The
Asia Pacific
Fund, Inc.
(LOGO)
ANNUAL REPORT
March 31, 1996
(LOGO)
<PAGE>
The Asia Pacific Fund, Inc.
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Contents
The Fund's Management 2
Letter to Shareholders 3
Report of the Investment Manager 5
Portfolio of Investments 15
Statements of Assets and Liabilities 22
Statement of Operations 23
Statement of Cash Flows 24
Statement of Changes in Net Assets 25
Notes to Financial Statements 26
Financial Highlights 31
Independent Auditors' Report 33
Share Price, Net Asset Value and Distribution History 34
Dividend Reinvestment Plan 36
This report, including the financial statements herein, is transmitted to the
shareholders of The Asia Pacific Fund, Inc. for their information. This is
not a prospectus, circular or representation intended for use in the purchase
of shares of the Fund or any securities mentioned in this report.
The Asia Pacific Fund, Inc.
One Seaport Plaza
New York, New York 10292
For information call toll free
(800) 451-6788
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1
<PAGE>
The Asia Pacific Fund, Inc.
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The Fund's Management
Directors
Don G. Hoff, Chairman
David J. Brennan
Robert H. Burns
Olarn Chaipravat
Michael J. Downey
Robert F. Gunia
Douglas Tong Hsu
John A. Morrell
David G. P. Scholfield
Officers
David G. P. Scholfield, President
David J. Brennan, Vice-President
Robert F. Gunia, Vice-President
Eugene S. Stark, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Deborah A. Docs, Assistant Secretary
Investment Manager
Baring International Investment (Far East) Limited
1901 Edinburgh Tower
15 Queen's Road Central
Hong Kong
Administrator
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, New York 10292
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1434
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
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2
<PAGE>
The Asia Pacific Fund, Inc.
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Letter to Shareholders
May 14, 1996
Dear Fellow Shareholders:
I would like to report to you on the performance of our Fund, discuss the
investment environment in the Asia Pacific region, and describe our
opportunities for future growth. During the year ended March 31, the Asia
Pacific Fund's net asset value per share appreciated by $1.32 from $13.55 to
$14.87. Taking into account the distribution of 4(cent) per share in January,
this reflects total return performance on a dividend reinvested basis of 10.1%
for the period. There were no capital gains or net income available for
distribution at the end of the fiscal year. Net unrealized capital gains,
however, at March 31, amounted to approximately $62.9 million.
At March 31, 1995 the Fund's shares stood at a premium to net asset value of
4.2%, with an average premium of 4.0% over the previous quarter. At this fiscal
year-end, the shares were trading at a discount of 4.2%, with the average for
the last quarter being a slight premium of 0.3%. According to published
materials, at March 31 our results compared favorably with the six other New
York Stock Exchange-listed Asian funds, whose aggregate discounts on that date
and for the last quarter were 6.0% and 3.9% respectively.
Notwithstanding the comparative results, your board continues to be concerned
about the share price relative to the net asset value. For the first five years
of the Fund's life there were only two New York Stock Exchange-listed
closed-end funds dedicated to the Asia Pacific region, of which only Asia
Pacific Fund did not invest in Japan. It therefore presented the purest play on
the Hong Kong market for U.S. fund investors. Then, in mid-1992, three more New
York-listed funds were launched and in 1993/94 an additional seven closed-end
funds were issued, being altogether five to invest in the Asia Pacific area
generally and five to invest in the China region. Two of these funds were
exceptionally large, each raising over $800 million. Thus, the Asia Pacific
Fund can no longer expect to command a premium on the basis of scarcity. If in
the future our Fund is to be accorded a superior rating to the group as a
whole, this will have to be justified by outperformance of its peers.
Another development is that closed-end funds generally are experiencing a
trough in the cycle of investor interest. Since late 1994, only one new fund
has been brought to the market. There are, however, clear advantages to a
closed-end structure in less liquid markets. As these are once again recognized
by the investment community, so the appetite for closed-end funds should be
renewed.
The remarkably strong performance of the U.S. stock market in 1995 dwarfed the
returns achieved by the markets of the developing world. When the U.S. domestic
market achieves returns of more than twice those seen in the emerging markets,
as in 1995, it is hardly surprising that less accessible investments should be
relegated until such time as their relative attractiveness is rebalanced. We
believe the likelihood of a reversal in the "rates of return" in favor of the
developing markets is becoming stronger as the year progresses.
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3
<PAGE>
The Asia Pacific Fund, Inc.
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Letter to Shareholders
continued
In summary, one or more of the following should alleviate the discount at which
the Fund's shares are trading relative to net asset value: the maintenance of
strong performance on an absolute and a relative basis; a resurgence of
investor interest in closed-end funds; and a reasonable expectation that
emerging markets will significantly outperform the U.S. domestic market.
Of the world's developing markets, those of Asia have the strongest earnings
growth prospects. They share the crucial components needed for superior market
performance: a well-educated and highly productive work force, well-managed
economies and ratios of public spending to GNP which should be the envy of most
OECD countries. Our outlook for the region's equity markets in the long term
remains positive; in the near term, however, it is one of cautious optimism
which is discussed in more detail on page 14 of this report.
Thank you for being part of our success. We believe our potential for growth
in the Asia Pacific markets continues to be excellent.
Sincerely,
Don G. Hoff
Chairman
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4
<PAGE>
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
Overview
The Fund's fiscal year ended March 31, 1996 has taken on a more positive tone
in Asia. Most markets in which the Fund is invested returned good performances,
particularly during the first and last quarters of the period. The second and
third quarters produced flat returns, as concerns grew about over-heating
economies with inflation picking up and external accounts deteriorating. This
has led to tighter monetary policy in most countries, although some of the
sting was taken out of the process by the knock-on effect of lower interest
rates in the United States. Foreign investor interest was subdued for most of
1995, but returned in a decisive fashion early this year.
The period has been notable for political influence on markets. The sharp fall
in Taiwan in response to intimidation from the People's Republic of China
("China") in the build-up to the presidential election made the biggest
headlines, but the arrest and trial in South Korea of two former presidents
was also a blow to domestic investor sentiment. Dissatisfaction with the new
government in Thailand and a political scandal in India explain, in part, the
relatively poor performances of those markets. On a more optimistic note,
relations between China and the United Kingdom have improved following Hong
Kong's first democratic elections for its Legislative Council. China, however,
remains resolved to disband the present legislature when it assumes sovereignty
of the British colony in July, 1997.
Corporate earnings forecasts weakened overall during the period, as investors
adjusted their expectations in line with the higher cost environment in most
places. Nevertheless, profits still grew generally at double digit rates during
1995, with particularly good results from Korea, Indonesia and The Philippines.
The Investment Manager is expecting average earnings growth of around 15% for
the next twelve months, giving an average price/earnings ratio for the region
of 17 times compared with a ten-year prospective average of almost 20 times.
The Investment Manager believes that valuations, despite having risen in recent
months, are not excessive in the context of such growth.
