The
Asia Pacific
Fund, Inc.
ANNUAL REPORT
March 22, 2003
The Asia Pacific Fund, Inc.
------------------------------------
Contents
The Fund's Management 2
Letter to Shareholders 3
Report of the Investment Manager 4
Portfolio of Investments 16
Statement of Assets and Liabilities 20
Statement of Operations 21
Statement of Changes in Net Assets 22
Notes to Financial Statements 23
Financial Highlights 28
Independent Auditors' Report 30
U.S. Federal Tax Information 31
Share Price, Net Asset Value and Distribution History 32
Dividend Reinvestment Plan 33
Management of the Fund 34
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.
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 at: 1-(888) 4-ASIA-PAC
The Fund's Web Site address is: www.asiapacificfund.com
The Fund's CUSIP number is 044901106
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The Asia Pacific Fund, Inc.
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The Fund's Management
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
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 Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
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The Asia Pacific Fund, Inc.
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Letter to Shareholders
May 22, 2003
Dear Shareholders:
The challenging equity market conditions of
the fiscal year ended March 31, 2003 resulted
in negative U.S. dollar performance of both
The Asia Pacific Fund (-22.1%) and its benchmark,
the MSCI All Countries Combined Far East Free ex-
Japan index (-25.2%). Even on an intra-year
basis, only the last quarter of 2002 proved
positive for the Asian stock markets as
measured by the index (+3.1%). This
disappointment was repeated on a global
scale, by all major markets. Nevertheless,
in maintaining its long-term record of
outperformance on a relative basis, the Fund
has continued to be true to its investment
objectives.
This has been a year in which market
performance has, not for the first time,
obscured the rich seam of investment
opportunity which is Asia. I take this
moment to restate your Board's confidence
in the Asia Pacific region and in the ongoing
ability of companies there to provide attractive
capital appreciation, long-term, for Fund
shareholders. The economic engine of China
is expected to grow by at least 7% this calendar
year. The region's strong fundamentals -
manifested by high earnings growth, strong
corporate balance sheets, low debts and
improving domestic consumption, combined
with low valuations - are likely to make it
a compelling proposition when equity risk
appetite returns.
On this last point, wariness of investors
about returning to Asian stock markets has
been a feature of the past year. It is
reflected by the continuation of the
discount - albeit narrower than in the past
- of the Fund's stock price to net asset
value. Despite poor performance, US mutual
fund investors overall have continued to
favor their domestic equity, bond and money markets.
I and my fellow directors believe that the
three tender offers made by the Fund over
the last two years sent an important,
positive message to the market about the
Board's commitment to addressing the Fund's
discount. Going forward we will seek to
continue our focus on aiming to deliver
superior Fund net asset value performance.
Thank you for your support.
Sincerely,
Michael J. Downey,
Chairman
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
for the year ended March 31, 2003
Summary
The Manager's optimism on the Asian markets
last year did not come to fruition. The
region neither generated positive returns,
nor significantly outperformed the major
regional markets (see Table 1 below). The
green shoots of Asian investors' optimism,
that were beginning to appear at the time of
the last annual report, withered. The
geopolitical backdrop of the last twelve
months - events in Iraq, high oil prices,
faltering global economic growth and growing
deflation concerns - has been a hostile
environment for equities. Indeed, there has
been nowhere to hide for equity investors.
Nevertheless, economic growth and corporate
earnings news for the region remained
robust, growing at +6% and +30%
respectively. This good news, however, was
not reflected in the local bourses and they
continued to be de-rated, despite their improved
fundamentals.
Table 1. Performance of Asia Pacific and
Major World Markets - Nowhere to Hide
Market Price (USD) 1 Yr to 2 Yrs to 3 Yrs to 5 Yrs to
Returns Gross (%) end March 2003 end March 2003 end March 2003 end March 2003
MSCI AC Far East -25.2 -14.9 -46.6 -27.1
Free Ex-Japan
MSCI World Index -23.9 -26.8 -45.0 -24.0
S&P Composite 500 -24.8 -24.6 -40.9 -17.4
NASDAQ -27.3 -27.1 -70.7 -26.9
MSCI Europe including UK -25.5 -29.2 -45.2 -31.6
Source: Factset (Baring Asset Management)
The outlook for the Asian markets in the
immediate future will remain influenced by
Wall Street. As for the region itself, the
Manager believes it to be discounting a
considerable amount of negative news. The
extent of bearishness is unfounded, unless
some unforeseen disaster strikes. At the
time of writing, this disaster is deemed to
be SARS (Severe Acute Respiratory Syndrome),
which is now jostling to replace the Iraq
War as the lead news item in global and
local media reports. The Manager, as we have
said repeatedly over the last two years,
continues to hold the view that the price
levels at which Asian markets are trading
today offer a very attractive investment
opportunity. Fear is at extreme levels and
is more likely to subside than to rise. Once
expectations improve, investors will return
to the markets.
Net, net, the optimism which we expressed
last year is postponed, not extinguished.
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Overview
During the fiscal year ending March 31,
2003, the Fund's benchmark, the MSCI All
Countries Combined Far East Free ex-Japan
index, fell 25.2%. As shown in Table 2
below, all markets, with the exception of
Thailand (+6.4%), fell. The Philippines
(-41.0%) and Taiwan (-32.4%) performed the
worst. Due to the high base comparison
effect, the market returns appear in a
particularly poor light (see Chart 1). The
markets closed the period under review
almost at their lows for the year. The
impact of firming Asian currencies - with
the exception of the Philippines Peso (-
4.9%) - against the U.S. dollar was of
minimal help in offsetting the declines in
the local bourses. The Indonesian Rupiah
(+9.4%), followed by the South Korean Won
(+5.5%), were the strongest Asian
currencies. Currency market performance for
the year under review is shown in Table 3
below.
Chart 1. MSCI AC Far East Free Ex-Japan -
Roller Coaster Ride
(CHART)
Source: Morgan Stanley Capital International
In many respects, the calendar year 2002 was
a good year for Asia and Asian corporates.
Regional economic growth, in real terms,
rose from +3.9% to +6.0%, or from +1.0% to
+4.2% if China and India are excluded.
Corporate earnings for the Fund's benchmark
index rose over 30%. As a result, on a
trailing price earnings (P/E) basis, the
index was de-rated from 19 times to 13 times,
or from 15 times to 11 times on a current P/E basis.
