<PAGE>
Directors
Don G. Hoff, Chairman
David J. Brennan
Robert H. Burns
Olarn Chaipravat
Michael J. Downey
Robert F. Gunia
John A. Morrell
Douglas Tong Hsu
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 LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
The accompanying financial statements as of
September 30, 1996
were not audited and, accordingly, no opinion is
expressed on them.
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.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
For general information on the Fund, please call
(toll-free) Dewe
Rogerson Inc., our shareholders servicing agent
toll-free at:
(888) 4-ASIA-PAC
044901106
The Asia Pacific
Fund, Inc.
- ------------------------------------------------------------
- -------
Semi-Annual Report
September 30, 1996
<PAGE>
- ------------------------------------------------------------
- --------------------
The Asia Pacific Fund, Inc.
As of September 30, 1996 (Unaudited)
- ------------------------------------------------------------
- --------------------
OUR NEW TOLL-FREE LINE:
1-888-4-ASIA-PAC
For further information on the Fund, please call. In
addition, the Fund makes
available monthly portfolio information. If you would like
to receive this
information please call the toll-free number indicated
above.
<TABLE>
Statistics
- -------------------------------------------
<S> <C>
Total Net Assets $273,180,367
Shares Outstanding 18,903,279
Equity and Equivalent
Securities 96.8%(a)
Other 3.2%(a)
</TABLE>
<TABLE>
<CAPTION>
Total Returns
- -------------------------------------------------
<S> <C> <C>
Market
Period Price(b) NAV(c)
6 months ended 9/30/96 (12.3)% (2.8)%
1 Year ended 3/31/96 1.2% 10.1%
3 Years ended 3/31/96 18.8% 71.8%
5 Years ended 3/31/96 99.8% 116.9%
8 Years ended 3/31/96 402.1% 341.4%
</TABLE>
<TABLE>
Other Information
- ------------------------------------------------
<S> <C>
Ticker Symbol APB
Primary Exchange NYSE
Dividend Repurchase Program Yes
- ------------------------------------------------
Footnote section
(a) Expressed as a percentage of total
investments.
(b) 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 period 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.
(c) 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.''
</TABLE>
<TABLE>
<CAPTION>
Portfolio Characteristics
(As of September 30, 1996)
- -----------------------------------------------------
Top Ten Long-Term Holdings
(% of Total Long-Term Investments)
- -----------------------------------------------------
<S> <C>
HSBC Holdings 5.9%
New World Development 5.5%
Cheung Kong Holdings 5.2%
Sun Hung Kai Properties 5.1%
Hutchinson Whampoa 4.8%
Development Bank of Singapore 3.7%
Swire-Pacific, Ltd. ``A'' 3.6%
Formosa Growth Fund 3.1%
Malayan Banking Berhad 2.8%
Resorts World Berhad 2.4%
</TABLE>
<TABLE>
<CAPTION>
(PIE CHART)
- ------------------------------------------------------
Long-Term Country Weightings
(% of Total Long-Term Investments)
- ------------------------------------------------------
<S> <C> <C> <C>
Hong Kong 39.7% The Philippines 5.9%
Malaysia 15.9% Taiwan 5.8%
Singapore 12.3% Indonesia 3.5%
Thailand 8.6% India 1.9%
Korea 6.3% Pakistan 0.1%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------
Sector Breakdown: Top Ten Industries
(% of Long-Term Investments)
- -----------------------------------------------------
<S> <C>
Banking 17.5%
Real Estate - Developers 14.0%
Conglomerates 9.2%
Real Estate - Landlords 8.8%
Utilities 8.6%
Diversified Funds 5.0%
Telecommunications 4.0%
Construction 3.3%
Electronics 3.0%
Leisure 2.7%
</TABLE>
1
<PAGE>
- ------------------------------------------------------------
- --------------------
REPORT OF THE INVESTMENT MANAGER
- ------------------------------------------------------------
- --------------------
OVERVIEW
The momentum behind the strong gains enjoyed by the Asian
markets in the
first quarter of 1996 quickly evaporated in the ensuing
months, with most
markets losing ground in the period under review.
The reasons for the poor markets were threefold. First,
foreign investors,
who had fueled the early 1996 rally, ceased their purchases
as their fears grew
over the outlook for US interest rates. Second, the Asian
economies began to
show signs of slowing. Third, a combination of factors,
including a rise in the
US dollar, a sharp slowdown in the electronics industry and
poorer-than-expected
demand, led to a reduction in corporate earnings forecasts
across the Asia
Pacific region.
PERFORMANCE
The Fund's net asset value per share was $14.87 at March
31, 1996 and $14.45
at September 30, 1996. The New York Stock Exchange prices
for these dates were
$14.25 and $12.50, respectively. The net asset value per
share depreciated by
2.8% over this six-month period.
