The Asia Pacific
Fund, Inc.
-------------------------------------------------------------------
Semi-Annual Report
September 30, 2002
www.asiapacificfund.com
The Asia Pacific Fund, Inc.
As of September 30, 2002 (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 $101,202,220
Shares Outstanding 10,344,072
Net Asset Value $9.78
Equity 98.7%(a)
Repurchase Agreement 1.3%(a)
Total Returns (US Dollar terms)
Market
Period Price(b) NAV(c)
3 months ended 9/30/02 (20.21)% (12.8)%
6 months ended 9/30/02 (17.69)% (16.2)%
9 months ended 9/30/02 (3.81)% (6.6)%
1 Year ended 9/30/02 28.55% 23.1%
3 Years ended 9/30/02 (6.26)% (11.6)%
5 Years ended 9/30/02 (18.24)% (19.5)%
10 Years ended 9/30/02 12.37% 35.7%
Since inception(d) 114.76% 169.9%
Since inception(d) (annualized) 5.07% 6.7%
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, 2002)
Top Ten Equity Holdings
(% of Total Equity Investments)
Samsung Electronics Co. 9.87%
Hutchison Whampoa, Ltd. 4.43%
China Mobile, Ltd. 3.79%
Kookmin Bank 3.67%
United Overseas Bank, Ltd. 3.39%
POSCO 3.30%
Taipei Bank 3.29%
Hong Kong and China Gas Co., Ltd. 3.24%
Hang Seng Bank 2.88%
Sun Hung Kai Properties, Ltd. 2.66%
Equity Country Weightings
(% of Total Equity Investments)
(CHART)
Hong Kong/China 30.94% Malaysia 6.37%
South Korea 29.57% Thailand 1.73%
Taiwan 16.62% India 1.56%
Singapore 12.22% Indonesia .99%
Sector Breakdown: Top Ten Industries
(% of Total Equity Investments)
Banking 21.20%
Information Technology 20.40%
Industrials 9.76%
Telecommunications 8.99%
Materials 7.96%
Consumer Discretionary 7.69%
Real Estate-Developers 5.68%
Financial Services 4.49%
Utilities 4.28%
Consumer Staples 3.49%
1
Report of the Investment Manager
For the period from March 31 to September 30, 2002
PERFORMANCE
Asian markets fell sharply during the period under review. During the last
six months the Fund's net asset value (NAV) per share decreased by
US$ 1.89 from US$ 11.67 to US$ 9.78. In percentage terms the Fund's total
return performance was negative 16.2%. This compares with the return of its
relevant benchmark index, the MSCI All Countries Combined Far East Free
Ex-Japan index of negative 21.4%. The Fund's outperformance of 5.2% was
principally sourced from stock selection.
Local Currency Exchange Rates
to US Dollar
March 31 -
Sept. 30
Currency March 31, June 30, Sept. 30, 2002
US$/local rate 2002 2002 2002 Change %
North Asia
Chinese Renminbi 8.28 8.28 8.27 0.1
Hong Kong Dollar 7.80 7.80 7.80 0.0
Korean Won 1,327.00 1,203.00 1,228.00 7.5
New Taiwan Dollar 35.00 33.41 34.95 0.1
ASEAN
Indonesian Rupiah 9,825.00 8,712.00 8,999.00 8.4
Malaysian Ringgit 3.80 3.80 3.80 0.0
Philippine Peso 51.02 50.32 52.43 -2.8
Singaporean Dollar 1.84 1.77 1.78 3.3
Thai Baht 43.52 41.53 43.26 0.6
South Asia
Indian Rupee 48.78 48.86 48.35 0.9
Stock Market Performance
March 31 to September 30, 2002
March 31 to June 30 to March 31 to
June 30, 2002 Sept. 30, 2002 Sept. 30, 2002
Market Market Market
Change % Change % Change %
Country - Index US $ US $ US $
North Asia
MSCI China 1.1% -14.5% -13.5%
MSCI Hong Kong -6.1 -16.0 -21.1
MSCI Korea -3.6 -16.2 -19.2
MSCI Taiwan -14.3 -24.8 -35.5
ASEAN
MSCI Indonesia Free 19.0 -18.5 -2.9
MSCI Malaysia Free -3.5 -11.7 -14.8
MSCI Philippines Free -24.5 -5.8 -28.9
MSCI Singapore Free -11.5 -14.0 -23.9
MSCI Thailand Free 5.3 -17.3 -12.9
South Asia
MSCI India -7.8 -7.2 -14.4
Regional
MSCI Combined Far East -6.6 -17.0 -22.4
Free Ex-Japan
Source: Factset
COUNTRY ALLOCATION(a)
March 31, June 30, Sept. 30,
Country 2002 2002 2002
North Asia 79.9% 73.7% 75.7%
Hong Kong/China 30.6 29.6 30.4
South Korea 29.4 26.9 29.0
Taiwan 19.9 17.2 16.3
ASEAN 19.1 18.3 20.9
Indonesia 0.9 0.5 1.0
Malaysia 4.2 5.0 6.2
Singapore 12.9 11.4 12.0
Thailand 1.1 1.4 1.7
South Asia
India 0.3 1.1 1.5
Cash and Equivalents 0.7 6.9 1.9
(a) Expressed as a percentage of total net assets.