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
The old investment adage, "the markets are
always right", implies that the decline in
regional indices presages a substantial
deterioration of the investment outlook.
Indeed, the geopolitical backdrop over the
last year has been poor, oil prices were
high, the global insurance industry was in
trouble and there were growing concerns over
sluggish OECD economic growth and even
deflation. As a result, investors' appetite
for risk has substantially declined. The
desire to take on risk, as measured by
CSFB's analysis on Asia's Equity Risk
Premium (ERP),suggests that fear has almost
never been higher, even when compared to the
height of the Asian Crisis in 1998. This is
illustrated on Chart 2.
Chart 2. Asian Equity Risk Premium - Close
To Record Highs
(CHART)
Source: CSFB
Methodology: To calculate ERP consensus IBES
earnings are taken for years 1-3. Medium
term growth rates and payout ratios are
assumed for years 4-12, along with a
terminal growth rate assumption: These
remain constant over time. The US 10 year
government bond is taken as the risk free
rate.
Low beta, defensive, value-oriented markets
and stocks outperformed during the period
under review. Growth stocks, 'New Economy'
plays and TMT (Telecommunications, Media,
Technology) sectors all struggled. Two new
major trends emerged during the year.
First, small markets tended to outperform
large ones and small capitalization stocks
tended to outperform large companies. One
explanation could be that large
markets/stocks are more liquid, hence are
easier to sell and, as a result, they
generally suffer the most as investors
(particularly those with global mandates)
withdraw from equities. Money that remains
invested looks for new, underheld names that
are unlikely to succumb to institutional
selling. Smaller markets/stocks,
particularly those on undemanding
valuations, usually assets that have been
previously penalized for their illiquidity,
find favor with investors.
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The Asia Pacific Fund, Inc.
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Moreover, as small markets/stocks tend to be
more domestically-oriented, these "specialist"
Asian investors are more prepared to
accumulate them in preference to large caps.
The latter tend to do better when global growth
is strong, which is a period usually associated with
inflows from global funds.
Second, the significance of dividends was
elevated. Dividends provide investors with a
tangible return. The significance of this
return grows on occasions when risk aversion
rises and in an environment of low
investment returns.
High dividend yield stocks over the year
increasingly became an alternative to bonds
and deposits, since the yields and interest
rates provided by these assets are at, or
close to, their all-time lows in many Asian
countries. Work done by CLSA in Chart 3
illustrates this point. The analysis shows
that Asian equities, on a market cap
weighted basis, yielded more at the end of
2002 than interbank rates. Just contrast
this with as short a time ago as December
2000, when the yield gap was negative 3.5%.
High yield stocks that the Fund added to
during the year included Hang Seng Bank,
PetroChina, S T Engineering, Phoenixtec
Power and Ratchaburi Electricity.
Chart 3. Asia Ex-Japan Dividend Yield Gap
Dividend Interest Div Yield Div Yield
Yield % rate % Gap % Gap %
Dec 02 Dec 02 Dec 02 Dec 00
Asia 3.1 2.8 0.3 -3.5
China 3.4 1.6 1.8 -3.6
Hong Kong 4.2 1.6 2.6 -3.2
India 3.0 5.8 -2.8 -7.6
Indonesia 4.8 13.0 -8.2 -8.7
Korea 1.8 4.9 -3.1 -4.7
Malaysia 2.8 3.2 -0.4 -0.9
Philippines 2.6 7.3 -4.7 -14.6
Singapore 3.5 0.8 2.7 0.4
Taiwan 2.0 1.8 0.2 -3.2
Thailand 2.8 1.8 1.0 -1.9
Note: Interest rates are weighted average interbank rates
Source: CLSA
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Table 2. Stock Market Performance
March 31, 2002 to March 31, 2003 in U.S. Dollars
Country - Index 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 1 Year to
2002 2002 2002 2003 03/31/03
% % % % %
North Asia
MSCI China Free 2.4 -13.7 0.8 -1.8 -12.5
MSCI Hong Kong Free -4.8 -15.3 1.8 -5.8 -22.7
MSCI South Korea Free -3.4 -16.1 3.4 -17.2 -30.6
MSCI Taiwan Free -13.9 -24.2 6.5 -2.8 -32.4
ASEAN
MSCI Indonesia Free 19.2 -15.7 2.7 -8.1 -5.3
MSCI Malaysia Free -2.9 -11.3 2.9 -1.1 -12.4
MSCI Philippines Free -24.0 -5.0 -18.4 0.1 -41.0
MSCI Singapore Free -10.7 -13.4 1.4 -6.7 -26.8
MSCI Thailand Free 6.9 -17.2 12.0 7.4 6.4
South Asia
MSCI India Free -7.7 -6.1 16.2 -10.0 -9.3
MSCI All Countries -5.9 -16.5 3.1 -7.7 -25.2
Combined Far East
Free Ex-Japan Gross
Source: Morgan Stanley Capital International
Table 3. Currency Market Performance (month-ends)
March 31, 2002 to March 31, 2003
Currency - US$/local rate March June Sept Dec March Year
2002 2002 2002 2002 2003 Change
%
North Asia
Chinese Renminbi 8.3 8.3 8.3 8.3 8.3 -
Hong Kong Dollar 7.8 7.8 7.8 7.8 7.8 -
South Korean Won 1,327.0 1,203.0 1,228.0 1,186.1 1,254.5 5.5
New Taiwan Dollar 35.0 33.4 35.0 34.8 34.8 0.7
ASEAN
Indonesian Rupiah 9,825.0 8,712.0 8,994.0 8,950.0 8,901.5 9.4
Malaysian Ringgit 3.8 3.8 3.8 3.8 3.8 -
Philippine Peso 51.0 50.3 52.4 53.4 53.5 -4.9
Singapore Dollar 1.8 1.8 1.8 1.7 1.8 3.8
Thai Baht 43.5 41.5 43.3 43.1 42.9 1.5
South Asia
Indian Rupee 48.8 48.9 48.4 48.0 47.5 2.8
Source: Factset (Baring Asset Management)
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The Asia Pacific Fund, Inc.
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Performance*
The Fund depreciated by 22.1% on a net asset
value per share and a dividend reinvested
basis during the fiscal year ended March 31,
2003. The net asset value per share at the
beginning and end of the year was $11.67 and
$9.10 respectively. No dividend was
distributed during the year.
