UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-4710
Exact name of registrant as specified in charter: The Asia Pacific Fund, Inc.
Address of principal executive offices: Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
Name and address of agent for service: Deborah A. Docs
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
Registrant's telephone number, including area code: 973-367-7521
Date of fiscal year end: March 31, 2004
Date of reporting period: September 30, 2003
Item 1 -- Reports to Stockholders
The Asia Pacific
Fund, Inc.
-------------------------------------------------------------------
Semi-Annual Report
September 30, 2003
www.asiapacificfund.com
The Asia Pacific Fund, Inc.
As of September 30, 2003 (Unaudited)
OUR 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.
Statistics
Total Net Assets $128,935,574
Shares Outstanding 10,344,072
Net Asset Value $12.46
Equity 99.9%(a)
Repurchase Agreement 0.1%(a)
Total Returns (US Dollar terms)
Market
Period Price(b) NAV(c)
3 months ended 9/30/03 18.42% 16.2%
6 months ended 9/30/03 47.65% 36.9%
9 months ended 9/30/03 34.68% 24.6%
1 Year ended 9/30/03 43.58% 27.3%
3 Years ended 9/30/03 36.69% 5.7%
5 Years ended 9/30/03 143.84% 89.1%
10 Years ended 9/30/03 1.38% 25.7%
Since inception(d) 208.34% 243.4%
Since inception(d) (annualized) 7.09% 7.8%
Other Information
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 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."
(d) Investment operations commenced on May 4, 1987.
Portfolio Characteristics
(As of September 30, 2003)
Top Ten Equity Holdings
(% of Total Equity Investments)
Samsung Electronics Co. 9.01%
Taiwan Semiconductor Manufacturing Co. 3.29%
Hang Seng Bank, Ltd. 3.10%
Cheung Kong Holding, Ltd. 3.07%
Fubon Financial Holdings Co. 3.04%
PetroChina Co., Ltd. 2.95%
Hutchison Whampoa, Ltd. 2.72%
Hong Kong and China Gas Co., Ltd. 2.71%
POSCO 2.68%
Hon Hai Precision Industry Co., Ltd. 2.63%
Equity Country Weightings
(% of Total Equity Investments)
[ PIE CHART ]
Hong Kong/China 32.56% Malaysia 6.19%
South Korea 26.10% India 2.72%
Taiwan 17.84% Thailand 2.09%
Singapore 10.55% Indonesia 1.95%
Sector Breakdown: Top Ten Industries
(% of Total Equity Investments)
Information Technology 19.0%
Banking 16.2%
Industrials 14.3%
Consumer Discretionary 10.3%
Telecommunications 7.2%
Financial Services 6.7%
Real Estate-Developers 6.3%
Materials 6.8%
Consumer Staples 5.2%
Utilities 3.8%
1
REPORT OF THE INVESTMENT MANAGER
For the period from March 31 to September 30, 2003
PERFORMANCE
During the last six months the Fund's net asset value (NAV) per share
increased by US$3.36 from US$9.10 to US$12.46. In percentage terms the
Fund's total return performance was 36.9%. This compares with the return of
its relevant benchmark index, the MSCI Combined Far East Free Ex-Japan Gross
Index of 39.6%.
