(LOGO)
Aberdeen
Asia-Pacific Income
Fund, Inc.
(GRAPHIC)
Invests primarily in Australian
and Asian debt securities.
Annual Report
October 31, 2002
Letter to Shareholders
December 13, 2002
Dear Shareholder,
We present this Annual Report which covers the activities of Aberdeen Asia-
Pacific Income Fund, Inc. (the "Fund") for the year ended October 31, 2002.
Included in this report is a review of the Australian and selected Asian
economies and investment markets, together with an overview of the Fund's
investments prepared by Aberdeen Asset Managers (C.I.) Limited (the
"Investment Manager").
Net Asset Value Performance: 8.2% Per Annum Return Since Inception
The Fund's net asset value ("NAV") return was 19.7% for the twelve months
ended October 31, 2002 and 8.2% per annum since inception, assuming
reinvestment of distributions.
Share Price Performance
The Fund's share price rose 5.7% over the year, from $4.02 on October 31,
2001 to $4.25 on October 31, 2002. The Fund's share price on October 31, 2002
represented a discount of 16.0% to the NAV per share of $5.06. This
represents a widening of the discount to NAV of 13.5% on October 31, 2001.
Asia: 42.8% of Total Assets invested in Asian Debt Securities
As of October 31, 2002, the Fund held 42.8% of its total assets in Asian debt
securities. Of the Fund's total assets, 26.4% were held in Asian Yankee
bonds, bringing the Fund's total U.S. dollar exposure to 29.1%.
Credit Quality: 71.1% of Total Assets Rated or Deemed Equivalent to A or
Better
The Fund's total investments have maintained a high credit quality. As of
October 31, 2002, 71.1% of the portfolio was invested in securities where
either the issue or the issuer was rated A or better, or judged by the
Investment Manager to be of equivalent quality.
Distributions
Distributions to common shareholders for the 12 months ended October 31, 2002
totaled 45 cents per share. Based on the share price of $4.25 on October 31,
2002, the cash distribution rate over the 12 months then ended was 10.6%.
Since all distributions are paid after deducting applicable withholding
taxes, the effective distribution rate may be higher for those U.S. investors
who are able to claim a tax credit. On December 11, 2002 the Board of
Directors declared a monthly distribution of 3.5 cents per share payable on
January 10, 2003 to all shareholders of record as of December 31, 2002. The
Board's policy is to provide investors with a stable monthly distribution out
of current income, supplemented by realized capital gains and, to the extent
necessary, paid-in capital. It is the Board's intention
2 Aberdeen Asia-Pacific Income Fund, Inc.
that the monthly distribution of 3.5 cents per share be maintained for 12
months, having begun with the February 2002 distribution payment. This
policy is subject to regular review at the Board's quarterly meetings,
unless market conditions require an earlier evaluation. The next review is
scheduled to take place in March 2003.
Buy-Back program
On March 19, 2001 the Fund announced the approval of a share buy-back
program. Purchases of shares under this program commenced on June 6, 2001
and, as of the date of this report, 2,723,300 shares have been repurchased
and cancelled.
Proposed Rights Offering to Common Shareholders
On October 8, 2002, the Fund filed a registration statement with the
Securities and Exchange Commission in connection with a proposed transferable
right offering to common shareholders. The purpose of the offering is to
enable the Fund to increase its investments in Asian debt securities and to
increase the Fund's net investment income. On November 19, 2002, the Fund
issued a press release indicating that the Rights Offering Committee of the
Board of Directors had made a determination that market conditions were not
then favorable for the commencement of the offering, and that the
commencement of the offering should be delayed until such time as market
conditions may provide the Fund with an opportunity to enhance returns to
shareholders. The Board of Directors will continue to review market
conditions and all possible actions, which may include a rights offering, to
enhance shareholder returns consistent with the Fund's primary investment
objective.
For information about the Fund, including weekly updates of share price, NAV
and details of distributions, please contact Aberdeen Asset Management
Investor Relations, by:
- calling toll free on 1-800-522-5465 in the United States,
- emailing InvestorRelations@aberdeen-asset.com, or
- visiting the website at www.aberdeen-asset.us.
For information about the Aberdeen Group, visit the Aberdeen Website at
www.aberdeen-asset.com.
Sincerely,
Martin Gilbert
Chairman
All amounts are U.S. dollars unless otherwise stated.
Aberdeen Asia-Pacific Income Fund, Inc. 3
Your Board's policy is to provide investors with a stable monthly
distribution out of current income, supplemented by realized capital gains
and, to the extent necessary, paid-in capital.
The Fund is subject to U.S. corporate, tax and securities laws. Under U.S.
tax accounting rules, the amount of distributable income for each fiscal
period depends on the actual exchange rates during the entire year between
the U.S. dollar and the currencies in which Fund assets are denominated and
on the aggregate gains and losses realized by the Fund during the entire
year.
Therefore, the exact amount of distributable income for each fiscal year can
only be determined as of the end of the Fund's fiscal year,
October 31. However, under the U.S. Investment Company Act of 1940, the Fund
is required to indicate the source of each distribution to shareholders. This
estimated distribution composition may vary from month to month because it
may be materially impacted by future realized gains and losses on securities
and fluctuations in the value of the currencies in which Fund assets are
denominated.
The distributions for the fiscal year ended October 31, 2002 were composed of
40% net investment income and 60% return of paid-in capital.
The amount attributed as a return of capital reflects, in part, the
realization of currency losses in the Fund's Australian bond portfolio as a
result of positioning the Fund's investments more toward Asia. Fund assets
are marked to market; therefore the realization of such currency losses does
not impact the Fund's net asset value. However these losses do offset
distributable income, therefore increasing the return of capital component of
the distribution.
The Investment Manager anticipates further increases in the level of
investment in Asian fixed income securities, which may result in the
realization of additional currency losses. The Investment Manager believes
that the Fund will benefit from the increased exposure to Asia. Likewise, the
Investment Manager anticipates that the higher yields currently available in
that region, as compared with yields currently available in Australia, may
better position the Fund to reduce and potentially eliminate the return of
capital component of the Fund's monthly distributions. There can be no
assurance, however, that the Investment Manager's expectations will be met.
In January 2003, a Form 1099 DIV will be sent to shareholders, which will
state the amount and composition of distributions and provide information
with respect to their appropriate tax treatment.
4 Aberdeen Asia-Pacific Income Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
We invite you to participate in the Fund's Dividend Reinvestment and Cash
Purchase Plan ("the Plan") which allows you to automatically re-invest your
distributions in shares of the Fund's common stock at favorable commission
rates. Distributions made under the Plan are taxed to the same extent as are
cash distributions. The Plan also enables you to make additional cash
investments in shares of at least $100 per month. Under this arrangement,
EquiServe Trust Company N.A. (the "Plan Agent") will purchase shares for you
on the stock exchange or otherwise on the open market on or about the 15th of
each month, unless shares of the Fund are trading at a premium, in which case
the Fund will issue additional shares.
As a Participant in the Plan, you will have the convenience of:
Automatic reinvestment - the Plan Agent will automatically reinvest your
distributions, allowing you to gradually grow your holdings in the Fund;
Lower costs - shares purchased on your behalf under the Plan will be at
reduced brokerage rates. Brokerage on share purchases is currently 2 cents
per share;
Convenience - the Plan Agent will hold your shares in non-certificated form
and will provide a detailed record of your holdings at the end of each
distribution period.
To request a brochure containing information on the Plan, together with an
authorization form, please contact the Plan Agent, EquiServe Trust Company
N.A., P.O. Box 43011, Providence, RI 02940-3011 or toll free on 1-800-451-
6788.
Aberdeen Asia-Pacific Income Fund, Inc. 5
Report of the Investment Manager
Share Price Performance
On October 31, 2002 the Fund's share price was $4.25, which represented a
discount of 16.0% to the NAV of $5.06. At the date of this report, the share
price was $4.40 representing a discount of 15.1% to the NAV of $5.18.
NAV vs Share Price April 1986 through October 2002
(LINE GRAPH)
Distributions
The Board reduced the Fund's monthly distribution from 4.5 cents per share to
3.5 cents per share beginning with the distribution payable on February 8,
2002. The Investment Manager continues its efforts to reallocate the
portfolio toward higher yielding Asian fixed income securities, and also
anticipates further improvement in the value of non-U.S. dollar currencies.
Together, these factors may enhance the Fund's net investment income and its
ability to realize capital gains. However, there can be no assurance that the
Investment Manager's expectations will be met.
Auction Market Preferred Stock (AMPS)
The Fund's $600 million of AMPS continued to be well bid at the weekly
auctions. The average dividend rate paid was 1.95% over the quarter ended
October 31, 2002, compared with an interest rate of 1.73% for 30-day U.S.
6 Aberdeen Asia-Pacific Income Fund, Inc.
Report of the Investment Manager (continued)
commercial paper over the same period. These rates remained broadly unchanged
over the period as the U.S. Federal Reserve has kept interest rates on hold.
The rates paid to preferred shareholders have decreased since October 31,
2002 to a level of 1.50% as of the date of this report.
Over the past year, the impact of AMPS on the Fund has been positive, as the
Australian dollar strengthened against the U.S. dollar. Most key Asian
currencies followed a similar trend, with the Korean won, Thai baht,
Singapore dollar and Indonesian rupiah all rising over the twelve months. In
addition, the fact that U.S. interest rates have remained at historic lows
has meant that the differential between AMPS funding rates and the yields at
which the Fund invests remains positive. Overall, the outlook over the
medium-term for investment markets and the portfolio in respect of these
factors is considered by the Investment Manager to be favorable and AMPS are
therefore seen as having the potential to enhance total shareholder returns
in the medium term.
On September 16, 2002, the Fund entered into a 2 year interest rate swap
agreement in order to hedge one third of the Fund's outstanding issues of
AMPS. Under the original terms of the agreement, the Fund received a floating
rate of interest (one month USD-LIBOR BBA rate) based on a notional amount of
US$200,000,000 and paid interest at a fixed rated of 2.46%. The fixed rate
was re-priced to 2.10% on October 1, 2002.
Aberdeen Asia-Pacific Income Fund, Inc. 7
Report of the Investment Manager (continued)
PORTFOLIO COMPOSITION
Quality of Investments
As of October 31, 2002, 71.1% of the Fund's total assets were invested in
securities where either the issue or the issuer was rated A or better by
Standard & Poor's Corporation or Moody's Investors Service, Inc. or, if
unrated, were judged to be of equivalent quality by the Investment Manager.
The following table shows the ratings of securities held by the Fund as of
October 31, 2002, compared with the previous quarter and twelve months:
AAA/Aaa AA/Aa A BBB/Baa BB/Ba* B* CCC*
Date % % % % % % %
October 31, 2002 46.7 11.5 12.9 16.7 9.7 2.4 0.1
July 31, 2002 46.5 13.7 11.2 16.6 9.1 2.8 0.1
October 31, 2001 51.0 21.2 2.6 19.3 3.5 2.4 0.0
* Below investment grade
Geographic Composition
The table below shows the geographical composition (i.e. with Yankees
allocated into country of issuance) of the Fund's total investments as of
October 31, 2002, compared with the previous quarter and twelve months:
Asia
Australia (including NZ) United States
Date % % %
October 31, 2002 56.3 42.8 0.9
July 31, 2002 56.4 43.2 0.4
October 31, 2001 63.5 31.1 5.4
Geographic Composition as of October 31, 2002
(BAR GRAPH)
8 Aberdeen Asia-Pacific Income Fund, Inc.
Report of the Investment Manager (continued)
Currency Composition
The table below shows the currency composition of the Fund's total
investments as of October 31, 2002, compared with the previous quarter and
twelve months:
Australian Asian Currencies
Dollar (including NZ dollar) US Dollar* Euro
Date % % % %
October 31, 2002 56.3 14.4 29.1 0.2
July 31, 2002 56.4 14.9 28.5 0.2
October 31, 2001 63.5 12.8 23.7 0.0
* Includes Asian Yankee Bonds: 26.4% on October 31, 2002, 28.1% on July 31,
2002, 18.3% on October 31, 2001.
Interest Rate Exposure
The table below shows the country composition of the Fund's total investments
as of October 31, 2002 according to interest rate risk, compared with the
previous quarter and twelve months:
Asia
Australia (including NZ) United States Euro
Date % % % %
October 31, 2002 56.3 14.4 29.1 0.2
July 31, 2002 56.4 14.9 28.5 0.2
October 31, 2001 63.5 12.8 23.7 0.0
Maturity Composition
On October 31, 2002 the duration of the portfolio was 4.5 years, compared
with 3.6 years on October 31, 2001. The average maturity of the portfolio was
7.8 years, compared with 5.7 years on October 31, 2001. The following table
shows the maturity composition of the Fund's portfolio as of October 31,
2002, compared with the previous quarter and twelve months:
Under 3 Years 3 to 5 Years 5 to 10 Years 10 Years & Over
Date % % % %
October 31, 2002 24.7 21.6 38.1 15.6
July 31, 2002 27.1 14.4 46.0 12.5
October 31, 2001 36.6 17.6 39.0 6.8
Aberdeen Asia-Pacific Income Fund, Inc. 9
Report of the Investment Manager (continued)
Sectoral Composition
The following shows the sectoral composition of the portfolio as of
October 31, 2002:
US Dollar and
Domestic Currency Bonds Euro Bonds
Asia United
(Including States
New (Cash/
Australia Zealand) Yankees Bonds) Euros
% % % % %
Government* 18.7 7.9 9.1 0.0 0.0
Semi Government** 21.4 0.6 2.7 0.0 0.0
Government Bank 0.0 1.5 1.6 0.0 0.0
Utility 2.4 0.3 1.7 0.0 0.0
Supranational 3.3 0.0 0.0 0.0 0.0
Bank/Finance Company*** 6.8 3.6 2.9 2.7 0.2
Corporate 3.7 0.5 8.4 0.0 0.0
* Includes government guaranteed debt.** Includes state government
guaranteed banks.