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5
<PAGE>
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Performance
The Fund appreciated by 10.1% on a net asset value per share and dividend
reinvested basis during the fiscal year ended March 31, 1996. The net asset
values per share at the beginning and end of the fiscal year were $13.55 and
$14.87, respectively.
The net asset value per share performance is illustrated in the chart below.
The table on page 7 shows the stock market performance in U.S. Dollar terms of
the countries in which the Fund's assets are invested.
Net Asset Value Per Share Performance
as of March 31, 1996 -- Dividends Reinvested at Net Asset Value
(CHART)
Note: This information represents the historical net asset value per share
performance of The Asia Pacific Fund, Inc. "Net asset value per share
performance" has been computed by the Investment Manager and, because it does
not reflect market price, is not the same as "total investment return" (see
pages 31 and 32 for a calculation of the latter). This performance information
does not compensate for the dilutive effect of the Fund's three rights
offerings. Past performance is not indicative of future returns.
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6
<PAGE>
The Asia Pacific Fund, Inc.
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Performance of Country Stock Exchange Indices-in U.S. Dollar Terms, during the
Fiscal Year Ended March 31, 1996
<TABLE>
<CAPTION>
Country Quarter Quarter Quarter Quarter
Year
April- July- October- January-
April-
June September December March
March
<S> <C> <C> <C> <C> <C>
Hong Kong +7.1% +4.9% +4.4% +8.8%
+27.6%
India -0.1% -0.4% -13.5% +11.0%
- -4.4%
Indonesia +15.2% -1.5% +3.0% +11.7%
+30.6%
Korea -1.9% +8.9% -11.4% -1.8%
- -7.1%
Malaysia +8.3% -5.5% -1.6% +16.0%
+16.9%
Pakistan -5.8% +3.9% -18.2% +4.6%
- -16.3%
The Philippines +17.1% -6.9% -1.9% +12.2%
+20.0%
Singapore +1.5% -2.0% +10.9% +7.3%
+18.4%
Taiwan -16.0% -12.1% +2.0% -0.4%
- -25.0%
Thailand +14.9% -8.7% -1.4% +0.5%
+4.0%
</TABLE>
The stock exchange indices referred to above are:
Hong Kong -Hang Seng Index
India -Bombay Sensitive Index
Indonesia -Jakarta Composite Index
Korea -Korea Official Stock Price Index
Malaysia -Kuala Lumpur Stock Exchange Composite Index
Pakistan -Karachi Stock Exchange Index
The Philippines -Manila Commercial and Industrial Index
Singapore -Oversea-Chinese Banking Corporation 30 Index
Taiwan -Taiwan Average Weighted Index
Thailand -Stock Exchange of Thailand Index
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7
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Report of the Investment Manager
continued
Country Allocation
During the period under review the most significant changes in allocation were
reductions in Singapore and Korea, while exposure was increased to Hong Kong,
Malaysia and The Philippines. Singapore was reduced because of signs of
deteriorating competitiveness and Korea, because strength in the electronics
sector provided a good opportunity to take profits. The portfolio retains a
significant exposure to Korea despite this decrease. The largest allocation
remains in Hong Kong. This is at an earlier stage in its economic cycle than
the other countries in the region and stands to benefit from a relaxation of
monetary policy in China. The all-important residential property market is
also showing good signs of recovery and valuation remains attractive.
While the Investment Manager remains nervous about the economic excesses in
Malaysia, the level of underweighting was moderated slightly, following signs
that the authorities were moving to address the problem. Both the economic and
corporate environment in The Philippines continue to improve and exposure was
increased to reflect this.
Geographical Breakdown of the Long-Term Investment Portfolio
as of March 31, 1996
(CHART)
as of March 31, 1995
(CHART)
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8
<PAGE>
The Asia Pacific Fund, Inc.
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The Investment Manager's estimates of earnings growth for the various Asia
Pacific countries as set forth below are based on information currently
available and there can be no assurance that this growth will be achieved.
(ICON) Hong Kong
US$118.1 million, 42.8% of the Fund's investment portfolio,
was invested in Hong Kong as of March 31, 1996.
Hong Kong was one of the better performers over the period. Economic
activity has reflected the slowdown in China but, with signs that China
is beginning to relax the austere policy regime that has been in place
since the fall of 1993, Hong Kong is well positioned to take up the
slack. It has benefited from lower U.S. interest rates and the
residential market, which had weakened sharply from its peak in early
1994, stabilized towards the end of 1995. During the last month or so,
both activity and apartment prices have picked up significantly. The
elections for the Legislative Council took place in September and,
although China has reiterated its intention to disband this assembly
once it regains sovereignty in 1997, there has been a noticeable
improvement in Sino-Hong Kong relations since then. The portfolio is
biased towards the residential development companies and regional
traders.
(ICON) India
US$7.1 million, 2.6% of the Fund's investment portfolio,
was invested in India as of March 31, 1996.
The Indian economy has continued to grow strongly, thanks to strong
consumption and investment. The Investment Manager expects GDP to
continue to grow at above 5%. Nevertheless, this has failed to translate
into the stock market and, as a result, there has been a dramatic
contraction in premium, which means an improvement in valuations. This
has, largely, been the result of politics, as India is about to enter a
period of general elections. The key issue in any Indian election is the
level of inflation, because the vast majority of the population spends
most of its income on staples. As a result, the government has squeezed
monetary growth to bring inflation down to below 5%. The Investment
Manager believes that once the election is over this process will
reverse, proving positive for the market. The portfolio is focused on
banking, engineering and resources.
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9
<PAGE>
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
(ICON) Indonesia
US$10.5 million, 3.8% of the Fund's investment portfolio,
was invested in Indonesia as of March 31, 1996.
The economy is estimated to have grown by 8% during 1995 but export
growth has been disappointing, while imports have risen at a rather
faster pace. As a result, the trade and current accounts have both seen
significant deterioration. The rise in imports is partly because of
increased demand for investment-related capital goods, but consumer
goods imports, while remaining a small part of the whole, have also
accelerated. This is a concern and the authorities have announced
measures to encourage export growth and curb domestic credit expansion.
This is all to the good but, recently, there has also been increased
evidence of a return to the sort of corporate relationships that have
obstructed competitiveness in the past. Corporate profits grew strongly
in 1995 and are expected to rise by 20% in 1996 for a price/earnings
ratio of 18 times. The portfolio is balanced between banks, building
materials, consumer goods and telecommunications.
(ICON) Korea
US$21.8 million, 7.9% of the Fund's investment portfolio,
was invested in Korea as of March 31, 1996.