The chart below illustrates the Fund's net asset value performance per share
during the period:
[ BAR GRAPH ]
Local Currency Exchange Rates
to US Dollar
March 31 -
Sept. 30
Currency March 31, June 30, Sept. 30, 2003
US$/local rate 2003 2003 2003 Change %
North Asia
Chinese Renminbi 8.28 8.28 8.28 0.0
Hong Kong Dollar 7.88 7.80 7.74 1.8
Korean Won 1,254.45 1,194.50 1,150.10 8.3
New Taiwan Dollar 34.75 34.61 33.76 2.8
ASEAN
Indonesian Rupiah 8,901.50 8250.00 8,394.64 5.7
Malaysian Ringgit 3.80 3.80 3.80 0.0
Philippine Peso 53.53 53.45 54.87 -2.5
Singaporean Dollar 1.77 1.76 1.73 2.3
Thai Baht 42.88 42.04 39.93 6.9
South Asia
Indian Rupee 47.46 46.47 45.76 3.6
Source: Factset (Baring Asset Managemnt)
Stock Market Performance
March 31 to September 30, 2003
March 31 to June 30 to March 31 to
June 30, 2003 Sept. 30, 2003 Sept. 30, 2003
Market Market Market
Change % Change % Change %
Country - Index US $ US $ US $
North Asia
MSCI China 20.2 18.1 42.0
MSCI Hong Kong 9.8 26.1 38.5
MSCI Korea 30.8 9.8 43.6
MSCI Taiwan 15.6 23.2 42.3
ASEAN
MSCI Indonesia Free 48.1 14.2 69.2
MSCI Malaysia Free 10.4 6.0 17.0
MSCI Philippines Free 23.5 4.3 28.8
MSCI Singapore Free 16.4 15.1 34.0
MSCI Thailand Free 28.9 24.3 60.2
South Asia
MSCI India 18.2 27.6 50.8
Regional
MSCI Combined Far East
Free Ex-Japan 19.2 17.1 39.6
Source: MSCI
COUNTRY ALLOCATION(a)
March 31, June 30, Sept. 30,
Country 2003 2003 2003
North Asia 71.9% 75.5% 76.3%
Hong Kong/China 31.5 31.3 32.5
South Korea 24.3 27.9 26.0
Taiwan 16.1 16.3 17.8
ASEAN 22.3 22.0 20.7
Indonesia 1.0 1.7 1.9
Malaysia 6.9 6.3 6.2
Singapore 12.3 11.7 10.5
Thailand 2.1 2.3 2.1
South Asia
India 2.5 2.5 2.7
Cash and Equivalents 3.3 0.0 0.3
(a) Expressed as a percentage of total net assets and rounded to one
decimal place.
2
MARKET & ASSET ALLOCATION REVIEW
The market as measured by our benchmark index, rallied strongly during the
period-up 39.6%. During the last six months there was no month that produced
a negative return. The second and third quarters of 2003 saw the benchmark
index return 19.2% and 17.1% respectively.
The US Dollar weakened over the period with only the Philippine Peso
performing worse than the Greenback. The Korean Won, Thai Baht and Indonesia
Rupiah strengthened the most against the US Dollar rising 8.3%, 6.9% and
5.7%, respectively. During the period, Asian currencies, especially those
pegged to the US Dollar (particularly the Chinese Renminbi), received much
criticism in the international political arena for being relatively
undervalued.
The Asian market recovery coincided with the remission of SARS in mid April.
At around the same time, improved global economic news followed the end of
the Gulf War. Significantly, Japanese economic data suggested it too was
seeing an upturn. Investor sentiment towards the region, particularly
amongst foreign investors, markedly brightened. Between May and September,
an estimated $24bn of net foreign portfolio investments have flowed into Asia
ex-Japan, driving the markets higher.
During the second quarter of calendar year 2003, the smaller, more illiquid,
ASEAN markets led the rally. Underheld, commodity related economies and
relative valuations were the accepted reasons for their attractiveness. In
the third quarter, however, the larger markets of North Asia gained
leadership. Asset reflation, liquidity and recovery were investors'
determinants for investing. Over the six months, China as an investment
theme has returned to the forefront of investors' minds. The Indian consumer
and the Thai recovery themes also became widely accepted investment stories.
High beta investments led the Asian rally. These included China 'H' shares,
Thai property companies, the Technology and Cyclical sectors. For the first
time since 1999/2000, asset stories, the Hong Kong property sector in
particular, returned to the lime-light. Low beta Utilities, Consumer
Durables and Telecoms were notable laggards.
During the six months, the Fund made three major changes. First, the
portfolio's cash position was reduced from 3.3% in late March to fractional
cash early in the period. Second, in the middle of the period under review,
the portfolio's focus shifted marginally from mid-capitalization stocks to
larger capitalization issues, as the latter are likely to benefit to a
greater extent from foreign inflows into the region. Third, the emphasis in
North Asia moved from South Korea to Hong Kong in mid/late July.
OUTLOOK
Having lagged earlier in the year, the June and September quarters have seen
the Asian markets catch up and then overtake those of the Developed World.
At the time of writing, the Asian markets are up over 50% from their lows.
Investor sentiment towards the region has moved from one of pessimism to
outright optimism. The extent and speed of the turn around in attitude is
extreme, but markets often exhibit schizophrenic behavior.
