The Asia Pacific Fund, Inc.
The FundOs Management
Contents
2
Letter to Shareholders 3
Report of the Investment Manager 5
Portfolio of Investments 17
Statement 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 AuditorsO Report 33
U.S. Federal Tax Information 34
Share Price, Net Asset Value and Distribution History
35
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.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
For general information on the Fund, please call (toll-
free) Dewe Rogerson Inc.,
our shareholdersO servicing agent at:E(888) 4-ASIA-PAC
The FundOs Web Site address is: www.asiapacificfund.com
The FundOs 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 QueenOs Road Central
Hong Kong
Administrator
Prudential Investments 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 Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Letter to Shareholders
May 19, 1997
Dear Fellow Shareholders:
I would like to report and comment to you on the
performance of our Fund and reaffirm my belief in the
prospects for long-term investment in the Asia Pacific
region. During the year ended March 31, the Asia
Pacific FundOs net asset value per share depreciated by
97 cents from $14.87 to $13.90. Taking into account the
distribution of 50 cents per share in January, this reflects
negative total return performance on a dividend
reinvested basis of 3.4% for the period. At the end of
the fiscal year $6,683,256 in long-term capital gains
and $1,627,950 in ordinary net income were available
for distribution. Net unrealized appreciation on
investments and foreign currencies amounted to
$34,489,204.
At this fiscal year end, the shares were trading at a
discount of 17.3%, with the average for the quarter
being a discount of 15%.
The persistent discount at which the FundOs shares have
traded during the year is not unique to Asia Pacific
Fund; published materials show it is on par with other
Asian closed-end funds during the reporting period.
This trend, which I expected to be alleviated during
1996, has to be seen as part and parcel of the wider
picture. U.S.-registered closed-end funds in general,
and those investing in developing markets in
particular, are experiencing a lack of interest by the
investment community. Be assured, however, that your
Board is monitoring the discount closely and, although
I do believe it to be primarily related to investment
performance in the region, we continue to search for
ways to lower the discount that are in the interest of
all shareholders. Recent comment in the financial press
indicates, however, that there may be a renewal of
investor interest in closed-end funds.
Last year, I also mentioned our FundOs performance and
the potential of the emerging markets to outperform the
U.S. domestic market as likely alleviators of the
discount. Neither of these conditions has materialized.
The FundOs performance over the year suffered as a
result of dramatic stock market falls in Korea and
Thailand which, together with disappointing returns in
other Asia Pacific and emerging markets worldwide, made
impossible the expectation that investments in the
region could outperform the U.S. market. This is
illustrated over the year to March 31 by an
appreciation of 17.8% in the Dow Jones Industrial
Average, compared with a rise of only 6.1% in the MSCI
Emerging Markets (Free) Index on a price basis. The
diversion of capital flows from Asia put further
pressure on the discount to our net asset value.
In terms of stock market performance, KoreaOs and
ThailandOs losses were, however, offset by gains in
Malaysia, The Philippines, Indonesia, Hong Kong and,
most notably, Taiwan. It is Hong Kong, however, which,
as the largest weighting in the portfolio, is key to
the FundOs performance. Its future D and that of the
Greater China region D is thus of particular interest.
All the signs are that Hong Kong will undergo a smooth
transition when sovereignty is handed over by the
United Kingdom to China on June 30, 1997. From this and
the recovering Chinese economy, Hong Kong is poised to
benefit. Taiwan is another possible beneficiary of
ChinaOs economic
recuperation, reflecting the potential of the Greater
China region, but this will depend on political
considerations. The Fund has been investing directly in
Taiwan since September 1996.
Indeed, the following report emphasizes the inter-
relationship between politics and the markets of the
region. Politics provides the backdrop and creates a
climate which influences economic developments either
favorably or otherwise. This is clearly visible in Hong
Kong, Taiwan, Korea, Indonesia, Thailand, India and
Pakistan. In Taiwan, the possibility that politics may
militate against the economic advantages of association
with China cannot be ruled out altogether. The rest of
our story, as the report shows, lies in the quality of
the Asia Pacific economies: the extent of their
abilities to sustain or slow growth as necessary, to
resolve their structural problems (for example in Korea
and Thailand) and, by means of readjustment, to chart a
course that will lead to ultimate economic health and
maturity. In the region we see many efforts in this
direction, although with differing degrees of success.
Its very vicissitudes, however, are an essential
constituent of the regionOs dynamism and potential. For
this reason, we reaffirm our positive outlook on its
long-term investment prospects and remain convinced of
the value to be found there.
Thank you for your support.
Sincerely,
Don G. Hoff
Chairman
Report of the Investment Manager
The ManagerOs estimates of earnings growth for the
various Asia Pacific countries as set forth in the
following Report of the Investment Manager are based on
information currently available and there can be no
assurance that this growth will be achieved.
Overview
The year under review has been a difficult one for
Asian stock markets. Returns amongst the markets have
been very disparate, with Taiwan and Hong Kong
providing double-digit gains, themselves offset by
large losses from Singapore, Korea and Thailand. The
first half of the period produced flat returns, while
the gains of the third quarter were in turn eroded by
the weak fourth quarter as concerns rose over the
direction of U.S. interest rates.
The Asia Pacific region has been hounded over the last
year by growing concerns over the sustainability of the
OAsian miracleO. Critics have argued that rising cost
pressures have led to a fall in the international
competitiveness of the region, as reflected in poor
export growth figures and declining investment returns.
In reality, the slackening in economic growth was a
natural consequence of the overheated levels of the
previous year; declining returns have been the result
of the over-investment that spurred the unsustainably
high economic growth levels; the strong U.S. Dollar, to
which the Asian currencies are closely correlated, has
impacted some export sectors; and the Asian export
slowdown has been magnified by the relative dependence
upon the electronics sector, which suffered a global
deceleration in 1996.