MARKET & ASSET ALLOCATION REVIEW
Asian markets, taking their cue from Wall Street, fell heavily during the
period under review. Unlike the Developed World's markets, the Fund's
benchmark (the MSCI All Countries Combined Far East Free ex-Japan Index) has
yet to fall back to the lows witnessed a year ago following the dreadful
terrorist attacks on the U.S.
Asia fell during the second calendar quarter by 6.6%, a creditable performance
compared to global equity markets. However, the significant period of
outperformance was short lived, as the region's markets fell sharply in the
third quarter (-17.0%). The catalyst for the decline was a loss of investor
confidence. This was partly due to growing concerns about the possibility of
a 'double dip' in the global economy. Also, international investors appear
to have become net sellers of Asian equities and this is probably due to
rising mutual fund redemptions. The supply / demand equation also worsened,
with forced sales by European insurance companies as they attempted to
better balance their assets and liabilities.
Economic and corporate results in Asia during the six months ended September
have been largely positive. The areas of weakness in technology-related
spheres have been more than offset by better-than-expected numbers across a
broad range of industries. However, investors chose to ignore the
2
positive news and to focus on the soft economic outlook for 2003 and disquiet
in the Middle East.
No Asian market provided a positive return in dollar terms over the period.
The best was Indonesia (-2.9%) and this was largely due to a strong Rupiah
(+9.2%). The worst performers were Taiwan (-35.5%), the Philippines (-28.9%)
and Singapore (-23.9%). Asian currencies over the period generally firmed.
The second quarter of the calendar year witnessed the Asian currencies moving
sharply higher against the US dollar, with the Rupiah and the Korean Won
seeing the sharpest gains. The gains were partly given back in the third
quarter. At the market level, the gains in the second quarter made by
Indonesia (+19%), Thailand (+5.5%) and China (+1.1%) were all (and more)
given back in the third quarter.
During the period, exposure to North Asia was reduced. This was due largely to
sales made in Taiwan. Profits were taken in Korea during the second quarter
but these were reinvested in that country towards the end of the third
quarter, after the market there had fallen. Elsewhere, exposure to Malaysia
was increased in the third quarter, a time which also saw a non-benchmark bet
being built in India. Finally, the Fund's cash position was built up in
June ahead of the Fund's tender offer in July. This was depleted following
the offer.
At the sector level, the Fund has been underweight Technology and Telecoms for
the period and has been overweight Banks and Consumer-Related. The number of
stocks held by the Fund has been reduced from in excess of 60 to nearer 50 to
55. Overall, stock selection has been strong over the period, particularly in
Taiwan, Singapore and Thailand. Asset allocation has been broadly neutral.
The positions in cash, India, the underweighting to Taiwan and the Philippines
have helped; but underweight exposure to Malaysia, Indonesia and Thailand,
plus the overweight exposure to Hong Kong/China, have detracted value.
OUTLOOK
The Manager, although cautious, is not as bearish as the consensus. Many
negative issues face equity markets, particularly in the more developed parts
of the world. Return expectations remain too high. Valuations are not yet
low enough to be indisputably attractive. Economic growth remains muted and
international politics are unstable. Yet, these have been widely discussed
and, to a degree, are already partially discounted.