As mentioned earlier in the report, foreigners have led this rally. Further
foreign fund flows are anticipated. Asian equities are no longer trading at
distressed levels, nor are they expensive in their own historic context; and
they remain inexpensive relative to most developed equity markets. Local
investors in most Asian markets remain conspicuous by their absence. The
next leg of the Asian rally is likely to require their presence and a belief
in the Asian reflation story. For the time being the jury is out, but the
omens are good, as loan growth appears to be picking up and property
transaction volumes are rising.
The Fund remains positioned in a cautiously optimistic manner. Its
investment focus is alpha based rather than beta oriented; in other words
quality-oriented rather than momentum-oriented companies are the main staple.
The portfolio is expected to perform well if weak markets transpire but also
to participate in further market strength.
James Squire
Investment Manager
Baring Asset Management (Asia) Limited
3
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THE ASIA PACIFIC FUND, INC.
Portfolio of Investments
September 30, 2003
(Unaudited)
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
EQUITIES--99.7%
Hong Kong--32.5%
500,000 Cheung Kong Holdings, Ltd. $ 3,954,777
(Real Estate-Developers)
986,500 China Mobile, Ltd.(a) .... 2,605,171
(Telecommunications)
320,000 CLP Holdings, Ltd. ....... 1,404,995
(Utilities)
820,000 Esprit Asia Holdings, Ltd.. 2,493,737
(Consumer Discretionary)
718,000 Fountain Set Holdings, Ltd. 560,952
(Industrials)
2,150,000 Giordano International,
Ltd. ................... 978,686
(Consumer Discretionary)
1,610,000 Global Bio-chem Technology
Group Co., Ltd. ........ 608,132
(Industrials)
8,000,000 Guangdong Investment, Ltd.. 1,508,303
(Industrials)
300,000 Guoco Group, Ltd. ........ 2,043,570
(Financial Services)
325,100 Hang Seng Bank, Ltd. ..... 3,988,287
(Banking)
2,056,000 Harbin Brewery Group,
Ltd.(a) ................. 716,857
(Consumer Staples)
2,591,846 Hong Kong and China Gas
Co., Ltd. .............. 3,480,875
(Utilities)
580,000 Hongkong Land Holdings,
Ltd. .................... 922,200
(Real Estate-Developers)
174,000 HSBC Holdings Plc. ....... 2,348,072
(Banking)
480,300 Hutchison Whampoa, Ltd. 3,504,345
(Industrials)
1,600,000 Kingboard Chemical
Holdings, Ltd. ......... 1,704,590
(Industrials)
2,186,000 Legend Holdings, Ltd. .... 882,157
(Information Technology)
2,504,000 Ngai Lik Industrial Holding
Ltd. .................... $ 881,144
(Consumer Discretionary)
11,210,000 PetroChina Co., Ltd. ..... 3,799,976
(Energy)
280,000 Sun Hung Kai Properties,
Ltd. .................... 2,268,912
(Real Estate-Developers)
1,020,000 Union Bank Hong Kong ..... 1,224,980
(Banking) ------------
41,880,718
------------
India--2.7%
78,147 Housing Development Finance
Corp., Ltd. ............ 852,257
(Financial Services)
11,414 Infosys Technologies,
Ltd.(a) . .............. 1,128,479
(Information Technology)
100,000 Morgan Stanley India
Investment Fund, Inc. ... 1,523,000
(Investment Company) ------------
3,503,736
------------
Indonesia--1.9%
9,582,000 PT Bank Mandiri Tbk(a) ... 970,185
(Banking)
1,144,000 PT Gudang Garam Tbk ...... 1,533,055
(Consumer Staples) ------------
2,503,240
------------
Malaysia--6.2%
149,200 British American Tobacco
Berhad ................. 1,550,895
(Consumer Staples)
1,800,000 Magnum Corp. Berhad ...... 1,184,210
(Consumer Discretionary)
1,032,400 Malayan Banking Berhad ... 2,608,168
(Banking)
500,000 Malaysia International
Shipping Corp. Berhad ... 1,302,632
(Industrials)
See Notes to Financial Statements.
4
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
Malaysia--(cont'd.)