For much of the period under review, the trend of Asian
interest rates was marginally lower, with the central
banks of Indonesia, Singapore, Malaysia and Taiwan
managing their countriesO economic slowdowns
successfully. Recently, these countries have turned
their focus on the outlook for U.S. interest rates;
further cuts will be harder if U.S. rates continue to
rise. The economic health of Korea and Thailand
deteriorated significantly in the last year and these
countries appear to be suffering from structural
problems which have led to their real interest rates
rising. Finally, China and Hong Kong, which led the
Asian economic cycle down in 1994, showed clear
evidence, in the latter half of 1996, that they had
entered a period of economic recovery. This trend
augurs well for the region.
Politics has had a noticeable influence on the markets
over the period. The steadying of relations between
Taiwan and China has helped propel Taiwan to make
significant gains. Korea has struggled from one crisis
to another, with the imprisonment of two former
presidents; deteriorating relations with North Korea;
the highly unpopular labor reform laws; and a
government loans-for-favors scandal involving President
Kim Young-SamOs own son in the Hanbo Steel Affair.
Political and religious riots have flared up with
disconcerting regularity in Indonesia; the most serious
of these followed the arrest of opposition leader
Megawatti Sukarno.
ThailandOs politics confounded commentators when the
highly unpopular Banharn Silpa-archa was replaced as
Prime Minister by the equally mischievous General
Chavalit Yongchaiyudh, rather than by the respected
Democratic Party leader, Chuan Leekpai. On a happier
note, Hong KongOs relations with China remained on an
even keel. This was epitomized by the election of Tung
Chee Hwa as first Chief Executive
Designate of the Special Administrative Region (SAR)
that Hong Kong will become following the handover of
sovereignty to China on June 30, 1997 and the
successful nomination as his number two of the
extremely popular Anson Chan. This duo has provided the
post change-over government with what is best described
as a political Odream teamO, while, in China, the
recent death of Deng Xiao Ping has been met with the
smooth transition of power to Jiang Zemin.
Corporate earnings forecasts weakened overall during
the period as investors accommodated their lower growth
expectations to the higher cost environment. The
largest downgrades came from those countries that
suffered the greatest economic shocks, namely Korea and
Thailand, although companies in Singapore and Indonesia
were also negatively impacted, while surprisingly
robust earnings came from Malaysia and The Philippines.
Average earnings growth for the region fell below the
double-digit level for the first time since the Gulf
Crisis of 1991. The Manager is expecting an earnings
rebound, with growth of around 15% for the next twelve
months, giving an average price/earnings ratio for the
region of 16 times compared with a ten-year prospective
average of almost 20 times. The Manager believes that
valuations are undemanding in the context of such
growth, particularly when considering that the region
is in the trough of its economic cycle and is expected
to be stronger in the coming year.
Performance
The Fund depreciated by 3.4% on a net asset value per
share and dividend reinvested basis during the fiscal
year ended March 31, 1997. The net asset values per
share at the beginning and end of the fiscal year were
$14.87 and $13.90, respectively. A distribution of 50 cents
per share out of long-term capital gains was paid to
shareholders on January 10.
The net asset value per share performance is
illustrated in the chart on the opposite page. The
table on page 8 shows the stock market performance in
U.S. Dollar terms of the countries in which the FundOs
assets are invested.
Net Asset Value Per Share Performance
as of March 31, 1997 D Dividends Reinvested at Net
Asset Value.
%
20
15
10
5
0
D5
D10
Quarter Quarter Quarter Quarter Year Last
Apr D Jul D Oct D Jan D Apr 96 D
9 Years
June 96 Sep 96 Dec 96 Mar 97 Mar 97
Annualized
Note: This information represents the historical net
asset value per share performance of The Asia Pacific
Fund, Inc. ONet asset value per share performanceO has
been computed by the Investment Manager and, because it
does not reflect market price, is not the same as
Ototal investment returnO (see pages 31 and 32 for a
calculation of the latter). This performance
information does not compensate for the dilutive effect
of the FundOs three rights offerings. Past performance
is not indicative of future returns.
Performance of Country Stock Exchange Indices
D in U.S. Dollar Terms, during the Fiscal Year Ended
March 31, 1997
Country Quarter Quarter Quarter Quarter
Year
April- July- October- January- April-
June September December March March
Hong Kong +0.5% +8.1% +12.9% D 6.9%
+14.1%
India +10.1% D16.0% D E5.8% +E8.9%
D 5.2%
Indonesia +E1.9% D 3.2% +9.1% +E2.2%
+10.1%
Korea D 9.8% DE5.1% D 19.4% D 1.6%
D32.1%
Malaysia +0.5% D 0.9% +E8.2% DE0.9%
+E6.8%
Pakistan +E8.3% D22.9% D E8.7% +14.7%
D 12.6%
The Philippines +12.8% D 3.4% D 0.4%
+E1.5% +10.2%
Singapore DE0.4% DE7.2% +E1.7% DE7.3%
D12.9%
Taiwan +25.7% 0.0% +6.5% +15.4%
+54.4%
Thailand DE3.9% D12.0% D25.0% D16.2%
D46.8%
The stock exchange indices referred to above are:
Hong Kong D Hang Seng Index
India D Bombay Sensitive Index
Indonesia D Jakarta Composite Index
Korea D Korea Official Stock Price Index
Malaysia D Kuala Lumpur Stock Exchange Composite
Index
Pakistan D Karachi Stock Exchange Index
The Philippines D Manila Commercial and
Industrial Index
Singapore D Oversea-Chinese Banking Corporation
30 Index
Taiwan D Taiwan Average Weighted Index
Thailand D Stock Exchange of Thailand Index
Country Allocation
Throughout the period the Manager has maintained a
substantial weighting in Hong Kong in the belief that
this market will perform strongly ahead of, and
following, the handover by the British to the Chinese
on June 30, 1997. Hong Kong also benefits from having
entered the early stages of an economic recovery ahead
of the other countries in the region.