In Asia, the Manager believes that barring a disaster (for example, the
scenario of the S&P 500 falling below the 600 level: it is 841 at the time of
writing, having seen a closing-day low of 798 on July 23 and, again, at 777 on
October 10), the downside for the region is relatively muted. Indeed, if the
market is in the process of troughing, the next big move is more likely to be
up than down, although there is no obvious near-term catalyst to spark this
trend. The positive arguments in favor of Asia have been made repeatedly by
the Manager over the last 18 months or so. They remain largely unchanged. So
far, the region has significantly outperformed most other equity markets but
is down slightly in absolute terms. Indeed, the biggest negative for Asian
equities is the very fact that they are "equities"! In time, risk appetite
will once again improve and the world will become a friendlier place for
investors, particularly for those invested in Asia. In the meantime, the
Manager will focus on the preservation of capital and believes that the Fund's
current portfolio is reasonably well positioned to be able to protect the
downside, as well as to capture market upside. The Asian markets are likely
to remain fragile and move within a relatively narrow trading range. They may
lag any initial rally on Wall Street but if the US market recovery is deemed
sustainable, they are likely to catch up and outperform in a similar manner to
late last year.
James Squire
Investment Manager
Baring Asset Management (Asia) Limited
November 1, 2002
3
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THE ASIA PACIFIC FUND, INC.
Portfolio of Investments
September 30, 2002
(Unaudited)
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
EQUITIES--98.1%
Hong Kong--30.4%
399,000 Cheung Kong Holdings, Ltd. $ 2,522,024
.
(Real Estate-Developers)
1,629,000 China Mobile, Ltd.(a) .... 3,759,439
(Telecommunications)
812,000 Esprit Asia Holdings, Ltd. 1,249,300
........................
(Consumer Discretionary)
3,500,000 Giordano International, 1,368,665
Ltd. .
(Consumer Discretionary)
329,000 Guoco Group, Ltd. ........ 1,860,218
(Financial Services)
272,100 Hang Seng Bank, Ltd. ..... 2,860,697
(Banking)
2,391,846 Hong Kong and China Gas 3,219,971
Co., Ltd. ..............
(Utilities)
150,000 HSBC Holdings Plc. ....... 1,543,355
(Banking)
761,300 Hutchison Whampoa, Ltd. 4,402,119
........................
(Industrials)
1,200,000 Kingboard Chemical 688,500
Holdings, Ltd. .........
(Industrials)
3,098,000 Legend Holdings, Ltd. .... 1,102,234
(Information Technology)
9,862,000 PetroChina Co., Ltd. ..... 1,997,798
(Energy)
450,000 Sun Hung Kai Properties, 2,642,454
Ltd.
(Real Estate-Developers)
924,000 Union Bank Hong Kong ..... 770,043
(Banking)
848,000 VTech Holdings, Ltd. ..... 739,323
(Industrials) ------------
30,726,140
------------
India--1.5%
50,000 Ranbaxy Laboratories, Ltd. 947,569
........................
(Healthcare)
125,650 State Bank of India ...... 597,454
(Finance) ------------
1,545,023
------------
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
Indonesia--1.0%
2,380,000 PT Telekomunikasi Tbk .... $ 985,713
(Telecommunications)
Malaysia--6.2%
123,200 British American Tobacco 1,142,838
Berhad .................
(Consumer Staples)
932,400 Malayan Banking Berhad ... 1,962,941
(Banking)
1,885,000 Public Bank Berhad ....... 1,269,890
(Finance)
804,000 Tanjong Co., Ltd. ........ 1,946,520
(Consumer Discretionary) ------------
6,322,189
------------
Singapore--12.0%
180,000 City Developments, Ltd. 476,017
........................
(Real Estate-Developers)
343,469 DBS Group Holdings, Ltd. 2,164,500
........................
(Banking)
274,080 Overseas-Chinese Banking 1,480,473
Corp., Ltd. ............
(Banking)
1,911,000 Singapore Exchange, Ltd. 1,236,547
........................
(Financial Services)
214,198 Singapore Press Holdings, 2,289,923
Ltd.
(Consumer Discretionary)
1,199,577 Singapore Technologies 1,127,189
Engineering, Ltd. ......
(Industrials)
502,000 United Overseas Bank, Ltd. 3,361,264
........................ ------------
(Banking)
12,135,913
------------
South Korea--29.0%
15,430 Hite Brewery Co., Ltd. ... 741,495
(Consumer Staples)
147,722 Hyosung Corp. ............ 1,491,959
(Materials)
117,652 Iroonet Co., Ltd. ........ 1,341,583
(Consumer Discretionary)
5,990 Keumkang, Ltd. ........... 570,825
(Industrials)
100,019 Kookmin Bank ............. 3,645,571
(Banking)
See Notes to Financial Statements.