*** Includes cash held by the Fund's custodian and repurchase agreements.
Sectorial Composition as of October 31, 2002
(BAR GRAPH)
10 Aberdeen Asia-Pacific Income Fund, Inc.
Market Review and Outlook
AUSTRALIA
Economy
The Australian economy is currently in its eleventh year of expansion. Recent
economic data indicated that the economy's annual growth rate was 3.8% in the
second quarter of 2002. This result was underpinned by strong consumer
demand, with retail sales 8% higher than the second quarter of 2001, and a
strong housing sector, with building approvals recently pulling back from 8
year highs.
In the labor market, employment growth is currently running at an annual rate
of 2% and the unemployment level has dropped to a 12-month low of 6.2%.
Business conditions improved throughout 2002 to reach their highest levels
since late 1999, reflecting better profitability and employment and trading
conditions at 2-year highs. Business confidence has also strengthened in the
face of weaker equity markets and threats of war.
Following two 0.25% tightenings earlier in 2002, the Reserve Bank of
Australia (RBA) has opted to leave interest rates unchanged since June 2002,
with their decisions likely to have been influenced by uncertainty about the
strength of the global recovery, the threat of military action in Iraq and
volatility in global equity markets. This has maintained Australian interest
rates at historically low levels and an accommodative stance of monetary
policy, although the RBA still retains a bias to raise interest rates
further.
Fixed Income
The benchmark 10-year bond yield rose to 5.57% from 5.23% over the year ended
October 31, 2002. Bank bill yields rose over the year, closing at 4.88%.
Currency
The Australian dollar surged through the first half of 2002 before losing
ground in July, with investors heading for the relative safety of the Euro
and the U.S. dollar, as the equity market fallout prompted renewed fears of a
global recession. The Investment Manager's long-held view that the Australian
dollar would appreciate towards 56 cents was achieved, and exceeded, in
recent months as an ebbing of support for the U.S. dollar benefited
peripheral currencies. The widening of the differential between Australian
and U.S. interest rates continued throughout 2002, reaching levels not seen
since the mid 1990s. The Investment Manager believes that this should remain
a key source of support to the currency in the near term --
Aberdeen Asia-Pacific Income Fund, Inc. 11
Market Review and Outlook (continued)
particularly given the likelihood that an easing in U.S. interest rates will
see the differential widen further - as will the relative strength of
domestic fundamentals. The Investment Manager retains the view that a target
of 60 cents is achievable over the next 12 months.
The Australian dollar closed the period at US $0.55 on October 31, 2002.
ASIA
Economies
During the last quarter consumer demand was strong throughout Asia despite a
fragile global economy. This reflected the easier fiscal and monetary policy
settings prevailing in these economies. Inflationary pressures were generally
low, with economic growth in a recovery phase and excess capacity evident in
a number of industries. The Investment Manager expects that most non-pegged
currencies in the Asian region will strengthen against the U.S. dollar,
providing a natural tightening bias for many economies and that the Asian
central banks will allow this to occur to an extent. However, the Investment
Manager also believes that substantial currency appreciation is likely to be
resisted by direct intervention or, in some cases, interest rate cuts. Asian
economies have seen a sharp improvement in their export performance since
late 2001. The Investment Manager anticipates that exports will probably
continue to be a significant contributor to Asian growth.
Domestic Bond and Currency Markets
Continued high levels of liquidity and ongoing concern over a weakening
outlook for the global backdrop saw domestic bonds rally over the quarter.
The Fund's total Asian currency exposure was increased during the year ended
October 31, 2002 to 14.4%.
Asian Yankee (US$ denominated) Bond Market
Asian Yankee bonds posted gains over the year, with yields falling sharply as
a result of rallying US Treasuries.
12 Aberdeen Asia-Pacific Income Fund, Inc.
Summary of Key Market Rates
The following table summarizes the movements of key interest rates and
currencies over the last six and twelve month periods:
October 31 July 31 October 31
2002 2002 2001
Australia
90 day bank bills 4.88% 4.95% 4.29%
10 year bonds 5.57% 5.95% 5.23%
Australian Dollar $ 0.55 $ 0.54 $ 0.50
New Zealand
90 day bank bills 5.91% 5.94% 4.96%
10 year bonds 6.32% 6.53% 6.18%
NZ Dollar $ 0.49 $ 0.47 $ 0.41
South Korea
90 day T-bills 4.78% 4.74% 4.37%
10 year bonds 5.99% 6.46% 6.85%
South Korean Won* W 1218.50 W 1188.09 W 1290.00
Thailand
90 day deposits 1.75% 2.00% 2.50%
10 year bonds 3.79% 5.00% 5.55%
Thai Baht* B 43.28 B 42.02 B 44.70
Philippines
90 day T-bills 5.80% 5.59% 11.07%
10 year bonds 12.65% 12.78% 17.80%
Philippine Peso* P 53.13 P 51.28 P 52.00
Malaysia
90 day T-bills 2.71% 2.73% 2.73%
10 year bonds 3.79% 3.97% 3.30%
Malaysia Ringgit* R 3.80 R 3.80 R 3.80
Singapore
90 day T-bills 0.95% 0.70% 0.60%
10 year bonds 3.04% 3.72% 2.97%
Singapore Dollar* S$ 1.77 S$ 1.76 S$ 1.82
US$ Yankee Bonds**
South Korea 4.10% 4.80% 5.54%
Malaysia 4.97% 5.61% 6.57%
Philippines 7.71% 8.08% 10.19%
Hong Kong 4.46% 5.18% 5.34%
* These currencies are quoted Asian currency per U.S. dollar. The Australian
and New Zealand dollars are quoted U.S. dollars per currency.
** Sovereign issues
Aberdeen Asset Managers (C.I.) Limited
December 2002
Aberdeen Asia-Pacific Income Fund, Inc. 13
Portfolio of Investments
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
LONG-TERM INVESTMENTS--122.7%
AUSTRALIA--71.5%
Government and Semi-Government--49.8%
Commonwealth of Australia--27.4%
A$
Australia Postal Corporation
22,000 6.00%, 3/25/09 $ 12,354,549
Commonwealth Bank of Australia
12,000 5.25%, 12/1/04 6,693,582
8,000 6.00%, 9/1/05 4,545,797
20,000 6.75%, 12/1/07 11,772,156
4,000 6.25%, 2/10/09 2,241,917
10,000 6.25%, 9/1/09 5,754,787
Commonwealth of Australia
40,000 9.00%, 9/15/04 23,827,375
45,450 7.50%, 7/15/05 26,865,817
10,000 10.00%, 2/15/06 6,383,795
22,000 6.75%, 11/15/06 12,949,250
40,500 10.00%, 10/15/07 27,154,592
77,000 8.75%, 8/15/08 50,026,798
88,000 7.50%, 9/15/09 54,633,111
75,000 5.75%, 6/15/11 42,301,354
133,000 6.50%, 5/15/13 79,045,313
---------------
366,550,193
---------------
New South Wales--7.0%
New South Wales Treasury Corporation
54,000 12.60%, 5/1/06 36,960,908
20,000 8.00%, 3/1/08 12,380,218
55,000 7.00%, 12/1/10 33,107,587
20,000 6.00%, 5/1/12 11,210,361
---------------
93,659,074
---------------
Queensland--4.3%
Queensland Treasury Corporation
20,000 6.50%, 6/14/05 11,498,308
15,200 6.00%, 7/14/09 8,650,385
40,000 6.00%, 6/14/11 22,640,290
10,000 6.00%, 10/14/15 5,621,277
17,000 6.00%, 6/14/21 9,525,505
---------------
57,935,765
---------------
South Australia--2.5%
South Australian Financing Authority
55,000 7.50%, 10/15/07 33,306,313
---------------
A$
Tasmania--0.5%
Tasmanian Public Finance Corporation
10,000 9.00%, 11/15/04 $ 5,956,849
---------------
Victoria--4.2%
Treasury Corporation of Victoria
10,000 6.00%, 11/15/06 5,707,971
20,500 10.25%, 11/15/06 13,440,579
25,000 7.50%, 8/15/08 15,278,405
40,000 5.50%, 9/15/10 22,013,780
---------------
56,440,735
---------------
Western Australia--3.9%
Western Australia Treasury Corporation
26,000 8.00%, 10/15/07 16,065,595
50,000 7.50%, 10/15/09 30,758,284
10,000 7.00%, 4/15/11 6,016,980
---------------
52,840,859
---------------
Total Australian government
and semi-government
(cost $693,063,835) 666,689,788
---------------
Eurobonds--16.2%
Banking and Finance--8.8%
ANZ Banking Corporation
10,000 6.75%, 3/22/12 5,706,028
Bank Austria AG
11,278 10.875%, 11/17/04 6,857,928
BHP Finance Limited
15,000 6.25%, 8/15/08 8,358,319
Commonwealth Bank of Australia
10,000 9.00%, 8/15/05 6,069,452
Dexia Municipal Agency
15,000 6.00%, 10/15/07 8,491,680
Federal National Mortgage Association Global
52,065 6.375%, 8/15/07 30,082,080
GE Capital Australia Limited
10,000 6.25%, 4/15/05 5,621,166
10,000 6.75%, 9/15/07 5,691,764
Jem Bonds Limited
10,000 9.00%, 7/15/06 6,188,691
KFW International Finance
5,513 9.125%, 7/26/05 3,355,549
14 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
A$
Landwirtschaft Rentenbank
10,000 6.00%, 9/15/09 $ 5,647,196
Northern Territory Authority
8,000 6.50%, 7/15/05 4,543,643
5,000 10.03%, 8/9/05 3,123,966
10,000 5.75%, 9/14/07 5,609,871
Principal Finance Global Fund
16,650 7.00%, 7/15/05 9,477,230
Puma
5,000 7.47%, 2/21/33 2,794,209
----------------
117,618,772
----------------
Semi-Government and Local
Government--4.4%
New South Wales Treasury Corporation
7,000 10.50%, 12/7/04 4,277,584
7,000 9.25%, 6/20/06 4,260,012
40,000 8.00%, 3/1/08 24,727,822
Queensland Treasury Corporation
20,000 12.00%, 6/15/05 12,998,980
20,000 8.00%, 9/14/07 12,358,483
----------------
58,622,881
----------------
Supranational Global--3.0%
EFIC
2,000 11.00%, 12/29/04 1,235,670
Eurofima
8,170 9.875%, 1/17/07 5,270,803
30,000 6.50%, 8/22/11 17,302,365
European Investment Bank
19,000 6.00%, 7/15/05 10,776,832
Kingdom of Sweden
8,287 7.875%, 4/23/07 5,030,263
Quebec Province
1,500 5.75%, 2/15/06 839,529
----------------
40,455,462
----------------
Total Australian
eurobonds
(cost $232,208,872) 216,697,115
----------------
Corporate Bonds--5.5%
Banking and Finance--0.8%
DSL Bank
15,000 6.25%, 11/15/06 8,574,495
A$
St. George Bank Limited
5,000 6.00%, 9/25/12 $ 2,789,020
----------------
11,363,515
----------------
Floating Rate Notes*--0.0%
Crusade Trust
745 4.6133%, 7/10/29 413,393
----------------
Services--4.7%
Airservices Australia
5,000 6.50%, 11/15/06 2,871,885
British American Tobacco Corporation
8,000 6.50%, 11/15/06 4,485,366
GPT Management Limited
10,000 6.50%, 10/15/07 5,665,706
ING Office Finance
4,500 6.25%, 8/19/08 2,477,886
Melbourne Airport
2,000 6.75%, 6/15/08 1,142,266
Southern Cross Airports Company Limited
15,500 6.02%, 10/11/07 8,607,895
Telstra Corporation
7,000 8.00%, 9/15/04 4,068,873
30,000 12.00%, 5/15/06 19,994,661
10,000 7.25%, 11/15/12 5,750,319
2,000 8.75%, 1/15/20 1,353,158
Wesfarmers Limited
6,000 6.25%, 8/27/07 3,361,477
Westpac Banking Corporation
5,000 7.00%, 8/2/10 2,865,530
----------------
62,645,022
----------------
Total Australian
corporate bonds
(cost $77,644,701) 74,421,930
----------------
Total Australian
long-term investments
(cost $1,002,917,408) 957,808,833
----------------
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 15
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
EUROPEAN COMMUNITY--0.3%
Corporate Bonds--0.3%
EUR
Oversea - Chinese Banking Corporation
4,000 7.25%, 9/6/11
(cost $3,624,971) $ 4,217,556
---------------
HONG KONG--0.1%
Corporate Bonds--0.1%
HKD
GH Water Supply Holdings Limited
16,384 8.00%, 12/22/10