Korea has been a disappointing market. The strong gains of the summer
months gave way to a lengthy period of attrition during which they were
completely reversed. The catalyst for this was the slush fund scandal in
the fall, which developed far beyond most observers' expectations. The
resultant arrest and trial of two former presidents, for corruption and
treason, has been a purging experience which is set to change the
political landscape. Both the economy and the stock market will
ultimately be beneficiaries of a more transparent system, but business
confidence was undoubtedly upset by the worry that the bribery scandal
would spread to a number of corporate leaders. In the event, it has been
contained and the surprisingly good showing of the ruling party, in the
National Assembly elections in April, should improve sentiment. Apart
from this, the investment parameters remain strong. The economy is
slowing and interest rates have fallen sharply, with the three-year bond
yield down from a peak of over 15% to below 11%. Corporate earnings
growth will slow in 1996, after a very strong year in 1995, but a
price/earnings ratio of under 12 times prospective earnings is
historically very low. The Fund's portfolio has introduced exposure to
the banking sector, but is otherwise still biased towards heavyweight
blue chips such as KEPCO and Samsung Electronics.
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10
<PAGE>
The Asia Pacific Fund, Inc.
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(ICON) Malaysia
US$28.5 million, 10.3% of the Fund's investment portfolio,
was invested in Malaysia as of March 31, 1996.
Malaysia's economy has grown at a faster pace than its resources can
sustain and, as a result, the external deficits have ballooned. As with
Indonesia, the deterioration has been partly a result of rising capital
equipment imports, but a significant proportion of these are aimed at
growing Malaysia's infrastructure rather than boosting its capacity to
export. This puts pressure on financing and, for the first time in some
years, foreign investment will have been inadequate to close the
balance. The policy response to this has been firm in recent months,
even if it got off to a slow start, but interest rates have risen and
the currency has been allowed to appreciate. After a period of weakness,
the market has seen good recovery during the first quarter of 1996 but,
at current levels, has fewer attractions. The portfolio is biased
towards infrastructure and the banking sector. The latter has been a
beneficiary of strong domestic demand and improvements to operating
efficiency are offsetting the negative effects of a tighter credit
market.
(ICON) Pakistan
US$0.9 million, 0.3% of the Fund's investment portfolio,
was invested in Pakistan as of March 31, 1996.
The market has been quite volatile, ranging between 1300 and 1900 on the
Karachi Stock Exchange Index. The dominant theme has been politics, with
persistent troubles in Karachi, the country's commercial capital.
Macroeconomic reform continues to be patchy, depending on the prevailing
state of the government's ambivalent relationship with the IMF, and
which is usually influenced by how bountiful foreign exchange reserves
are. Growth, however, is accelerating, and is likely to be in excess of
6% this year due to a bumper cotton crop and strength throughout the
agricultural sector, a sizeable portion of the economy. The portfolio is
focused on resources and telecommunications.
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11
<PAGE>
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
(ICON) The Philippines
US$13.6 million, 4.9% of the Fund's investment portfolio,
was invested in The Philippines as of March 31, 1996.
After a buoyant few months in the spring and early summer, the market
sold off badly in the second half of calendar 1995, as a spurt in
consumer prices was met by sharply higher interest rates. While
initially blamed on food price increases following disruption by
typhoons and flooding, inflation has held up in recent months. This is
partly attributable to price rises caused by government policy, through
expansion of the value added tax and reductions in oil price subsidies,
but increased demand has also played its part. The weak fiscal position
of the government has been a major determinant of the poor investment
record of The Philippines over the last decade, and the determination
being shown by the Ramos Administration in addressing this will be very
beneficial to the country. Foreign investment is returning and the
development of the former U.S. naval base at Subic Bay is proceeding
apace. The improved economic environment is attracting remittances from
the large body of Filipinos working abroad, which has helped to reduce
the external deficit to a relatively low level. Company profits have
been growing strongly and look set to continue doing so. The Investment
Manager is forecasting 20% earnings per share growth on a
price/earnings ratio of 17 times 1996 earnings. The portfolio is
focused on property and infrastructure through electricity generation
and telecommunications.
<ICON> Singapore
US$24.2 million, 8.8% of the Fund's investment portfolio,
was invested in Singapore as of March 31, 1996.
The sharp rises in unit labor costs during the early part of the year
moderated as 1995 progressed, but the strength of the currency, the
shortage of labor and the rising cost of industrial land raise question
marks over Singapore's competitiveness. There is also a disproportionate
reliance on the health of the personal computer industry, with more than
half of its exports related to manufactured electronic equipment. Export
growth slowed from the heady levels of 1994 but did better in the second
half, contributing to the strength of the domestic economy, which grew
by 8.9% over the year. The property market had another good year, which
was reflected in property shares. The Fund's holdings are spread between
the property, banking and ship repair sectors.
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12
<PAGE>
The Asia Pacific Fund, Inc.
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(ICON) Taiwan
US$4.0 million, 1.4% of the Fund's investment portfolio,
was invested in Taiwan as of March 31, 1996.
The Taiwanese market performed badly during the reporting period.
Initial declines in the spring occurred despite strong reported profits
growth, reflecting worries about the bad debt problems in the financial
sector. Economic growth was quite buoyant at the time, but its domestic
component has since succumbed to poor business and consumer confidence
following President Lee Teng Hui's visit to the United States. This met
with heavy criticism from China and shows of military strength on the
mainland, which subsequently developed into the provocative missile
tests in the Taiwan Straits in the weeks leading up to the presidential
election in March. Domestic sentiment was at an extremely low ebb during
this period and large-scale capital flight took place. Subsequent to the
election, which was won decisively by President Lee, both sides have
been making conciliatory noises and there has been some return of
capital and a sharp rally in the stock market. The Investment Manager is
forecasting 12% earnings growth in the current year for a multiple of 20
times.
(ICON) Thailand
US$47.4 million, 17.2% of the Fund's investment portfolio,
was invested in Thailand as of March 31, 1996.
The Thai stock market has been more subdued than most during the period
under review, although the strength of bank shares has allowed the
Fund's investments in Thailand to do considerably better than the
underlying market. The main root of the market's despondency has been
the monetary response to excessive growth, although investor
dissatisfaction with the coalition government has also played its part.
Despite the efforts of the authorities, the economy is still growing
above its sustainable rate; as a result, the central bank has augmented
its tougher policy on interest rates with administrative controls.
Interest rates now appear to have peaked, provided there is no reversal
in the United States, and there is evidence of a slowdown in bank
lending and output. However, the external deficit remains a concern.
Corporate profits had to contend in 1995 not only with the
above-mentioned measures, but also with the damaging effects of severe
flooding towards the end of the year and, in consequence, they grew by
less than most people had expected. The present year should see a
significant improvement in earnings growth and valuation is undemanding
on 15 times prospective earnings, growing at an estimated 18%. The
portfolio is biased towards banks, but also has significant exposure to
energy production and mobile telephones.
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13
<PAGE>
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Outlook
The Investment Manager remains very positive about the benefits that
reunification with China will bring to Hong Kong, while recognizing that, as
the changeover approaches, there are bound to be setbacks which may act as a
temporary depressant on sentiment. However, this is felt to be implicit in the
market's rating, which, at 13 times 1996 earnings, is lower than that of most
other countries in the region. Korea, on a slightly lower multiple, should also
enjoy a recovery now that political sentiment is stabilizing. The Investment
Manager remains cautious about the outlook for Malaysia and Singapore. In the
former, interest rates have further to rise and value is more difficult to
find. In Singapore, the high-cost environment is eating into competitiveness
and the market is not cheap on 20 times earnings.