520,000 Tanjong Co., Ltd. ........ $ 1,320,526
(Consumer Discretionary) ------------
7,966,431
------------
Singapore--10.5%
420,469 DBS Group Holdings, Ltd. .. 3,137,919
(Banking)
2,400,000 Lindeteves-Jacoberg, Ltd. . 1,471,754
(Industrials)
150,000 Singapore Airlines, Ltd. . 919,846
(Industrials)
253,198 Singapore Press Holdings,
Ltd. .................... 2,680,584
(Consumer Discretionary)
1,939,577 Singapore Technologies
Engineering, Ltd. ...... 2,098,296
(Industrials)
420,000 United Overseas Bank, Ltd. 3,255,908
(Banking) ------------
13,564,307
------------
South Korea--26.0%
14,730 Amorepacific Corp. ....... 1,786,580
(Consumer Staples)
14,000 Cheil Communications, Inc. 1,618,919
(Consumer Discretionary)
100,019 Kookmin Bank ............. 3,278,456
(Banking)
68,000 Korea Electrical Terminal
Co., Ltd. .............. 1,173,586
(Industrials)
79,980 KT Corp. ................. 1,594,002
(Telecommunications)
125,400 KT&G Corp. ............... 1,141,140
(Consumer Staples)
61,600 LG Petrochemical Co., Ltd. 1,226,484
(Materials)
140,350 Poongsan Corp. ........... 1,134,856
(Materials)
30,040 POSCO .................... 3,447,620
(Materials)
34,008 Samsung Electronics Co. ... 11,590,780
(Information Technology)
32,000 Samsung Fire & Marine
Insurance Co., Ltd. .... 1,791,766
(Financial Services)
7,580 Shinsegae Co., Ltd. ...... 1,341,156
(Consumer Discretionary)
15,290 SK Telecom Co., Ltd. ..... 2,446,081
(Telecommunications) ------------
33,571,426
------------
Taiwan--17.8%
374,231 Asustek Computer, Inc.(a) . $ 947,771
(Information Technology)
419,000 Basso Industry Corp. ..... 800,518
(Industrials)
72,000 Chunghwa Telecom Co., Ltd. 1,008,720
(Telecommunications)
2,120,000 Formosa Plastic Corp. .... 2,932,583
(Materials)
3,999,960 Fubon Financial Holdings
Co.(a) ................. 3,909,914
(Financial Services)
781,718 Hon Hai Precision Industry
Co., Ltd.(a) ........... 3,380,652
(Information Technology)
700,840 Lite-On Technology Corp. .. 753,569
(Consumer Discretionary)
2,399,965 Phoenixtec Power Co., Ltd. 2,729,818
(Industrials)
2,145,046 Taiwan Semiconductor
Manufacturing Co. ...... 4,225,283
(Information Technology)
2,711,457 United Microelectronics
Corp., Ltd.(a) ......... 2,248,839
(Information Technology) ------------
22,937,667
------------
Thailand--2.1%
3,380,000 Land & Houses PCL ........ 1,024,243
(Real Estate-Developers)
2,800,000 Shin Corp. PCL ........... 1,661,908
(Telecommunications) ------------
2,686,151
------------
Total equities
(cost $99,755,508)....... 128,613,676
------------
Principal
Amount
(000)
----------
REPURCHASE AGREEMENT--0.1%
United States
$ 123 State Street Bank & Trust
Co., 0.35%, dated 9/30/03
due 10/1/03 in the amount
of $123,001 (cost
$123,000; collateralized
by $110,000 U.S. Treasury
Notes, 6.5% due 2/15/10,
approximate value of
collateral including
accrued interest
$130,763)................ 123,000
------------
Total Investments--99.8%
(cost $99,878,508)......... 128,736,676
Other assets in excess of
liabilities--0.2%........ 198,898
------------
Net Assets--100%........... $128,935,574
------------
------------
---------------
(a) Non-income producing security.
See Notes to Financial Statements.
5
----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Assets and Liabilities
September 30, 2003
(Unaudited)
----------------------------------------------------------
Assets
Investments, at value (cost
$99,878,508)......................... $128,736,676
Foreign currency (cost $34,221)........ 34,551
Cash................................... 3,030
Receivable for investments sold........ 286,393
Dividends and interest receivable...... 256,804
Other assets........................... 74,558
------------
Total assets......................... 129,392,012
------------
Liabilities
Accrued expenses....................... 200,755
Deferred Thailand capital gains tax
liability............................ 120,535
Investment management fee payable...... 99,335
Administration fee payable............. 26,646
Foreign withholding taxes payable...... 9,167
------------
Total liabilities.................... 456,438
------------
Net Assets............................. $128,935,574
------------
------------
Net assets comprised:
Common stock, at par................. $ 103,441
Paid-in capital in excess of par..... 131,246,165
------------
131,349,606
Undistributed net investment income.... 986,121
Accumulated net realized losses on
investments and foreign currency
transactions......................... (32,138,319)
Net unrealized appreciation on
investments and foreign currencies... 28,738,166
------------
Net Assets, September 30, 2003......... $128,935,574
------------
------------
Net Asset Value per share:
($128,935,574 3 10,344,072 shares of
common stock outstanding)............ $12.46
------------
------------
See Notes to Financial Statements.