COUNTRY ALLOCATION
Throughout the period, the Manager has maintained a
substantial weighting in
Hong Kong on the belief that the market will perform
strongly ahead of the
handover by the British to China at midnight on June 30,
1997. The Manager has
made three significant changes in country allocation over
the last six months.
First, the weighting in Taiwan has been increased following
the easing in
tensions between China and Taiwan, and following the recent
increase of Taiwan
in the regional market indices. Second, a reduction in
Thailand on the view that
the country's current economic slowdown will be greater and
more protracted than
investors currently envisage. Third, an increase in Malaysia
as the Manager's
concerns over the country's economic outlook have abated.
Hong Kong
The Hang Seng Index rose 8.6% during the period to close
at 11902. The
majority of this gain was made in the late third quarter,
following the strong
first-half corporate results. Furthermore, sentiment was
helped by the Federal
Reserve Board's inaction in not raising interest rates in
the United States over
the summer; and by China's announcement of its first cut in
interest rates for
over two years, signaling an end to its austerity program.
The focus of the
rally was on China plays (companies with a significant
portion of their profits
or sales coming directly from the mainland), property and
the banking sector.
The Fund benefited from this trend, with the portfolio's
largest holding, HSBC
Holdings, up over 25% during the period, while strong
performances also came
from Sun Hung Kai Properties, New World Development and HKR
International.
The economy has remained weak, with the government's
March forecast of 5% GDP
growth year-on-year now appearing too high. Recent trade
figures --although
improving from earlier in the year --have been
disappointing. Better news is
found with inflation, which is at a nine-year low. Property
prices have shown
signs of firming, as indicated by the strong over-
subscription level of two
recent major residential property launches.
There have been a number of significant political
developments during the
period. The part-sale of Cathay Pacific Airlines to CITIC, a
mainland-backed
investment vehicle, reflected a growing trend of the
mainland wishing to
participate in Hong Kong's success post-1997. Cathay Pacific
has been owned
largely by the Swire group, a traditional British trading
``hong'' (company).
Currently, the selection for the new Chief Executive for
Hong Kong --a post
which will replace the existing Governor's role after the
handover --is taking
place and the winner is likely to reflect the Chinese
authorities' attitudes to
the territory, which the Manager feels will be conciliatory.
The Manager continues to believe the Hong Kong market
remains undervalued,
due largely to concerns over political risk. With the Hong
Kong market trading
on around 14 times earnings, compared to Taiwan, for
example, this divergence is
likely to contract (in Hong Kong's favor). Taiwan must have
similar
2
<PAGE>
risk to Hong Kong but is trading on 20 times earnings. The
Fund is heavily
weighted to the property and banking sectors, while China
plays (companies with
a significant portion of their profits or sales coming
directly from the
mainland) have been added to, as well.
India
The market continued to be weak, largely because of the
ongoing credit
crunch. Foreign investors, who tend to influence the
direction of the market,
are not convinced that the coalition government has the
resolve to address
structural problems. The Manager is also skeptical about
recent measures to
boost liquidity. It is felt that there are better
opportunities elsewhere in the
region and the Manager has been selling out of India.
Indonesia
The Jakarta Stock Exchange Index fell 2.0% during the
period, but the market
held up better than the consensus anticipated. Over the last
six months the
country risk for Indonesia has increased following the death
of President
Suharto's wife, the heart problems of the President himself
and the lack of any
judicial or legal framework (or desire) for the election of
a successor.
Opposition is growing and was reflected in the worst riots
for twenty years in
May following the ousting of the PDI (opposition party)
leader.
Korea
Despite the ruling party's better-than-expected showing
in the April National
Assembly election; an additional hike in the foreign
ownership ceiling from 15%
to 18% on April 1; and a further ceiling expansion on
October 1 to 20%, the
Korea Official Stock Price Index shed 9.7% over the period.
The sharp
deterioration in the economy and, in particular, the trade
balance, has been the
market's driving factor. The Central Bank has responded by
allowing the Won to
depreciate by over 5% against the US dollar so far this year
in order to
maintain export competitiveness. The Manager believes this
policy to be
misguided and feels that Korean exports will only improve
when global demand
improves for its three largest (heavily cyclical) export
industries of
petrochemicals, steels and electronics.
Malaysia
The Kuala Lumpur Composite Index registered an
unimpressive performance in
the period, dropping 1.2%. The Second Section, however --up
18.7% over the six
months --enjoyed most of the activity, with local investors
speculating heavily
on small, theme-driven stocks. Exceptions to the above trend
were found in two
of the Fund's blue chip Malaysian holdings, United Engineers
and Sime Darby,
both of which performed relatively well.
Previous concerns over the country's current account
deficit declined as rate
rises, enacted earlier in the year, began to take effect.
These were reflected
in the GDP figures slowing to 8.4% year-on-year in the first
half of 1996, down
from 9.2% year-on-year in the fourth quarter of 1995. In
turn, the deceleration
in import growth outpaced that of the export slowdown,
leading to a sharp
improvement in the trade numbers. The current account
deficit is forecast to
fall to 5.8% year-on-year in 1996, down from last year's
level of 8.3%
year-on-year.