During the period there have been five significant
changes in asset allocation. In summary, exposure to
Thailand and India has been reduced significantly,
while weightings in Malaysia, Singapore and Taiwan have
been increased. The most dramatic change has been in
Thailand, where the last year has revealed a number of
structural weaknesses in the economy, while cripplingly
high interest rates are raising the likelihood of a
serious economic downturn as well as a financial and
real estate meltdown. IndiaOs high interest rates, the
governmentOs poor fiscal position and the countryOs
continued anti-foreign investment policies led the
Manager to reduce the FundOs exposure. During the
period concerns over MalaysiaOs trade deficit and
economic excesses abated, while the countryOs very
supportive monetary policies led the Manager to
increase the FundOs exposure to the market, despite
relatively full valuations. In late 1996, the FundOs
exposure to Singapore was increased on the view that
the economy had bottomed out, while improving exports
of electronics goods and a recovery in the domestic
property market would lead to renewed market confidence
and strong corporate earnings. Finally, Taiwan, like
Hong Kong, benefits from the improving Chinese economy
and, combined with the exceptionally supportive local
liquidity, this encouraged the Manager to raise the
FundOs exposure to the country.
Geographical Breakdown of the Long-Term Investment
Portfolio
as of March 31, 1997
The Philippines
4.8%
Malaysia
19.6%
Thailand
1.8%
India
0.2%
Hong Kong
43.4%
Korea
5.7%
Indonesia
4.0%
Singapore
13.8%
Taiwan
6.7%
as of March 31, 1996
Malaysia
10.3%
Pakistan
0.3%
Thailand
17.2%
India
2.6%
The Philippines
4.9%
Hong Kong
42.8%
Korea
7.9%
Indonesia
3.8%
Singapore
8.8%
Taiwan
1.4%
Hong Kong
US$111.1 million, 43.0% of the FundOs investment
portfolio,
was invested in Hong Kong as of March 31, 1997.
The Fund maintained a significant exposure to Hong Kong
throughout the period. Economic activity has
increasingly reflected the situation in China as the
two become integrated ever more tightly. The cut in
interest rates in China in mid-1996 signaled the end of
the austerity program the authorities introduced there
in 1993. The recovery was almost simultaneously felt in
Hong Kong and was most clearly reflected in the looser
liquidity conditions feeding through to strong demand
for residential property (particularly at the high end)
and commercial property. The speed and extent of
property price rises have led to fears that the
authorities will step in to curb speculation. Similar
strong gains were seen in the stock market, which
rallied in the second half of 1996. The OChinaisationO
of Hong Kong has also taken place at the corporate
level. Recent deals, such as those by CITIC and Li Ka
ShingOs stable of companies, have witnessed the
transfer of key assets, for example Cathay Pacific and
China Light & Power respectively, to China-friendly
hands. Similarly, investor interest has increasingly
focused on China plays (i.e. companies with a
significant portion of their profits or sales coming
directly from the mainland) known as Ored chipsO. The
Fund remains biased towards residential property
development companies and regional traders, although in
recent quarters it has significantly increased its
exposure to China counters.
India
US$0.4 million, 0.2% of the FundOs investment
portfolio,
was invested in India as of March 31, 1997.
The market fell slightly for the year as a whole but
this annual figure masks considerable volatility within
the period. India has been troubled by political and
economic concerns which have had important implications
for corporate performance. The earnings outlook became
steadily worse throughout 1996, until December, when
speculation about a more pro-business budget gave
encouragement to the idea that 1997 would see some
growth again. Foreigners, who represent the real swing
factor in this equation, remained cautious. Contrary to
previous years since 1993 (when foreign investment in
India began) they are now more wary of government
policy announcements and, consequently, less willing to
commit funds to India.
Indonesia
US$10.2 million, 3.9% of the FundOs investment
portfolio,
was invested in Indonesia as of March 31, 1997.
Last year Indonesia benefited from the high oil price
and weak Yen trends, since the governmentOs major
source of revenue is oil and its debt is primarily Yen-
denominated. Nevertheless, export growth excluding oil
remained weaker than expected, at 9%. Despite political
unrest, foreign direct investment approvals remained
strong at US$29.9 billion in 1996. Corporate
OcronyismO, that has obstructed competitiveness in the
past, has once again been very much in the public
domain, with many of the countryOs largest companies
such as Astra, Sampoerna and Telkom being afflicted as
President SuhartoOs family members continue to meddle
in business affairs. The lack of any legal framework
for the election of a successor to Suharto continues to
concern the Manager. Nevertheless, with local investors
now accounting for around 70% (compared with 30%
previously) of the stock marketOs turnover, the market
is becoming more mature, while the potential long-term
rewards of investing in Indonesia are clearly
attractive.
Korea
US$14.6 million, 5.7% of the FundOs investment
portfolio,
was invested in Korea as of March 31, 1997.
Korea remains a disappointing market. A series of
negative factors emerged during the year, amongst which
the collapse of Hanbo Steel, a weakening currency
(which is at a twelve-year low against the U.S. Dollar)
and further political scandals are notable. Perhaps the
periodOs most significant trend for Korea has been the
weak electronics industry, in particular the collapse
of DRAM prices. This has had both a psychological and
economic impact, since the net effect has been a
significant deterioration of the current account
deficit to over 4% of GNP. A cyclical downturn,
reflected in weak prices of petrochemical products,
steel and heavy industry goods, led to a significant
deterioration in KoreaOs corporate profitability D
earnings dropped by 70% in 1996 D and has been further
magnified by the chaebolsO (powerful industrial
conglomerates) over-expansion in 1994/1995. Finally,
the Bank of Korea has kept interest rates high due to
fears over inflation and the weak currency which, in
turn, has compounded the poor business backdrop.