The profits growth that has accompanied the recovery in Asian markets during
the year under review has left valuation levels little higher than at the
beginning of the period. Domestic monetary constraints in a number of the
countries have slowed earnings growth and, in the absence of any re-rating by
markets, this may well inhibit performance over the next few months. However,
the combination of value and growth offered by the region is likely to attract
further foreign interest. As investors begin to focus on the outlook for 1997,
it is likely that they will anticipate the easier monetary policies that by
then should be in place. This, together with increased demand from rather
more-buoyant OECD economies, should enable earnings to accelerate again. This
is an attractive prospect for the region's stock markets.
Baring International Investment (Far East) Limited
Hong Kong
April 25, 1996
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14
<PAGE>
The Asia Pacific Fund, Inc.
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Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.2%
COMMON STOCKS--94.3%
HONG KONG--41.8%
2,256,000 Cheung Kong Holdings, Ltd. (Real Estate-Developers) $15,899,651
853,000 China Light & Power Co., Ltd. (Utilities) 3,849,696
3,100,000 Guangdong Investment, Ltd. (Conglomerate) 1,964,309
859,000 Henderson Land Development (Real Estate-Developers) 6,026,219
1,851,200 HKR International, Ltd. (Real Estate-Developers) 2,010,873
2,728,000 Hong Kong Telecommunications, Ltd.
(Telecommunications) 5,450,356
956,600 HSBC Holdings, Plc. (Banking) 14,349,618
2,387,000 Hutchinson Whampoa, Ltd. (Conglomerate) 15,063,442
1,940,000 Hysan Development Co., Ltd. (Real Estate-Landlords) 6,259,278
426,000 Jardine Matheson Holdings, Ltd. (Conglomerate) 3,322,800
1,520,000 JCG Holdings, Ltd. (Financial Services) 1,385,749
3,160,000 New World Development Co., Ltd.
(Real Estate-Developers) 14,710,979
1,591,000 Sun Hung Kai Properties, Ltd. (Real Estate-Landlords) 14,247,608
1,212,000 Swire-Pacific, Ltd. "A" (Conglomerate) 10,657,701
601,000 Television Broadcasts, Ltd. (Leisure) 2,211,102
-----------
117,409,381
-----------
INDIA-2.5%
16,050 Bajaj Auto, Ltd. (Automotive) 384,822
250 Bombay Suburban Electric Supply (Utilities) 1,230
63,300 Crompton Greaves (Electrical Goods) 440,023
12,800 Essel Packaging (Packaging) 79,175
100 Garden Silk Mills (Textiles)
85
20,600 Grasim Industries (Textiles) 339,794
100 Great Eastern Shipping (Shipping) 132
100 Gujarat Ambuja Cement (Cement) 1,037
</TABLE>
See Notes to Financial Statements.
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15
<PAGE>
The Asia Pacific Fund, Inc.
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Portfolio of Investments
continued
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
INDIA (continued)
20,500 Hindalco Industries (Aluminium) $688,365
18,200 Hindustan Lever, Ltd. (Household Products) 380,618
4,300 Housing Development Finance (Financial Services) 410,368
81,200 India Cements, Ltd. (Building Materials & Components) 364,742
93,900 Indo Gulf Fertilizers & Chemicals (Chemicals) 145,206
51,500 Indo Rama Synthetics, Ltd. (Textiles) 60,677
44,200 Larsen & Toubro, Ltd. (Machinery & Engineering) 315,063
1,040,000 Modern Syntex (Textiles) 1,164,065
40,900 Nicholas Piramal (Pharmaceutical) 361,414
19,200 Ranbaxy Laboratories, Ltd. (Pharmaceuticals) 373,255
100 Reliance Industries Ltd. (Textiles) 613
36,200 RPG Telecom (Telecommunications) 60,778
5,350 Scici, Ltd. (Shipping) 7,170
124,500 State Bank of India (Banking) 871,867
9,600 Tata Engineering & Locomotive (Automobiles & Trucks) 128,943
59,200 Tata Iron & Steel Co., (Iron & Steel) 345,261
26,900 TVS Suzuki, Ltd. (Automobiles & Trucks) 207,990
-----------
7,132,693
-----------
INDONESIA-3.7%
383,000 Modern Photo Film (Leisure) 2,080,898
1,120,000 Bank Bali (Banking) 2,395,722
70,000 PT Indonesia Satellite (ADR) (Telecommunications) 2,388,750
885,500 Semen Gresik (Building Materials & Components) 3,134,765
472,500 Voksel Electric (Cable Manufacturing) 394,171
-----------
10,394,306
-----------
</TABLE>
See Notes to Financial Statements.
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16
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
KOREA-7.7%
201,000 Cho Hung Bank Co., Ltd. (Banking) $2,569,511
6,686 Dongah Tire Co. (Chemicals) 478,640
65,000 Hanil Bank (Banking) 793,544
106,042 Kookmin Bank (Banking) 2,372,304
5,900 Korea Chemical Co. (Chemicals) 648,642
85,000 Korea Electric Power Corp. (Utilities) 3,314,158
88,000 Pohang Iron & Steel Co. (Iron & Steel) 6,367,274
11,095 Samsung Electro-Mechanics Co. (Electronics) 405,647
2,777(b) Samsung Electro-Mechanics Co. (New)
(Bonus Shrs.) (Electronics) 91,377
31,301 Samsung Electronics Co. (Electronics) 3,681,294
9,433(b) Samsung Electronics Co. (Electronics)
(Bonus Shrs.) 998,469
578 Samsung Electronics Co. (GDR) (Electronics) 33,524
169(b) Samsung Electronics Co. (GDR) (Electronics)
(Bonus Shrs.) 8,822
326 Sejin Co. (Machinery) 4,209
-----------
21,767,415
-----------
MALAYSIA-10.1%
413,000 Ammb Holdings Berhad (Banking) 5,472,903
270 Amsteel Corp. Berhad (Iron & Steel) 205
95,000 Genting Berhad (Conglomerate) 860,562
1,032,500 Land & General Berhad (Conglomerate) 2,736,452
620,000 Malayan Banking Berhad (Banking) 5,787,975
534,000 Resorts World Berhad (Leisure) 3,041,772
650,000 Telekom Malaysia Berhad (Utilities) 5,990,902
722,000 Tenaga Nasional Berhad (Utilities) 3,055,933
220,000 United Engineers Malaysia Berhad (Construction) 1,522,943
-----------
28,469,647
-----------
PAKISTAN-0.3%
226,875 DG Khan Cement (Construction) 131,577
3,050,000 Dhan Fibres (Textiles) 742,921
-----------
874,498
-----------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
17
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Portfolio of Investments
continued
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
THE PHILIPPINES-4.9%
1,375,000 Ayala Land, Inc. "B" (Real Estate-Developers) $2,232,143
878,063 Cebu Shipyards & Engineering Works, Inc. "B"
(Port Services) 100,618
2,450,000 Filinvest Land, Inc. (Real Estate-Developers) 1,146,390
99,178 Jardine Davies, Inc. "B" (Conglomerate) 378,831
415,817 Keppel Philippines Holdings, Inc. "B" (Shipyards) 122,299
536,958 Manila Electric Company "B" (Utilities) 4,737,865
74,000 Philippine Long Distance Telephone (ADR) (Utilities) 3,968,250
283,139 San Miguel Corp. "B" (Beverages) 951,728
-----------
13,638,124
-----------
SINGAPORE-5.4%
1,055,000 DBS Land (Real Estate-Developers) 4,049,184
210,000 Development Bank of Singapore, Ltd. (Banking) 2,582,181
180,000 Overseas-Chinese Banking Corp., Ltd. (Banking) 2,417,996
823,000 Straits Steamship Land, Ltd. (Real Estate-Landlords) 2,772,678
345,600 United Overseas Bank, Ltd. (Banking) 3,488,056
-----------
15,310,095
-----------
TAIWAN-1.0%
223,000 Formosa Growth Fund (Diversified Funds) 2,787,500
-----------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
18
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
THAILAND-16.9%
349,800 Advanced Info Service PCL (Telecommunications) $6,571,748
122,800 Banpu Public Co., Ltd. (Mining) 3,056,615
230,000 Bangkok Bank Co., Ltd. (Banking) 3,099,485
718,750 Bank of Ayudhya, Ltd. (Banking) 4,700,505
1,800,000 Kamrai Tawee Capital Fund (Diversified Funds) 1,623,068
184,000 Land & House Public Co., Ltd.