Pakistan
The market has been marred by political uncertainty. The
Bhutto government is
getting weaker by the day, and the economy looks precarious,
especially the
Rupee, which has devalued from 34 to the US dollar to over
40. The Manager has
only a residual exposure to the market.
The Philippines
The Philippine stock market rose 9.3% over the period.
This strong
performance, however, masks the volatility of the market,
which saw a rise of
12.9% in the second quarter of 1996 and a fall of 3.2% in
the third quarter. The
property sector --in which the Fund is invested through
Ayala Land --and banking
sector led the rally.
The economic recovery of the country continued; year-on-
year GNP grew 7.1% in
the first half of 1996, with the second quarter rate at
7.7%. This was primarily
due to strong domestic production, particularly in the
agricultural sector,
combined with the strong inflow of foreign earnings from
Filipino nationals
abroad. Inflation fell from 11.3% year-on-year in
3
<PAGE>
April to 7.9% year-on-year in August. The trade deficit,
however, has worsened
as imports outpaced exports. Demand for capital equipment
was primarily
responsible for the acceleration of imports.
Singapore
The Straits Times Industrial Index fell 8.8% during the
period. Pressures,
both at the economic and corporate level, have risen in
1996. Exports also
slowed dramatically, although this was largely due to the
global slowdown of the
electronics industry, which accounts for almost half of
Singapore's total
manufacturing output. Corporate earnings estimates for
Singapore have been
reduced from 15% to 10% on a lower level of activity in the
stock market,
banking and property industries. The latter has been
impacted by the
government's measures, early in the second quarter, to curb
speculative activity
in the property market. The market's primary exposure to
these industries,
combined with continued wage cost pressures, means that the
outlook for
Singaporean equities remains dull. Finally, the hoped for
recovery in the
shipyard sector --to which the Fund has exposure via Keppel
Corporation --failed
to materialize, leading the stock to be a negative
contributor.
Thailand
The Stock Exchange of Thailand Index fell 14.8% over the
period, with the
decline accelerating in the third quarter (-11.9%). Earlier,
hopes of a recovery
were crushed when investors began losing confidence in the
authorities' ability
to manage the economy. It is now apparent that the Bank of
Thailand missed its
opportunity to reduce rates earlier in the year and that the
high rates are
impacting negatively both corporate profits and economic
growth.
The political scene has been in turmoil for much of the
year. Events
culminated in September with the resignation of Prime
Minister Banharn, followed
by the dissolution of Parliament on September 27. The next
election is due to
take place on November 15 and, if a Democrat-led coalition
were to form the next
government, settlement in the short term would improve
sharply. However, the
full effects of the slowdown have yet to be felt and the
economic damage caused
in recent quarters will take time to be worked out of the
system; therefore, any
post-election recovery is likely to be short-lived.
Taiwan
Over the period under review, the Taiwan Weighted Index
rose 29.6%, having
rallied strongly in the April-June quarter (+30.3). The
rally came in response
to improved relations with China and news that Morgan
Stanley would include
Taiwan in two of its regional indices. The economy, however,
has remained
sluggish in the period, although GDP did rise to 5.4% year-
on-year in the second
quarter, up from 5.1% year-on-year in the first quarter. The
Central Bank has
attempted to stimulate growth by cutting the reserve
requirement no fewer than
five times this year. Nevertheless, money supply has
remained slow, with M2 in
August at 8.4%, below the government target of 9-14%. The
trade surplus
continues to remain healthy, although this trend has been
driven by import
slowdown rather than export strength.
OUTLOOK
The markets are, in aggregate, inexpensive compared with
their historic
trading ranges. Furthermore, most South East Asian markets
are at, or close to,
the top of their interest rate cycles, while the Greater
China sub-region (PRC,
Hong Kong, Taiwan) is already at the start of a new business
cycle. Thus,
earnings are less likely to disappoint consensus forecasts
in the former markets
and could increasingly surprise on the upside in the latter.
Assuming that
domestic political concerns are largely discounted already,
the risks to Asia
are mainly external, for example, an overly strong US dollar
or a surprisingly
strong oil price.
The Asia Pacific region remains one of the world's high-
quality growth
stories. The current problems of the region are short-term
and cyclical rather
than structural and secular. As China, Europe and Japan
recover, Asian trade
will reaccelerate, foreign direct investment will be
sustained and Asian
economic and earnings growth will remain at a premium to
that of the Western
World.
