Aberdeen Asia-Pacific Income Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act file number:   811-04611
Exact name of registrant as specified in charter:   Aberdeen Asia-Pacific Income Fund, Inc.
Address of principal executive offices:  

1735 Market Street, 32nd Floor

Philadelphia, PA 19103

Name and address of agent for service:  

Ms. Andrea Melia

Aberdeen Asset Management Inc.

1735 Market Street 32nd Floor

Philadelphia, PA 19103

Registrant’s telephone number, including area code:   800-522-5465
Date of fiscal year end:   October 31
Date of reporting period:   October 31, 2013


Item 1  –  Reports to Stockholders


LOGO


Managed Distribution Policy (unaudited)

 

 

 

The Board of Directors of the Fund has authorized a managed distribution policy (“MDP”) of paying monthly distributions at an annual rate set once a year. It is the Board’s intention that a monthly distribution of $0.035 per share be maintained for 12 months beginning with the July 12, 2013 distribution payment. With each distribution, the Fund will issue a notice to shareholders and an accompanying press release which will provide detailed information regarding the amount and composition of the distribution and other information required by the Fund’s MDP exemptive order. The Fund’s Board of Directors may amend or terminate the MDP at any time without prior notice to shareholders; however, at this time, there are no reasonably foreseeable circumstances that might cause the termination of the MDP. You should not draw any conclusions about the Fund’s investment performance from the amount of distributions or from the terms of the Fund’s MDP.

Distribution Disclosure Classification (unaudited)

 

 

The Fund’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 rules, the amount applicable to the Fund and character 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. Under Section 19 of the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund is required to indicate the sources of certain distributions to shareholders. The estimated distribution composition may vary from month to month because it may be materially impacted by future income, expenses and realized gains and losses on securities and fluctuations in the value of the currencies in which the Fund’s assets are denominated.

The distributions for the fiscal year ended October 31, 2013 consisted of 100% net investment income.

In January 2014, 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 for the 2013 calendar year.

Dividend Reinvestment and Direct Stock Purchase Plan (unaudited)

 

 

Computershare Trust Company, N.A., the Fund’s transfer agent, sponsors and administers a Dividend Reinvestment and Direct Stock Purchase Plan (the “Plan”), which is available to shareholders.

The Plan allows registered stockholders and first time investors to buy and sell shares and automatically reinvest dividends and capital gains through the transfer agent. This is a cost-effective way to invest in the Fund.

Please note that for both purchases and reinvestment purposes, shares will be purchased in the open market at the current share price and cannot be issued directly by the Fund.

For more information about the Plan and a brochure that includes the terms and conditions of the Plan, please call Computershare at 1-800-647-0584 or visit www.computershare.com/buyaberdeen.

 


Letter to Shareholders (unaudited)

 

 

 

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, 2013. The Fund’s principal investment objective is to seek current income. The Fund may also achieve incidental capital appreciation.

Restructuring the Fund’s Leverage

On June 27, 2013, the Fund closed a private offering of 2 million shares of Series A Mandatory Redeemable Preferred Shares due in 2023 (“Series A MRPS”). The Series A MRPS, with a liquidation value of $50 million, are rated “AA” by Fitch Ratings. Net proceeds from the Series A MRPS were used to refinance a portion of the Fund’s existing $200 million syndicated revolving credit facility. With the offering, the Fund completed a program of restructuring the Fund’s leverage.

The table below summarizes certain key terms of the Fund’s current leverage:

 

     

Amount

($ in millions)

     Maturity  

364-day Syndicated Revolving Credit Facility

   $ 150         April 9, 2014   

7-year Series A Senior Secured Notes

   $ 100         June 12, 2020   

10-year Series B Senior Secured Notes

   $ 100         June 12, 2023   

5-year Term Loan A

   $ 100         June 12, 2018   

3-year Term Loan B

   $ 100         June 12, 2016   

10-year Series A Mandatory Redeemable Preferred Shares

   $ 50         June 27, 2023   

We believe the Fund has been able to lock in an attractive rate cost of borrowing and extend the maturity of the leverage facility while diversifying its borrowing structure during what we believe to be a favorable current interest rate environment. A more detailed description of the Fund’s leverage structuring during the annual period can be found in the Notes to Financial Statements.

Total Return Performance

The Fund’s total return, based on net asset value (“NAV”), net of fees, was (5.8%) for the year ended October 31, 2013 and 9.0% per annum since inception, assuming the reinvestment of dividends and distributions. The Fund’s total return for the year ended October 31, 2013 and per annum since inception is based on the reported NAV on each annual period end.

Share Price and NAV

For the year ended October 31, 2013, based on market price, the Fund’s total return was (13.4%), assuming reinvestment of dividends and distributions. The Fund’s share price decreased by 18.5% over the year, from $7.90 on October 31, 2012 to $6.44 on October 31, 2013. The Fund’s share price on October 31, 2013 represented a discount of 6.5% to the NAV per share of $6.89 on that date, compared with a premium of 1.5% to the NAV per share of $7.78 on October 31, 2012.

Portfolio Allocation

As of October 31, 2013, the Fund held 37.6% of its total investments in Australian debt securities, 55.5% in Asian debt securities, 4.4% in European debt securities, 1.7% in U.S. debt securities and 0.8% in Canadian debt securities.

Of the Fund’s total investments, 37.1% were held in U.S. Dollar-denominated bonds issued by foreign issuers, bringing the Fund’s U.S. Dollar exposure to 38.8%. The rest of the Fund’s currency exposure was 41.4% in the Australian Dollar and 19.8% in various Asian currencies.