The Fund outperformed its benchmark, the
MSCI All Countries Combined Far East Free
ex-Japan index, during the year under
review. The difference of 3.1% was primarily
due to the discount at which the tender offer
was effected, and due to the Investment Manager's
decision to gear the portfolio with a facility
put in place at the time of the tender offer
and strong stock selection.
*Note: The NAV data in this report
represents the historic net asset value per
share performance of The Asia Pacific Fund,
Inc. "Net asset value per share performance"
has been computed by the Investment Manager
and, because it does not reflect market
price, is not the same as "total investment
return" (see pages 28 and 29 for a
calculation of the latter). Past performance
is not indicative of future returns.
Asset Allocation of the Fund
The main trend in allocation during the
period under review was the de-emphasis
of North Asian markets in favor of ASEAN,
India and cash. South Korea and Taiwan
were the major source of funds. Within the
Fund's Hong Kong/China exposure, China's
weighting increased whereas Hong
Kong's declined. At the sector level,
Financials and Materials exposure was
increased at the expense of Property and
Information Technology. Major country and
sector bets have remained limited due to
the large country, sector and stock volatility
the region has experienced in recent times,
exacerbated by the low market liquidity
conditions. Overall, the asset allocation
moves contributed positively to the total
return of the Fund.
The reduction in the Fund's exposure to North
Asia took place in the June quarter of 2002 and
in early 2003. The June move involved reducing
Taiwan, due to concerns about the outlook for
the Information Technology sector that accounts
for around 60% of the island's market by
capitalization. South Korea was also pared
back based on the view that corporate
profitability was peaking and it was best to
take profits at a time when investor
interest was high in the country : the 2002
Soccer World Cup was being hosted by South
Korea and Japan at the time. The portfolio's
position in South Korea was rebuilt during the
second half of the calendar year as the market
weakened. However, the Manager reduced South Korea
again at the start of 2003 for three
reasons. First, rising military tension with
North Korea. Second, increased concerns
about the financial stability of the credit
card companies. Third, the surprise victory
- as President - of Roh Moo Hyun, a relatively
unknown political entity who was voted in by
the electorate on an anti-American and anti-Chaebol
ticket.
9
The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Exposure to ASEAN was increased largely as a
result of stock specific reasons. The
Manager found a number of undervalued,
underheld companies that he believes will
create significant value for shareholders
over time. Exposure to India was raised as
it provides opportunities to invest in
sectors such as Pharmaceuticals and
Software, which act as efficient
diversifiers versus the Far East universe.
Table 4. Asset Allocation at Quarter Ends*
Country March June Sept Dec Mar
2002 2002 2002 2002 2003
% % % % %
North Asia 79.9 73.7 75.7 76.4 71.9
Hong Kong/China 30.6 29.6 30.4 30.2 31.5
South Korea 29.4 26.9 29.0 29.9 24.3
Taiwan 19.9 17.2 16.3 16.3 16.1
ASEAN 19.1 18.3 20.9 20.2 22.3
Indonesia 0.9 0.5 1.0 1.0 1.0
Malaysia 4.2 5.0 6.2 5.9 6.9
Singapore 12.9 11.4 12.0 11.7 12.3
Thailand 1.1 1.4 1.7 1.6 2.1
South Asia
India 0.3 1.1 1.5 1.0 2.5
Cash 0.7 6.9 1.9 2.4 3.3
*Rounded to one decimal place.
Outlook
The Manager remains optimistic about the
outlook for Asia. Our optimism is somewhat
tempered by the fact that the region's
markets have not been able to decouple
themselves from Wall Street, despite what we
believe to be their more reasonable
fundamentals and more attractive outlook.
One explanation for this sychronization is
that during bear periods, market
correlations tend to rise. Hence, a period
of market consolidation in the US will be a
necessary pre-condition for the global and
regional equity risk premium to fall. This
will then allow investor confidence to be
restored. Chart 4 below illustrates the
long-term market technicals of the S&P 500.
In summary, base building above the 780
level on the S&P 500 is the scenario
anticipated to emerge in the coming year.
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The Asia Pacific Fund, Inc.
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Chart 4. S&P 500 - Where To Next? Base
Building..... Hopefully!
(CHART)
Source: Bloomberg
A method one can use to determine what the
market is discounting is by solving for the
growth rate the market is implying. This is
calculated by assuming a discount rate (in
this case 11%, using the U.S. 10 year bond
rate (4%) and equity and sovereign risk
premium (7%)) and solving for the Market
Annualized Implied Growth Rate (MIGR).
Similar variables are used as when
calculating the ERP: EPS forecasts, medium-
term growth assumptions, a terminal growth
rate and a payout ratio assumption. This
work has been recently carried out by CSFB
and, as Chart 5 below shows, the annualized
MIGR is currently at 2.9%. This is at a new
low and is lower than the long-term nominal
economic growth rate of the region that is
estimated at +5% per annum. In other words,
Asian stock markets today are implying that
earnings will be significantly less than the
region's economic growth. The Manager
believes that the long-term regional
earnings growth rate should be approximately
equivalent to the real economic growth rate.
On a less theoretical note, the Manager has
witnessed significant improvements post
1997/8 of Asian corporates allocating their
capital more efficiently, creating value for
shareholders and generating returns
significantly above their cost of capital.
This, in turn, would suggest that the growth
rates in the future should be higher than
those achieved in the past.
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
Chart 5. Asia ex-Japan MIGR* - Unrealistically low
(CHART)
* Market Implied Growth Rate
Source: CSFB
As mentioned earlier in the report, the
region has been significantly de-rated
in recent times. According to CLSA's analysis,
the region has only traded on a similar
current P/E ratio for brief periods in the
early 1990s and the mid 1980s. Historically,
such times provided tremendous investment
opportunities. These were periods when
brave investors made fabulous returns. A
similar picture is reflected when using a
value indicator, the price to book multiple.
Charts 6 and 7 below illustrate that Asia
today is trading at or below valuation levels
last recorded during the Asian crisis years of 1997/8.
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The Asia Pacific Fund, Inc.