Baring International Investment (Far East) Limited
4
<PAGE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Portfolio of Investments
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------
Value
Shares Description (Note 1)
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS--98.5%
Equities and Equivalents--98.3%
Common Stocks--95.5%
Hong Kong--38.9%
1,818,000 Cheung Kong Holdings, Ltd. $ 13,988,051
(Real Estate-Developers)
762,000 China Light & Power Co., Ltd. 3,547,348
(Utilities)
2,000,000 Cosco Pacific, Ltd. ........ 1,703,610
(Shipping)
850,000 Guangshen Railway(a) ....... 327,003
(Transportation)
180,000 Hang Seng Bank, Ltd. ....... 1,913,030
(Banking)
3,440,000 Hong Kong Telecommunications,
Ltd. ..................... 6,227,774
(Telecommunications)
1,156,000 Hong Kong Land Holdings, Ltd. 2,693,480
(Real Estate-Landlords)
856,600 HSBC Holdings, Plc. ........ 15,895,579
(Banking)
1,922,000 Hutchinson Whampoa, Ltd. ... 12,924,183
(Conglomerate)
1,736,000 Hysan Development Co., Ltd. 5,432,647
(Real Estate-Landlords)
1,359,000 JCG Holdings, Ltd. ......... 1,221,379
(Misc. Financial Services)
2,828,000 New World Development Co.,
Ltd.(a) .................. 14,847,448
(Real Estate-Developers)
1,290,000 Sun Hung Kai Properties, Ltd. 13,720,565
(Real Estate-Developers)
1,085,000 Swire-Pacific, Ltd. ``A'' 9,716,188
(Conglomerate)
537,000 Television Broadcasts, Ltd. 1,996,450
(Media) ------------
106,154,735
------------
India--1.9%
16,050 Bajaj Auto, Ltd. ........... 450,773
(Automotive)
250 Bombay Suburban Electric
Supply .................... 1,211
(Utilities)
48,800 Crompton Greaves ........... 226,889
(Electrical Goods)
12,800 Essel Packaging ............ 46,676
(Packaging)
100 Garden Silk Mills .......... 52
(Textiles)
18,800 Grasim Industries .......... $ 205,403
(Textiles)
100 Great Eastern Shipping ..... 99
(Shipping)
100 Gujarat Ambuja Cement ...... 825
(Cement)
23,850 Hindalco Industries(a) ..... 459,940
(Aluminum)
14,000 Hindustan Lever, Ltd.(a) ... 321,431
(Household Products)
45,200 Hindustan Petroleum ........ 401,919
(Household Products)
4,300 Housing Development Finance 277,269
(Misc. Financial Services)
40,600 India Cements, Ltd. ........ 136,662
(Building Materials &
Components)
60,500 Indian Petrochem ........... 188,797
(Chemicals)
28,300 Indian Rayon ............... 281,302
(Textiles)
246,600 Indo Gulf Fertilizers &
Chemicals ................. 243,833
(Chemicals)
51,500 Indo Rama Synthetics, Ltd. 45,505
(Textiles)
44,200 Larsen & Toubro, Ltd. ...... 287,641
(Machinery & Engineering)
320,000 Modern Syntex .............. 251,332
(Textiles)
6,400 Ranbaxy Laboratories, Ltd. 109,195
(Pharmaceuticals)
100 Reliance Industries, Ltd. 534
(Textiles)
14,100 RPG Telecom ................ 18,391
(Telecommunications)
5,350 Scici, Ltd.(a) ............. 4,802
(Shipping)
58,800 State Bank of India ........ 416,878
(Banking)
59,300 Sterlite Industries(a) ..... 312,302
(Capital Goods)
9,600 Tata Engineering & Locomotive 120,034
(Automobiles & Trucks)
2,200 Tata Iron & Steel Co. ...... 10,583
(Iron & Steel)
</TABLE>
See Notes to
Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
Value
Shares Description (Note 1)
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
India (cont'd.)
40,300 TVS Suzuki, Ltd. ........... $ 414,870
(Automobiles & Trucks) ------------
5,235,148
------------
Indonesia--3.5%
2,082,000 Great River Industry(a) .... 1,031,581
(Textiles)
383,000 Modern Photo Film .......... 1,113,852
(Consumer Products)
1,120,000 PT Bank Bali ............... 2,316,243
(Banking)
70,000 PT Indonesia Satellite (ADR) 2,327,500
(Telecommunications)
885,500 Semen Gresik ............... 2,632,464
(Building Materials & ------------
Components)
9,421,640
------------
Korea--6.2%
201,000 Cho Hung Bank Co., Ltd. .... 2,190,073
(Banking)
6,686 Dongah Tire Co.(a) ......... 508,330
(Auto Parts)
65,000 Hanil Bank ................. 621,671
(Banking)
106,042 Kookmin Bank ............... 1,887,188
(Banking)
5,900 Korea Chemical Co. ......... 482,143
(Chemicals)
85,000 Korea Electric Power Corp. 2,809,322
(Utilities)
88,000 Pohang Iron & Steel Co., Ltd. 4,847,458
(Iron & Steel)
11,095 Samsung Electro-Mechanics Co. 292,822
(Electronics)
2,777 Samsung Electro-Mechanics Co.