4
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
South Korea (cont'd.)
70,000 Korea Electric Terminal Co. $ 812,462
........................
(Industrials)
73,980 KT Corp. ................. 1,640,876
(Telecommunications)
154,350 Poongsan Corp. ........... 1,244,606
(Materials)
37,790 POSCO .................... 3,278,057
(Materials)
40,308 Samsung Electronics Co. 9,799,990
........................
(Information Technology)
23,500 Samsung Fire & Marine 1,366,646
Insurance Co., Ltd. ....
(Financial Services)
14,000 Samsung SDI Co., Ltd. .... 937,324
(Information Technology)
12,890 SK Telecom Co., Ltd. ..... 2,488,235
(Telecommunications) ------------
29,359,629
------------
Taiwan--16.3%
472,428 Asustek Computer, Inc.(a) 1,108,414
........................
(Information Technology)
2,545,000 Formosa Plastic Corp. .... 1,885,993
(Materials)
131 Fubon Financial Holdings 109
Co.(a) .................
(Financial Services)
600,432 Hon Hai Precision Industry 2,001,439
Co., Ltd.(a) ...........
(Information Technology)
2,246,000 Phoenixtec Power Co., Ltd. 1,355,953
........................
(Industrials)
1,002,175 President Chain Store Corp. 1,577,099
.
(Consumer Staples)
174,954 Sunplus Technology Co., 647,329
Ltd.
(Information Technology)
3,586,000 Taipei Bank .............. 3,262,796
(Banking)
-------------------------------------------------------
Value
Shares Description (Note 1)
-------------------------------------------------------
1,975,154 Taiwan Semiconductor $ 2,322,712
Manufacturing Co. ......
(Information
Technology-Upstream)
3,451,920 United Microelectronics 2,340,786
Corp., Ltd.(a) ......... ------------
(Information
Technology-Upstream)
16,502,630
------------
Thailand--1.7%
1,600,000 GMM Grammy Public Co., 684,235
Ltd. ....................
(Consumer Discretionary)
2,643,800 Ratchaburi Electricity 1,032,829
Generating Holding PCL ------------
........................
(Utilities)
1,717,064
------------
Total common stocks
(cost $97,682,590)....... 99,294,301
------------
Principal
Amount
(000)
----------
REPURCHASE AGREEMENT--1.3%
United States
$ 1,284 State Street Bank and Trust
Co., 0.50%, dated 9/30/02
due 10/1/02 in the amount
of $1,284,018 (cost
$1,284,000;
collateralized by
$865,000 U.S. Treasury
Bonds, 9.25% due 2/15/16,
approximate value of
collateral including
accrued interest
$1,316,963).............. 1,284,000
------------
Total Investments--99.4%
(cost $98,966,590; Note
4)....................... 100,578,301
Other assets in excess of
liabilities--0.6%........ 623,919
------------
Net Assets--100%........... $101,202,220
------------
------------
---------------
(a) Non-income producing security.
See Notes to Financial Statements.
5
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THE ASIA PACIFIC FUND, INC.
Statement of Assets and Liabilities
September 30, 2002
(Unaudited)
----------------------------------------------------------
Assets
Investments, at value (cost
$98,966,590)......................... $100,578,301
Foreign currency (cost $1,170,769)..... 1,164,377
Cash................................... 954
Dividends and interest receivable...... 156,055
Other assets........................... 66,712
------------
Total assets......................... 101,966,399
------------
Liabilities
Accrued expenses....................... 569,672
Investment management fee payable...... 87,306
Deferred Thailand capital gains tax
liability............................ 81,434
Administration fee payable............. 22,350
Foreign withholding taxes payable...... 3,417
------------
Total liabilities.................... 764,179
------------
Net Assets............................. $101,202,220
------------
------------
Net assets comprised:
Common stock, at par................. $ 103,441
Paid-in capital in excess of par..... 131,209,458
------------
131,312,899
Undistributed net investment income.... 67,855
Accumulated net realized losses on
investments and foreign currency
transactions......................... (31,702,492)
Net unrealized appreciation on
investments and foreign currencies... 1,523,958
------------
Net Assets, September 30, 2002......... $101,202,220
------------
------------
Net Asset Value per share:
($101,202,220 3 10,344,072 shares of
common stock outstanding)............ $9.78
------------
------------
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THE ASIA PACIFIC FUND, INC.