(Real Estate-Developers) 3,033,848
218,939 Regional Container Lines PCL (Shipping) 2,516,540
370,000 Renown Leatherwears Public Co., Inc.
(Misc. Material & Commodities) 2,082,442
217,500 Shinawatra Computer & Communication (Computers) 5,586,207
75,000 Siam Cement Co., Ltd. (Construction) 3,864,447
141,470 Siam Commercial Bank, Ltd. (Banking) 2,175,599
772,670 Thai Farmers Bank, Ltd. (Banking) 9,065,015
-----------
47,375,519
-----------
Total common stocks
(cost $205,224,159) 265,159,178
-----------
Units WARRANTS(a)-3.2% Value
(Note 1)
HONG KONG
370,240 HKR International, Ltd. (Real Estate-Developers)
Expiring June 2000 @ HKD 10.00 119,695
-----------
SINGAPORE-3.2%
1,486,000 Keppel Corp., Ltd. (Electronics)
Expiring June 1997 @ Sing. $6.00 7,076,442
440,940 United Overseas Bank, Ltd. (Banking)
Expiring June 1997 @ Sing. $3.34 1,864,738
-----------
8,941,180
-----------
Total warrants
(cost $3,323,447) 9,060,875
-----------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
19
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Portfolio of Investments
continued
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note 1)
(000)
<C> <S> <C>
CONVERTIBLE BONDS-0.6%
HONG KONG-0.2%
HKD4,859 HKR International, Ltd. (Real Estate-Developers)
6.00%, 6/26/00 $532,567
-----------
TAIWAN-0.4%
US$1,140 United Micro Electronics (Electronic Components)
1.25%, 6/8/04
(convertible into 547.3469 common shares per
US$1,000 principal amount until 5/29/04) 1,179,900
-----------
Total convertible bonds
(cost $1,806,540) 1,712,467
-----------
Units RIGHTS(a)-0.1% Value
(Note 1)
INDONESIA-0.1%
1,041,000 Great River Industries (Textiles)
Expiring April 1996 160,325
-----------
PAKISTAN
68,062(b) DG Khan Cement (Construction) 2,968
-----------
Total rights 163,293
-----------
Total long-term investments
(cost $210,354,146) 276,095,813
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
20
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note 1)
(000)
<C> <S> <C>
SHORT-TERM INVESTMENT-5.9%
UNITED STATES
Repurchase Agreement
US$16,537 State Street Bank and Trust Co., 4.75%,
dated 3/29/96, due 4/1/96 in the amount of
$16,543,546 (cost $16,537,000; collaterized
by $16,175,000 U.S. Treasury Notes, 6.625% due
3/31/97, value including
accrued interest-$16,871,754) $16,537,000
-----------
Total investments-104.1%
(cost $226,891,146; Note 3) 292,632,813
Liabilities in excess of other assets-(4.1%) (11,576,123)
-----------
Net Assets-100% $281,056,690
-----------
-----------
(a) Non-income producing security.
(b) Fair valued security.
ADR-American Depository Receipt.
GDR-Global Depository Receipt.
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
21
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Statement of Assets and Liabilities
March 31, 1996
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments, at value (cost $226,891,146) $292,632,813
Cash, including foreign currency (cost $11,392,373) 11,384,395
Dividends and interest receivable 751,161
Receivable for investments sold 83,965
Other assets 1,700
------------
Total assets 304,854,034
------------
Liabilities
Loans payable 20,000,000
Deferred Thailand capital gains tax liability 2,862,820
Investment management fee payable 193,592
Interest payable 112,671
Payable for investments purchased 78,401
Foreign withholding taxes payable 65,288
Administration fee payable 60,015
Accrued expenses and other liabilities 424,557
------------
Total liabilities 23,797,344
------------
Net Assets $281,056,690
------------
------------
Net assets comprised:
Common stock, at par $189,033
Paid-in capital in excess of par 219,583,880
------------
219,772,913
Undistributed net investment income 37,113
Accumulated net realized losses on
investment and foreign currency transactions (1,619,564)
Net unrealized appreciation on investments and
foreign currencies 62,866,228
------------
Net assets, March 31, 1996 $281,056,690
------------
------------
Net asset value per share
($281,056,690 / 18,903,279 shares of common
stock issued and outstanding) $ 14.87
------------
------------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
22
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Statement of Operations
Year Ended March 31, 1996
<TABLE>
<CAPTION>
Net Investment Income
Income
<S> <C>
Dividends (net of foreign withholding taxes of $306,258) $ 4,419,636
Interest (net of foreign withholding taxes of $4,466) 446,683
-----------
Total income 4,866,319
-----------
Expenses
Investment management fee 2,001,148
Administration fee 606,964
Custodian's fees and expenses 325,000
Reports to shareholders 320,000
Legal fees and expenses 95,000
Directors' fees 86,000
Transfer agent's fees and expenses 48,000
Registration expenses 37,000
Audit fee and expenses 38,000
Miscellaneous 157,137
-----------
Total operating expenses 3,714,249
Loan interest 112,671
-----------
Total expenses 3,826,920
-----------
Net investment income 1,039,399
-----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions (net of Thailand
capital gains taxes of $424,693) 4,432,021
Foreign currency transactions (173,258)
-----------
4,258,763
-----------
Net change in unrealized appreciation on:
Investments (net of change in deferred foreign
capital gains taxes of $2,690,684) 24,808,151
Foreign currencies 156,712
-----------
24,964,863
-----------
Net gain on investments and foreign currencies 29,223,626
-----------
Net Increase in Net Assets
Resulting From Operations $30,263,025
-----------
-----------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
23
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Statement of Cash Flows
Year Ended March 31, 1996
<TABLE>
<CAPTION>
Increase (Decrease) in Cash (including Foreign Currency)
<S> <C>
Cash flows used for operating activities:
Interest received (net of foreign withholding taxes) $ 421,859
Dividends received (net of foreign withholding taxes) 4,504,468
Operating expenses paid (3,723,912)
Purchase of short-term portfolio investments, net (14,443,000)
Purchase of long-term portfolio investments (112,492,938)
Proceeds from disposition of long-term
portfolio investments 54,487,548
-------------
Net cash used for operating activities (71,245,975)
-------------
Cash flows provided by financing activities:
Increase in loans outstanding 20,000,000
Proceeds from issuance of shares (net of fees
of $2,335,379) 59,941,400
Rights offering costs paid (444,060)
Cash dividends paid (excluding reinvestment of
dividends of $42,842) (713,166)
-------------
Net cash provided by financing activities 78,784,174
-------------
Net realized and unrealized foreign currency losses (16,546)
-------------
Net increase in cash 7,521,653
Cash at beginning of year 3,862,742
-------------
Cash at end of year $11,384,395
-------------
-------------
Reconciliation of Net Increase in Net Assets to Net Cash
(including Foreign Currency) used for Operating Activities
Net increase in net assets resulting from operations $30,263,025
-------------
Increase in investments (75,484,861)
Net realized gain on investment transactions (4,432,021)
Net realized loss on foreign currency transactions 173,258
Net increase in unrealized appreciation (24,964,863)
Decrease in receivable for investments sold 267,386
Decrease in dividends and interest receivable 67,740