(cost $1,844,715) 1,869,724
---------------
JAPAN--0.9%
Government Bonds--0.9%
JPY
Inchon Metropolitan City
500,000 3.70%, 4/26/06 4,391,618
PTT Exploration & Production
900,000 3.35%, 9/19/07 7,984,990
---------------
Total Japan long-term
investments
(cost $12,209,216) 12,376,608
---------------
KOREA--4.4%
Government Bonds--4.4%
KRW
Korea Deposit Insurance Fund Bond
19,000,000 8.72%, 3/12/04 16,767,626
2,000,000 15.00%, 7/3/04 1,967,564
Korea Treasury Bonds
19,170,000 7.15%, 4/11/06 16,604,566
10,000,000 5.64%, 10/17/06 8,258,778
16,674,000 6.91%, 7/18/11 14,628,703
---------------
Total Korea long-term
investments
(cost $53,542,690) 58,227,237
---------------
MALAYSIA--1.4%
Government Bonds--0.9%
MYR
Malaysia Government Bonds
17,300 5.00%, 4/15/05 $ 4,763,180
11,390 6.844%, 10/1/09 3,616,295
15,000 3.833%, 9/28/11 3,966,943
---------------
Total Malaysia government
bonds
(cost $11,679,500) 12,346,418
---------------
Corporate Bonds--0.5%
British American Tobacco Corporation
9,000 7.10%, 11/2/04 2,540,691
YTL Corporation Berhad
13,000 8.50%, 6/29/04 3,685,282
---------------
Total Malaysia corporate
bonds
(cost $6,028,852) 6,225,973
---------------
Total Malaysia long-term
investments
(cost $17,708,352) 18,572,391
---------------
PHILIPPINES--0.8%
Government Bonds--0.8%
PHP
Philippine Government Bonds
372,800 18.00%, 11/26/08 9,013,614
95,000 13.00%, 4/25/12 1,854,270
---------------
Total Philippines long-term
investments
(cost $11,266,031) 10,867,884
---------------
SINGAPORE--1.3%
Government Bonds--1.3%
SGD
Singapore Government Bonds
6,000 4.00%, 2/1/05 3,601,986
20,872 4.625%, 7/1/10 13,304,500
---------------
Total Singapore long-term
investments
(cost $15,550,690) 16,906,486
---------------
16 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
THAILAND--2.2%
Government Bonds--2.2%
THB
Eastern Water Resources
115,000 9.00%, 7/22/04 $ 2,921,959
Export-Import Bank of Thailand
80,000 7.25%, 5/6/04 1,982,072
Thailand Government Bonds
185,000 6.25%, 6/15/04 4,554,546
63,100 8.50%, 10/14/05 1,719,824
44,000 8.00%, 12/8/06 1,237,220
68,000 5.60%, 7/7/07 1,775,399
85,000 8.50%, 12/8/08 2,552,029
80,000 5.375%, 11/30/11 2,077,742
431,000 5.50%, 1/18/17 11,207,907
----------------
Total Thailand
long-term investments
(cost $28,775,999) 30,028,698
----------------
UNITED STATES--39.8%
Yankee Bonds--39.8%
USD
AES China Generating Co. Limited
5,200 10.125%, 12/15/06 4,836,000
Bangkok Bank Public Company
10,000 8.75%, 3/15/07 11,413,088
12,500 9.025%, 3/15/29 12,274,232
Bangkok Sentral Ng
4,000 8.60%, 6/15/27 3,590,800
Cable & Wireless Optus Finance
5,800 8.00%, 6/22/10 6,649,554
China Development Bank
4,000 8.25%, 5/15/09 4,822,000
Cho Hung Bank
5,500 6.95%, 1/7/05 6,395,070
1,500 11.875%, 4/1/10 1,748,670
CITIC Ka Wah Bank
14,200 7.625%, 7/5/11 14,941,240
3,350 9.125%, 5/30/12 3,529,225
CLP Power HK Finance
2,500 6.25%, 5/8/12 2,714,227
CNOOC Finance Limited
4,875 6.375%, 3/8/12 5,279,089
Dao Heng Bank Limited
4,500 7.75%, 1/24/07 5,067,242
USD
Development Bank of Singapore
7,000 7.657%, 3/15/11 $ 7,529,143
5,000 7.125%, 5/15/11 5,499,000
Flextronics International Limited
2,500 9.875%, 7/1/10 2,600,000
GH Water Supply Holdings Limited
1,900 7.00%, 6/22/08 1,900,000
Globe Telecom Incorporated
9,000 13.00%, 8/1/09 10,459,338
4,750 9.75%, 4/15/12 4,999,375
Hanvit Bank
4,000 11.75%, 3/1/10 4,606,000
3,500 12.75%, 3/1/10 4,120,938
Hutchison Whampoa International Limited
6,000 7.00%, 2/16/11 6,211,510
Hysan Limited
4,000 7.00%, 2/1/12 4,217,326
Hyundai Motor Co. Limited
2,000 7.33%, 12/12/05 2,124,766
Industrial Finance Corporation
1,000 7.375%, 1/14/07 1,113,600
Jardine Strategic Finance Limited
3,500 6.375%, 11/8/11 3,447,284
Kia Motors Corporation
4,000 9.375%, 7/11/06 4,568,880
Kingdom of Thailand
2,700 7.07%, 9/30/13 2,778,278
Korea Development Bank
3,000 5.25%, 11/16/06 3,177,000
Korea Electric Power Corporation
9,000 7.75%, 4/1/13 10,617,390
10,000 7.00%, 2/1/27 10,917,400
Kowloon Canton Ry Corporation
16,500 8.00%, 3/15/10 19,899,495
Kumgang Korea Chemical Co. Limited
3,500 7.625%, 6/20/08 3,846,217
LG Caltex Oil Corporation
5,000 7.50%, 7/15/07 5,667,000
3,000 7.75%, 7/25/11 3,454,602
Malayan Banking Berhad
3,990 6.125%, 7/6/12 4,104,565
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 17
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
USD
Malaysia (Sovereign)
5,000 8.75%, 6/1/09 $ 6,012,000
22,000 7.50%, 7/15/11 24,856,700
MEI Euro Finance Limited
5,600 10.00%, 3/19/07 5,502,000
Merrill Lynch & Co., Incorporated
2,700 12.50%, 9/17/12 2,700,000
National Power Corporation
7,000 8.40%, 12/15/16 6,429,500
Oversea - Chinese Banking Corporation
13,000 7.75%, 9/6/11 14,782,328
PCCW-HKTC Capital Limited
10,400 7.75%, 11/15/11 10,735,141
People's Republic of China
10,000 9.00%, 1/15/96 10,635,800
Petroliam Nasional Berhad
15,000 7.75%, 8/15/15 16,730,400
Petronas Capital Limited
6,800 7.00%, 5/22/12 7,355,560
4,000 7.875%, 5/22/22 4,148,320
Philippine Long Distance Telecom
2,000 10.625%, 5/15/07 1,899,400
1,000 11.375%, 5/15/12 922,203
1,000 8.35%, 3/6/17 687,000
Pohang Iron & Steel Corporation
4,000 7.125%, 11/1/06 4,454,272
PT Bank Mandiri Cayman
1,600 10.625%, 8/2/12 1,632,000
PTT Exploration & Production
6,500 7.625%, 10/1/06 7,349,475
Quezon Power (Philippines) Limited
7,770 8.86%, 6/15/17 6,073,832
Reliance Industries Limited
7,250 10.25%, 1/15/97 6,654,811
Republic of Philippines
3,000 7.50%, 9/11/07 3,056,256
27,750 8.375%, 3/12/09 27,992,812
11,250 9.875%, 3/16/10 12,234,375
14,100 9.375%, 1/18/17 14,523,000
2,000 6.50%, 12/1/17 1,848,532
32,850 9.875%, 1/15/19 32,028,750
3,500 9.50%, 10/21/24 3,812,349
9,936 10.625%, 3/16/25 10,134,720
USD
Republic of South Korea
14,500 8.875%, 4/15/08 $ 17,814,700
Singapore Telecom
2,600 6.375%, 12/1/11 2,753,400
SK Corporation
3,900 7.50%, 5/31/06 4,308,372
SM Investments Corporation
4,400 8.00%, 10/16/07 4,367,000
Telekom Malaysia
3,000 7.875%, 8/1/25 2,861,400
Telekomunikasi Selular Finance Limited
4,000 9.75%, 4/30/07 4,159,244
Tenaga Nasional Berhad
7,750 7.625%, 4/1/11 8,260,641
5,000 7.50%, 11/1/25 4,531,500
14,000 7.50%, 1/15/96 11,839,800
Thai Farmers Bank PLC
2,400 8.25%, 8/21/16 2,374,509
Total Access Communication Public
7,150 8.375%, 11/4/06 7,185,750
Woori Bank
3,500 3.625%, 10/10/05 3,475,073
3,500 4.50%, 10/10/07 3,476,897
----------------
Total United States
long-term investments
(cost $491,676,223) 533,719,366
----------------
Total long-term
investments
(cost $1,639,116,295) 1,644,594,783
----------------
SHORT-TERM INVESTMENTS--18.8%
AUSTRALIA--8.3%
Government and Semi-Government--4.7%
Commonwealth of Australia--2.3%
A$
Commonwealth Bank of Australia
5,000 6.00%, 8/1/03 2,799,524
2,800 7.625%, 8/5/03 1,584,008
Commonwealth of Australia
45,000 9.50%, 8/15/03 25,887,676
----------------
30,271,208
----------------
South Australia--0.8%
South Australian Financing Authority
20,000 10.00%, 1/15/03 11,215,801
----------------
18 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
A$
Victoria--1.6%
Treasury Corporation of Victoria
36,000 12.50%, 10/15/03 $ 21,404,675
----------------
Total Australian
government and
semi-government
(cost $77,609,140) 62,891,684
----------------
Eurobonds--1.9%
Banking and Finance--1.9%
GE Capital Australia Limited
45,000 6.25%, 8/15/03
(cost $24,068,767) 25,179,306
----------------
Corporate Bonds--0.1%
Services--0.1%
Telstra Corporation
2,000 7.80%, 7/17/03
(cost $1,444,814) 1,130,749
----------------
Demand Deposits--1.6%
Banque National de Paris Demand Deposit
39,712 4.50%, 11/1/02
(cost $21,704,699) 22,041,200
----------------
Total Australian
short-term investments
(cost $124,827,420) 111,242,939
----------------
KOREA--4.1%
Government Bonds--4.1%
KRW
Korea Deposit Insurance Fund Bond
10,000,000 9.99%, 10/23/03 8,994,132
Korea Monetary Stabilization Bond
10,000,000 Zero Coupon, 7/31/03 7,909,977
Korea Treasury Bonds
10,000,000 7.10%, 11/10/02 8,212,590
10,000,000 5.88%, 7/6/03 8,255,495
10,000,000 7.70%, 8/16/03 8,374,498
10,000,000 5.07%, 10/8/03 8,210,357
USD
South Korea National Debt - Embarc(a)
5,500 7.70%, 8/18/03 4,759,446
----------------
Total Korea short-term
investments
(cost $53,516,495) 54,716,495
----------------
MALAYSIA--0.1%
Government Bonds--0.1%
MYR
Malaysia Government Bonds
2,000 4.427%, 3/31/03
(cost $526,009) $ 529,666
----------------
NEW ZEALAND--0.0%
Demand Deposits--0.0%
NZD
New Zealand Call Deposit
515 4.50%, 11/1/02
(cost $221,254) 250,498
----------------
SINGAPORE--0.1%
Government Bonds--0.1%
SGD
Singapore Government Bonds
1,200 3.00%, 11/1/02
(cost $691,195) 679,673
----------------
Corporate Bonds--0.0%
General Motors Acceptance Corporation
1,000 3.95%, 4/25/03
(cost $580,821) 564,770
----------------
Total Singapore
short-term investments
(cost $1,272,016) 1,244,443
----------------
THAILAND--0.2%
Government Bonds--0.0%
THB
Thailand Government Bonds
34,400 8.25%, 10/14/03
(cost $854,941) 841,196
----------------
Corporate Bonds--0.2%
Advance Information Services PLC
96,000 6.25%, 3/31/03
(cost $2,532,844) 2,251,849
----------------
Total Thailand
short-term investments
(cost $3,387,785) 3,093,045
----------------
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 19
Portfolio of Investments (continued)
October 31, 2002
Principal
Amount
Local
Currency** Value
(000) Description (US$)
-------------------------------------------------------
UNITED STATES--6.0%
Yankee Bonds--1.9%
USD
Hongkong & Shanghai Banking Corporation
4,000 Zero Coupon, 12/23/02 $ 3,974,436
16,000 Zero Coupon, 3/26/03 15,718,740
Republic of South Korea
5,500 8.75%, 4/15/03 5,684,250
---------------
Total United States yankee
bonds
(cost $25,211,947) 25,377,426
---------------
Repurchase Agreement--4.1%
55,349 State Street Bank & Trust
Company 1.72% due 11/1/02
in the amount of
$55,351,644 (cost
$55,349,000; collateralized
by United States Treasury
Bonds 8.125% due 5/15/21;
value including accrued
interest - $52,030,860,
Zero Coupon due 1/30/03;
value including accrued
interest - $4,432,200,
total value including
accrued interest -
$56,463,060) $ 55,349,000
---------------
Total United States
short-term investments
(cost $80,560,947) 80,726,426
---------------
Total short-term
investments
(cost $264,311,926) 251,803,512
---------------
------------------------------------------------------------------------------------------
Total Investments--141.5% (cost $1,903,428,221) 1,896,398,295
Other assets in excess of liabilities--3.3% 43,472,866
Liquidation value of preferred stock--(44.8%) (600,000,000)
------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shareholders--100% $ 1,339,871,161
------------------------------------------------------------------------------------------
Net asset value per common share ($1,339,871,161 / 264,654,000 shares of
common stock issued and outstanding) $5.06
------------------------------------------------------------------------------------------
------------------------------
* The interest rate reflected for floating rate notes is the rate in
effect at October 31, 2002.
