
equivalent investment. Shareholders who wish to realise their
investment in the Company may take a cash exit by electing to receive
shares in the US Dollar Sub-fund and for those shares to be redeemed at
the net asset value per share on the business day following the
Effective Date.
(c) No preliminary charge will be levied on any shares issued by Fidelity
Funds SICAV to Shareholders pursuant to the proposals.
(d) Shareholders who elect to convert their investment into shares in the
Emerging Japan Sub-fund or, if the Japan Smaller Companies Sub-fund
Option applies, the Japan Smaller Companies Sub-Fund will not have made
a 'disposal' for the purposes of United Kingdom taxation of capital
gains.
Japan Smaller Companies Sub-fund Option
If the aggregate net asset value of the Ordinary Shares the holders of
which have elected or are deemed to have elected for Emerging Japan Sub-
fund Shares is $25,000,000 or less on the day on which the special
resolutions to be proposed at the First EGM are passed, Fidelity Funds
SICAV may notify the Company by the close of business on that day that it
will not establish the Emerging Japan Sub-fund as part of the proposals but
will instead issue to Shareholders who have not elected to receive US
Dollar Sub-fund Shares in these circumstances, shares in the Japan Smaller
Companies Sub-fund of Fidelity Funds SICAV.
Mechanics of the Proposals
Following the passing of the special resolutions to be proposed at the
First EGM described below, the assets of the Company will be split into two
pools, the Emerging Japan Sub-fund Pool and the US Dollar Sub-fund Pool.
The division will be pro rata to the number of Ordinary Shares whose
holders have, or been deemed to have, elected for each Sub-fund.
The investment portfolios of the two Sub-fund Pools will then be
reorganised, in the period leading up to the Effective Date, so that each
comprises securities of a type that are eligible for transfer into the
Emerging Japan Sub-fund and the US Dollar Sub-fund respectively. The costs
of these reorganisations will be borne by the relevant Sub-fund Pool.
Following the Second EGM, the Liquidators will retain cash and other assets
which they consider sufficient to provide for all outstanding liabilities
of the Company, including the expenses of the Company in relation to the
proposals, any investments that have not been and are not being transferred
to Fidelity Funds SICAV and any other contingencies and creditors. These
assets will be drawn from the Emerging Japan Sub-fund Pool and the US
Dollar Sub-fund Pool pro rata to the number of Ordinary Shares whose
holders have, or been deemed to have, elected for each Sub-fund.
The successor investments
Fidelity Funds SICAV was incorporated in Luxembourg in 1990 and issues a
series of sub-funds investing in a range of equity, bond, cash and balanced
funds denominated in a variety of currencies. Fidelity Funds SICAV is
managed by Fidelity International Limited.
(a) Emerging Japan Sub-fund
This is a new sub-fund that is being established for the initial
purpose of enabling Shareholders to exchange their investment in the
Company for an investment vehicle with a similar investment
objective.
The sub-fund aims to achieve long term capital growth primarily
through investment in equities as well as equity related or debt
instruments traded on the Japanese OTC Market, the TSE Mothers Market
and other similar regulated markets for emerging Japanese companies.
Mr Kenichi Mitzushita, who is the individual who has acted as the
principal portfolio manager for the Company since December, 1996,
will be the individual responsible for the management of the
portfolio of the Emerging Japan Sub-fund.
The sub-fund has been structured to permit investment in the recently
announced Mothers section of the TSE and new markets such as NASDAQ
Japan which are expected to attract companies that might previously
have joined the Japan OTC Market.
The annual management charge will be 1.5 per cent.
(b) US Dollar Sub-fund
This sub-fund was established in September, 1993 and had net assets
on 30th November 1999 of approximately $325 million. The sub-fund
aims to provide investors with a relatively high and regular income
where both capital security and high liquidity are prime
considerations from a professionally managed portfolio of debt
securities and other assets permitted by law, with the opportunity to
achieve the objective of regular income and high liquidity.
The annual management charge is 0.4 per cent.
The annual management charge for the Company is 1.75 per cent.
Management Agreement
The existing Management Agreement between Fidelity International Limited
and the Company will terminate on the Effective Date and Fidelity
International Limited has waived its right to compensation on such
termination.
Further details of the Proposals
(a) Entitlements
Each holder of Ordinary Shares will receive shares in the relevant Sub-fund
or Sub-funds selected, the number of shares to be calculated by dividing
the value of the assets in the relevant pool at the Effective Date by the
relevant issue price. The shares in the Emerging Japan Sub-fund will be
issued at Y1,000 per share and shares in the US Dollar Sub-fund and, if the
Japan Smaller Companies Sub-fund Option applies, shares in the Japan
Smaller Companies Sub-fund, will be issued at their respective net asset
values on the Effective Date.
(b) Redemption of shares
Shareholders electing to redeem US Dollar Sub-fund Shares, under the
Redemption Option, will receive a price equal to the net asset value per
share on the business day following the Effective Date.
(c) Non-returns
Shareholders who do not duly complete and return the Form of Election by
the date specified in the Circular, which is expected to be Saturday, 29th
January 2000, will be deemed to have elected to receive Emerging Japan Sub-
fund Shares, or, if the Japan Smaller Companies Sub-fund Option applies,
shares in the Japan Smaller Companies Sub-fund, in respect of all their
holding of Ordinary Shares.
(d) Implementation
The proposals are conditional, inter alia, on the passing by Shareholders
of the resolutions to be proposed at the First and Second EGMs. If the
proposals are not approved by Shareholders, the Directors are committed to
convene an extraordinary general meeting on or about 1st December, 2000 at
which, in accordance with the Articles, an ordinary resolution will be
proposed to place the Company in voluntary winding up.
(e) The Liquidators
Brendan McMahon and David Pirouet, both of PricewaterhouseCoopers, are the
proposed liquidators of the Company.
Dealings and Settlement
Information on dealings and settlement for both the Company and Sub-funds
will be set out in the Circular to be sent to Shareholders shortly. The
expected key dates are as follows:
Expected Key Dates:
2000
Latest date for receipt of Forms of Election
from Shareholders Saturday, 29th January
First Extraordinary General Meeting Monday, 31st January
Second Extraordinary General Meeting Friday, 10th March
Payments made under the Redemption Option no later than Friday, 17th March
Shareholders' Meetings
(a) First Extraordinary General Meeting
The First Extraordinary General Meeting is expected to be held on Monday,
31st January, 2000. At this meeting, at which all Shareholders are
encouraged to attend and vote, resolutions will be proposed to approve the
Scheme, to make the necessary changes to the Articles and to authorise the
implementation of the Scheme by the Liquidators. The Scheme will not
become effective until the passing of the resolutions to be proposed at the
Second Extraordinary General Meeting. To be passed, the resolutions will
require the approval of at least two thirds of the votes cast by those
Shareholders present in person or by proxy.
(b) Second Extraordinary General Meeting
The Second Extraordinary General Meeting is expected to be held on Friday,
10th March, 2000. At this meeting, at which all Shareholders may attend
and vote, a further resolution will be proposed for the winding-up of the
Company and the appointment of the Liquidators. To be passed, the
resolution will require the approval of at least two thirds of the votes
cast by those Shareholders present in person or by proxy.
ING Barings, which is regulated in the UK by the Securities and Futures
Authority, is acting only for Fidelity Japan OTC & Regional Markets Fund
Limited in connection with these proposals and will not be responsible to
anyone other than Fidelity Japan OTC & Regional Markets Fund Limited for
providing the protections afforded to customers of ING Barings or for
providing advice in relation to these proposals.