Concerns over a liquidity crunch are rising, leading
the Manager to be cautious on the market. But, in a few
individual cases, outstanding value at the stock level
can be found.
Malaysia
US$50.4 million, 19.5% of the FundOs investment
portfolio,
was invested in Malaysia as of March 31, 1997.
Malaysia has once again confounded its critics.
InvestorsO fears at the start of last year were
pronounced as they cited their concerns about the
countryOs high current account deficit, the very
extended economic cycle and the marketOs high valuation
levels. However, the trade deficit has improved sharply
to 5.5% of GNP in 1996, down from 9% in the previous
year. Corporate earnings have remained robust, growing
over 16%, and are forecast to grow at a similar level
in 1997; these compare favorably with the rest of Asia.
The liquidity situation has been loose, with the
momentary aggregates having remained in the mid-
twenties. Excess liquidity found its way to the Kuala
Lumpur Second Section (consisting of second-tier
stocks) which rose 38% in the period under review,
compared to 6% for the main board (first-tier, blue
chip companies). Corporate restructuring remains a
prevailing theme in the market D leading to mergers or
the remoulding of old companies with a new business
emphasis D and makes analysis difficult.
Pakistan
Politics have been the center-piece. The market joined
the clamor for the ousting of Prime Minister Benazir
Bhutto because of frustration at the lack of reform.
The market tried to rally a few times, but sentiment
has been dogged by the risk that Pakistan may default
on its international debt obligations. Foreign reserves
are still only US$1 billion. The new Sharif
administration has so far failed to bolster confidence
significantly.
The Philippines
US$12.4 million, 4.8% of the FundOs investment
portfolio,
was invested in The Philippines as of March 31, 1997.
The Philippines recovery story continues and the
country can now justly claim to be a member of the
OAsian TigersO club. The country remained in its
economic upswing, while the reformation of the tax
system D with the expansion of the value added tax as
its center-piece D along with the liberation of oil
prices, will ensure future prosperity. The degree of
attention as to whether President Ramos will run for a
second term in the 1998 election is over-emphasized,
although it is as yet unclear who his successor will
be. Corporate earnings growth of 26% in 1996 has been
very robust, being fueled by stronger economic growth,
a credit-lending increase of over 35% and a buoyant
property market. Fears of a bubble in the last of these
are justified at the high end of the residential
housing sector in Metro Manila, although demand still
strongly outweighs supply at the low end. Overseas
workersO remittances, which totaled over US$7billion in
1996, remain crucial to the funding of the large trade
deficit, but to a considerable degree these deposits
reflect these workersO confidence; momentum here
remains positive. The marketOs gains for the period
under review were achieved in the April-June quarter,
with stocks trading sideways for the remainder of the
year. The ManagerOs main concern is the health of the
financial system and its inflows of U.S. Dollar loans,
although The PhilippinesO current earnings growth is
the most attractive in Asia.
Singapore
US$37.3 million, 14.4% of the FundOs investment
portfolio,
was invested in Singapore as of March 31, 1997.
As anticipated, the slowdown in the electronics
industry impacted Singapore severely, since almost two-
thirds of its exports are related to manufactured
electronics equipment. However, the governmentOs
measures in the middle of the year to curb speculation
in the property market were unexpected and dented local
sentiment significantly. Unit labor cost pressure
remains a long-term concern and its crippling impact is
most clearly visible in the continued poor performance
of the shipbuilding sector. The Manager believes that
the bad news is adequately reflected in the market and
has increased the portfolioOs exposure to property
stocks in particular. The economy, corporate earnings
and investor sentiment are all likely to improve in the
coming quarters, on expectations of a pick-up in the
electronics industry and rising property prices; recent
land auctions have been stronger than anticipated
which, in turn, reflects developersO confidence.
Taiwan
US$17.2 million, 6.7% of the FundOs investment
portfolio,
was invested in Taiwan as of March 31, 1997.
In contrast to the previous year, the Taiwanese market
performed strongly in the period under review. Improved
relations with China were the marketOs main driver.
This was noticeably true in 1996 and can be tracked by
monitoring foreign exchange outflows and inflows from
and to Taiwan. In recent quarters outflows have almost
dried up, whereas, at the height of the missile crises,
US$10 billion left the country in less than a month.
More recently, market performance has been the result
of the loose monetary policy the Central Bank has
engineered in its attempts to stimulate economic
growth. Falling rates have led depositors to move their
funds from long-term savings accounts into short-term
instruments including the stock market. The latest
economic data suggest the economyOs health is
improving, although it will be some time before real
demand chokes off the excess liquidity in the system.
Medium term, the question of where Taiwan stands in
relation to President LeeOs concerns of over-investment
in China (hence TaiwanOs over-reliance on its neighbor)
remains unanswered and could once again lead to
nervousness across the Straits of Taiwan.
Thailand
US$4.6 million, 1.8% of the FundOs investment
portfolio,
was invested in Thailand as of March 31, 1997.
In many respects Thailand has been the most
disappointing of the Asian markets in the period under
review. By the third quarter of 1996, the prevailing
high interest rates began to take a considerable toll
on the KingdomOs economic and corporate health. As in
any crisis, the weaknesses of the system have become
exposed. In this case the excesses of cheap money in
recent years and over-zealous lending by poorly-managed
finance companies, whose loans, more often than not,
were collateralized by over-inflated property values,
have been the outcome. The collapse of Finance One and
the scandals surrounding the bankrupt Bangkok Bank of
Commerce are good examples of financial ineptitude and
corruption. Due to the exchange rate between the U.S.