Statement of Operations
Six Months Ended September 30, 2002
(Unaudited)
----------------------------------------------------------
Net Investment Income
Income
Dividends (net of foreign withholding
taxes of $305,932)................. $ 1,635,634
Interest............................. 12,798
------------
Total income....................... 1,648,432
------------
Expenses
Investment management fee............ 647,208
Administration fee................... 177,280
Custodian's fees and expenses........ 177,000
Reports to shareholders.............. 168,000
Legal fees and expenses.............. 104,000
Directors' fees...................... 49,000
Audit fee............................ 20,000
Registration expenses................ 16,000
Insurance............................ 15,000
Transfer agent's fees and expenses... 10,000
Miscellaneous........................ 32,886
------------
Total operating expenses......... 1,416,374
Loan interest (Note 6)............... 14,323
------------
Total expenses................... 1,430,697
------------
Net investment income................ 217,735
------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions (net of
Thailand capital gains taxes of
$17,003)........................... 4,381,482
Foreign currency transactions........ 91,383
------------
4,472,865
------------
Net change in unrealized appreciation
(depreciation) on:
Investments (net of change in
deferred Thailand capital gains
taxes of $46,403).................. (27,581,565)
Foreign currencies................... (4,951)
------------
(27,586,516)
------------
Net loss on investments and foreign
currencies........................... (23,113,651)
------------
Net Decrease in Net Assets
Resulting From Operations.............. $(22,895,916)
------------
------------
See Notes to Financial Statements. 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 2002 2002
------------- ------------
Operations
Net investment income
(loss)............... $ 217,735 $ (454,442)
Net realized gain
(loss) on investments
and foreign currency
transactions......... 4,472,865 (2,216,294)
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... (27,586,516) 24,209,456
------------- ------------
Net increase (decrease)
in net assets
resulting from
operations........... (22,895,916) 21,538,720
Cost of Fund shares
reacquired in
repurchase program
(Note 5)............... -- (1,292,200)
Cost of Fund shares
reacquired in tender
offer (Note 5)......... (36,909,201) (14,818,274)
------------- ------------
Total increase
(decrease)............. (59,805,117) 5,428,246
Net Assets
Beginning of period...... 161,007,337 155,579,091
------------- ------------
End of period(a)......... $ 101,202,220 $161,007,337
------------- ------------
------------- ------------
(a) Undistributed net
investment income $ 67,855 --
------------- ------------
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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 The following is a summary
Policies of significant accounting
policies followed by the Fund in the preparation
of its financial statements.
Securities Valuation: Investments are stated at value. Investments for which
market quotations are readily available are valued at the last reported sales
prices. If there is no sales price or reliable market quotation on the date of
valuation, then investments are valued at the last bid price quoted on such date
or at fair value as determined in good faith by or under the direction of the
Fund's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults, and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in United States dollars. Foreign currency amounts are translated into United
States dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at
the closing rate of exchange.
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 are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: It is the Fund's intention to continue to meet the requirements of the
U.S. Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.
Withholding taxes on foreign dividends, interest and capital gains have been
provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates.
Note 2. Investment The Fund has a manage
Management and ment agreement with Bar-
Administration ing Asset Management
Agreements (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 Purchases and sales of
Securities investment securities, other
than short-term investments, for the six months
ended September 30, 2002 aggregated $18,533,888 and $55,984,889, respectively.
Note 4. Tax As of March 31, 2002, the
capital loss carryforward for tax purposes is
approximately $36,050,900 of which $33,815,100 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 $124,400. The differences between book and tax
accumulated net investment loss are primarily attributable to post-October
currency losses of approximately $79,800 and marking to market of unrealized
losses on passive foreign investment companies of approximately $70,100.
The United States federal income tax basis of the Fund's investments and
unrealized appreciation as of September 30, 2002 were as follows:
Total Net
Other Cost Unrealized
Tax Basis Appreciation Depreciation Adjustments Appreciation
----------- ------------ ------------ ----------- ------------
$99,124,952 $ 17,043,962 $ 15,590,613 $(6,319) $ 1,447,030
Note 5. Capital There are 30 million shares
of $0.01 par value common stock authorized.