Decrease in other assets 1,159
Increase in payable for investments purchased 78,401
Increase in interest payable 112,671
Increase in accrued expenses and other liabilities 2,672,130
-------------
Total adjustments (101,509,000)
-------------
Net cash used for operating activities $(71,245,975)
-------------
-------------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
24
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year ended March 31
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income (loss) $ 1,039,399 $ (4,589)
Net realized gain on investments
and foreign currency transactions 4,258,763 4,269,762
Net change in unrealized appreciation
on investments and foreign currencies 24,964,863 772,545
------------ ------------
Net increase in net assets
resulting from operations 30,263,025 5,037,718
Dividends to shareholders from
net investment income (756,008) (324,404)
Distributions to shareholders from
net realized gains on investment
and foreign currency transactions -- (43,454,408)
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 42,842 2,376,439
Increase in net assets from issuance of
shares pursuant to rights offerings 59,497,340 --
------------ ------------
Total increase (decrease) 89,047,199 (36,364,655)
Net Assets
Beginning of year 192,009,491 228,374,146
------------ ------------
End of year $281,056,690 $192,009,491
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
- ------------------------------------------
25
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Notes to Financial Statements
Note 1 Accounting Policies
The Asia Pacific Fund, Inc. (the "Fund") was incorporated in Maryland on June
17, 1986, as a diversified, closed-end, management investment company. The
Fund's investment objective is to achieve long-term capital appreciation
through investment primarily in equity securities of companies in the Asia
Pacific countries. The Fund had no operations until April 21, 1987, when it
sold 10,000 shares of common stock for $100,000 to Austin Assets Ltd., an
affiliate of Baring International Investment (Far East) Limited (the
"Investment Manager"). Investment operations commenced on May 4, 1987. The
Investment Manager is an indirect, wholly-owned subsidiary of Internationale
Nederlanden Groep N.V.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation
Investments are stated at value. Investments for which market quotations are
readily available are valued at the last reported sales prices. If there is no
sales price or reliable market quotation on the date of valuation, then
investments are valued at the last bid price quoted on such date or at fair
value as determined in good faith by or under the direction of the Fund's Board
of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to ensure the adequacy of the collateral.
If the seller defaults, and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation
The books and records of the Fund are maintained in United States dollars.
Foreign currency amounts are translated into United States dollars on the
following basis:
(i) market value of investment securities, other assets and liabilities -- at
the closing rate of exchange.
(ii) purchases and sales of investment securities, income and expenses -- at
the rate of exchange prevailing on the respective dates of such transactions.
- ------------------------------------------
26
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal year, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at fiscal year end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of portfolio securities sold during
the fiscal year.
Net realized losses on foreign currency transactions of $173,258 represent net
foreign exchange losses from sales and maturities of short-term securities,
holding of foreign currencies, currency gains or losses realized between the
trade and settlement dates on security transactions, and the difference between
the amounts of dividends, interest and foreign taxes recorded on the Fund's
books and the U.S. dollar equivalent amounts actually received or paid. Net
currency gains and losses from valuing foreign currency denominated assets,
other than investment securities, and liabilities at fiscal year end exchange
rates are reflected as a component of unrealized appreciation on investments
and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the level of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability.
Cash Flow Information
The Fund invests in securities and distributes dividends from net investment
income and makes distributions from net realized gains which are paid in cash
or are reinvested at the discretion of shareholders. These activities are
reported in the Statement of Changes in Net Assets and additional information
on cash receipts and cash payments is presented in the Statement of Cash Flows.
Accounting practices that do not affect reporting activities on a cash basis
include, among other things, the carrying of investments at value and
amortizing discounts on debt obligations. Cash, as used in the Statement of
Cash Flows, is the amount reported as "Cash, including foreign currency" in
the Statement of Assets and Liabilities.
Security Transactions and Net Investment Income
Security transactions are recorded on the trade date. Realized and unrealized
gains and losses from security and foreign currency transactions are calculated
on the identified cost basis. Dividend income is recorded on the ex-dividend
date, and interest income is recorded on an accrual basis. Expenses are
recorded on the accrual basis which may require the use of certain estimates
by management.
- ------------------------------------------
27
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Notes to Financial Statements
continued
Dividends and Distributions
Dividends from net investment income, if any, are declared and paid at least
annually. The Fund will distribute at least annually any net capital gains in
excess of net capital loss carryforwards. Dividends and distributions are
recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes
It is the Fund's intention to continue to meet the requirements of the U.S.
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.
Withholding taxes on foreign dividends, interest and capital gains have been
provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates.
Reclassification of Capital Accounts
The Fund accounts for and reports distributions to shareholders in accordance
with the American Institute of Certified Public Accountants' Statement of
Position 93-2: Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. As a result of this Statement, the Fund reclassified amounts to
better disclose the differences between financial statement amounts and
distributions determined in accordance with U.S. federal income tax
regulations. The effect of applying this statement was to decrease
undistributed net investment income by $173,258 and increase accumulated net
realized losses on investments and foreign currency transactions by $173,258
for differences in the treatment for book and tax purposes of certain
transactions involving foreign securities, currencies and withholding taxes.
Net investment income, net realized gains and net assets were not affected by
this change.