Dollar and the Thai Baht being effectively fixed, the
authorities have been unable to reduce interest rates
to provide relief for the corporates, since to do so
would lead to foreign capital outflows, money which is
critical to funding the large (8% of GDP) current
account deficit and to maintaining the existing
exchange rate policy. Therefore, despite a 0.5% cut in
rates in September, real rates have increased and the
likelihood of the country entering its most severe
recession since the mid-1980s is high. In anticipation,
the Manager has dramatically reduced the FundOs
exposure to the market and awaits news of signals from
the Thai government indicating that it is aware of the
extent of the crisis and that it has formulated a
workable plan to deal with the countryOs structural
problems.
Outlook
The Manager remains positive about the reunification of
Hong Kong with China. As the handover approaches,
sentiment may be fragile, although this is already
implicit in the marketOs rating, which at 13 times 1997
earnings, is lower than that of most other countries in
the region. Recent political maneuvers suggest that
China is keen to ensure a smooth change-over, while the
recent ending of the austerity program in China points
to a favorable economic backdrop for Hong Kong. The
FundOs large position in Hong Kong remains the key
factor to performance contribution. The Manager remains
cautious on Thailand and fears that concerns over the
sustainability of the fixed exchange rate between the
U.S. Dollar and the Thai Baht could have a short-term,
knock-on effect on other countries in the region.
Singapore, with its safe haven status, should benefit
from any turmoil.
The Asian markets will remain sensitive to the
prevailing trends in the OECD. However, the regionOs
fundamental economic and market outlook is promising.
With the exception of Thailand and possibly Korea,
AsiaOs central bankers have managed to slow their
economies successfully and these appear well placed to
grow moderately faster in the coming year. Corporate
earnings should also benefit from this trend, while the
regionOs value/growth ratio, both on an historic and on
a global comparison basis, appears attractive.
Sentiment remains a key market-driver and this is
currently negative, although the handover of Hong Kong
in June and the World Bank meeting in Hong Kong in
October will provide an opportunity for investors to
refocus on the bright long-term outlook for Asia.
Baring International Investment (Far East) Limited
Hong Kong
May 19, 1997
Portfolio of Investments
March 31, 1997
Shares Description Value
(Note 1)
LONG-TERM INVESTMENTS D 97.5%
HONG KONG D 42.3%
1,818,000 Cheung Kong Holdings, Ltd. (Real Estate
D Developer) $ 16,012,195
1,500,000 China Everbright(a) (Conglomerate)
1,132,404
1,250,000 Citic Pacific, Ltd. (Conglomerate)
6,194,348
3,000,000 Guangdong Investment, Ltd.
(Conglomerate) 2,574,526
180,000 Hang Seng Bank, Ltd. (Banking)
1,858,304
500,000 Henderson China Holdings (Real Estate D
Landlord) 896,890
500,000 Hong Kong and China Gas (Utilities)
938,831
800,000 Hong Kong Land Holdings (Real Estate D
Landlord) 1,856,000
2,600,000 Hong Kong Telecommunications, Ltd.
(Telecommunications) 4,445,735
760,600 HSBC Holdings, Plc. (Banking)
17,667,828
1,922,000 Hutchison Whampoa, Ltd. (Conglomerate)
14,447,864
1,300,000 Hysan Development Co., Ltd. (Real Estate
D Landlord) 3,892,115
1,359,000 JCG Holdings, Ltd. (Financial Services)
1,069,803
2,600,000 New World Development Co., Ltd.
(Real Estate D Developer) 14,025,035
600,000 New World Infrastructure(a)
(Construction) 1,718,931
750,000 Smartone Telecommunications(a)
(Telecommunications) 1,606,659
1,290,000 Sun Hung Kai Properties, Ltd. (Real
Estate D Developer) 13,650,794
900,000 Swire-Pacific, Ltd. OAO (Conglomerate)
7,084,785
__________
111,073,047
__________
INDIA D 0.2%
250 Bombay Suburban Electric Supply (Utilities)
1,387
800 Essel Packaging (Pulp & Paper) 2,118
100 Garden Silk Mills (Textiles) 40
100 Gujarat Ambuja Cement (Building Materials)
700
7,950 Hindalco Industries (Aluminium)
201,991
1,000 Hindustan Lever, Ltd. (Household
Products) 26,167
300 Housing Development Finance (Financial
Services) 22,996
18,620 India Petrochem (Chemicals)
71,755
4,200 Larsen & Toubro, Ltd. (Machinery)
23,415
Shares Description Value
(Note 1)
INDIA (continued)
100 Reliance Industries, Ltd. (Textiles) $
716
8,300 RPG Telecom (Telecommunications)
4,916
1,350 Scici, Ltd. (Shipping) 894
800 State Bank of India (Banking) 6,082
200 Sterlite Industries (Capital Goods)
1,440
4,600 Tata Engineering & Locomotive
(Automobiles) 43,596
500 Tata Iron & Steel Co., (Iron & Steel)
2,230
50 TVS Suzuki, Ltd. (Automobiles) 488
__________
410,931
__________
INDONESIA D 3.9%
1,120,000 Bank Bali (Banking) 2,693,877
70,000 PT Indonesia Satellite(a) (ADR)
(Telecommunications) 1,855,000
885,500 Semen Gresik (Building Materials)
2,203,608
860,000 Tambang Timah(a) (Mining)
1,343,190
1,355,000 Telekomunikasi(a) (Telecommunications)
2,073,980
__________
10,169,655
__________
KOREA D 5.6%
301,000 Cho Hung Bank Co., Ltd. (Banking)
1,546,175
100,000 Han Wha(a) (Conglomerate)
1,217,197
65,000 Hanil Bank (Banking) 362,926
125,162 Kookmin Bank (Banking) 1,719,143
15,510 Korea Chemical Co. (Chemicals)
1,195,075
118,000 Korea Electric Power Corp. (Utilities)
3,426,019
50,000 Pohang Iron & Steel Co. (Iron & Steel)
2,406,477
40,735 Samsung Electronics Co. (Electronics)
2,724,764
__________
14,597,776
__________
See Notes to Financial Statements.