(New) .................... 69,257
(Electronics) (Bonus Shrs.)
9,433 Samsung Electronics Co. .... 710,330
(Electronics) (Bonus Shrs.)
31,302 Samsung Electronics Co., ... 2,455,653
(Electronics)
578 Samsung Electronics Co.,
(GDR)(a) ................. 28,611
(Electronics)
174 Samsung Electronics Co. (GDR) 6,481
(Electronics) (Bonus Shrs.)
327 Sejin Co. .................. 4,592
(Machinery) ------------
16,913,931
------------
Malaysia--15.6%
826,000 Ammb Holdings Berhad ....... $ 5,998,165
(Banking)
1,032,500 Land & General Berhad ...... 2,203,996
(Conglomerate)
770,000 Malayan Banking Berhad ..... 7,649,922
(Banking)
378,000 New Straits Times ``A''
Berhad ................... 1,990,823
(Consumer Products)
1,163,000 Resorts World Berhad ....... 6,589,235
(Leisure)
1,230,000 Sime Darby Berhad .......... 4,073,335
(Conglomerate)
650,000 Telekom Malaysia Berhad .... 5,731,557
(Telecommunications)
722,000 Tenaga Nasional Berhad ..... 2,535,052
(Utilities)
760,000 United Engineers Malaysia
Berhad .................... 5,882,775
(Construction) ------------
42,654,860
------------
Pakistan--0.1%
20,875 DG Khan Cement ............. 5,228
(Construction)
1,435,800 Dhan Fibres(a) ............. 143,841
(Textiles) ------------
149,069
------------
The Philippines--5.8%
2,062,500 Ayala Land, Inc. ``B'' ..... 2,515,723
(Real Estate-Developers)
878,063 Cebu Shipyards & Engineering
Works, Inc. ``B'' ........ 80,995
(Transport)
3,675,000 Filinvest Land, Inc.(a) .... 1,330,761
(Real Estate-Developers)
99,178 Jardine Davies, Inc. ``B'' 306,210
(Conglomerate)
538,045 Manila Electric Company ``B'' 3,978,682
(Utilities)
80,000 Metro Bank & Trust Co.(a) 1,905,851
(Banking)
74,000 Philippine Long District 4,643,500
Telephone (ADR) ..........
(Telecommunications)
361,452 San Miguel Corp. ``B'' ..... 1,184,863
(Food & Beverage ------------
Manufacturing)
15,946,585
------------
</TABLE>
See Notes to
Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
Value
Shares Description (Note 1)
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
Singapore--9.9%
246,000 Cycle & Carriage(a) ........ $ 2,673,153
(Automobiles)
1,055,000 DBS Land ................... 3,491,690
(Real Estate-Developers)
810,000 Development Bank of
Singapore, Ltd. .......... 9,952,415
(Banking)
320,000 Fraser & Neave, Ltd. ....... 3,295,455
(Food & Beverage)
198,000 Overseas-Chinese Banking
Corp., Ltd. .............. 2,376,563
(Banking)
550,000 Straits Steamship Land, Ltd. 1,796,875
(Real Estate-Landlords)
345,600 United Overseas Bank, Ltd. 3,362,727
(Banking) ------------
26,948,878
------------
Taiwan--5.2%
35,100 Advanced Semiconductor
Engineering Inc. ......... 265,707
(Electronics)
29,400 China Steel(a) ............. 595,938
(Iron & Steel)
599 Formosa Fund(a) ............ 5,211,300
(Diversified Funds)
570,000 Formosa Growth Fund(a) ..... 8,265,000
(Diversified Funds) ------------
14,337,945
------------
Thailand--8.4%
174,800 Advanced Info Service ...... 2,269,281
(Telecommunications)
230,000 Bangkok Bank Co., Ltd. ..... 3,003,993
(Banking)
898,438 Bank of Ayudhya, Ltd. ...... 4,099,955
(Banking)
122,800 Banpu Public Co., Ltd. ..... 2,686,001
(Mining)
130,200 Land & House Public Co., Ltd. 1,608,324
(Real Estate-Developers)
218,939 Regional Container Lines ... 2,463,328
(Shipping)
370,000 Renown Leatherwears ........ 1,746,691
(Misc. Materials &
Commodities)
117,500 Shinawatra Computer &
Communication ............ 2,015,382
(Telecommunications)
75,000 Siam Cement Co., Ltd. ...... 3,056,708
(Construction) ------------
22,949,663
------------
Total common stocks
(cost $219,065,399)........ 260,712,454
------------
Warrants(a)--2.3%
Singapore--2.3%
Keppel Corp., Ltd.
1,352,000 Expiring June 1997 @ Sing.
$6.00...................... $ 4,609,091
(Electronics)
United Overseas Bank, Ltd.
440,940 Expiring June 1997 @ Sing.
$4.01...................... 1,612,813
(Banking) ------------
6,221,904
------------
Thailand
50,572(b) Thai Farmers Bank, Ltd.