During the year ended March 31, 2002, the Fund participated in a share
repurchase program. The Fund repurchased 152,700 shares in the open market at an
average market price of $8.46, representing a weighted average discount to NAV
per share of 20.38%.
During the fiscal quarters ended September 30, 2002 and December 31, 2001,
the Fund conducted tender offers. For the second fiscal quarter ended September
30, 2002, 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%. For the third fiscal quarter ended December 31,
2001, the Fund purchased 1,532,455 shares (10% of the total shares outstanding
as of December 7, 2001) at a price of $9.56 per share, representing a discount
to NAV per share of 10%.
Note 6. Borrowings The Fund had a
$25,000,000 committed unsecured line of credit
with an unaffiliated lender.
On July 8, 2002, the Fund borrowed $25,000,000, which was repaid by the Fund
on July 16, 2002 at which time the line of credit was cancelled. The borrowing
was at an average interest rate of 2.29%. Total interest expense paid to the
unaffiliated lender during the period was $14,323.
9
THE ASIA PACIFIC FUND, INC.
Financial Highlights
(Unaudited)
--------------------------------------------------------------------------------
Six Months
Ended Year Ended March 31,
September 30, ------------------------------------------------------------
Per Share Operating Performance: 2002 2002 2001 2000 1999 1998
------------- -------- -------- -------- -------- --------
Net asset value, beginning of period... $ 11.67 $ 10.05 $ 14.69 $ 8.60 $ 9.19 $ 13.90
------------- -------- -------- -------- -------- --------
Net investment income (loss)........... 0.02 (0.03) (0.01) --(c) 0.06 0.12
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... (2.22) 1.52 (4.87) 6.23 (0.61) (4.14)
------------- -------- -------- -------- -------- --------
Total from investment operations....... (2.20) 1.49 (4.88) 6.23 (0.55) (4.02)
------------- -------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income... -- -- -- -- (0.04) (0.12)
Distributions in excess of net
investment income.................... -- -- -- (0.14) -- (0.16)
Distributions from realized gains on
investments.......................... -- -- -- -- -- (0.41)
------------- -------- -------- -------- -------- --------
Total dividends and distributions...... -- -- -- (0.14) (0.04) (0.69)
Increase resulting from share
repurchase........................... -- 0.02 0.06 -- -- --
Increase resulting from tender offer... 0.31 0.11 0.18 -- -- --
------------- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 9.78 $ 11.67 $ 10.05 $ 14.69 $ 8.60 $ 9.19
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Market value, end of period............ $ 8.33 $ 10.12 $ 7.86 $10 7/16 $ 7 1/16 $ 9.00
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Total investment return(a)............. (17.69)% 28.75% (24.70)% 49.68% (21.02)% (16.07)%
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
Ratios to Average Net Assets:
Expenses before loan interest and
commitment fee....................... 2.02%(b) -- -- -- -- --
Total expenses......................... 2.03%(b) 2.24% 1.81% 1.66% 1.79% 1.56%
Net investment income (loss)........... 0.31%(b) (0.31)% (0.05)% (0.01)% 0.80% 0.99%
Supplemental Data:
Average net assets (000 omitted)....... $ 140,451 $148,224 $214,819 $230,725 $141,079 $220,857
Portfolio turnover rate................ 14%(d) 49% 52% 62% 64% 54%
Net assets, end of period (000
omitted)............................. $ 101,202 $161,007 $155,579 $278,011 $162,719 $174,019
---------------
(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 13, 2002.
The number of shares issued, outstanding and eligible to vote as of the
record date of July 9, 2002 were 10,344,072 shares. Proxies representing
7,940,074.5910 shares of Common Stock or 76.7596% 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
-------------- -------------------
Olarn Chaipravat 7,308,156.5060 631,918.0850
Michael J. Downey 7,119,854.9510 820,219.6400
Proposal II--Stockholder Proposal (To recommend that the Board of Directors take
steps to open-end the fund.)
FOR AGAINST ABSTAIN NO-VOTE
--------------- -------------- ------------ --------------
1,091,216.3580 2,334,716.1020 118,482.1310 4,395,670.0000
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
Christine Gerrity-Yacuk, Assistant Treasurer
Deborah A. Docs, Secretary
Vasso-Athene Spanos, Assistant 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 and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
The accompanying financial statements as of September 30, 2002
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 CUSIP number is
044901106