Shares Description Value
(Note 1)
MALAYSIA D 19.1%
700,800 Ammb Holdings Berhad (Banking) $
5,822,805
314,000 IOI Corp. (Conglomerate) 521,792
750,000 Malayan Banking Berhad (Banking)
8,545,759
57,000 Malaysian Assurance(a) (Insurance)
328,762
378,000 New Straits Times OAO Berhad (Media)
2,317,428
1,363,000 Resorts World Berhad (Leisure)
5,827,371
2,400,000 Sime Darby Berhad (Conglomerate)
8,760,537
990,000 Sungei Way Holdings Berhad(a)
(Construction) 2,715,283
491,000 Telekom Malaysia Berhad
(Telecommunications) 3,822,168
722,000 Tenaga Nasional Berhad (Utilities)
3,523,656
920,000 United Engineers Malaysia Berhad
(Construction) 8,015,166
__________
50,200,727
__________
PAKISTAN
25 DG Khan Cement(a) (Construction) 9
__________
THE PHILIPPINES D 4.7%
1,712,500 Ayala Land, Inc. OBO (Real Estate D
Developer) 1,948,606
131,709 Cebu Shipyards & Engineering Works, Inc.
OBO(a)
(Port Services) 7,793
450,045 Manila Electric Company OBO (Utilities)
3,584,656
3,560,000 Petron Corp. (Oil & Gas) 1,451,546
61,500 Philippine Long Distance Telephone (ADR)
(Utilities) 3,674,625
501,452 San Miguel Corp. OBO (Food & Beverage)
1,740,294
__________
12,407,520
__________
See Notes to Financial Statements. Shares
Description Value
(Note 1)
SINGAPORE D 13.4%
320,000 City Developments(a) (Real Estate D
Developer) $ 2,834,014
140,000 Cycle & Carriage (Automobiles)
1,414,239
1,055,000 DBS Land (Real Estate D Developer)
3,605,964
700,000 Development Bank of Singapore, Ltd.
(Banking) 8,136,719
400,000 Fraser & Neave, Ltd. (Food & Beverage)
3,265,758
550,000 Keppel Land, Ltd. (Diversified Holding
Company) 1,697,225
1,000,000 Marco Polo Development(a) (Leisure)
2,103,370
198,000 Oversea-Chinese Banking Corp., Ltd.
(Banking) 2,356,327
300,000 Singapore Airlines(a) (Airlines)
2,407,805
495,600 United Overseas Bank, Ltd. (Banking)
5,074,988
850,000 Wing Tai Holdings (Real Estate D
Landlord) 2,505,362
__________
35,401,771
__________
TAIWAN D 6.5%
430,000 Cathay Life Insurance(a) (Insurance)
2,560,639
30,135 China Steel (Iron & Steel)
592,906
480,000 Formosa Growth Fund(a) (Diversified
Funds) 7,200,000
583,050 Roc Taiwan Fund(a) (Diversified Funds)
6,850,838
__________
17,204,383
__________
THAILAND D 1.8%
174,800 Advanced Info Service PCL
(Telecommunications) 1,493,960
150,000 Bangkok Bank Co., Ltd. (Banking)
1,455,245
75,039 Regional Container Lines PCL (Shipping)
652,890
365,000 Renown Leatherwears Public Co., Inc.
(Textiles) 368,864
25,000 Siam Cement Co., Ltd. (Building
Materials) 650,626
__________
4,621,585
__________
Total long-term investments
(cost $223,055,037) 256,087,404
__________
See Notes to Financial Statements.
Units Description Value
(Note 1)
SHORT-TERM INVESTMENTS D 2.3%
WARRANTS(a) D 0.7%
SINGAPORE
440,940 United Overseas Bank, Ltd. (Banking)
Expiring June 1997 @ Sing. $5.25
(cost $575,000) $ 1,876,276
__________
RIGHTS(a) D 0.1%
MALAYSIA
700,800 Ammb Holdings Berhad (Banking)
Expiring April 1997
(Bond Rights) 67,839
700,800 Ammb Holdings Berhad (Banking)
Expiring April 1997
(Loan Stock Rights) 90,451
__________
158,290
__________
REPURCHASE AGREEMENT D 1.5%
UNITED STATES
US$4,089 State Street Bank and Trust Co., 4.00%,
dated 3/31/97, due 4/1/97 in the amount of
$4,089,454 (cost $4,089,000; collateralized
by $4,255,000 U.S. Treasury Notes, 5.00% due
2/15/99, value including
accrued interest D $4,173,819)
4,089,000
__________
Total short-term investments
(cost $4,664,000) 6,123,566
__________
Total investments D 99.8%
(cost $227,719,037; Note 3)
262,210,970
Other assets in excess of liabilities D 0.2%
481,789
__________
Net Assets D 100% $ 262,692,759
__________
__________
(a) Non-income producing security.
ADR D American Depository Receipt.
See Notes to Financial Statements.
Statement of Assets and Liabilities
March 31, 1997
Assets
Investments, at value (cost $227,719,037) $
262,210,970
Cash, including foreign currency (cost $1,730,765)
1,728,036
Dividends and interest receivable 849,710
Receivable for investments sold 539,187
Other assets 5,099
__________
EETotal assets 265,333,002
__________
Liabilities
Payable for investments purchased 1,617,481
Accrued expenses and other liabilities 621,354
Investment management fee payable 187,501
Foreign withholding taxes payable 124,747
Administration fee payable 57,840
Deferred Thailand capital gains tax liability
31,320
__________
EETotal liabilities 2,640,243
__________
Net Assets $ 262,692,759
__________
__________
Net assets comprised:
EECommon stock, at par $ 189,033
EEPaid-in capital in excess of par 219,583,880
__________
219,772,913
EEUndistributed net investment income 966,897
EEAccumulated net realized gains on
EEEEinvestment and foreign currency transactions
7,493,540
EENet unrealized appreciation on investments and
EEEEforeign currencies 34,459,409
__________
Net assets, March 31, 1997 $ 262,692,759
__________
__________
Net asset value per share:
EE($262,692,759 I 18,903,279 shares of common
EEstock issued and outstanding) $ 13.90
__________
__________
See Notes to Financial Statements.