Expiring Sept. 2002 @ Thb
68.00 ..................... 135,286
(Banking) ------------
Total warrants
(cost $3,128,635).......... 6,357,190
------------
<CAPTION>
Principal
Amount
(000) Convertible Bond--0.5%
- --------
Taiwan
US$1,140 United Micro Electronics
1.25%, 6/8/04,
(convertible into 547.3469
common shares per US$1,000
principal amount until
5/29/04)................... 1,373,700
(Electronic Components) ------------
(cost $1,806,540)
Corporate Bond--0.2%
Hong Kong
HKR International, Ltd.
HKD4,859 6.00%, 6/26/00............. 565,551
(Real Estate-Developers) ------------
(cost $599,962)
Total long-term investments
(cost $224,600,536)........ 269,008,895
SHORT-TERM INVESTMENTS--3.0%
UNITED STATES
Repurchase Agreements
US$8,227 State Street Bank & Trust
Co., 4.75% dated 9/30/96,
due 10/1/96 in the amount
of $8,228,086 (cost
$8,227,000; collateralized
by $6,880,000 U.S. Treasury
Notes, 8.34% due 5/15/17,
value including accrued
interest-$8,392,520)....... 8,227,000
------------
Total Investments--101.5%
(cost $232,827,536; Note
3)......................... 277,235,895
Liabilities in excess of
other assets--(1.5%)....... (4,055,528)
------------
Net Assets--100%............. $273,180,367
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Fair valued security.
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to
Financial Statements.
7
<PAGE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Assets and Liabilities
September 30, 1996
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost
$232,827,536)........................ $277,235,895
Cash, including foreign currency (cost
$173,993)............................ 174,275
Receivable for investments sold........ 843,907
Dividends and interest receivable...... 561,060
Other assets........................... 4,865
------------
Total assets......................... 278,820,002
------------
Liabilities
Payable for investments purchased...... 3,645,312
Deferred Thailand capital gains tax
liability............................ 1,217,223
Accrued expenses and other
liabilities.......................... 479,887
Investment management fee payable...... 178,029
Foreign withholding taxes payable...... 64,433
Administration fee payable............. 54,751
------------
Total liabilities.................... 5,639,635
------------
Net Assets............................. $273,180,367
------------
------------
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.... 973,646
Accumulated net realized gains on
investment and foreign currency
transactions......................... 9,245,920
Net unrealized appreciation on
investments and foreign currencies... 43,187,888
------------
Net assets, September 30, 1996......... $273,180,367
------------
------------
Net asset value per share
($273,180,367 / 18,903,279 shares of
common stock issued and
outstanding)......................... $14.45
------------
------------
</TABLE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Operations
Six Months Ended September 30, 1996
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Net Investment Income
Income
Dividends (net of foreign withholding
taxes of $228,400).................. $ 2,999,327
Interest.............................. 374,300
-----------
Total income........................ 3,373,627
-----------
Expenses
Investment management fee............. 1,114,413
Administration fee.................... 344,139
Custodian's fees and expenses......... 321,000
Reports to shareholders............... 130,000
Legal fees and expenses............... 103,000
Directors' fees....................... 45,000
Transfer agent's fees and expenses.... 26,000
Audit fees............................ 22,000
Registration expense.................. 16,000
Miscellaneous......................... 34,859
-----------
Total operating expenses.......... 2,156,411
Loan interest......................... 183,493
-----------
Total expenses........................ 2,339,904
-----------
Net investment income................. 1,033,723
-----------
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
$836,870)........................... 10,865,484
Foreign currency transactions......... (97,190)
-----------
10,768,294
-----------
Net change in unrealized appreciation
on:
Investments (net of deferred foreign
capital gains taxes of
$1,645,597)......................... (19,687,711)
Foreign currencies.................... 9,371
-----------
(19,678,340)
-----------
Net loss on investments and foreign
currencies............................ (8,910,046)
-----------
Net Decrease in Net Assets
Resulting From Operations............... $(7,876,323)
-----------
-----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Cash Flows
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Increase (Decrease) in Cash
(including Foreign Currency)
Cash flows provided from operating
activities:
Interest received (net of foreign
withholding taxes).................. $ 386,886
Dividends received (net of foreign
withholding taxes).................. 3,175,987
Operating expenses paid............... (2,125,073)
Interest paid......................... (296,164)
Proceeds from disposition of
short-term portfolio investments,
net................................... 8,310,000
Purchase of long-term portfolio
investments........................... (49,159,912)
Proceeds from disposition of long-term
portfolio investments............... 48,585,975
-------------
Net cash provided from operating
activities............................ 8,877,699
-------------
Cash flows provided by financing
activities:
Decrease in loans outstanding......... (20,000,000)
-------------
Net realized and unrealized foreign
currency losses....................... (87,819)