----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Operations
Six Months Ended September 30, 2003
(Unaudited)
----------------------------------------------------------
Net Investment Income
Income
Dividends (net of foreign withholding
taxes of $344,296).................. $ 2,265,444
Interest.............................. 2,151
-----------
Total income........................ 2,267,595
-----------
Expenses
Investment management fee............. 550,699
Administration fee.................... 142,794
Custodian's fees and expenses......... 129,000
Legal fees and expenses............... 90,000
Directors' fees and expenses.......... 75,000
Reports to shareholders............... 58,000
Insurance expense..................... 31,000
Audit fee............................. 21,000
Transfer agent's fees and expenses.... 18,000
Registration expenses................. 17,000
Miscellaneous......................... 30,234
-----------
Total expenses.................... 1,162,727
-----------
Net investment income................. 1,104,868
-----------
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
$104,044)........................... 1,327,607
Foreign currency transactions......... (43,595)
-----------
1,284,012
-----------
Net change in unrealized appreciation
(depreciation) on:
Investments (net of change in deferred
Thailand capital gains taxes of
$52,521)............................ 32,407,121
Foreign currencies.................... 12,662
-----------
32,419,783
-----------
Net gain on investments and foreign
currencies............................ 33,703,795
-----------
Net Increase in Net Assets
Resulting From Operations............... $34,808,663
-----------
-----------
See Notes to Financial Statements.
6
----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
----------------------------------------------------------
Six Months
Ended Year Ended
Increase (Decrease) September 30, March 31,
in Net Assets 2003 2003
------------- ------------
Operations
Net investment
income............... $ 1,104,868 $ 110,773
Net realized gain on
investments and
foreign currency
transactions......... 1,284,012 2,719,634
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 32,419,783 (32,792,091)
------------- ------------
Net increase (decrease)
in net assets
resulting from
operations........... 34,808,663 (29,961,724)
Cost of Fund shares
reacquired in tender
offer (Note 5)......... -- (36,918,702)
------------- ------------
Total increase
(decrease)............. 34,808,663 (66,880,426)
Net Assets
Beginning of period...... 94,126,911 161,007,337
------------- ------------
End of period(a)......... $ 128,935,574 $ 94,126,911
------------- ------------
------------- ------------
(a) Undistributed net
investment income $ 986,121 --
------------- ------------
----------------------------------------------------------
THE ASIA PACIFIC FUND, INC.
Notes to Financial Statements
(Unaudited)
----------------------------------------------------------
The Asia Pacific Fund, Inc. (the 'Fund') is 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.
Note 1. Accounting Policies
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 current rate of exchange.
7
(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. Accordingly, these realized foreign currency
gains(losses) are included in the reported net realized gains(losses) on
investment transactions.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange losses from sales and maturities of short-term securities,
holding of foreign currencies, currency gains (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.
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, if any, in excess of net capital loss carryforwards.
Dividends and distributions to shareholders, which are determined in accordance
with federal income tax regulations and which may differ from generally accepted
accounting principles, are recorded on the ex-dividend date. Permanent book/tax
differences relating to income and gains are reclassified to paid-in capital
when they arise.
Taxes: It is the Fund's policy 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.
Note 2. Investment Management and Administration Agreements
The Fund has a management agreement with Baring Asset Management
(Asia) Limited (the 'Investment Manager') and an administration agreement with
Prudential Investments LLC (the 'Administrator'). The Investment Manager is an
indirect, wholly owned subsidiary of ING Groep N.V.
The investment management fee is computed weekly and payable monthly: 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 the Fund's average weekly net assets.
The administration fee is also computed weekly and payable monthly at an
annual rate of 0.25% up to $200 million and 0.20% in excess of $200 million
based upon 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.
8
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended September 30, 2003 aggregated $35,290,463 and
$31,507,274, respectively.