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Chart 6. Asia ex-Japan - Price to earnings
(CHART)
Note: Calculations are based on inception 01/1995
Source: CLSA (Asia ex-Japan Universe)
Chart 7. Asia ex-Japan - Price to book value
(CHART)
Note: Calculations are based on inception
01/1995
Source: CLSA (Asia ex-Japan Universe)
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The Asia Pacific Fund, Inc.
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Report of the Investment Manager
continued
When the Manager compares Asia with the
world's other major equity regions, the
relative attractiveness of Asian equities
clearly stands out. The two charts below
show this in differing ways. Chart 8 shows
how the region has been de-rated against
Europe and the U.S. Asia is currently
trading at a discount of greater than 20%
versus the latter two. This compares to a
premium it had previously enjoyed in the mid
1990s. Chart 9 shows the historic and
current P/E ratios of the markets. One notes
the significant earnings rebound being
forecasted by European and American analysts
for their markets. Asian earnings forecasts
are considerably less strong, due to their
higher earnings (but less volatile) base.
The risk remains that corporate earnings in
the developed markets will disappoint. The
Manager believes Asian equities, as a
result, are a less risky proposition than
many developed markets, since their historic
foundations (earnings base) are sounder
(lower P/E) and forecast expectations are
more realistic (hence less susceptible to
negative surprises).
Chart 8. The region has not always traded at a discount
(CHART)
Source: HSBC
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The Asia Pacific Fund, Inc.
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Chart 9. Asia is extremely attractively
valued given its bright economic prospects
(CHART)
Source: HSBC
Occasionally, the legendary investor Warren
Buffett - using a Benjamin Graham analogy -
has described the effects of investor
sentiment as transforming the stock market
from a weighing machine to a voting machine:
"In the short run, the market is a voting
machine - reflecting a voter-registration
test that requires only money not
intelligence or emotional stability - but in
the long run, the market is a weighing
machine." The latter calculates and reflects
the true value of a company.
As at today, investors' fear in Asia is very
high, as reflected in high risk premia and
low implied growth rates. Asian markets, as
a result, have been de-rated and fail to
reflect their true worth. This can remain
the case for some time but not indefinitely.
The Manager remains bullish.
Baring Asset Management (Asia) Limited
April 29, 2003
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The Asia Pacific Fund, Inc.
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Portfolio of Investments
March 31, 2003
Shares Description Value
(Note 1)
EQUITIES - 96.7%
HONG KONG - 31.5%
467,000 Cheung Kong Holdings, Ltd. (Real Estate - Developers) $ 2,580,656
1,500,000 China Mobile, Ltd. (a) (Telecommunications) 2,980,980
420,000 CLP Holdings, Ltd. (Utilities) 1,733,968
750,000 Esprit Asia Holdings, Ltd. (Consumer Discretionary) 1,413,561
3,800,000 Giordano International, Ltd. (Consumer Discretionary) 1,193,674
8,000,000 Guangdong Investment, Ltd. (Utilities) 1,241,113
329,000 Guoco Group, Ltd. (Financial Services) 1,902,429
320,100 Hang Seng Bank, Ltd. (Banking) 3,262,788
2,391,846 Hong Kong and China Gas Co., Ltd. (Utilities) 2,944,018
100,000 HSBC Holdings Plc. (Banking) 1,028,919
480,300 Hutchison Whampoa, Ltd. (Industrials) 2,611,046
800,000 Kingboard Chemical Holdings, Ltd. (Industrials) 702,614
3,098,000 Legend Holdings, Ltd. (Information Technology) 963,228
10,800,000 PetroChina Co., Ltd. (Energy) 2,270,929
400,000 Sun Hung Kai Properties, Ltd. (Real Estate - Developers) 1,918,084
1,020,000 Industrial and Commercial Bank of China, Ltd. (Banking) 863,138
-------------
29,611,145
-------------
INDIA - 2.5%
319,700 ICICI Bank, Ltd. (Banking) 902,314
5,885 Infosys Technologies, Ltd. (Information Technology) 500,994
100,000 Morgan Stanley India Investment Fund, Inc. 929,000
(Mutual Funds)
-------------
2,332,308
-------------
INDONESIA - 1.0%
2,380,000 PT Telekomunikasi Tbk (Telecommunications) 969,219
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The Asia Pacific Fund, Inc.
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Shares Description Value
(Note 1)
MALAYSIA - 6.9%
149,200 British American Tobacco Berhad (Consumer Discretionary) $1,521,448
2,129,000 Magnum Corp. Berhad (Consumer Discretionary) 1,333,426
932,400 Malayan Banking Berhad (Banking) 2,048,826
700,000 Tanjong Co., Ltd. (Consumer Discretionary) 1,630,263
-------------
6,533,963
-------------
SINGAPORE - 12.3%
411,469 DBS Group Holdings, Ltd. (Banking) 2,144,585
160,080 Oversea-Chinese Banking Corp., Ltd. (Banking) 857,013
150,000 Singapore Airlines Ltd. (Industrials) 743,563
1,911,000 Singapore Exchange, Ltd. (Financial Services) 1,353,284
214,198 Singapore Press Holdings, Ltd. (Consumer Discretionary) 2,160,000
1,799,577 Singapore Technologies Engineering, Ltd. (Industrials) 1,814,717
420,000 United Overseas Bank, Ltd. (Banking) 2,450,783
-------------
11,523,945
-------------
SOUTH KOREA - 24.3%
16,500 Cheil Communications, Inc. (Consumer Discretionary) 1,249,551
22,830 Hite Brewery Co., Ltd. (Consumer Staples) 1,046,455
45,000 Hyundai Department Store Co., Ltd.
(Consumer Discretionary) 638,527
114,239 Iroonet Co., Ltd. (Consumer Discretionary) 446,228
107,019 Kookmin Bank (Banking) 2,525,220
80,000 Korea Electrical Terminal Co., Ltd. (Industrials) 1,084,140
73,980 KT Corp (Telecommunications) 1,270,237
140,350 Poongsan Corp. (Materials) 1,062,876
34,040 POSCO (Materials) 2,672,837
34,008 Samsung Electronics Co. (Information Technology) 7,699,208
32,000 Samsung Fire & Marine Insurance Co., Ltd.
(Financial Services) 1,265,256
15,290 SK Telecom Co., Ltd. (Telecommunications) 1,864,857
-------------
22,825,392
-------------
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The Asia Pacific Fund, Inc.