-------------
Net decrease in cash.................... (11,210,120)
Cash at beginning of period............. 11,384,395
-------------
Cash at end of period................... $ 174,275
-------------
-------------
Reconciliation of Net Decrease in Net
Assets to Net Cash (including Foreign
Currency) Provided from Operating
Activities
Net decrease in net assets resulting
from operations....................... $ (7,876,323)
-------------
Decrease in investments................. 6,574,691
Net realized gain on investment
transactions.......................... (10,865,484)
Net realized loss on foreign currency
transactions.......................... 97,190
Net decrease in unrealized
appreciation.......................... 19,678,340
Increase in receivable for investments
sold.................................. (759,942)
Decrease in dividends and interest
receivable............................ 190,101
Increase in other assets................ (3,165)
Increase in payable for investments
purchased............................. 3,566,911
Decrease in interest payable............ (112,671)
Increase in accrued expenses and other
liabilities........................... 33,648
Decrease in deferred capital gains tax
liability............................. (1,645,597)
-------------
Total adjustments..................... 16,754,022
-------------
Net cash provided from operating
activities............................ $ 8,877,699
-------------
-------------
</TABLE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) September 30, March 31,
in Net Assets 1996 1996
------------- ------------
<S> <C> <C>
Operations
Net investment
income............... $ 1,033,723 $ 1,039,399
Net realized gain on
investments and
foreign currency
transactions......... 10,768,294 4,258,763
Net change in
unrealized
appreciation on
investments and
foreign currencies... (19,678,340) 24,964,863
------------- ------------
Net increase (decrease)
in net assets
resulting from
operations........... (7,876,323) 30,263,025
------------- ------------
Dividends to shareholders
from net investment
income................. -- (756,008)
Net asset value of shares
issued to shareholders
in reinvestment of
dividends and
distributions.......... -- 42,842
Increase in net assets
from issuance of shares
pursuant to rights
offering............... -- 59,497,340
------------- ------------
Total increase
(decrease)............. (7,876,323) 89,047,199
------------- ------------
Net Assets
Beginning of period...... 281,056,690 192,009,491
------------- ------------
End of period............ $ 273,180,367 $281,056,690
------------- ------------
------------- ------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- ----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Notes to Financial Statements
(Unaudited)
- ----------------------------------------------------------
Note 1. Accounting The Asia Pacific Fund, Inc.
Policies (the ``Fund'') was incorpo-
rated 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.
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.
Although the net assets of the Fund are presented at the
foreign exchange
rates and market values at the close of the fiscal period,
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 period 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 period.
Net realized losses on foreign currency transactions of
$97,190 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
period 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.
10
<PAGE>
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.
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. The
effect of applying
this statement was to decrease undistributed net investment
income and increase
accumulated net realized gains on investments and foreign
currency transactions
by $97,190 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.
Note 2. Investment The Fund has a manage-
Management and ment agreement with Bar-
Administration ing International Invest-
Agreements ment (Far East) Limited
(the ``Investment Manager'')
and an administration
agreement with Prudential Mutual Fund Management LLC (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 Purchases and sales of
Securities investment securities, other
than short-term investments,
for the six months
ended September 30, 1996 aggregated $52,726,823 and
$50,182,788, respectively.
The United States federal income tax basis of the Fund's
investments at
September 30, 1996 was $232,841,927 and, accordingly, net
unrealized
appreciation for federal income tax purposes was $44,393,968
(gross unrealized
appreciation--$57,618,589; gross unrealized depreciation--
$13,224,621).
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.
11
<PAGE>
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 September 30, 1996, the Fund had no
loan balance
outstanding. The loan of $20,000,000 outstanding at the
beginning of the period
had an interest rate of approximately 5.79% and matured on
May 28, 1996. The
average loan balance outstanding during the period ended
September 30, 1996 was
approximately $6,229,000.
Note 5. Capital There are 20 million shares
of $0.01 par value common
stock authorized. Of the
18,903,279 shares outstanding at September 30, 1996, Baring
Asset Management
(Asia), Ltd., an affiliate of the Investment Manager, owned
21,809 shares.
During the year ended March 31, 1996, the Fund issued 2,890
shares in connection
with the reinvestment of dividends and distributions and
issued 4,725,097 shares
in connection with a rights offering of the Fund's shares.
12
<PAGE>
- ------------------------------------------------------------
- --------------------
THE ASIA PACIFIC FUND, INC.