- ------------------------------------------
28
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Note 2 Investment Management and
Administration Agreements
The Fund has a management agreement with the Investment Manager and an
administration agreement with Prudential Mutual Fund Management, Inc. (the
"Administrator").
The investment management fee is computed weekly and payable monthly at the
following annual rates: 1.10% of the Fund's average weekly net assets up to
$50 million, 0.90% of such assets between $50 million and $100 million and
0.70% of such assets in excess of $100 million based upon average net assets
at the end of each week. The administration fee is also computed weekly and
payable monthly at an annual rate of 0.25% of the Fund's average weekly net
assets.
Pursuant to the agreements, the Investment Manager provides continuous
supervision of the investment portfolio and the Administrator provides
occupancy and certain clerical and accounting services for the Fund. Both the
Investment Manager and the Administrator pay the cost of compensation of
certain directors and officers of the Fund. The Fund bears all other costs and
expenses.
- -------------------------------------------------------------------------
Note 3 Portfolio Securities
Purchases and sales of investment securities, other than short-term
investments, for the year ended March 31, 1996 aggregated $112,571,339 and
$54,676,735, respectively.
The United States federal income tax basis of the Fund's investments at March
31, 1996 was $227,830,983 and, accordingly, net unrealized appreciation for
federal income tax purposes was $64,801,830 (gross unrealized
appreciation -- $73,064,457; gross unrealized depreciation -- $8,262,627).
For federal income tax purposes, the Fund has a capital loss carryforward at
March 31, 1996 of approximately $1,645,900, which will expire in 2004.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amounts.
- ------------------------------------------
29
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Notes to Financial Statements
continued
Note 4 Borrowings
The Fund has a credit agreement with an unaffiliated bank. The borrowing
limitation under this agreement is $70,000,000. Drawings may be made for
periods of one, two or three months and interest is accrued daily and payable
at the end of the loan period. At March 31, 1996, the Fund had an outstanding
loan of $20,000,000 with interest rates of approximately 5.77% on the first
$18,000,000 and approximately 6.02% on the remaining $2,000,000. The current
loan matures on May 28, 1996.
- -------------------------------------------------------------------------
Note 5 Capital
There are 20 million shares of $0.01 par value common stock authorized. Of the
18,903,279 shares outstanding at March 31, 1996, Baring Asset Management
(Asia), Ltd., an affiliate of the Investment Manager, owned 21,809 shares.
During the years ended March 31, 1996 and 1995, the Fund issued 2,890 and
159,730 shares, respectively, in connection with the reinvestment of dividends
and distributions.
During the year ended March 31, 1996, the Fund issued 4,725,097 shares, in
connection with a rights offering of the Fund's shares. In connection with the
rights offering, shareholders of record on August 21, 1995 were issued one
non-transferable right for each share of common stock owned, entitling
shareholders the opportunity to acquire one newly issued share of common stock
for every three rights held at a subscription price equal to 95% of the lower
of (i) the average of the last reported sales prices of a share of the Fund's
common stock on the New York Stock Exchange on September 15, 1995 and the four
preceding business days or (ii) the net asset value per share as of the close
of business on September 15, 1995. The shares issued pursuant to the rights
offering were issued at $13.18 per share (which was equal to 95% of the Fund's
average market value on September 15, 1995 and the four preceding business
days). Rights offering costs of $444,060 ($0.02 per share) were charged to
paid-in capital in excess of par. Soliciting and dealer-manager fees of
$2,335,379 ($0.12 per share) were charged against the proceeds of the
subscription. Prudential Securities Incorporated, an affiliate of the
Administrator, and its financial advisors earned approximately $500,000 of the
aforementioned commissions with respect to their participation in the offering.
- ------------------------------------------
30
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Financial Highlights
<TABLE>
<CAPTION>
Year ended March 31
Per Share Operating Performance: 1996 1995
<S> <C> <C>
Net asset value, beginning of year $ 13.55 $ 16.29
-------- --------
Net investment income 0.05 --
Net realized and unrealized gain on
investments and foreign currency transactions 1.91 0.38
-------- --------
Total from investment operations 1.96 0.38
-------- --------
Less dividends and distributions:
Dividends to shareholders from net
investment income (0.04) (0.02)
Distributions paid to shareholders from realized
gains on investments and foreign currencies -- (3.10)
-------- --------
Total dividends and distributions (0.04) (3.12)
-------- --------
Capital charge in respect of issuance of shares (0.60) --
-------- --------
Net asset value, end of year $14.87 $13.55
-------- --------
-------- --------
Market value, end of year $14 1/4 $14 1/8
-------- --------
-------- --------
Total investment return (a) 1.16% (3.65%)
-------- --------
-------- --------
Ratios to Average Net Assets:
Expenses (including loan interest expense) 1.58% 2.06%
Expenses (excluding loan interest expense) 1.53% 1.72%
Net investment income 0.43% --
Supplemental Data:
Average net assets (000 omitted) $242,487 $214,527
Portfolio turnover 23% 48%
Net assets, end of year (000 omitted) $281,057 $192,009
Total debt outstanding at year end (000 omitted) $20,000 --
Asset coverage (b) $15,053 --
Average commission rate paid per share $0.0150 N/A
</TABLE>
(a) Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market value on the last day of each fiscal year reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
These calculations do not include brokerage commissions.
(b) Per $1,000 of debt outstanding.
Contained above is selected data for a share of common stock outstanding,
total investment return, ratios to average net assets and other
supplemental data for the years indicated. This information has been
determined based upon information provided in the financial statements and
market price data for the Fund's shares.
See Notes to Financial Statements.
- ------------------------------------------
31
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Financial Highlights
continued
<TABLE>
<CAPTION>
Year ended March 31
Per Share Operating Performance: 1994 1993 1992
<S> <C> <C> <C>
Net asset value, beginning of year $ 13.11 $ 13.23 $ 14.20
-------- -------- --------
Net investment income (loss) (0.05) 0.10 0.10
Net realized and unrealized gain on
investments and foreign currency transactions 7.41 1.83 1.40
-------- -------- --------
Total from investment operations 7.36 1.93 1.50
-------- -------- --------
Less dividends and distributions:
Dividends to shareholders from net
investment income -- (0.09) (0.13)
Distributions paid to shareholders from
realized gains on investments and
foreign currencies (3.30) (1.65) (2.34)
-------- -------- --------
Total dividends and distributions (3.30) (1.74) (2.47)
-------- -------- --------
Capital charge in respect of issuance of shares (0.88) (0.31) --
-------- -------- --------
Net asset value, end of year $16.29 $13.11 $13.23
-------- -------- --------
-------- -------- --------
Market value, end of year $17 3/4 $14 5/8 $15 1/2
-------- -------- --------
-------- -------- --------
Total investment return (a) 44.31% 5.68% 34.37%
-------- -------- --------
-------- -------- --------
Ratios to Average Net Assets:
Expenses (including loan interest expense) 2.37% 2.57% 2.19%
Expenses (excluding loan interest expense) 1.72% 1.93% 1.92%
Net investment income (loss) (0.33%) 0.76% 0.70%
Supplemental Data:
Average net assets (000 omitted) $193,116 $120,112 $119,552
Portfolio turnover 101% 105% 63%
Net assets, end of year (000 omitted) $228,374 $145,647 $116,831
Total debt outstanding at year end
(000 omitted) $ 40,000 $ 26,000 $ 6,822
Asset coverage (b) $ 6,709 $ 6,602 $ 18,126
Average commission rate paid per share N/A N/A N/A
</TABLE>
(a) Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market value on the last day of each fiscal year reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
These calculations do not include brokerage commissions.