** Portfolio securities are listed in currency in which they are traded.
A$--Australian dollar
EUR--Euro
HKD--Hong Kong dollar
JPY--Japanese yen
KRW--South Korean won
MYR--Malaysian ringgit
NZD--New Zealand dollar
PHP--Philippine peso
SGD--Singapore dollar
THB--Thailand baht
USD--United States dollar
(a) Value of security is linked to the value of Government of Korea 7.70%,
8/16/03 and the movement of the South Korean won.
20 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Statement of Assets and Liabilities
October 31, 2002
Assets
Investments, at value (cost $1,903,428,221)............... $1,896,398,295
Foreign currency, at value (cost $12,458,194)............. 13,199,385
Cash...................................................... 551,262
Interest receivable....................................... 33,223,153
Receivable for investments sold........................... 8,477,038
Unrealized appreciation on interest rate and currency
swaps................................................... 1,299,218
Other assets.............................................. 537,130
Unrealized appreciation on forward currency contracts..... 438,221
Due from broker-variation margin.......................... 269,195
Prepaid rights offering costs............................. 100,000
--------------
Total assets.......................................... 1,954,492,897
--------------
Liabilities
Dividends payable-common stock............................ 9,262,890
Withholding taxes payable................................. 1,540,254
Accrued expenses and other liabilities.................... 1,249,310
Investment management fee payable......................... 816,850
Dividends payable-preferred stock......................... 705,508
Unrealized depreciation on interest rate swaps............ 576,061
Unrealized depreciation on forward currency contracts..... 211,951
Administration fee payable................................ 158,912
Payable for rights offering............................... 100,000
--------------
Total liabilities..................................... 14,621,736
--------------
Preferred stock ($.01 par value per share and $25,000
liquidation value per share applicable to 24,000 shares;
Note 5)................................................. 600,000,000
--------------
Net Assets Applicable to Common Shareholders.............. $1,339,871,161
--------------
--------------
Net assets were composed of:
Common stock:
Par value ($.01 per share, applicable to 264,654,000
shares)............................................. $ 2,646,540
Paid-in capital in excess of par...................... 1,813,855,084
--------------
1,816,501,624
Accumulated net investment loss......................... (11,508,652)
Accumulated net realized loss on investments............ (23,475,790)
Net unrealized appreciation on investments.............. 26,976,617
Accumulated net realized and unrealized foreign exchange
losses................................................ (468,622,638)
--------------
Net Assets Applicable to Common Shareholders.............. $1,339,871,161
--------------
--------------
Net asset value per common share: ($1,339,871,161 /
264,654,000 shares of common stock issued and
outstanding)............................................ $5.06
--------------
--------------
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 21
Statement of Operations
Year Ended October 31, 2002
Net Investment Income
Income
Interest (net of foreign withholding taxes of
$6,258,722)...................................... $123,996,947
------------------
Expenses
Investment management fee.......................... 10,135,504
Administration fee................................. 2,291,078
Custodian's fees and expenses...................... 2,100,000
Auction agent's fees and broker commissions........ 1,600,000
Reports to shareholders............................ 750,000
Legal fees and expenses............................ 620,000
Directors' fees and expenses....................... 615,000
Transfer agent's fees and expenses................. 450,000
Insurance expense.................................. 310,000
Investor relations fees and expenses............... 185,000
Independent accountant's fees and expenses......... 165,000
Miscellaneous...................................... 103,052
------------------
Total operating expenses........................... 19,324,634
------------------
Net investment income................................ 104,672,313
------------------
Realized and Unrealized Gains (Losses) on Investments
and Foreign Currencies
Net realized gain (loss) on:
Investment transactions............................ 8,978,062
Interest rate and currency swaps................... (1,412,000)
Financial futures transactions..................... (27,040)
------------------
7,539,022
------------------
Net change in unrealized appreciation (depreciation)
on:
Investments........................................ 9,848,888
Interest rate and currency swaps................... (187,153)
Financial futures contracts........................ (44,451)
------------------
9,617,284
------------------
Net gain on investments.............................. 17,156,306
------------------
Net increase in net assets from operations before net
foreign exchange gains............................. 121,828,619
Net realized and unrealized foreign exchange gains... 113,718,938
------------------
Net increase in Net Assets from operations........... 235,547,557
------------------
Dividends from net investment income to preferred
shareholders......................................... (12,375,836)
------------------
Net Increase In Net Assets Applicable to Common
Shareholders Resulting From Operations............... $223,171,721
------------------
------------------
22 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Statement of Cash Flows
Year Ended October 31, 2002
Increase (Decrease) in Cash (Including Foreign
Currency)
Cash flows provided from (used in) operating
activities
Interest received (excluding premium/discount
amortization of $14,391,745)..................... $ 136,776,801
Expenses paid...................................... (19,333,888)
Proceeds from sales/maturities of short-term
portfolio investments, net....................... 154,592,148
Purchases of long-term portfolio investments....... (708,203,778)
Proceeds from sales of long-term portfolio
investments...................................... 591,663,998
Dividends and distributions paid to preferred
shareholders..................................... (12,528,645)
Loss on swaps and futures.......................... (1,540,839)
Other.............................................. (115,239)
------------------
Net cash provided from operating activities...... 141,310,558
------------------
Cash flows used for financing activities
Dividends and distributions paid to common
shareholders..................................... (119,389,266)
Cost of Fund shares reacquired in repurchase
program.......................................... (8,494,873)
------------------
Net cash used for financing activities........... (127,884,139)
------------------
Effect of changes in exchange rate................... (9,882,010)
------------------
Net increase in cash................................. 3,544,409
Cash at beginning of year.......................... 10,206,238
------------------
Cash at end of year................................ $ 13,750,647
------------------
------------------
Reconciliation of Cash Provided From
Operating Activities
Net increase in total net assets resulting from
operations......................................... $ 223,171,721
------------------
Increase in investments............................ 48,178,785
Net realized gain on investment transactions....... (7,539,022)
Increase in unrealized appreciation on forward
currency contracts................................. (3,506)
Net change in unrealized appreciation on
investments...................................... (9,617,284)
Net realized and unrealized foreign exchange
gains............................................ (113,718,938)
Increase in interest receivable.................... (1,076,124)
Dividends paid to preferred shareholders........... 12,528,645
Increase in deferred offering costs payable........ 100,000
Increase in deferred offering costs................ (100,000)
Net increase in other assets....................... (115,239)
Decrease in payable for investments purchased...... (1,780,465)
Increase in receivable for investments sold........ (8,477,038)
Decrease in accrued expenses and other
liabilities...................................... 28,218
Increase in variation margin....................... (269,195)
------------------
Total adjustments................................ (81,861,163)
------------------
Net cash provided from operating activities.......... $ 141,310,558
------------------
------------------
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 23
Statement of Changes in Net Assets
Year Ended October 31,
----------------------------------------
2002 2001
------------------ ------------------
Increase (Decrease) in Net Assets
Operations
Net investment income.......... $ 104,672,313 $ 139,812,296
Net realized gain on investment
transactions................. 7,539,022 3,740,038
Net change in unrealized
appreciation on
investments.................. 9,617,284 68,418,255
------------------ ------------------
Net increase in net assets
resulting from operations
before net foreign exchange
gains (losses)............... 121,828,619 211,970,589
Net realized and unrealized
foreign exchange gains
(losses)..................... 113,718,938 (73,152,895)
------------------ ------------------
Net increase in net assets from
operations................... 235,547,557 138,817,694
------------------ ------------------
Dividends from net investment
income to preferred
shareholders................. (12,375,836) (29,663,738)
------------------ ------------------
Net increase in Net Assets
applicable to common
shareholders resulting from
operations..................... 223,171,721 109,153,956
------------------ ------------------
Dividends from net investment
income to Common shareholders.. (41,276,180) (58,797,328)
Tax return of capital
distribution................... (75,370,804) (85,450,731)
------------------ ------------------
Total dividends and distributions
to common shareholders (116,646,984) (144,248,059)
------------------ ------------------
Cost of Fund shares reacquired in
repurchase program (2,127,600
and 595,700 shares,
respectively).................. (8,494,873) (2,412,750)
------------------ ------------------
Total increase (decrease) in net
assets applicable to common
shareholders................... 98,029,864 (37,506,853)
Net Assets Applicable to
Common Shareholders
Beginning of year(a)............. 1,241,841,297 1,279,348,150
------------------ ------------------
End of year...................... $1,339,871,161 $1,241,841,297
------------------ ------------------
------------------ ------------------
(a) Amounts have been restated to conform to new requirements for
presentation of preferred stock under generally accepted accounting
principles.
24 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Notes to Financial Statements
Aberdeen Asia-Pacific Income Fund, Inc. (the 'Fund') was incorporated in
Maryland on March 14, 1986 as a closed-end, non-diversified management
investment company. The Fund's investment objective is to seek current income.
The Fund may also achieve incidental capital appreciation. The Fund will seek to
achieve its investment objective through investment in Australian and Asian debt
securities. In order to comply with a rule adopted by the Securities and
Exchange Commission under the Investment Company Act of 1940 regarding fund
names, the Board of Directors has adopted an investment policy that, for as long
as the name of the Fund remains Aberdeen Asia-Pacific Income Fund, Inc., it
shall be the policy of the Fund normally to invest at least 80% of its net
assets plus the amount of any borrowings for investment purposes, in Asian debt
securities, Australian debt securities and New Zealand debt securities. This 80%
investment policy is a non-fundamental policy of the Fund and may be changed by
the Board of Directors upon 60 days prior written notice to shareholders. There
can be no assurance that the Fund will achieve its objectives. The ability of
issuers of debt securities held by the Fund to meet their obligations may be
affected by economic developments in a specific industry, country or 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.
Basis of Presentation:
The financial statements of the Fund are prepared in accordance with accounting
principles generally accepted in the United States of America, using the United
States dollar as both the functional and reporting currency.
Security Valuation:
The Fund's Board of Directors has adopted Pricing and Valuation Procedures (the
'Procedures') to be used in determining the value of the assets held by the
Fund. In accordance with the Procedures, investments are stated at value.
Investments for which market quotations are readily available are valued at the
last trade price on the date of determination as obtained from a pricing source.
If no such trade price is available, such investments are valued at the quoted
bid price or the mean between the quoted bid and asked price on the date of
determination as obtained from a pricing source. 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.
Securities for which market quotations are not readily
Aberdeen Asia-Pacific Income Fund, Inc. 25
Notes to Financial Statements (continued)
available are valued at fair value in good faith using methods set forth in the
Procedures.
Repurchase Agreements:
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian takes possession of the
underlying collateral 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 collateral is
valued on a daily basis to determine its adequacy. 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:
Australian dollar ('A$'), New Zealand dollar ('NZD') and Asian currency amounts
are translated into United States dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at the
exchange rates at the end of the reporting periods;
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
The Fund isolates 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 the securities held at October 31, 2002.
Similarly, the Fund isolates the effect of changes in foreign exchange rates
from the fluctuations arising from changes in the market prices of portfolio
securities sold during the reporting periods.
Net realized and unrealized foreign exchange gains include realized foreign
exchange gains and losses from sales and maturities of portfolio securities,
sales of foreign currencies, currency gains or losses realized between the trade
and settlement dates on securities transactions, the difference between the
amounts of interest, discount and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid
and changes in unrealized foreign exchange gains and losses in the value of
portfolio securities and other assets and liabilities arising as a result of
changes in the exchange rate. Accumulated net realized and unrealized foreign
exchange gains shown in the
26 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
composition of net assets at October 31, 2002 represent foreign exchange gains
for book purposes that have not yet been recognized for tax purposes.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin, including
unanticipated movements in the value of the foreign currency relative to the
U.S. dollar.
The exchange rate at October 31, 2002 was US$.55 to A$1.00 for the Australian
dollar.
Securities Transactions and Investment Income:
Securities transactions are recorded on the trade date. Realized and unrealized
gains and losses from security and currency transactions are calculated on the
identified cost basis. Interest income is recorded on an accrual basis.
Discounts and premiums on securities purchased are accreted or amortized on an
effective yield basis over the estimated lives of the respective securities.
Expenses are recorded on the accrual basis. The preparation of financial
statements requires management to make estimates and assumptions that affect the
reported amounts and disclosures. Actual results could differ from those
estimates.
Changes in Accounting Principles:
As required, effective November 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies and began amortizing
premiums on debt securities for financial statement reporting purposes. This
change has no impact on the net asset value of the Fund. Prior to November 1,
2001, the Fund did not amortize premiums on debt securities. Upon initial
adoption, the Fund was required to adjust the cost of its fixed-income
securities by the cumulative amounts of amortization that would have been
recognized had the amortization been in effect from the purchase date of each
holding. Adopting this accounting principle does not affect the Fund's net asset
value, but changes the classification of certain amounts between interest income
and realized and unrealized gain (loss) in the Statement of Operations. The
current adjustments for the year ended October 31, 2002 resulted in a decrease
to net investment income of $14,105,126, an increase of net realized capital
gains of $28,161,311 and a decrease of unrealized appreciation of $14,056,185.