Financial Highlights
(Unaudited)
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended March 31,
September 30,
- --------------------------------------------------------
Per Share Operating Performance: 1996
1996 1995 1994 1993 1992
-------------
- -------- -------- -------- -------- --------
<S> <C>
<C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 14.87
$ 13.55 $ 16.29 $ 13.11 $ 13.23 $ 14.20
-------------
- -------- -------- -------- -------- --------
Net investment income (loss)................ 0.05
0.05 -- (0.05) 0.10 0.10
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions.............................. (0.47)
1.91 0.38 7.41 1.83 1.40
-------------
- -------- -------- -------- -------- --------
Total from investment operations............ (0.42)
1.96 0.38 7.36 1.93 1.50
-------------
- -------- -------- -------- -------- --------
Less dividends and distributions:
Dividends to shareholders from net
investment income......................... --
(0.04) (0.02) -- (0.09) (0.13)
Distributions paid to shareholders from
realized gains on investments and foreign
currencies................................ --
- -- (3.10) (3.30) (1.65) (2.34)
-------------
- -------- -------- -------- -------- --------
Total dividends and distributions........... --
(0.04) (3.12) (3.30) (1.74) (2.47)
-------------
- -------- -------- -------- -------- --------
Capital charge in respect of issuance of
shares.................................... --
(0.60) -- (0.88) (0.31) --
-------------
- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 14.45
$ 14.87 $ 13.55 $ 16.29 $ 13.11 $ 13.23
-------------
- -------- -------- -------- -------- --------
-------------
- -------- -------- -------- -------- --------
Market value, end of period................. $ 12 1/2
$ 14 1/4 $ 14 1/8 $ 17 3/4 $ 14 5/8 $ 15 1/2
-------------
- -------- -------- -------- -------- --------
-------------
- -------- -------- -------- -------- --------
Total investment return(a).................. (12.28)%
1.16% (3.65)% 44.31% 5.68% 34.37%
-------------
- -------- -------- -------- -------- --------
-------------
- -------- -------- -------- -------- --------
Ratios to Average Net Assets:
Expenses (including loan interest
expense)..................................
1.71%(c) 1.58% 2.06% 2.37% 2.57%
2.19%
Expenses (excluding loan interest
expense)..................................
1.57%(c) 1.53% 1.72% 1.72% 1.93%
1.92%
Net investment income (loss)................
.75%(c) 0.43% -- (0.33)% 0.76%
0.70%
Supplemental Data:
Average net assets (000 omitted)............ $ 273,701
$242,487 $214,527 $193,116 $120,112 $119,552
Portfolio turnover.......................... 19%
23% 48% 101% 105% 63%
Net assets, end of period (000 omitted)..... $ 273,180
$281,057 $192,009 $228,374 $145,647 $116,831
Total debt outstanding at end of period
(000 omitted)............................. $ --
$ 20,000 -- $ 40,000 $ 26,000 $ 6,822
Asset coverage(b)........................... $ --
$ 15,053 -- $ 6,709 $ 6,602 $ 18,126
Average commission rate paid per share...... $ 0.0131
$ 0.0150 N/A 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 period
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. Total returns for
periods of less than a full year are not annualized.
(b) Per $1,000 of debt outstanding.
(c) Annualized.
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 periods 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.
13
<PAGE>
Supplemental Proxy Information
The Annual Meeting of Shareholders of The Asia Pacific
Fund, Inc. (the
``Fund'') was held on Tuesday, July 2, 1996 at the offices
of Prudential
Securities Incorporated, One Seaport Plaza, New York, New
York. The meeting was
held for the following purposes:
<TABLE>
(1) To elect three Directors to serve as follows:
Director Class
Term Expiring
------------------------------ -----
- -------- --------
<C> <S> <C>
<C> <C>
Olarn Chaipravat II
3 years 1999
Michael J. Downey II
3 years 1999
John A. Morrell II
3 years 1999
Directors whose term of office continued beyond this
meeting are David J.
Brennan, Robert H. Burns, Robert F. Gunia, Don G.
Hoff, Douglas Tong Hsu and
David G.P. Scholfield.
(2) To approve an amendment to the Articles of
Incorporation to increase the
authorized Common Stock of the Fund.
(3) To authorize the Board of Directors to approve from
time to time the
investments by the Fund in additional Asian
countries (excluding Japan).*
(4) To ratify the selection of Deloitte & Touche LLP as
independent public
accountants for the fiscal year ending March 31,
1997.
(5) To transact such other business as may properly come
before the meeting or
any adjournment thereof.
The results of the proxy solicitation on the above
matters were as follows:
</TABLE>
<TABLE>
<CAPTION>
Director/Matter Votes for Votes
against Votes withheld Abstentions
------------------------- ---------- ---------
- ----- --------------- ------------
<S> <C> <C> <C>
<C> <C>
(1) Olarn Chaipravat 9,167,480 --
181,098 --
Michael J. Downey 9,187,378 --
161,200 --
John A. Morrell 9,167,708 --
180,870 --
(2) Amendment to Articles of
Incorporation 8,706,741
486,459 155,379 --
(3) Authorization to invest
in additional countries 7,489,393
179,628 494,878 --
(4) Deloitte & Touche LLP 9,248,143
44,594 -- 55,841
(5) There was no other business voted upon at the Annual
Meeting of Shareholders.
</TABLE>
* The meeting was adjourned until July 24, 1996 with respect
to this proposal.
14