(b) Per $1,000 of debt outstanding.
Contained above is selected data for a share of common stock outstanding,
total investment return, ratios to average net assets and other
supplemental data for the years indicated. This information has been
determined based upon information provided in the financial statements and
market price data for the Fund's shares.
See Notes to Financial Statements.
- ------------------------------------------
32
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Independent Auditors' Report
The Shareholders and Board of Directors of
The Asia Pacific Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of The Asia Pacific Fund, Inc. as of
March 31, 1996, the related statements of operations and of cash flows for the
year then ended and of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the
securities owned as of March 31, 1996, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Asia Pacific
Fund, Inc. as of March 31, 1996, the results of its operations, its cash flows,
the changes in its net assets and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
May 13, 1996
- ------------------------------------------
33
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Share Price, Net Asset Value and
Distribution History
<TABLE>
<CAPTION>
Quarter End Closing Price Net Asset Value Dividends and
at Quarter End per Share Distributions
at Quarter End During Quarter
<S> <C> <C> <C>
Financial Year 87/88
June 10 1/4 9.69 --
September 10 3/8 11.36 --
December 4 3/8 6.70 --
March 6 1/4 7.79 --
Financial Year 88/89
June 7 8.74 --
September 6 1/8 8.00 --
December 6 1/4 8.76 0.07
March 9 10.93 --
Financial Year 89/90
June 10 11.79 --
September 15 3/4 14.65 --
December 17 3/4 15.78 0.18
March 13 7/8 15.71 --
Financial Year 90/91
June 13 3/4 16.28 0.66
September 10 11.56 --
December 10 1/8 12.02 0.62
March 13 7/8 14.20 --
Financial Year 91/92
June 12 3/8 13.41 0.65
September 12 5/8 13.31 --
December 12 3/4 12.24 1.82
March 15 1/2 13.23 --
</TABLE>
- ------------------------------------------
34
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
<TABLE>
<CAPTION>
Quarter End Closing Price Net Asset Value Dividends and
at Quarter End per Share Distributions
at Quarter End During Quarter
<S> <C> <C> <C>
Financial Year 92/93
June 16 1/2 15.14 --
September 13 12.68 1.21
December 15 12.46 0.53
March 14 5/8 13.11 --
Financial Year 93/94
June 15 5/8 12.96 1.24
September 18 3/4 15.26 --
December 25 1/2 21.33 2.06
March 17 3/4 16.29 --
Financial Year 94/95
June 17 1/2 14.40 2.37
September 18 1/4 16.23 --
December 13 3/4 13.89 0.75
March 14 1/8 13.55 --
Financial Year 95/96
June 15 1/2 14.68 --
September 13 1/4 14.37 --
December 13 7/8 14.19 0.04
March 14 1/4 14.87 --
</TABLE>
- ------------------------------------------
35
<PAGE>
The Asia Pacific Fund, Inc.
- ---------------------------
Dividend Reinvestment Plan
Shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested in Fund shares (Shares) pursuant to the Fund's
Dividend Reinvestment Plan (the Plan). Shareholders who do not participate in
the Plan will receive all distributions in cash paid by check in United States
dollars mailed directly to the shareholders of record (or if the shares are
held in street or other nominee name, then to the nominee) by the custodian, as
dividend disbursing agent. Shareholders who wish to participate in the Plan
should complete the attached enrollment card or contact the Fund at
(800) 451-6788.
After the Fund declares a dividend or determines to make a capital gains
distribution, if (1) the market price is lower than net asset value, the
participants in the Plan will receive the equivalent in Shares valued at the
market price determined as of the time of purchase (generally, following the
payment date of the dividend or distribution); or if (2) the market price of
Shares on the payment date of the dividend or distribution is equal to or
exceeds their net asset value, participants will be issued Shares at the
higher of net asset value or 95% of the market price.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below.
The Plan Agent's (State Street Bank & Trust Co.) fees for the handling of the
reinvestment of dividends and distributions will be paid by the Fund. There
will be no brokerage commissions charged with respect to shares issued
directly by the Fund. 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 distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal income tax that may be payable on such dividends
or distributions.
The Fund reserves the right to amend or terminate the Plan upon 90 days'
written notice to shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon written notice
to the Plan Agent and will receive certificates for whole Shares and cash for
fractional Shares.
- ------------------------------------------
36
<PAGE>
Why should you consider reinvesting?
- --It's Convenient -- Fund shares are automatically purchased for you.
- --It Saves Money -- Invest at no brokerage cost or at reduced costs.
- --It's Smart -- By regularly reinvesting dividends and capital
gains, you will be following the time-tested investment approach called
"Dollar Cost Averaging", that actually allows you to purchase more
shares when prices are low and less when they are high. Dollar Cost
Averaging does not assure a profit and does not protect against loss
in declining markets. Such a plan involves continuous investment in
securities regardless of fluctuating price levels of such securities
and investors should consider their financial ability to continue
participating in such a plan. Over time the average cost per share is
usually lower than if the entire investment had been made all at once!
- --It's More Efficient -- There's no extra paperwork. You'll regularly
receive an account statement that shows total dividends, date of
investment and number of shares purchased.
- --If your shares are held through a brokerage firm, bank or other nominee,
you should instruct them to participate on your behalf. If they are
unable to accommodate your request, you may wish to register your shares
in your own name, which will enable you to participate directly in
the plan.
Help Your Asia Pacific Fund Shares Grow
One of the easiest -- and smartest -- ways is by choosing to automatically
reinvest your dividends and capital gains. This disciplined investment
approach harnesses the asset building power of compounding that provides
the potential for your money to grow faster.
/ / Yes! Send me a reinvestment brochure.
- ------------------------------------------------------------------------------
Name (Please Print)
- ------------------------------------------------------------------------------
Street City
- ------------------------------------------------------------------------------
State/Zip Code Daytime Telephone
- ------------------------------------------------------------------------------
Financial Adviser, if any
- ------------------------------------------------------------------------------
Firm
- ------------------------------------------------------------------------------
City
- ------------------------------------------------------------------------------
<PAGE>
Asset Building the Easy Way . . .
Reinvest Your Dividends
Call 1-800-451-6788
In the United States
Or Send in This Card
Place
Stamp
Here
STATE STREET BANK & TRUST CO.
P.O. BOX 8200
BOSTON, MA 02266-8200
USA
<PAGE>
SBP (City) Ltd - London - 0171-378 6932