The cumulative adjustment upon adoption through October 31, 2001 resulted in a
decrease in accumulated net investment income of $53,372,190 and a decrease to
net unrealized depreciation on investments of $53,372,190. Because the Fund
determines its required distributions under Federal income tax laws, adoption of
Aberdeen Asia-Pacific Income Fund, Inc. 27
Notes to Financial Statements (continued)
this principle does not affect the amount or composition of distributions paid
to shareholders.
Forward Currency Contracts:
A forward currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. The Fund enters into
forward currency contracts in order to hedge its exposure to changes in foreign
currency exchange rates on its foreign portfolio holdings or on specific
receivables and payables denominated in a foreign currency. The contracts are
valued daily at current forward exchange rates and any unrealized gain or loss
is included in net unrealized appreciation or depreciation on investments. Gain
or loss is realized on the settlement date of the contract equal to the
difference between the settlement value of the original and renegotiated forward
contracts. This gain or loss, if any, is included in net realized gain (loss) on
foreign currency transactions. Risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the terms
of their contracts.
Financial Futures Contracts:
A financial futures contract is an agreement to purchase (long) or sell (short)
an agreed amount of securities or commodities at a set price for delivery on a
future date. Upon entering into a financial futures contract, the Fund is
required to pledge to the broker an amount of cash and/or other assets equal to
a certain percentage of the contract amount. This amount is known as the
'initial margin.' Subsequent payments, known as 'variation margin,' are made or
received by the Fund periodically, depending on the periodic fluctuations in the
value of the underlying security or commodity. Such variation margin is recorded
for financial statement purposes on a daily basis as unrealized gain or loss.
When the contract expires or is closed, the gain or loss is realized and is
presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value. Under a variety of circumstances, the Fund may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and the underlying
assets.
Securities Lending:
The Fund's investment policies permit the Fund to lend to banks and
28 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
broker-dealers, portfolio securities with an aggregate market value of up to 15%
of the Fund's total assets when it deems advisable. Pursuant to a securities
lending agreement ('Agreement') between the Fund and State Street Bank and Trust
Company ('State Street'), any loans made under the Agreement must be secured by
collateral (consisting of any combination of cash, U.S. Government securities,
irrevocable letters of credit or other high-quality debt securities) in an
amount at least equal (on a daily marked-to-market basis) to the current market
value of the securities loaned. An amendment to the Agreement provides that the
cash collateral may be invested in State Street Navigator Securities Lending
Trust, an affiliate of State Street, and proceeds from this investment are
divided 70% as to the Fund and 30% as to State Street.
The Agreement also provides that the Fund may terminate the loans at any time
and obtain the return of the securities, and that the Fund will continue to
receive any interest or dividends obtained on any of the loaned securities and
will continue to have voting rights with respect to the securities.
In the event the Fund lends its portfolio securities, the Fund may be exposed to
counterparty risk, which may result in the delay in recovery of the loaned
securities or possible loss of right in the collateral should the borrower
become insolvent. However, under the amendment to the Agreement, State Street
will indemnify the Fund in the case of borrower default.
Interest Rate and Currency Swap:
The Fund may engage in certain swap transactions in order to obtain a desired
return at a lower cost than if the Fund had invested directly in the asset that
yielded the desired return.
An interest rate and currency swap is an agreement between two parties which
involves exchanging principal and fixed rate interest payments (one currency for
principal and fixed rate interest payments in another currency in the case of
interest rate and currency swap) for a specified period of time. Interest rate
and currency swaps involve the accrual and exchange of interest payments between
the parties.
During the term of the swap, changes in the value of the swap are recognized as
unrealized gains or losses by 'marking-to-market' to reflect the market value of
the swap. When the swap is terminated, the Fund will record a realized gain or
loss equal to the difference, if any, between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract.
Aberdeen Asia-Pacific Income Fund, Inc. 29
Notes to Financial Statements (continued)
The Fund is exposed to credit loss in the event of non-performance by the other
party to the interest rate and currency swap. However, the Fund does not
anticipate non-performance by any counterparty.
Dividends and Distributions:
It is the Fund's current policy to pay dividends from net investment income
supplemented by net realized foreign exchange gains, net realized short-term
capital gains and return of capital distributions if necessary, on a monthly
basis. The Fund will also declare and pay distributions at least annually from
net realized gains on investment transactions and net realized foreign exchange
gains, if any. Dividends and distributions to common shareholders are recorded
on the ex-dividend date. Dividends and distributions to preferred shareholders
are accrued on a weekly basis and are determined as described in Note 6.
Income distributions and capital and currency gains distributions are determined
in accordance with income tax regulations which may differ from accounting
principles generally accepted in the United States of America. These differences
are primarily due to differing treatments for foreign currencies, loss deferrals
and recognition of market discount and premium.
Taxes:
For federal income and excise tax purposes, the Fund's transactions are
accounted for using the Australian dollar as the functional currency.
Accordingly, only realized currency gains and losses resulting from the
repatriation of Australian dollars into United States dollars or transactions in
New Zealand dollars or Asian country currencies are recognized for tax purposes.
No provision has been made for United States income taxes because it is the
Fund's policy to continue to meet the requirements of the United States Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. The chart below summarizes the
withholding tax rates in effect on interest income at the period end.
Withholding
Country Tax Rate
------------------------------------
Australia 10%
Hong Kong 30
Japan 10
Korea 12
Malaysia 30
30 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
Withholding
Country Tax Rate
------------------------------------
New Zealand 10%
Philippines 15
Singapore 30
Thailand 15
Cash Flow Information:
The Fund invests in securities and makes distributions to common shareholders
from net investment income and net realized gains from investment and currency
transactions, and to the extent necessary, from return of paid-in capital. These
distributions are paid in cash or are reinvested at the discretion of
shareholders. These activities are reported in the Statement of Changes in Net
Assets and additional information on cash receipts and cash payments is
presented in the Statement of Cash Flows. Cash includes domestic and foreign
currency.
Note 2. Agreements
Aberdeen Asset Managers (C.I.) Limited (the 'Investment Manager') serves as
investment manager to the Fund and Aberdeen Asset Management Limited (the
'Investment Adviser') serves as investment adviser to the Fund pursuant to a
management agreement and an advisory agreement, respectively. The Investment
Manager and the Investment Adviser are wholly-owned subsidiaries of Aberdeen
Asset Management PLC.
The Investment Manager makes investment decisions on behalf of the Fund on the
basis of recommendations and information furnished to it by the Investment
Adviser, including the selection of and the placement of orders with brokers and
dealers to execute portfolio transactions on behalf of the Fund.
The management agreement provides the Investment Manager with a fee, computed
weekly and payable monthly, at the following annual rates: 0.65% of the Fund's
average weekly total net assets of common and preferred shareholders up to $200
million, 0.60% of such assets between $200 million and $500 million, 0.55% of
such assets between $500 million and $900 million, 0.50% of such assets between
$900 million and $1,750 million and 0.45% of such assets in excess of $1,750
million.
The Investment Manager pays fees to the Investment Adviser for its services
rendered. The Investment Manager informed the Fund that it paid $4,360,224 to
the Investment Adviser during the year ended October 31, 2002.
Aberdeen Asia-Pacific Income Fund, Inc. 31
Notes to Financial Statements (continued)
Prudential Investments LLC (the 'Administrator') serves as administrator to the
Fund pursuant to an agreement. The administration agreement provides the
Administrator with a fee at the annual rate of 0.15% of the Fund's average
weekly total net assets of common and preferred shareholders up to $900 million,
0.10% of such assets between $900 million and $1,750 million and 0.07% of such
assets in excess of $1,750 million. During the year, the Administrator remitted
$240,000 to the Investment Manager for certain compliance related administrative
services provided.
Under terms of an Investor Relations Services Agreement, Aberdeen Fund Managers,
Inc. ('Aberdeen'), an affiliate of the Fund's Investment Manager and Investment
Advisor, serves as the Fund's investor relations services provider. This
agreement provides Aberdeen with a monthly retainer fee of $10,000 plus
out-of-pocket expenses. During the year ended October 31, 2002, the Fund
incurred fees of approximately $120,000 for the services of Aberdeen. As of
October 31, 2002, $10,000 of this amount was due to Aberdeen. Investor relations
fees and expenses in the Statement of Operations include certain out-of-pocket
expenses.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 2002 aggregated $708,129,654 and $600,141,036,
respectively.
The Fund entered into two interest rate and foreign currency swaps on
February 16, 1999. Under the terms of the first swap, the Fund receives interest
at a rate of 11.50% based on a notional amount of KRW5,124,367,250 and pays
interest at a rate of 3.70% based on a notional amount of JPY500,000,000. Under
the terms of the second swap, the Fund receives interest at a rate of 13.05%
based on a notional amount of THB290,920,192 and pays interest at a rate of
3.35% based on a notional amount of JPY900,000,000. Net receipts or payments of
such amounts are exchanged semi-annually. At October 31, 2002 the unrealized
appreciation on currency swaps was $1,652,167. The swaps are scheduled to
terminate on April 26, 2006.
The Fund entered into an interest rate swap agreement on September 1, 2000.
Under the terms of the agreement, the Fund receives a floating rate of interest
based on a notional value of SGD 4,000,000 and pays interest at a fixed rate of
4.835%
32 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
based on a notional value of SGD 4,000,000. Net receipts of payments of such
amounts are exchanged semi-annually. At October 31, 2002 the unrealized
depreciation on this interest rate swap was $352,949. The swap is scheduled to
terminate on September 6, 2010.
The Fund entered into an interest rate swap agreement on September 16, 2002.
Under the terms of the agreement, the Fund receives a floating rate of interest
based on a notional value of $200,000,000 and pays interest at a fixed rate of
2.10% subject to periodic resets. At October 31, 2002 the floating rate in
effect was 1.82%. The net receipts of payments of such amounts are exchanged
every 28 calendar days beginning after October 1, 2002. At October 31, 2002 the
unrealized depreciation on this interest rate swap was $576,061. The swap is
scheduled to terminate on September 18, 2004.
Net interest income of $782,159 on interest rate and currency swaps earned
during the year is included in interest income in the Statement of Operations.
At October 31, 2002 the Fund had outstanding forward currency contracts to buy
and sell foreign currency against United States dollars as follows:
Value at
Foreign Currency Settlement Current
Sale Contract Date Receivable Value Depreciation
-------------------------------- --------------- ----------- --------------
Thailand Baht
settlement date 11/29/02 $ 7,788,049 $ 7,838,484 $ 50,435
--------------- ----------- --------------
--------------- ----------- --------------
Value at
Foreign Currency Settlement Current Appreciation
Purchase Contract Date Payable Value (Depreciation)
-------------------------------- --------------- ----------- --------------
Indian Rupee
settlement date 11/6/02 $ 8,135,000 $ 8,297,731 $ 162,731
settlement date 11/6/02 4,458,000 4,503,835 45,835
Philippine Peso
settlement date 1/29/03 6,191,000 6,202,141 11,141
South Korean Won
settlement date 1/13/03 7,700,000 7,913,416 213,416
Thailand Baht
settlement date 11/1/02 1,804,000 1,805,933 1,933
settlement date 11/29/02 8,000,000 7,838,484 (161,516)
Yuan Renminbi
settlement date 1/24/03 8,316,000 8,319,165 3,165
--------------- ----------- --------------
$44,604,000 $44,880,705 $ 276,705
--------------- ----------- --------------
--------------- ----------- --------------
Aberdeen Asia-Pacific Income Fund, Inc. 33
Notes to Financial Statements (continued)
During the year ended October 31, 2002, the Fund entered into financial futures
contracts. Details of open contracts at October 31, 2002 are as follows:
Value at Value at Unrealized
Number of Expiration October 31, Trade Appreciation/
Contracts Type Date 2002 Date (Depreciation)
---------- ------------ ----------- ----------- ---------- ---------------
Short
Positions:
10yr U.S.
Treasury
10 Notes Dec. 02 $1,147,188 $1,116,485 $ (30,703)
10yr
Australian
Treasury
58 Bonds Dec. 02 3,041,921 3,030,171 (11,750)
3yr
Australian
Treasury
60 Bonds Dec. 02 3,165,630 3,163,632 (1,998)
---------------
$ (44,451)
---------------
---------------
Note 4. Distributions and Tax Information
Distributions to shareholders, which are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principals, are recorded on the ex-dividend date. In order to present
undistributed net investment income (loss) and accumulated net realized gains
(losses) on the Statement of Assets and Liabilities in a way that more closely
represent their tax character, certain adjustments have been made to paid-in
capital in excess of par, undistributed net investment income (loss) and
accumulated net realized gains (loss) on investments.
For the year ended October 31, 2002, the adjustments were to decrease
accumulated net investment loss by $27,208,126, decrease accumulated net
realized gain on investments by $29,758,103, decrease accumulated net realized
and unrealized foreign exchange losses by $77,920,781 and decrease paid-in
capital in excess of par by $75,370,804. Net investment income, net realized
losses and net assets were not affected by this change.
For the year ended October 31, 2002, the tax character of total dividends paid
to common shareholders as reflected in the Statement of Changes in Net Assets,
are
34 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
$41,276,180 of ordinary income and $75,370,804 of return of capital
distributions.