Note 4. Tax
As of March 31, 2003, the capital loss carryforward for tax purposes is
approximately $31,479,700 of which $29,243,900 expires in 2007 and $2,235,800
expires in 2010. Accordingly, no capital gains distribution is expected to be
paid to shareholders until net gains have been realized in excess of such
carryforward. The capital loss carryforward differs from the amount on the
statement of assets and liabilities primarily due to the Fund's deferring 'wash
sale' losses of approximately $428,300 and post-October capital losses of
approximately $1,514,200. The differences between book and tax accumulated net
investment loss are primarily attributable to post-October currency gains of
approximately $28,800 and marking to market of unrealized gains on passive
foreign investment companies of approximately $90,000.
The United States federal income tax basis of the Fund's investments and
unrealized appreciation as of September 30, 2003 were as follows:
Total Net
Unrealized
Tax Basis Appreciation Depreciation Appreciation
------------ ------------ ------------ ------------
$100,306,844 $ 34,501,516 $ 6,071,684 $ 28,429,832
Note 5. Capital
There are 30 million shares of $0.01 par value common stock authorized.
During the fiscal quarter ended September 30, 2002, the Fund conducted a
tender offer in which the Fund purchased 3,448,024 shares (25% of the total
shares outstanding as of July 7, 2002) at a price of $10.66 per share,
representing a discount to NAV per share of 5%.
Note 6. Borrowings
The Fund is a party to a revolving loan facility with Barings (Guernsey)
Limited, an affiliate and wholly-owned division of Baring Asset Management. The
credit facility provides for a maximum commitment of the lower of $30 million or
25% of the Fund's net assets. Interest on any borrowings under the credit
facility will be at 0.75% plus the current LIBOR. The purpose of the credit
facility is to assist the Fund with its general cash flow requirements including
the provision of gearing accommodations. The expiration of the credit facility
is July 31, 2004. The Fund did not borrow any amounts pursuant to the credit
facility during the six months ended September 30, 2003.
9
THE ASIA PACIFIC FUND, INC.
Financial Highlights
(Unaudited)
--------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
September 30, ------------------------------------------------------------
Per Share Operating Performance: 2003 2003 2002 2001 2000 1999
------------- -------- -------- -------- -------- --------
Net asset value, beginning of period... $ 9.10 $ 11.67 $ 10.05 $ 14.69 $ 8.60 $ 9.19
------------- -------- -------- -------- -------- --------
Net investment income (loss)........... 0.11 0.01 (0.03) (0.01) --(c) 0.06
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... 3.25 (2.77) 1.52 (4.87) 6.23 (0.61)
------------- -------- -------- -------- -------- --------
Total from investment operations....... 3.36 (2.76) 1.49 (4.88) 6.23 (0.55)
------------- -------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income... -- -- -- -- -- (0.04)
Distributions in excess of net
investment income.................... -- -- -- -- (0.14) --
------------- -------- -------- -------- -------- --------
Total dividends and distributions...... -- -- -- -- (0.14) (0.04)
Increase resulting from share
repurchase........................... -- -- 0.02 0.06 -- --
Increase resulting from tender offer... -- 0.19 0.11 0.18 -- --
------------- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 12.46 $ 9.10 $ 11.67 $ 10.05 $ 14.69 $ 8.60
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Market value, end of period............ $ 11.96 $ 8.10 $ 10.12 $ 7.86 $10 7/16 $ 7 1/16
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Total investment return(a)............. 47.65% (19.96)% 28.75% (24.70)% 49.68% (21.02)%
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Ratios to Average Net Assets:
Expenses before loan interest and
commitment fee....................... -- 2.24% -- -- -- --
Total expenses......................... 2.05%(b) 2.25% 2.24% 1.81% 1.66% 1.79%
Net investment income (loss)........... 1.95%(b) 0.09% (0.31)% (0.05)% (0.01)% 0.80%
Supplemental Data:
Average net assets (000 omitted)....... $ 113,002 $122,681 $148,224 $214,819 $230,725 $141,079
Portfolio turnover rate................ 28%(d) 34% 49% 52% 62% 64%
Net assets, end of period (000
omitted)............................. $ 128,936 $ 94,127 $161,007 $155,579 $278,011 $162,719
---------------
(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) Annualized.
(c) Less than $0.005 per share.
(d) Not 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.
10
--------------------------------------------------------------------------------
Supplemental Proxy Information
--------------------------------------------------------------------------------
The Annual Meeting of Stockholders of the Asia Pacific Fund, Inc. was held on
August 7, 2003.