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Shares Description Value
(Note 1)
TAIWAN - 16.1%
472,428 Asustek Computer, Inc. (Information Technology) $ 904,110
517,000 Delta Electronics, Inc. (Information Technology) 580,255
1,600,000 Formosa Plastic Corp. (Materials) 1,680,648
4,709,960 Fubon Financial Holdings Co. (Financial Services) 3,659,695
651,432 Hon Hai Precision Industry Co., Ltd. (a)
(Information Technology) 2,071,549
2,393,000 Phoenixtec Power Co., Ltd. (Industrials) 1,790,523
500,175 President Chain Store Corp. (Consumer Staples) 588,721
1,986,154 Taiwan Semiconductor Manufacturing Co.
(Information Technology) 2,417,783
2,606,920 United Microelectronics Corp., Ltd.
(Information Technology) 1,447,935
-------------
15,141,219
-------------
THAILAND - 2.1%
2,043,800 Ratchaburi Electricity Generating Holding PCL
(Utilities) 938,856
3,590,000 Shin Corp. Public Company Limited (Telecommunications) 1,063,146
----------
2,002,002
-------------
Total equities
(cost $94,540,668) 90,939,193
-------------
18
The Asia Pacific Fund, Inc.
------------------------------------
Principal Description Value
Amount (Note 1)
(000) Repurchase Agreement - 1.9%
UNITED STATES
US$1,799 State Street Bank & Trust Company, 0.15%, dated
03/31/03 due 04/01/03 in the amount of $1,799,007
(cost $1,799,000; collateralized by $1,330,000
U.S. Treasury Bonds, 7.875% due 2/15/21, approximate
value of collateral including accrued interest
$1,841,688) $ 1,799,000
Total Investments - 98.6%
(cost $96,339,668; Note 4) 92,738,193
Other assets in excess of liabilities - 1.4% 1,388,718
-------------
Net Assets - 100% $ 94,126,911
-------------
(a) Non-income producing securities.
19
The Asia Pacific Fund, Inc.
------------------------------------
Statement of Assets and Liabilities
March 31, 2003
Assets
Investments, at value (cost $96,339,668) $ 92,738,193
Cash 251,382
Foreign currency (cost $1,149,762) 1,145,154
Receivable for investments sold 863,855
Dividends and interest receivable 363,572
Other assets 24,902
-------------
Total assets 95,387,058
-------------
Liabilities
Payable for investments purchased 755,256
Accrued expenses and other liabilities 293,253
Investment management fee payable 83,208
Deferred Thailand capital gains tax liability 68,014
Foreign withholding taxes payable 39,824
Administration fee payable 20,592
-------------
Total liabilities 1,260,147
-------------
Net Assets $ 94,126,911
-------------
-------------
Net assets comprised:
Common stock, at par $ 103,441
Paid-in capital in excess of par 131,246,165
-------------
131,349,606
-------------
Accumulated net investment loss (118,747)
Accumulated net realized losses on
investments and foreign currency transactions (33,422,331)
Net unrealized depreciation on investments and
foreign currencies (3,681,617)
------------
Net Assets, March 31, 2003 $ 94,126,911
------------
------------
Net Asset Value per share:
($94,126,911 I 10,344,072 shares of common
stock outstanding) $ 9.10
------------
20
The Asia Pacific Fund, Inc.
------------------------------------
Statement of Operations
Year ended March 31, 2003
Net Investment Income
Income
Dividends (net of foreign withholding taxes of $496,940) $ 2,856,445
Interest 15,868
------------
Total income 2,872,313
------------
Expenses
Investment management fee 1,159,100
Administration fee 306,527
Legal fees and expenses 472,000
Custodian's fees and expenses 291,000
Reports to shareholders 170,000
Directors' fees 88,000
Insurance expense 58,000
Audit fees and expenses 41,000
Registration expenses 35,000
Transfer agent's fees and expenses 23,000
Miscellaneous 105,193
------------
Total operating expenses 2,748,820
Loan interest expense (Note 6) 12,760
------------
Total expenses 2,761,580
------------
Net investment income 110,733
------------
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 $73,435) 2,680,153
Foreign currency transactions 39,481
------------
2,719,634
------------
Net change in unrealized
appreciation/(depreciation) on:
Investments (net of change in deferred Thailand
capital gains taxes of $32,983) (32,781,331)
Foreign currencies (10,760)
------------
(32,792,091)
------------
Net loss on investments and foreign currencies (30,072,457)
------------
Net Decrease in Net Assets
Resulting From Operations $(29,961,724)
------------
------------
21
The Asia Pacific Fund, Inc.
------------------------------------
Statement of Changes in Net Assets
Year ended March 31
Increase/(Decrease) in Net Assets 2003 2002
Operations
Net investment income/(loss) $ 110,733 $ (454,442)
Net realized gain/(loss) on investments
and foreign currency transactions 2,719,634 (2,216,294)
Net change in unrealized appreciation/
(depreciation) on investments
and foreign currencies (32,792,091) 24,209,456
----------- -----------
Net increase/(decrease) in net assets
resulting from operations (29,961,724) 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) (36,918,702) (14,818,274)
----------- -----------
Total increase/(decrease) (66,880,426) 5,428,246
Net Assets
Beginning of year 161,007,337 155,579,091
----------- ------------
End of year $94,126,911 $161,007,337
----------- ------------
----------- ------------
22
The Asia Pacific Fund, Inc.
------------------------------------
Notes to Financial Statements
The Asia Pacific Fund, Inc. (the
"Fund") is registered under the Investment
Company Act of 1940 as a diversified,
closed-end, management investment company.
The Fund's investment objective is to
achieve long-term capital appreciation
through investment of at least 80% of
investable assets in equity securities of
companies in the Asia Pacific region.
Note 1. Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the
preparation of its financial statements.
The Fund's financial statements are
prepared in accordance with accounting
principles generally accepted in the United
States, which may require the use of management
estimates and assumptions. Actual results
could differ from these assumptions.
Securities Valuation
Investments are stated at value.
Investments for which market quotations are
readily available are valued at the last
reported sales prices. If there is no sales
price or reliable market quotation on the
date of valuation, then investments are
valued at the last bid price quoted on such
date or at fair value as determined in good
faith by or under the direction of the
Fund's Board of Directors.