The United States federal income tax basis of the Fund's investments and the net
unrealized appreciation as of October 31, 2002 were as follows:
Net
Tax Basis Unrealized
of Investments Appreciation Depreciation Appreciation
-------------- ------------ ------------ ------------
$1,857,348,511 $64,762,638 $25,712,854 $39,049,784
The difference between book basis and tax basis was primarily attributable to
deferred losses on wash sales, differing tax treatment for foreign currencies,
loss deferrals and recognition of discount and of premium amortization.
Note 5. Common Stock
There are 400 million shares of common stock authorized. At October 31, 2002,
there were 264,654,000 common shares issued and outstanding.
On October 8, 2002, the Fund filed a registration statement with the Securities
and Exchange Commission in connection with a proposed transferable rights
offering to common shareholders. The purpose of the offering is to enable the
Fund to increase its investments in Asian debt securities and increase the
Fund's net investment income. For the year ended October 31, 2002, the Fund
incurred $100,000 of expenses in connection with the proposed rights offering.
These expenses are being deferred and will reduce the future proceeds from the
offering. If the Fund does not consummate the rights offering, the deferred
expenses will be recognized.
On March 1, 2001, the Board of Directors approved a stock repurchase program.
The stock repurchase program allows the Fund to repurchase up to 10% of its
outstanding common stock in the open market during any 12 month period if and
when the discount to net asset value is at least 10%. The weighted average
discount rate for the year ended October 31, 2002 was 13.33%. The number of
shares repurchased and cancelled under this program for the years ended October
31, 2002 and October 31, 2001 were 2,127,600 and 595,700, respectively.
Aberdeen Asia-Pacific Income Fund, Inc. 35
Notes to Financial Statements (continued)
Note 6. Preferred Stock
The Preferred Stock shareholders have rights as determined by the Board of
Directors. The 24,000 shares of Auction Market Preferred Stock ('Preferred
Stock') outstanding consist of nine series as follows: Series A--3,000 shares,
Series B--3,000 shares, Series C--2,000 shares, Series D--4,000 shares, Series
E--2,000 shares, Series F--2,000 shares, Series G--3,000 shares, Series H--2,500
shares and Series I--2,500 shares.
Dividends on each series of Preferred Stock are cumulative at a rate established
at the initial public offering and are typically reset every 28 days for Series
A through D and every seven days for Series E through I based on the results of
an auction. Dividend rates ranged from 1.7% to 2.7% during the year ended
October 31, 2002. Under the Investment Company Act of 1940, the Fund may not
declare dividends or make other distributions on shares of common stock or
purchase any such shares if, at the time of the declaration, distribution or
purchase, asset coverage with respect to the outstanding Preferred Stock would
be less than 200%.
The Preferred Stock is redeemable at the option of the Fund, in whole or in
part, on any dividend payment date at liquidation value plus any accumulated but
unpaid dividends. The Preferred Stock is also subject to mandatory redemption at
liquidation value plus any accumulated but unpaid dividends if certain
requirements relating to the composition of the assets and liabilities of the
Fund as set forth in the Articles of Incorporation are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of common
stock (one vote per share) and will vote together with holders of shares of
common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Fund's directors.
A recent Securities and Exchange Commission staff announcement, Emerging Issues
Task Force Discussion ('EITF D'-98), Classification and Measurement of
Redeemable Securities, was issued providing new guidance related to the
presentation of Preferred Shares in the financial statements. To conform with
this guidance, the Fund has reclassified its Preferred Stock outside of net
assets in the Statement of Assets and Liabilities and restated its Statement of
Changes in Net Assets to reflect only net assets applicable to common
shareholders.
36 Aberdeen Asia-Pacific Income Fund, Inc.
Notes to Financial Statements (continued)
Note 7. Subsequent Events
On November 18, 2002 and December 11, 2002, the Board of Directors declared a
monthly distribution of 3.5 cents per share payable on December 6, 2002 and
January 10, 2003 to all shareholders of record as of November 29, 2002 and
December 31, 2002 (ex-dividend dates November 26, 2002 and December 27, 2002,
respectively).
Subsequent to October 31, 2002, dividends and distributions declared and paid on
Preferred Stock totaled approximately $1,338,895 for the nine outstanding
preferred share series in the aggregate through December 13, 2002.
Aberdeen Asia-Pacific Income Fund, Inc. 37
Financial Highlights
Year
Ended
October 31,
2002###
--------------------
PER SHARE OPERATING PERFORMANCE*:
Net asset value per common share, beginning of year...... $ 4.65
--------
Net investment income.................................... .40
Net realized and unrealized gain (loss) on investments
and foreign currencies................................. .50
--------
Total from investment operations........................ .90
--------
Dividends from net investment income to preferred
shareholders........................................... (.05)
Dividends from net investment income to common
shareholders........................................... (.16)
Tax return of capital distribution....................... (.28)
Distributions from net capital and currency gains to
preferred shareholders................................. --
Distributions from net capital and currency gains to
common shareholders.................................... --
--------
Total dividends and distributions....................... (.49)
--------
Capital reduction with respect to issuance of shares..... --
Increase resulting from Fund share repurchase............ --##
--------
Net asset value per common share, end of year............ 5.06
--------
--------
Market price per common share, end of year............... $ 4.25
--------
--------
TOTAL INVESTMENT RETURN BASED ON(D):
Market value............................................. 17.01%
Net asset value.......................................... 19.65%
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS/SUPPLEMENTAL DATA#:
Expenses(D)(D)........................................... 1.51%
Net investment income available to common shareholders... 7.21%
Portfolio turnover rate.................................. 36%
Net assets of common shareholders, end of period (000
omitted)............................................... $1,339,871
Average net assets of common shareholders (000
omitted)............................................... $1,280,112
Senior securities (preferred stock) outstanding (000
omitted)............................................... $ 600,000
Asset coverage of preferred stock at period-end.......... 326%
------------------------------
* Calculated based upon average shares outstanding during the year.
D Total investment return is calculated assuming a purchase of common stock on the first
day and a sale on the last day of each 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. Total investment return does not reflect brokerage
commissions.
DD Includes expenses of both preferred and common stock.
# Ratios calculated on the basis of income, expenses and preferred share dividends
applicable to both the common and preferred shares relative to the average net assets of
common shareholders. Expense ratios relative to the average net assets of common and
preferred shareholders are 1.03%, 1.03%, .98%, .95% and .95%, respectively. Ratios to
average net assets of net investment income before preferred stock dividends are 8.18%,
10.76%, 10.52%, 9.79% and 10.72%, respectively. Ratios to average net assets of preferred
stock dividends are .97%, 2.28%, 2.30%, 1.45% and 2.21%, respectively.
## Less than $0.005 per share.
### Effective November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and
Accounting Guide for Investment Companies and began amortizing premiums on debt
securities. The effect of this change for the year ended October 31, 2002 was to decrease
net investment income per share by $0.05 and increase net realized and unrealized gain
(loss) per share by $0.05 and decrease the ratio of net investment income from 8.31% to
7.21%. Per share amounts and ratios for the years ended prior to October 31, 2002 have
not been restated to reflect this change in presentation.
38 Aberdeen Asia-Pacific Income Fund, Inc. See Notes to Financial Statements.
Financial Highlights (continued)
Year Ended October 31,
-----------------------------------------------------------
2001 2000 1999 1998
----------- ----------- ----------- -----------
$ 4.78 $ 6.20 $ 7.33 $ 8.85
----------- ----------- ----------- -----------
.53 .60 .67 .82
(.01) (1.28) (.35) (1.45)
----------- ----------- ----------- -----------
.52 (.68) .32 (.63)
----------- ----------- ----------- -----------
(.11) (.13) (.10) (.17)
(.22) (.39) (.63) (.51)
(.32) (.21) -- --
-- (.01) (.02) --
-- -- (.09) (.21)
----------- ----------- ----------- -----------
(.65) (.74) (.84) (.89)
----------- ----------- ----------- -----------
-- -- (.61) --
--## -- -- --
----------- ----------- ----------- -----------
$ 4.65 $ 4.78 $ 6.20 $ 7.33
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
$ 4.02 $ 3.86 $ 6.00 $ 5.625
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
18.74% (26.73)% 20.96% (23.19)%
10.91% (12.19)% (5.15)% (8.10)%
1.51% 1.36% 1.26% 1.47%
8.48% 8.22% 8.34% 8.51%
47% 64% 89% 61%
$ 1,241,841 $ 1,279,346 $ 1,657,365 $ 1,428,142
$ 1,299,044 $ 1,530,638 $ 1,775,894 $ 1,485,690
$ 600,000 $ 600,000 $ 600,000 $ 600,000
308% 316% 376% 338%
NOTE: Contained above is operating performance for a share of common stock outstanding, total
investment return, ratios to average net assets of common shareholders and other
supplemental data for each of the years indicated. This information has been determined
based upon financial information provided in the financial statements and market value
data for the Fund's common shares.
See Notes to Financial Statements. Aberdeen Asia-Pacific Income Fund, Inc. 39
Report of Independent Accountants
To the Shareholders and Board of Directors of
Aberdeen Asia-Pacific Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Aberdeen Asia-Pacific Income
Fund, Inc. (the 'Fund') at October 31, 2002, the results of its operations and
its cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at October 31, 2002 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
December 16, 2002
40 Aberdeen Asia-Pacific Income Fund, Inc.
Federal Tax Information (Unaudited)
As required by Internal Revenue Code regulations, we are to advise you within 60
days of the Fund's fiscal year end (October 31, 2002) as to the tax status of
dividends, distributions and foreign tax credits paid by the Fund during the
fiscal year. During fiscal year 2002, the Fund paid dividends and distributions
to common shareholders of $.16 and $.28 of net investment income and return of
capital, respectively. During fiscal year 2002, the Fund paid amounts for
dividends and distributions to preferred shareholders from net investment income
and capital gains as shown in the table below. These dividends do not qualify
for the 70% dividends received deduction for corporations.
The Fund has elected to give the benefit of foreign tax credits to its
shareholders in the amount designated below on a per share basis. Accordingly,
shareholders who must report their gross income dividends and distributions in a
federal income 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.
The following table allocates the dividends and distributions paid by their
sources:
Net
Dividends
Foreign and
Gross Taxes Distributions
Common Shares Amount Paid Paid
---------------------------------------- ------- -------- -------------
Distributions:
Foreign Source $.3246 $.0260 $ .2986
United States .1414 -- .1414
------- -------- -------------
$.4660 $.0260 $ .4400
------- -------- -------------
------- -------- -------------
Preferred Shares
-------------------------------------------------------------------------------
Series A:
Ordinary Income:
Foreign Source $402.15 $25.77 $376.38
United States 163.93 -- 163.93
------- -------- -------------
$566.08 $25.77 $540.31
------- -------- -------------
------- -------- -------------
Series B:
Ordinary Income:
Foreign Source $397.53 $25.47 $372.06
United States 162.04 -- 162.04
------- -------- -------------
$559.57 $25.47 $534.10
------- -------- -------------
------- -------- -------------
Aberdeen Asia-Pacific Income Fund, Inc. 41
Federal Tax Information (Unaudited) (continued)
Net
Dividends
Foreign and
Gross Taxes Distributions
Common Shares Amount Paid Paid
---------------------------------------- ------- -------- -------------
Series C:
Ordinary Income:
Foreign Source $382.93 $24.54 $358.39
United States 156.09 -- 156.09
------- -------- -------------
$539.03 $24.54 $514.49
------- -------- -------------
------- -------- -------------
Series D:
Ordinary Income:
Foreign Source $390.46 $25.02 $365.44
United States 159.16 -- 159.16
------- -------- -------------
$549.62 $25.02 $524.60
------- -------- -------------
------- -------- -------------
Series E:
Ordinary Income:
Foreign Source $378.11 $24.23 $353.88
United States 154.13 -- 154.13
------- -------- -------------
$532.24 $24.23 $508.01
------- -------- -------------
------- -------- -------------
Series F:
Ordinary Income:
Foreign Source $379.96 $24.35 $355.62
United States 154.88 -- 154.88
------- -------- -------------
$534.85 $24.35 $510.50
------- -------- -------------
------- -------- -------------
Series G:
Ordinary Income:
Foreign Source $384.75 $24.65 $360.10
United States 156.84 -- 156.84
------- -------- -------------
$541.59 $24.65 $516.93
------- -------- -------------
------- -------- -------------
Series H:
Ordinary Income:
Foreign Source $385.24 $24.69 $360.55
United States 157.04 -- 157.04
------- -------- -------------
$542.28 $24.69 $517.59
------- -------- -------------
------- -------- -------------
Series I:
Ordinary Income:
Foreign Source $385.92 $24.73 $361.19
United States 157.31 -- 157.31
------- -------- -------------
$543.23 $24.73 $518.50
------- -------- -------------
------- -------- -------------
42 Aberdeen Asia-Pacific Income Fund, Inc.
Federal Tax Information (Unaudited) (continued)
Although the Fund has made the election required to make this foreign tax credit
or deduction available to you, the amount of allowable tax credit is subject to
Section 904 of the Internal Revenue Code. Shareholders are advised to consult
their own tax advisors with respect to the tax consequences of their investment
in the Fund.
In January 2003 shareholders will receive Form 1099-DIV, or substitute 1099-DIV,
which will reflect the amount of dividends and distributions and foreign taxes
to be used by calendar year taxpayers on their 2002 federal income tax returns.