The number of shares issued, outstanding and eligible to vote as of the
record date of July 3, 2003 were 10,344,072 shares. Proxies representing
6,680,226 shares of Common Stock or 64.58% of the total outstanding shares voted
in the following manner:
Proposal I (Election of Directors)
Total Vote For Total Vote Withheld
Each Director Each Director
-------------- -------------------
Robert H. Burns 6,428,543 251,683
Douglas Tong Hsu 6,478,177 202,050
David G.P. Scholfield 6,589,723 90,503
--------------------------------------------------------------------------------
Corporate Governance
--------------------------------------------------------------------------------
In September 2003, in connection with its periodic review of the corporate
governance of the Fund, the Board of Directors approved various amendments to
the Fund's Bylaws that it believed were in the best long-term interests of the
Fund. These amendments, among other things, modified certain of the present
procedures for the conduct of stockholder meetings, added to the present
informational requirements for the advance notice of stockholder nominees for
the Board of Directors and of other stockholder proposals, and increased the
vote required for the election of Directors from a majority of the votes cast at
a stockholder meeting to the affirmative vote of holders of a majority of the
Fund's outstanding shares. A possible effect of this increase would be the
continuation in office of incumbent Directors in the event that neither
candidates nominated by stockholders nor candidates nominated by the Board
received the affirmative vote of holders of a majority of the Fund's outstanding
shares at an annual meeting of stockholders. The amended Bylaws are on file with
the Securities and Exchange Commission.
11
Directors
Michael J. Downey, Chairman
David J. Brennan
Robert H. Burns
Olarn Chaipravat
Robert F. Gunia
Douglas Tong Hsu
David G. P. Scholfield
Nicholas T. Sibley
Officers
Ronald G. M. Watt, President
Robert F. Gunia, Vice President and Treasurer
Linda McMullin, Assistant Treasurer
James D. Kelly, Assistant Treasurer
Deborah A. Docs, Secretary
Investment Manager
Baring Asset Management (Asia) Limited
1901 Edinburgh Tower
15 Queen's Road Central
Hong Kong
Administrator
Prudential Investments LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Equiserve Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
Independent Accountants
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that the Fund may purchase, from time
to time, shares of its common stock at market prices.
The accompanying financial statements as of September 30, 2003
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)
Citigate Dewe Rogerson, our shareholders' servicing agent toll-free
at:
(888) 4-ASIA-PAC
Current information about the Fund is available on its website
(http://www.asiapacificfund.com). This website includes monthly
updates of the Fund's performance and other data as well as the
Manager's quarterly presentation of performance and asset
allocations and comments on the current Asian outlook.
The Fund's Web Site address is: www.asiapacificfund.com
The Fund's CUSIP number is
044901106
APBS
Item 2 -- Code of Ethics -- Not required in this filing
Item 3 -- Audit Committee Financial Expert -- Not required in this filing
Item 4 -- Principal Accountant Fees and Services -- Not required in
this filing
Item 5 -- Reserved
Item 6 -- Reserved
Item 7 -- Disclosure of Proxy Voting Policies and Procedures for Closed-
End Management Investment Companies -- Not required in this filing
Item 8 -- Reserved
Item 9 -- Controls and Procedures
(a) It is the conclusion of the registrant's principal executive
officer and principal financial officer that the effectiveness of
the registrant's current disclosure controls and procedures (such
disclosure controls and procedures having been evaluated within 90
days of the date of this filing) provide reasonable assurance that
the information required to be disclosed by the registrant has been
recorded, processed, summarized and reported within the time period
specified in the Commission's rules and forms and that the
information required to be disclosed by the registrant has been
accumulated and communicated to the registrant's principal
executive officer and principal financial officer in order to allow
timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Item 10 -- Exhibits
(a) Code of Ethics -- Not required in this filing
(b) Certifications pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act - Attached hereto
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) The Asia Pacific Fund, Inc.
By (Signature and Title)* /s/Deborah A. Docs
------------------
Deborah A. Docs
Secretary
Date November 21, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By (Signature and Title)* /s/Ronald G. M. Watt
--------------------
President and Principal Executive Officer
Date November 21, 2003
By (Signature and Title)* /s/Robert F. Gunia
------------------
Treasurer and Principal Financial Officer
Date November 21, 2003
* Print the name and title of each signing officer under
his or her signature.