Short-term securities which mature in
more than 60 days are valued at current
market quotations. Short-term securities
which mature in 60 days or less are valued
at amortized cost.
In connection with transactions in
repurchase agreements with U.S. financial
institutions, it is the Fund's policy that
its custodian take possession of the
underlying securities, the value of which
exceeds the principal amount of the
repurchase transaction, including accrued
interest. To the extent that any repurchase
transaction exceeds one business day, the
value of the collateral is marked-to-market
on a daily basis to ensure the adequacy of
the collateral. If the seller defaults, and
the value of the collateral declines or if
bankruptcy proceedings are commenced with
respect to the seller of the security,
realization of the collateral by the Fund
may be delayed or limited.
Foreign Currency Translation
The books and records of the Fund are
maintained in United States Dollars. Foreign
currency amounts are translated into United
States Dollars on the following basis:
(i) market value of investment
securities, other assets and liabilities -
at the closing rate of exchange.
(ii) purchases and sales of
investment securities, income and expenses -
at the rate of exchange prevailing on the
respective dates of such transactions.
23
The Asia Pacific Fund, Inc.
------------------------------------
Although the net assets of the Fund
are presented at the foreign exchange
rates and market values at the close of the
fiscal year, the Fund does not isolate that
portion of the results of operations arising
as a result of changes in the foreign exchange
rates from the fluctuations arising from changes
in the market prices of securities held at fiscal
year end. Similarly, the Fund does not isolate the
effect of changes in foreign exchange rates
from the fluctuations arising from changes
in the market prices of portfolio securities
sold during the fiscal year. Accordingly,
these realized foreign currency gains
(losses) are included in the reported net
realized gains on investment transactions.
Net realized gains(losses) on foreign
currency transactions represent net foreign
exchange gains(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(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.
Security Transactions and Net Investment Income
Security transactions are recorded on
the trade date. Realized and unrealized
gains(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.
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 accounting principles generally
accepted in the United States of America.
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.
24
The Asia Pacific Fund, Inc.
------------------------------------
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 at the
following annual rates: 1.10% of the Fund's
average weekly net assets up to $50 million,
0.90% of such assets between $50 million and
$100 million and 0.70% of such assets in excess
of $100 million based upon average net assets.
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.
Note 3. Portfolio Securities
Purchases and sales of investment
securities, other than short-term
investments, for the year ended March 31,
2003 aggregated $40,107,589 and $79,063,810,
respectively.
Note 4. Tax Information
Distributions to shareholders are
determined in accordance with United States
federal income tax regulation, which may
differ from generally accepted accounting
principles. In order to present undistributed
net investment income and accumulated net
realized gains (losses) on the statement of
Assets and Liabilities that more closely
represent their tax character, certain
adjustments have been made to undistributed
net investment income and accumulated net
realized gain (loss) on investments. For
the year ended March 31, 2003, the adjustments
were to increase accumulated net investment
loss by $79,600, decrease accumulated net
realized loss investments by $33,392, and
increase paid-in capital in excess of par
by $46,208 due to net operating losses
experienced during the year. Net investment
income, net realized losses and net assets
were not affected by this change.
25
The Asia Pacific Fund, Inc.
------------------------------------
Notes to Financial Statements
continued
As of March 31, 2003, the Fund had for
US tax reporting purposes no undistributed
ordinary income or long-term capital gains on
a tax basis.
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 the deferral of post-October currency losses
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 the
unrealized depreciation as of March 31, 2003
were as follows:
Other Total Net
Cost Basis Unrealized
Tax Basis Appreciation Depreciation Adjustments Depreciation
---------- ------------ ------------ ----------- ------------
$96,857,985 $13,191,314 $17,311,106 $(80,142) $4,199,934
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%.
26
The Asia Pacific Fund, Inc.
------------------------------------
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 canceled.
The borrowing was at an average
interest rate of 2.29%. Total interest
expense paid to the unaffiliated
lender during the period was $12,760.
27
Financial Highlights
Year ended March 31
Per Share Operating Performance: 2003 2002
Net asset value, beginning of year $11.67 $10.05
-------- -------
Net investment income/(loss) 0.01 (0.03)
Net realized and unrealized gain/(loss)
on investments and foreign currency
transactions (2.77) 1.52
-------- -------
Total from investment operations (2.76) 1.49
-------- -------
Total dividends and distributions - -
Increase resulting from share repurchase
- 0.02
Increase resulting from tender offer 0.19 0.11
-------- -------
Net asset value, end of year $9.10 $11.67
-------- -------
-------- -------
Market value, end of year $8.10 $10.12
-------- -------
-------- -------
Total investment return (a) (19.96)% 28.75%
-------- --------
Ratios to Average Net Assets:
Expenses before loan interest 2.24% -
Total expenses 2.25% 2.24%
Net investment income (loss) 0.09% (0.31)%
Supplemental Data:
Average net assets (000 omitted) $122,681 $148,224
Portfolio turnover 34% 49%
Net assets, end of year (000 omitted) $ 94,127 $161,007
(a) Total investment return is calculated
assuming a purchase of common stock at the
current market value on the first day and a
sale at the current market value on the last
day of each fiscal year reported. Dividends
and distributions are assumed, for purposes
of this calculation, to be reinvested at
prices obtained under the Fund's dividend
reinvestment plan. These calculations do not
include brokerage commissions.
Contained above are selected data for a
share of common stock outstanding, total
investment return, ratios to average net
assets and other supplemental data for the
years indicated. This information has been
determined based upon information provided
in the financial statements and market price
data for the Fund's shares.
28
The Asia Pacific Fund, Inc.