Statement of Operations
Year Ended March 31, 1997
Net Investment Income
Income
Dividends (net of foreign withholding taxes of
$517,470) $ 5,266,719
Interest (net of foreign withholding taxes of $206)
411,623
_________
EETotal income 5,678,342
_________
Expenses
Investment management fee 2,236,334
Administration fee 691,254
CustodianOs fees and expenses 695,000
Reports to shareholders 270,000
Legal fees and expenses 150,000
DirectorsO fees 83,000
Audit fee and expenses 53,000
Transfer agentOs fees and expenses 52,000
Registration expenses 24,000
Miscellaneous 64,877
_________
EETotal operating expenses 4,319,465
Loan interest 183,493
_________
EETotal expenses 4,502,958
_________
Net investment income 1,175,384
_________
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions
Net realized gain (loss) on:
EEInvestment transactions (net of Thailand
EEEEcapital gains taxes of $1,271,092) 18,564,619
EEForeign currency transactions (245,600)
_________
18,319,019
_________
Net change in unrealized appreciation on:
EEInvestments (net of change in deferred Thailand
EEEEcapital gains taxes of $2,831,500)
(28,418,234)
EEForeign currencies 11,415
_________
(28,406,819)
_________
Net loss on investments and foreign currencies
(10,087,800)
_________
Net Decrease in Net Assets
Resulting From Operations $ (8,912,416)
_________
_________
See Notes to Financial Statements.
Statement of Cash Flows
Year Ended March 31, 1997
Increase (Decrease) in Cash (including Foreign
Currency)
Cash flows provided by operating activities:
EEInterest received (net of foreign withholding taxes)
$ 440,415
EEDividends received (net of foreign withholding taxes)
5,198,837
EEOperating expenses paid (4,134,333)
EEInterest paid (296,164)
EEProceeds from disposition of short-term portfolio
EEEEinvestments, net 12,448,000
EEPurchase of long-term portfolio investments
(116,008,850)
EEProceeds from disposition of long-term
EEEEportfolio investments 122,381,436
__________
Net cash provided by operating activities
20,029,341
__________
Cash flows used for financing activities:
EEDecrease in loans outstanding (20,000,000)
EECash dividends paid (9,451,515)
__________
EENet cash used for financing activities
(29,451,515)
__________
Net realized and unrealized foreign currency losses
(234,185)
__________
Net decrease in cash (9,656,359)
Cash at beginning of year 11,384,395
__________
Cash at end of year $ 1,728,036
__________
__________
Reconciliation of Net Decrease in Net Assets to Net
Cash
(including Foreign Currency) provided by Operating
Activities
Net decrease in net assets resulting from operations
$ (8,912,416)
__________
Decrease in investments 20,568,228
Net realized gain on investment transactions
(18,564,619)
Net realized loss on foreign currency transactions
245,600
Net decrease in unrealized appreciation 28,406,819
Increase in receivable for investments sold
(455,222)
Increase in dividends and interest receivable
(98,549)
Increase in other assets (3,399)
Increase in payable for investments purchased
1,539,080
Decrease in interest payable (112,671)
Increase in accrued expenses and other liabilities
247,990
Decrease in deferred capital gains tax liability
(2,831,500)
__________
Total adjustments 28,941,757
__________
Net cash provided by operating activities $
20,029,341
__________
__________
See Notes to Financial Statements.
Statement of Changes in Net Assets
Increase (Decrease) Year ended March 31
in Net Assets 1997 1996
Operations
Net investment income $ 1,175,384
$EE1,039,399
Net realized gain on investments
EEand foreign currency transactions 18,319,019
4,258,763
Net change in unrealized appreciation
EEon investments and foreign currencies
(28,406,819) 24,964,863
__________ __________
Net increase (decrease) in net assets
EEresulting from operations (8,912,416)
30,263,025
Dividends to shareholders from
EEnet investment income (756,008)
Distributions to shareholders from
EEnet realized gains on investment
EEand foreign currency transactions
(9,451,515)
Net asset value of shares issued to
EEshareholders in reinvestment of
EEdividends and distributions 42,842
Increase in net assets from issuance of
EEshares pursuant to rights offerings
59,497,340
__________ __________
EETotal increase (decrease) (18,363,931)
89,047,199
Net Assets
Beginning of year 281,056,690
192,009,491
__________ __________
End of year $ 262,692,759 $ 281,056,690
__________ __________
__________ __________
See Notes to Financial Statements.
Notes to Financial Statements
Note 1 Accounting Policies
The Asia Pacific Fund, Inc. (the OFundO) was
incorporated in Maryland on June 17, 1986, as a
diversified, closed-end, management investment company.
The FundOs 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 ING 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 FundOs 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
FundOs 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)Emarket value of investment securities,
other assets and liabilities D at the closing rate of
exchange.
(ii) purchases and sales of investment
securities, income and expenses D 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 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 $245,600 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 FundOs 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 OCash, including foreign currencyO 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 FundOs 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 FundOs understanding of the
applicable countryOs 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 AccountantsO
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
$245,600 and increase accumulated net realized gains on
investments and foreign currency transactions by
$245,600 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 Management and
Administration Agreements
The Fund has a management agreement with
Baring International Investment (Far East) Limited (the
OInvestment ManagerO) and an administration agreement
with Prudential Investments Fund Management LLC (the
OAdministratorO).