Aberdeen Asia-Pacific Income Fund, Inc. 43
Capital Structure (Unaudited)
SHARE CAPITAL
-----------------------------------------------------------------------------------------------------
Authorized Issued
-----------------------------------------------------------------------------------------------------
400,000,000 264,654,000 Common stock, $0.01 par value per share
24,000 24,000 Preferred stock, $25,000 liquidation value per
share
-----------------------------------------------------------------------------------------------------
CAPITAL HISTORY
-----------------------------------------------------------------------------------------------------
Common Stock
-----------------------------------------------------------------------------------------------------
April 11, 1986 10,723 Seed Shares issued to Equitilink International
Management Ltd. (former name of the Investment
Manager of the Fund) at $9.33
April 24, 1986 85,643,095 Initial public offering of common stock at $9.31
per share
Quarter ended July 1986 24,698 Shares issued through dividend reinvestment
program
January 15, 1987 215,277 Shares issued through dividend reinvestment
program
Quarter ended July 1989 60,825 Shares issued through dividend reinvestment
program
Quarter ended January 447,154 Shares issued through dividend reinvestment
1992 program
1,184,955 Common stock dividend paid
Quarter ended April 1992 334,574 Shares issued through dividend reinvestment
program
Quarter ended July 1992 341,430 Shares issued through dividend reinvestment
program
October 9, 1992 13,177,779 Rights offering of common stock at $9.75 per
share
Quarter ended October 363,896 Shares issued through dividend reinvestment
1992 program
Quarter ended January 443,783 Shares issued through dividend reinvestment
1993 program
Quarter ended April 1993 301,318 Shares issued through dividend reinvestment
program
559,335 Common stock dividend paid
Quarter ended July 1993 452,926 Shares issued through dividend reinvestment
program
Quarter ended October 474,075 Shares issued through dividend reinvestment
1993 program
November 12, 1993 17,311,869 Rights offering of common stock at $9.48 per
share
Quarter ended January 532,983 Shares issued through dividend reinvestment
1994 program
Quarter ended July 1994 1,053,232 Shares issued through dividend reinvestment
program
Quarter ended October 541,952 Shares issued through dividend reinvestment
1994 program
Quarter ended January 177,377 Shares issued through dividend reinvestment
1995 program
702,496 Common stock dividend paid
May 5, 1995 30,723,350 Rights offering of common stock at $7.64 per
share
Quarter ended January 568,703 Shares issued through dividend reinvestment
1996 program
May 29, 1996 38,911,951 Rights offering of common stock at $8.03 per
share
Quarter ended October 184,572 Shares issued through dividend reinvestment
1997 program
November 2, 1998 71,991,921 Rights offering of common stock at $5.30 per
share
Quarter ended October 641,051 Shares issued through dividend reinvestment
1999 program
Quarter ended July 2001 (590,700) Buy back of common stock
Quarter ended October (5,000) Buy back of common stock
2001
Quarter ended January (1,562,200) Buy back of common stock
2002
Quarter ended April 2002 (520,700) Buy back of common stock
Quarter ended July 2002 (44,700) Buy back of common stock
-----------------------------------------------------------------------------------------------------
44 Aberdeen Asia-Pacific Income Fund, Inc.
Capital Structure (Unaudited) (continued)
-----------------------------------------------------------------------------------------------------
Preferred Stock
-----------------------------------------------------------------------------------------------------
Authorized Issued
-----------------------------------------------------------------------------------------------------
January 19, 1989 2,000 Preferred stock issuance
(Series A-750 shares, B-750 shares & C-500
shares)
(Liquidation value $200 Million)
August 2, 1989 1,000 Preferred stock issuance (Series D)
(Liquidation value $100 Million)
December 23, 1992 500 Preferred stock issuance (Series E)
(Liquidation value $50 Million)
December 20, 1993 500 Preferred stock issuance (Series F)
(Liquidation value $50 Million)
July 27, 1995 3,000 Preferred stock issuance (Series G)
(Liquidation value $75 Million)
April 25, 1996 12,000 Preferred stock split 4 to 1 (Series A, B, C, D,
E, F)
September 10, 1996 5,000 Preferred stock issuance
(Series H-2,500 shares & I-2,500 shares)
(Liquidation value $125 million)
-----------------------------------------------------------------------------------------------------
Aberdeen Asia-Pacific Income Fund, Inc. 45
Other Information (Unaudited)
Dividend Reinvestment and Cash Purchase Plan.--Shareholders may elect to have
all distributions of dividends and capital gains automatically reinvested in
Fund shares pursuant to the Fund's Dividend Reinvestment and Cash Purchase Plan
(the 'Plan'). Generally, 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
contact the Fund at (800) 451-6788.
EquiServe Trust Company N.A. (the 'Plan Agent') serves as agent for the
shareholders in administering the Plan. Dividends and capital gains
distributions payable to Plan participants will be promptly invested. If the
Fund declares an income dividend or capital gains distribution payable in stock
to shareholders who are not Plan participants, then Plan participants will
receive that dividend or distribution in newly issued shares on identical terms
and conditions.
In every other case Plan participants will receive shares on the following
basis: If the market price of the Fund's common stock plus any brokerage
commission is equal to or exceeds net asset value, Plan participants will
receive newly issued shares valued at the greater of net asset value or 95% of
current market price. If, on the other hand, the net asset value plus any
brokerage commission exceeds the market price, the Plan Agent will buy shares in
the open market. If the market price plus any applicable brokerage commission
exceeds net asset value before the Plan Agent has completed its purchases, the
Fund will issue new shares to complete the program. All reinvestments are in
full and fractional shares carried to three decimal places.
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 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 and distributions.
46 Aberdeen Asia-Pacific Income Fund, Inc.
Other Information (Unaudited)(continued)
The Plan also allows participants to make optional cash investments of at least
$100 in Fund shares as frequently as monthly through the Plan Agent on the open
market. Participants must pay a service fee of $0.75 for each investment and a
pro rata share of the brokerage commissions.
The Fund reserves the right to amend or terminate the Plan either in full or
partially upon 90 days' written or telephone notice to shareholders of the Fund.
Participants in the Plan may withdraw some or all of their shares from the Plan
upon written notice to the Plan Agent and will receive certificates for whole
Shares and cash for fractional Shares. In the alternative, by giving proper
notice to the Plan Agent, participants may receive cash in lieu of shares in an
amount which is reduced by brokerage commissions in connection with the sale of
shares and a $2.50 service fee.
All correspondence concerning the Plan should be directed to the Plan Agent,
EquiServe Trust Company N.A., P.O. Box 43011, Providence, RI 02940-3011.
Aberdeen Asia-Pacific Income Fund, Inc. 47
Management of the Fund (Unaudited)
Board of Directors Information
The names of the Directors and officers of the Fund, their addresses, ages and
principal occupations during the past five years are provided in the tables
below. Directors that are deemed 'interested persons' (as that term is defined
in Section 2(a)(19) of the Investment Company Act of 1940, as amended) of the
Fund, the Investment Manager or the Investment Adviser are included in the table
below under the heading 'Interested Directors.' Directors who are not interested
persons as described above are referred to in the table below under the heading
'Independent Directors.'
Interested Directors
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
Martin J. Gilbert** Chairman of Term expires Mr. Gilbert is the Chief 2 Aberdeen Global Income
One Albyn Place the Board; 2003; Director Executive and an Executive Fund, Inc., Aberdeen
Aberdeen, AB10 1YG Class III since 2001 Director of Aberdeen Asset Asia-Pacific Income
United Kingdom Director Management PLC, which was Investment Company
established in 1983 and is Limited.
Age: 47 the parent company of the
Fund's Investment Manager Mr. Gilbert is also a
and Investment Adviser. He Director of foreign funds
is one of the founding advised by entities
directors of Aberdeen affiliated with the
Asset Management PLC and Investment Manager and the
has been involved in the Investment Adviser.
investment management
industry since 1982, after
he qualified as a
chartered accountant. He
has been Chairman of the
Board of the Fund and of
Aberdeen Global Income
Fund, Inc. since 2001. He
has been a Director of
Aberdeen Asset Management
Limited (the Fund's
Investment Adviser) and
Aberdeen Asset Managers
(C.I.) Limited (the Fund's
Investment Manager) since
2001.
Beverley Hendry** Class I Term as Mr. Hendry served as 1
300 Las Olas Place Director; Director Executive Director of
300 S.E. 2nd Street, Assistant expires 2004; Aberdeen Asset Management
Suite 820 Treasurer Director since PLC (parent company of the
Fort Lauderdale, FL 33301 2001 Fund's Investment Manager
and Investment Adviser)
Age: 49 from 1991 to 2002. He has
also served as Chief
Executive Officer of
Aberdeen Fund Managers,
Inc. (affiliate of the
Fund's Investment Manager
and Investment Adviser)
since 1995. Mr. Hendry has
been a Director of
Aberdeen Asset Managers
(C.I.) Limited (the Fund's
Investment Manager) since
2001.
Brian M. Sherman** Class II Term expires Mr. Sherman has 36 years 1 Aberdeen Asia-Pacific
2 Paddington Street Director 2005; Director experience in Income Investment Company
Paddington, NSW 2021 Australia since 1986 international funds Limited; EquitiLink
management, stockbroking, Holdings Pty. Limited
Age: 59 and in particular, 24 (holding company);
years in the funds Aberdeen Leaders Limited
management industry in (investment company); Ten
Australia, managing money Network Holdings
in equities and
48 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 49
Management of the Fund (Unaudited) (continued)
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
bonds. He was Chairman of
the Fund from 2000 to 2001
and President of the Fund
to 2001. Until December
2000, he was Chairman and
Joint Managing Director of
the Fund's Investment
Adviser, and a Director of
the Fund's Investment
Manager.
Mr. Sherman was also Vice
President and a Director
from 1992 to 2000, and
Chairman from 1995 to
2000, of Aberdeen Global
Income Fund, Inc.;
President from 1985 to
2001 and Director from
1985 to 2000 of Aberdeen
Australia Equity Fund,
Inc.; Joint Managing
Director from 1986 to 2001
and Chairman from 1995 to
2001 of Aberdeen
Asia-Pacific Income
Investment Company
Limited; Joint Managing
Director from 1988 to 2000
of EquitiLink Limited
(holding company); and a
Director of Equitilink E
Link Ltd. from 1998 to
2002 (listed investment
company). Mr. Sherman was
a Director of the Sydney
Olympic Games Organizing
Committee (SOGOC) from
1996 until 2000. He is
currently Chairman of
Sherman Group Limited, an
investment company;
Chairman of Sonic
Communications Pty.
Limited; and Chairman of Limited (television
Pulse International Pty. network); Kirman Pty.
Limited. Mr. Sherman has Limited; Kirman Holdings
also been President of the Pty. Limited; Hestian Pty.
Australian Museum Trust Limited; EIML Australia
(since 2000). Pty. Limited.
---------------------------
* Aberdeen Australia Equity Fund, Inc. and Aberdeen Global
Income Fund, Inc. have a common Investment Manager and
Investment Adviser with the Fund, and may thus be deemed
to be part of the same 'Fund Complex' as the Fund.
** Mr. Sherman is deemed to be an interested person because
of his ownership of securities of Aberdeen Asset
Management PLC, the parent company of the Fund's
Investment Manager and Investment Adviser. Messrs.
Gilbert and Hendry are deemed to be interested persons
because of their affiliation with the Fund's Investment
Manager and Investment Adviser.
50 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 51
Management of the Fund (Unaudited) (continued)
Independent Directors
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
Anthony E. Aaronson Class I Term expires Mr. Aaronson is owner of 2 Aberdeen Australia Equity
110 E. 9th Street Director 2004; Director Tony Aaronson Textiles. He Fund, Inc.
Suite 721B since 1986 was a Director of the
Los Angeles, CA 90079 Textile Association of Los
Angeles from 1997 to 2000.
Age: 65 Mr. Aaronson has extensive
experience in the
management of private
investments. He served as
Chairman of the Audit
Committee of the Fund from
the inception of the Fund
until 2000.
David L. Elsum, A.M. Class III Term expires Mr. Elsum has over 20 3 Aberdeen Australia Equity
9 May Grove Director 2003; Director years of experience in Fund, Inc.; Aberdeen
South Yarra, Victoria 3141 since 1986 investment and insurance Global Income Fund, Inc.;
Australia markets. He was a member Aberdeen Asia-Pacific
of the Corporations and Income Investment Company
Age: 65 Securities Panel of the Limited; Melbourne
Australian Securities Wholesale Fish Market Pty.
Commission until 2000, a Ltd.; Queen Victoria
member of the Australian Market Pty. Ltd.
Federal Government (municipal market);
Administrative Appeals Financial Planning
Tribunal until 2001, Association Limited
Chairman of Audit Victoria (industry association);
(government statutory Aberdeen Leaders Limited
authority) from 1997 to (investment company).
2000, and has been a
member of the State of
Victoria Regulator-General
Appeal Panel since 2001.
Mr. Elsum is Chairman of
Stodart Investment Pty.
Ltd. Previously, he was
founding Managing Director
of Capel Court Investment
Bank, and Chief Executive
of several major public
companies, including The
MLC Limited (insurance)
and President of the State
of Victoria Superannuation
Fund (pension fund
management).