------------------------------------
Year ended March 31
Per Share Operating Performance: 2001 2000 1999
Net asset value, beginning of year $14.69 $8.60 $9.19
------- ------ ------
Net investment income (0.01) -(b) 0.06
Net realized and unrealized loss on
investments and foreign currency
transactions (4.87) 6.23 (0.61)
------- ------ ------
Total from investment operations (4.88) 6.23 (0.55)
------- ------ ------
Less dividends and distributions:
Dividends from net investment income - - (0.04)
Dividends in excess of net investment income - (0.14) -
Distributions from realized gains on
investments and foreign currencies - - -
------- ------ ------
Total dividends and distributions - (0.14) (0.04)
------- ------ ------
Increase resulting from share repurchase 0.06 - -
Increase resulting from tender offer 0.18 - -
Net asset value, end of year $10.05 $14.69 $8.60
------- ------ ------
------- ------ ------
Market value, end of year $7.86 $107/16 $71/16
------- ------ ------
------- ------ ------
Total investment return (a) (24.70%) 49.68% (21.02)%
------- ------ ------
------- ------ ------
Ratios to Average Net Assets:
Expenses 1.81% 1.66% 1.79%
Net investment income (loss) (0.05)% (0.01)% 0.80%
Supplemental Data:
Average net assets (000 omitted) $214,819 $230,725 $141,079
Portfolio turnover 52% 62% 64%
Net assets, end of year (000 omitted) $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 year reported. Dividends
and distributions are assumed, for purposes
of this calculation, to be reinvested at
prices obtained under the Fund's dividend
reinvestment plan. These calculations do not
include brokerage commissions.
Contained above are selected data for a
share of common stock outstanding, total
investment return, ratios to average net
assets and other supplemental data for the
years indicated. This information has been
determined based upon information provided
in the financial statements and market price
data for the Fund's shares.
(b) Less than $0.005 per share.
29
The Asia Pacific Fund, Inc.
------------------------------------
Independent Auditors' Report
To the Shareholders and Board of Directors
of The Asia Pacific Fund, Inc.
We have audited the accompanying statement
of assets and liabilities of The Asia
Pacific Fund, Inc., including the portfolio
of investments, as of March 31, 2003, and
the related statement of operations for the
year then ended and the statement of changes
in net assets and the financial highlights
for each of the two years in the period then
ended. These financial statements and
financial highlights are the responsibility
of the Fund's management. Our responsibility
is to express an opinion on these financial
statements and financial highlights based on
our audits. The financial highlights for
each of the three years in the period ended
March 31, 2001, were audited by other
auditors whose report, dated May 4, 2001,
expressed an unqualified opinion on such
financial highlights.
We conducted our audits in accordance with
auditing standards generally accepted in the
United States. 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 and financial highlights. Our
procedures included confirmation of securities
owned as of March 31, 2003, by correspondence
with the custodian and others. 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, the financial statements and
financial highlights referred to above, and
audited by us, present fairly, in all material
respects, the financial position of The Asia
Pacific Fund, Inc., at March 31, 2003, the
results of its operations for the year then
ended and the changes in its net assets and
financial highlights for each of the two
years in the period then ended, in
conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
New York, New York
May 15, 2003
30
The Asia Pacific Fund, Inc.
------------------------------------
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, 2003.
The Fund has elected to give the benefit of
foreign tax credits to its shareholders.
Accordingly, shareholders who must report
their gross income dividends and
distributions in a federal tax return will
be entitled to a foreign tax credit, or an
itemized deduction, in computing their U.S.
income tax liability. It is generally more
advantageous to claim a credit rather than
to take a deduction. For the fiscal year
ended March 31, 2003, the Fund intends on
passing through $0.048 per share of ordinary
income distributions as a foreign tax
credit.
During the fiscal year, the Fund paid no
dividends from ordinary income.
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 2004.
31
The Asia Pacific Fund, Inc.
------------------------------------
Share Price, Net Asset Value and
Distribution History (Unaudited)
Quarter End Closing Price Net Asset Value Dividends and
at Quarter End per Share Distributions
at Quarter End During Quarter*
Financial Year 98/99
June $ 6 5/16 $ 6.80 -
September 5 6.70 -
December 6 3/4 8.20 $ 0.04
March 7 1/16 8.60 -
Financial Year 99/2000
June 9 13/16 11.66 -
September 9 11.19 -
December 11 1/4 14.33 0.14
March 10 7/16 14.69 -
Financial Year 2000/2001
June 9 11/16 13.58 -
September 8 3/4 11.80 -
December 7 13/16 10.60 -
March 7.86 10.05 -
Financial Year 2001/2002
June 8.26 10.09 -
September 6.48 7.96 -
December 8.66 10.49 -
March 10.12 11.67 -
Financial Year 2002/2003
June 10.44 11.22 -
September 8.33 9.78 -
December 8.88 10.00 -
March 8.10 9.10 -
* Total per share distributions over the 5
years to March 31, 2003 amounted to $0.18.
Total per share distributions over the
Fund's life have amounted to $13.56.
32
The Asia Pacific Fund, Inc.
------------------------------------
Dividend Reinvestment Plan
Shareholders may elect to have all
distributions of dividends and capital gains
automatically re-invested in Fund shares
("Shares") pursuant to the Fund's Dividend
Reinvestment Plan ("the Plan"). Shareholders
who do not participate in the Plan will
receive all distributions in cash paid by
check in United States Dollars mailed
directly to the shareholders of record (or
if the shares are held in street or other
nominee name, then to the nominee) by the
custodian, as dividend disbursing agent.
Shareholders who wish to participate in the
Plan should complete the attached enrollment
card or contact the Fund at 1-(800) 451-6788.
After the Fund declares a dividend or
determines to make a capital gains
distribution, if (1) the market price is
lower than net asset value, the participants
in the Plan will receive the equivalent in
Shares valued at the market price determined
as of the time of purchase (generally,
following the payment date of the dividend
or distribution); or if (2) the market price
of Shares on the payment date of the
dividend or distribution is equal to or
exceeds their net asset value, participants
will be issued Shares at the higher of net
asset value or 95% of the market price.
There is no charge to participants for
reinvesting dividends or capital gain
distributions, except for certain brokerage
commissions, as described below. The Plan
Agent's (Equiserve Trust Co.) fees for the
handling of the reinvestment of dividends
and distributions will be paid by the Fund.
There will be no brokerage commissions
charged with respect to shares issued
directly by the Fund. However, each
participant will pay a pro rata share of
brokerage commissions incurred with respect
to the Plan Agent's open market purchases in
connection with the reinvestment of
dividends and distributions. The automatic
reinvestment of dividends and distributions
will not relieve participants of any federal
income tax that may be payable on such
dividends or distributions.
The Fund reserves the right to amend or
terminate the Plan upon 90 days' written
notice to shareholders of the Fund.
Participants in the Plan may withdraw from
the Plan upon written notice to the Plan
Agent and will receive certificates for
whole Shares and cash for fractional Shares.
33
The Asia Pacific Fund, Inc.