The investment management fee is computed
weekly and payable
monthly at the following annual rates: 1.10% of the
FundOs 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 FundOs 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, 1997 aggregated $117,547,930 and
$124,107,750, respectively.
The United States federal income tax basis of
the FundOs investments at March 31, 1997 was
$228,381,676 and, accordingly, net unrealized
appreciation for federal income tax purposes was
$33,829,294 (gross unrealized appreciation D
$52,180,110; gross unrealized depreciation D
$18,350,816).
For federal income tax purposes, the Fund
utilized its capital loss carryforward of approximately
$1,645,900, to partially offset the FundOs net taxable
gains realized and recognized during the year ended
March 31, 1997.
Financial Highlights
Year ended March 31
Per Share Operating Performance: 1997 1996
Net asset value, beginning of year $14.87
$13.55
Net investment income 0.06 0.05
Net realized and unrealized gain/(loss) on
EEinvestments and foreign currency transactions
(0.53) 1.91
Total from investment operations (0.47) 1.96
Less dividends and distributions:
EEDividends to shareholders from net
EEinvestment income (0.04)
EEDistributions paid to shareholders from realized
EEgains on investments and foreign currencies
(0.50)
Total dividends and distributions (0.50)
(0.04)
Capital charge in respect of issuance of shares
(0.60)
Net asset value, end of year $13.90 $14.87
Market value, end of year $111U2 $141U4
Total investment return (a) (16.18)% 1.16%
Ratios to Average Net Assets:
Expenses (including loan interest expense) 1.63%
1.58%
Expenses (excluding loan interest expense) 1.57%
1.53%
Net investment income 0.43% 0.43%
Supplemental Data:
Average net assets (000 omitted) $275,702
$242,487
Portfolio turnover 43% 23%
Net assets, end of year (000 omitted) $262,693
$281,057
Total debt outstanding at year end (000 omitted)
$20,000
Asset coverage (b) $15,053
Average commission rate paid per share $0.0143
$0.0150
(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 FundOs 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
FundOs shares.
See Notes to Financial Statements.
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, 1997, the Fund had no loan balance
outstanding. The average loan balance outstanding
during the year ended March 31, 1997 was approximately
$3,123,000.
Note 5 Capital
There are 30 million shares of $0.01 par
value common stock authorized. Of the 18,903,279 shares
outstanding at March 31, 1997, Baring Asset Management
(Asia) Limited, an affiliate of the Investment Manager,
owned 22,647 shares.
Year ended March 31
Per Share Operating Performance: 1995 1994 1993
Net asset value, beginning of year $16.29
$13.11 $13.23
Net investment income (loss) (0.05) 0.10
Net realized and unrealized gain on
EEinvestments and foreign currency transactions
0.38 7.41 1.83
Total from investment operations 0.38 7.36 1.93
Less dividends and distributions:
EEDividends to shareholders from net
EEinvestment income (0.02) (0.09)
EEDistributions paid to shareholders from realized
EEgains on investments and foreign currencies
(3.10) (3.30) (1.65)
Total dividends and distributions (3.12)
(3.30) (1.74)
Capital charge in respect of issuance of shares
(0.88) (0.31)
Net asset value, end of year $13.55 $16.29
$13.11
Market value, end of year $141U8 $173U4
$145U8
Total investment return (a) (3.65)% 44.31%
5.68%
Ratios to Average Net Assets:
Expenses (including loan interest expense) 2.06%
2.37% 2.57%
Expenses (excluding loan interest expense) 1.72%
1.72% 1.93%
Net investment income (loss) (0.33)% 0.76%
Supplemental Data:
Average net assets (000 omitted) $214,527
$193,116 $120,112
Portfolio turnover 48% 101% 105%
Net assets, end of year (000 omitted) $192,009
$228,374 $145,647
Total debt outstanding at year end (000 omitted)
$40,000 $26,000
Asset coverage (b) $6,709 $6,602
Average commission rate paid per share N/A N/A
N/A
(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 FundOs 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
FundOs shares.
See Notes to Financial Statements.
Independent AuditorsO 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, 1997, 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 FundOs 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, 1997, 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, 1997, 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 2, 1997
U.S. Federal Tax Information
Dividends and Distributions
As required by the U.S. Internal Revenue code, we wish
to advise you as to the federal tax status of dividends
and distributions paid by the Fund during its fiscal
year ended March 31, 1997.
During the fiscal year, the Fund paid distributions
totalling $0.50 per share. This amount represents a
distribution from long-term capital gains and is
taxable as such.
For purposes of preparing your federal income tax
return, however, you should report the amounts as
reflected on the appropriate Form 1099-DIV or
substitute Form 1099-DIV which you should receive in
January 1998.
Share Price, Net Asset Value and
Distribution History
Quarter End Closing Price Net Asset Value
Dividends and
at Quarter End per Share Distributions
at Quarter End During Quarter
Financial Year 92/93
June $16 1U2 $15.14
September 13 12.68 $1.21
December 15 12.46 0.53
March 14 5U8 13.11
Financial Year 93/94
June 15 5U8 12.96 1.24
September 18 3U4 15.26
December 25 1U2 21.33 2.06
March 17 3U4 16.29
Financial Year 94/95
June 17 1U2 14.40 2.37
September 18 1U4 16.23
December 13 3U4 13.89 0.75
March 14 1U8 13.55
Financial Year 95/96
June 15 1U2 14.68
September 13 1U4 14.37
December 13 7U8 14.19 0.04
March 14 1U4 14.87
Financial Year 96/97
June 13 14.54
September 12 1U2 14.45
December 12 3U8 14.77 0.50
March 11 1U2 13.90
Dividend Reinvestment Plan
Shareholders may elect to have all distributions of
dividends and capital gains automatically reinvested in
Fund shares (OSharesO) pursuant to the FundOs Dividend
Reinvestment Plan (Othe PlanO). 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 AgentOs (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 AgentOs 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 daysO 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.