Howard A. Knight Class II Term expires Mr. Knight has over 30 2 Aberdeen Australia Equity
421 Glenbrook Road, #2 Director 2005; Director years of experience in Fund, Inc.; Lions Gate
Stamford, CT 06906 since 1993 financial markets and has Entertainment Corp. (film
been actively involved in production and
Age: 60 the Australian financial distribution); Agaton
markets for more than 25 Fitness AG.
years. From 1991 to 1994,
he served as President of
Investment Banking, Equity
Transactions and Corporate
Strategy at Prudential
Securities. From 1996 to
2001, Mr. Knight served as
Vice Chairman and Chief
Operating
52 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 53
Management of the Fund (Unaudited) (continued)
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
Officer of SBS
Broadcasting SA (European
television and radio
broadcasting), where he
was actively involved in
investment management and
capital markets. Mr.
Knight is currently an
independent director and
management adviser.
P. Gerald Malone Class II Term expires Mr. Malone has been 1 Aberdeen Asia-Pacific
861 Coronation Road Director 2005; Director chairman or a director of Income Investment Company
Park Royal since 2001 several companies in the Limited.
London NW 107PT health care industry since
United Kingdom 1998. He has been Chairman
since 2000 and a Director
Age: 52 since 1999 of Regent GM
Laboratories Ltd. (generic
pharmaceutical
manufacturer); Director of
Chiltern Invadex plc
(manufacturers of patient
handling and showering
equipment) since 1999; a
Director of Ultrasis plc
(developers of health care
software) since 2000, a
Director of European
Growth and Income Trust
plc (investment trust)
since 2000, a Director
ofQuinta dos Pinhieros
Limited (real estate)
since 2001; and a Director
of Sense-Sonic Limited.
Mr. Malone was Minister of
Health between 1994 and
1997, and a Member of
Parliament from Winchester
between 1992 and 1997. Mr.
Malone was the Executive
Editor of The European in
1998.
Neville J. Miles Class I Term expires Mr. Miles has over 20 3 Aberdeen Australia Equity
2 Paddington Street Director 2004; Director years of international Fund, Inc.; Aberdeen
Paddington, NSW 2021 Australia since 1996 investment banking Global Income Fund, Inc.;
experience. He was Aberdeen Asia-Pacific
Age: 56 formerly head of Corporate Income Investment Company
Treasury at Westpac Limited; Aberdeen Leaders
Banking Corporation and Limited (investment
Managing Director of Ord company).
Minnett Securities Limited
(stockbrokers). Mr. Miles
has extensive experience
in the areas of corporate
acquisitions and equity
offerings.
Mr. Miles is currently an
investor and real estate
developer. He has served,
for over five years, as a
Director of Ballyshaw Pty.
Ltd. (investing/consulting)
and Dawnglade Pty. Ltd.
(real estate investment),
54 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 55
Management of the Fund (Unaudited) (continued)
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
and has served as a
Director of Villepen Pty.
Ltd. (real estate
investment company) since
1999; Sonic Communications
Pty. Ltd. since 2000, and
Commsecure Limited since
2002.
Peter J. O'Connell Class III Term expires Mr. O'Connell is involved 2 Aberdeen Australia Equity
3 Spring Street Director 2003; Director in modern technology Fund, Inc.
Suite 8, Level 6 since 1999 developments, has
Sydney, NSW 2000 extensive business
Australia experience in the Asian
region, and has served as
Age: 49 an international mergers
and acquisitions lawyer in
this region. Mr. O'Connell
is admitted as a solicitor
in Australia and he has
been Chief Executive
Officer of Smart Device
Marketing Company since
2001. Mr. O'Connell has
also served as Chief
Executive Officer of Lang
Holdings (Aust) Pty. Ltd.
(technology consulting)
since 2001; and Chief
Executive Officer of Ten
Ventures Pty. Ltd.
(establishment of
media-based internet
businesses) from 1999
until 2000. Mr. O'Connell
was Chief of Operations of
Consolidated Press
Holdings Pty. Limited
(supervision of private
equity investments) from
1997 to 1999; Chief
Executive Officer (from
1994 to 1996) and Director
(from 1994 to 1999) of
Hargrave Consultants Pty.
Ltd., (technology
consulting).
William J. Potter Class II Term expires Mr. Potter has extensive 3 Aberdeen Australia Equity
236 West 27th Street Director 2003; Director experience in investment Fund, Inc.; Aberdeen
3rd Floor since 1986 banking and fund Global Income Fund, Inc.;
New York, NY 10001 management. Mr. Potter has Aberdeen Asia-Pacific
held senior positions with Income Investment Company
Age: 54 Toronto Dominion Bank, Limited; National Foreign
Barclays Bank PLC, and Trade Counsel (trade
Prudential Securities, association); Alexandria
Inc., as well as board of Bancorp (banking group in
director positions with Cayman Islands); E.C.
investment funds involving Power, Inc. (energy
over $20 billion in assets company); Alexandria
since 1983. Mr. Potter has Funds.
been involved in the
Australian capital markets
since 1974, including
management and board of
director positions with a
noted Australian brokerage
house. Mr. Potter is
President of a U.S.
56 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 57
Management of the Fund (Unaudited) (continued)
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
investment bank and has
securities licenses in
both the U.S. and Canada.
Mr. Potter also has
extensive securities
underwriting experience in
various capital markets
with an emphasis on
natural resources.
Mr. Potter is currently
President of Ridgewood
Group International Ltd.,
an international
consulting and merchant
banking company, and
President of Ridgewood
Capital Funding, Inc., a
private placement
securities firm.
Peter D. Sacks Class II Term expires Mr. Sacks is currently 3 Aberdeen Australia Equity
445 King Street West, Director 2005; Director Managing Partner of Toron Fund, Inc.; Aberdeen
4th Floor since 1993 Capital Markets, Inc., a Global Income Fund, Inc.;
Toronto, Ontario M5V 1K4 company he established in Aberdeen Asia-Pacific
Canada 1988 to design and manage Income Investment Company
customized equity, fixed Limited; Aberdeen G7
Age: 57 income and currency Trust; First Horizon
portfolios for individual Holdings Ltd.; First
and corporate clients. Mr. Horizon Capital Corp.;
Sacks serves on the Boards Cirrus Financial Concepts
of Directors of Toron Inc.
Capital Markets, Inc.
(portfolio management),
Toron Capital Management,
Ltd. and Toron Asset
Management, Inc.
Dr. Anton E. Schrafl Preferred Current term Dr. Schrafl was Deputy 2 Aberdeen Global Income
Wiesenstrasse 7 Stock expires 2003; Chairman of Holcim Fund, Inc.; Aberdeen
8008 Zurich Director Director since Limited, a global Asia-Pacific Income
Switzerland 1998 manufacturer and Investment Company
distributor of cement and Limited.
Age: 70 allied products until May
2002. He currently serves
as Chairman of the Board
of Directors of Dynavest,
AG, a corporation focusing
on investments. Dr.
Schrafl is also on the
Board of Directors of
Organogenesis, Inc., a
medical products company
involved in
biotechnological tissue
engineering, and Apogee
Technology Inc., a
manufacturer of digital
amplifiers.
John T. Sheehy Preferred Current term Mr. Sheehy has over 30 3 Aberdeen Australia Equity
560 Sylvan Avenue Stock expires 2003; years' experience in Fund, Inc.; Aberdeen
Englewood Cliffs, NJ Director Director since investment banking with Global Income Fund, Inc.;
07632 1986 companies such as J.P. Aberdeen Asia-Pacific
Morgan & Company and Bear, Income Investment Company
Age: 60 Stearns & Co. Inc. His Limited.
specialty areas include
securities valuation,
public offerings
58 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 59
Management of the Fund (Unaudited) (continued)
Number of
Funds in
Term of Fund
Position(s) Office* Complex* Other
Held With and Length of Principal Occupation(s) Overseen by Directorships Held
Name, Address and Age the Fund Time Served During Past Five Years Director by Director
-----------------------------------------------------------------------------------------------------------------------------------
and private placements of
debt and equity
securities, mergers and
acquisitions and
management buyout
transactions. He has been
Senior Managing Director
of B.V. Murray and Company
(investment banking) since
2001, and Managing Member
of The Value Group LLC
(private equity) since
1997.
---------------------------
* Aberdeen Australia Equity Fund, Inc. and Aberdeen Global
Income Fund, Inc. have a common Investment Manager and
Investment Adviser with the Fund, and may thus be deemed
to be part of the same 'Fund Complex' as the Fund.
Information Regarding Officers who are Not Directors
Term of
Position(s) Office**
Held With and Length of Principal Occupation(s)
Name, Address and Age the Fund Time Served During Past Five Years
----------------------------------------------------------------------------------------
Hugh Young President Since 2001 Managing Director of
21 Church Street Aberdeen Asset Management
#01-01 Capital Square Two PLC (parent company of the
Singapore 049480 Fund's Investment Manager
and Investment Adviser)
Age: 44 (from 1991 to 2002);
Managing Director of
Aberdeen Asset Management
Asia Limited (affiliate of
the Fund's Investment
Manager and Investment
Adviser) (since 1992);
Managing Director of
Aberdeen International
Fund Managers Limited
(affiliate of the Fund's
Investment Manager and
Investment Adviser) (since
2000); Director of the
Investment Manager and the
Investment Adviser (since
2001); Chairman of the
Board of Directors of
Aberdeen Australia Equity
Fund, Inc.
Michael Karagianis Vice Since 2002 Vice President (since
One Bow Churchyard President 2002) and Assistant Vice
London EC4M 9HH President (from 2001 to
United Kingdom 2002) of the Fund;
Director of Economics and
Age: 37 Investment Strategy of the
Fund's Investment Adviser
(since 1999); Director of
Portfolio
60 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 61
Management of the Fund (Unaudited) (continued)
Term of
Position(s) Office**
Held With and Length of Principal Occupation(s)
Name, Address and Age the Fund Time Served During Past Five Years
----------------------------------------------------------------------------------------
Investment of County
Investment Management
(from 1995 to 1999).
Christian Pittard Treasurer Since 2001 Managing Director of the
P.O. Box 641 and Fund's Investment Manager
One Seaton Place Assistant (since 2001); Managing
St. Helier, Jersey JE4 Secretary Director of Aberdeen
8YJChannel Islands Private Wealth Management
(affiliate of the Fund's
Age: 29 Investment Manager and
Investment Adviser);
Chartered Accountant, KPMG
(from 1994 to 1998) and
Quorum Trust Group (1998).
Roy M. Randall Secretary Since 1986 Partner of Stikeman,
Level 40, Chifley Tower Elliott, Australian
Two Chifley Square counsel to the Fund.
Sydney, NSW 2000
Australia
Age: 66
---------------------------
* The named officer holds the same position(s) with
Aberdeen Australia Equity Fund, Inc. and Aberdeen Global
Income Fund, Inc., both of which may be deemed to be part
of the same 'Fund Complex' as the Fund.
** Officers hold their positions with the Fund until a
successor has been duly elected and qualified. Officers
are generally elected annually at the meeting of the
Board of Directors next following the annual meeting of
stockholders. The officers were last elected on June 19,
2002.
62 Aberdeen Asia-Pacific Income Fund, Inc.
Aberdeen Asia-Pacific Income Fund, Inc. 63
Directors Officers
Martin J. Gilbert, Chairman Hugh Young, President
Anthony E. Aaronson Michael Karagianis, Vice President
David L. Elsum Christian Pittard, Treasurer and
Beverley Hendry Assistant Secretary
Howard A. Knight Roy M. Randall, Secretary
P. Gerald Malone James Blair, Assistant Vice President
Neville J. Miles Beverley Hendry, Assistant Treasurer
Peter J. O'Connell Timothy Sullivan, Assistant Treasurer
William J. Potter Simon Bignell, Assistant Treasurer
Peter D. Sacks Jack R. Benintende, Assistant Treasurer
Anton E. Schrafl Allan S. Mostoff, Assistant Secretary
John T. Sheehy Margaret A. Bancroft, Assistant Secretary
Brian M. Sherman Sander M. Bieber, Assistant Secretary
This report, including the Financial Statements herein, is transmitted to the
shareholders of Aberdeen Asia-Pacific Income Fund, Inc. for their general
information only. It does not have regard to the specific investment
objectives, financial situation and the particular needs of any specific
person.
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 in the open market.
Aberdeen Asia-Pacific Income Fund, Inc.
Corporate Information
Investment Manager Aberdeen Asset Managers (C.I.) Limited
P.O. Box 578, 17 Bond Street
St. Helier, Jersey JE45XB Channel Islands
Investment Advisor Aberdeen Asset Management Limited
Level 6, 201 Kent Street
Sydney, NSW 2000, Australia
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
Auction Agent Deutsche Bank
Four Albany Street
New York, NY 10006
Independent Accountants PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel Dechert
1775 Eye Street, N.W.
Washington, DC 20006
Stikeman Elliott
Level 40, Chifley Tower
Two Chifley Square
Sydney, NSW 2000, Australia
Investor Relations Aberdeen Asset Management
45 Broadway, 31st Floor
New York, NY 10006
(800) 522-5465 or (212) 968-8800
or e-mail us at:
InvestorRelations@aberdeen-asset.com
(LOGO)
Aberdeen
ASSET MANAGERS
Aberdeen Asset Managers (C.I.) Limited
The common shares of Aberdeen Asia-Pacific Income Fund, Inc. are traded on
the American Stock Exchange and on the Pacific Stock Exchange under
the symbol "FAX". Information about the Fund's net aset value and market
price is published weekly in Barron's and in the Monday edition of
The Wall Street Journal.
003009107