------------------------------------
Management of the Fund
Information pertaining to the Directors of
the Fund is set forth below. Directors who
are not deemed to be "interested persons" of
the Fund as defined in the Investment
Company Act of 1940, as amended (the 1940
Act) are referred to as "Independent
Directors." Directors who are deemed to be
"interested persons" of the Fund are
referred to as "Interested Directors." The
"Fund Complex" consists of the Fund and any
other investment companies managed by Baring
Asset Management (Asia) Limited (the
Investment Manager).
Independent Directors
--------------------
Term of Office***
Positions and Length of
Name, Address** and Age With Fund Time Served
----------------------- --------- ------------------
Robert H. Burns (73) Director Since 1986
(Class II)
Olarn Chaipravat (58) Director Since 1986
(Class I)
Michael J. Downey (59) Director and Since 1986
Chairman (Class I) Since 1999
Douglas Tong Hsu (60) Director Since 1986
(Class II)
David G. P. Scholfield (59) Director Since 1988
(Class II)
34
The Asia Pacific Fund, Inc.
------------------------------------
Number of
Portfolios in
Fund Complex Other Directorships
Principal Occupations Overseen by Held by the
During Past 5 Years Director Director****
Chairman, Robert H. Burns Holdings 1
Limited (an investment business),
Hong Kong; formerly, Chairman and
Chief Executive Officer, Regent
International Hotels, Limited, Hong Kong.
Formerly, President and Chief Executive 1
Officer (October 1992 - January 1999),
Director and Senior Executive Vice
President (July 1990-September 1992)
and Senior Executive Vice President
(September 1987-June 1990), The Siam
Commercial Bank, Public Company Limited,
Thailand.
Managing Partner, Lexington Capital LLC 1 The Merger Fund.
Chairman and Chief Executive Officer, Far 1
Eastern Textile Ltd., Taiwan.
Since 1998, Managing Director, The Bank 1
of Bermuda (Hong Kong Branch); formerly
Director, Baring International Investment
Management Limited.
35
The Asia Pacific Fund, Inc.
------------------------------------
Term of Office***
Positions and Length of
Name, Address** and Age With Fund Time Served
----------------------- --------- ------------------
Nicholas T. Sibley (64) Director Since 2001
(Class III)
Interested Directors
Term of Office***
Positions and Length of
Name, Address** and Age With Fund Time Served
----------------------- --------- ------------------
David J. Brennan (45)* Director Since 1990
(Class III)
Robert F. Gunia (56)* Vice President, Since 1988
Director and Since 1989
Treasurer Since 1999
(Class III)
36
The Asia Pacific Fund, Inc.
------------------------------------
Number of
Portfolios in
Fund Complex Other Directorships
Principal Occupations Overseen by Held by the
During Past 5 Years Director Director****
Fellow of the Institute of Chartered 1
Accountants in England and Wales
Number of
Portfolios in
Fund Complex Other Directorships
Principal Occupations Overseen by Held by the
During Past 5 Years Director Director****
Chairman and Chief Executive Officer, 1
Baring Asset Management Holdings
Limited; Chairman, Baring Asset
Management Holdings, Inc.;
Chairman, Baring Asset Management
(Asia) Ltd.; Chairman, Barings
(Guernsey) Ltd.; Chairman, Baring
Asset Management, Inc.; Chairman,
Baring International Investment Ltd.;
Non-Executive Director, Baring Asset
Management (Japan) Ltd.
Executive Vice President and Chief 1 Vice President and
Administrative Officer (since June 1999) Director of 113 Funds
of Prudential Investments LLC (PI); in the Prudential
Executive Vice President and Treasurer Mutual Fund
(since January 1996) of PI; President complex
(since April 1999) of Prudential Investment
Management Services LLC (PIMS); Corporate
Vice President (since September 1997) of The
Prudential Insurance Company of America
(Prudential); formerly Senior Vice President
(March 1987-May 1999) of Prudential
Securities Incorporated (Prudential
Securities).
37
The Asia Pacific Fund, Inc.
------------------------------------
Management of the Fund
continued
Information pertaining to the Officers of
the Fund who are not also Directors is set
forth below.
Officers
Term of Office***
Positions and Length of
Name, Address** and Age With Fund Time Served
----------------------- --------- ------------------
Deborah A. Docs (45) Secretary Since 1998
Linda McMullin (41) Assistant Since 2000
Treasurer
Christine Gerrity-Yacuk (37) Assistant Since 2000
Treasurer
Vasso-Athene Spanos(44) Assistant Since 1997
Secretary
Ronald Watt(56) President Since 1998
38
The Asia Pacific Fund, Inc.
------------------------------------
Principal Occupations
During Past 5 Years
-----------------------------------------------------------
Vice President and Corporate Counsel (since January 2001) of
Prudential; Vice President and Assistant Secretary (since
December 1996) of PI.
Director within Prudential Mutual Fund Administration
(from December 1996).
Director within Prudential Mutual Fund Administration (since
June 2000); Manager within Prudential Mutual Fund
Administration (from December 1996).
Assistant Director - Investment Companies (since April 2000)
and during last eight years has been an account manager
and/or back-up account manager responsible for several
investment companies at Baring Asset Management Limited.
Director of the Institutional Group of Baring Asset Management
Limited and President of the Greater China Fund, Inc (since
1998); formerly Managing Director (1993-1997) of QESST Pty
Ltd Management Consultants.
* Mr. Brennan is an "Interested" Director,
as defined in the 1940 Act, because of his
employment with the Investment Manager and
Mr. Gunia is an "Interested" Director
because he is an officer of the Fund.
** The address of the Directors and Officers
is c/o: Prudential Investments LLC, Gateway
Center Three, 100 Mulberry Street, Newark,
New Jersey, 07102-4077.
*** The Fund's Charter and Bylaws provide
that the Board of Directors is divided into
three classes of Directors, as nearly equal
in number as possible. Each Director serves
for a term of three years, with one class
being elected each year. Each year the term
of office of one class will expire. In
addition, the Board of Directors has
adopted a retirement policy that calls for
the retirement of Directors on December 31
of the year in which they reach the age of 75.
**** This column includes only
directorships of companies required to
register, or file reports with the SEC under
the Securities Exchange Act of 1934 (the
Exchange Act) (i.e., "public companies") or
other investment companies registered under
the 1940 Act.
39