Credit Quality

As of October 31, 2013, 69.9% of the Fund’s total investments were invested in securities where either the issue or the issuer was rated A or better by Standard & Poor’s or Moody’s Investors Services, Inc., or, if unrated, judged by Aberdeen Asset Management Asia Limited (the “Investment Manager”) to be of equivalent quality.

Managed Distribution Policy

Distributions to common shareholders for the twelve-months ended October 31, 2013 totaled $0.42 per share. Based on the share price of $6.44 on October 31, 2013, the distribution rate over the twelve-month period ended October 31, 2013 was 6.5%. 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 November 12, 2013 and December 10, 2013, the Fund announced that it will pay, on December 13, 2013 and January 17, 2014, a distribution of US $0.035 per share to all shareholders of record as of November 29, 2013 and December 31, 2013, respectively.

The Fund’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, which is a non-taxable return of capital. It is the Board’s intention that a monthly distribution of $0.035 per share be maintained for twelve months,

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

1


Letter to Shareholders (unaudited) (concluded)

 

 

 

beginning with the July 12, 2013 distribution payment. This policy is subject to regular review at the Board’s quarterly meetings, unless market conditions require an earlier evaluation. The next annual review is scheduled to take place in June 2014.

Open Market Repurchase Program

The Fund’s policy is generally to buy back Fund shares on the open market when the Fund trades at certain discounts to NAV. During the fiscal year ended October 31, 2013 and fiscal year ended October 31, 2012, the Fund did not repurchase any shares.

Portfolio Holdings Disclosure

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q filings are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund makes the information on Form N-Q available to shareholders on the Fund’s website or upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465.

Proxy Voting

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve months ended June 30 is available by August 30 of the relevant year: (i) upon request and without charge by calling Investor Relations toll-free at 1-800-522-5465; and (ii) on the SEC’s website at http://www.sec.gov.

Investor Relations Information

As part of our ongoing commitment to provide information to our shareholders, I invite you to visit the Fund on the web at www.aberdeenfax.com. From this page, you can view monthly fact

sheets, portfolio manager commentary, distribution and performance information, updated daily fact sheets courtesy of Morningstar®, conduct portfolio charting and other timely data.

Please take a look at Aberdeen’s award-winning Closed-End Fund Talk Channel, where you can watch fund manager web casts and view our latest short films. For replays of recent broadcasts or to register for upcoming events, please visit Aberdeen’s Closed-End Fund Talk Channel at www.aberdeen-asset.us/aam.nsf/usclosed/aberdeentv.

Please ensure that you are enrolled in our email services, which feature timely news from Aberdeen portfolio managers located around the world. Enroll today at www.aberdeen-asset.us/aam.nsf/usclosed/email and be among the first to receive the latest closed-end fund news, announcements of upcoming fund manager web casts, films and other information.

Please contact Aberdeen Asset Management Inc. by:

 

 

calling toll free at 1-800-522-5465 in the United States, or

 

emailing InvestorRelations@aberdeen-asset.com

 

Visiting Aberdeen Closed-End Fund Center at http://www.aberdeen-asset.us/aam.nsf/usclosed/home;

 

visiting www.aberdeenfax.com

Yours sincerely,

 

LOGO

Christian Pittard

President

 

 

All amounts are U.S. Dollars unless otherwise stated.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

2


Report of the Investment Manager (unaudited)

 

 

 

Market Review

Asian local currency bonds posted modest losses while credit markets closed flat during the year ended October 31, 2013 (reporting period). Global markets initially were on a steady uptrend until May 2013, as quantitative easing (QE) in Japan and the West, a dimming growth outlook, and receding inflation were positive for bonds. Thereafter, a sharp sell-off ensued in tandem with a spike in U.S. Treasury yields due to fears that the Federal Reserve (Fed) was about to trim its government asset purchases. Volatility was most pronounced among the more emerging markets in the region, such as India and Indonesia, where structural weaknesses made them more susceptible to capital outflows. The end of the reporting period, however, brought a welcome respite, as the much-feared Fed tapering of its QE policy failed to materialize. The U.S. Congress also reached a deal to resolve the fiscal impasse and end a government shutdown. Lending further support to markets were more encouraging data, with a slew of positive numbers from China, and growth in exports and industrial output across the region.

Philippine bonds were the strongest regional performers, underpinned by ample domestic liquidity, benign inflation and upgrades to investment-grade status. They were followed by offshore Chinese and Indian bonds. Conversely, Indonesia was the weakest performer, as yields rose by more than 100 basis points across the yield curve in response to hikes in fuel prices and interest rates. Taiwan bonds also lagged as growth data indicated improvement in the economy. Yields in Singapore and Hong Kong rose in tandem with those of U.S. Treasuries. Most Asian currencies depreciated against the U.S. Dollar during the annual period, led by the Indonesian Rupiah and Indian Rupee, but the Chinese Yuan and Korean Won bucked the trend and posted modest gains.

In Australia, monetary policymakers cut the cash rate to a record low of 2.5% in an effort to help companies cope with the challenging operating environment amid benign inflation. Economic data were mixed. Building approvals accelerated, foreshadowing improving residential investment. The labor market, however, remained weak with stagnant job growth. While confidence rose among corporates, business conditions improved marginally from depressed levels. The business sector was, in our view, most likely buoyed by the Federal election result, which saw the country move away from a gridlocked parliament. Against this backdrop, Australian bonds closed with mixed performance over the year. The yield curve steepened as short-dated bonds outperformed their longer-dated peers, due largely to the central bank’s policy easing.

High-yield corporate bonds led gains in Asian credit markets, whereas the laggards were investment-grade sovereign bonds and quasi-sovereign bonds,1 the sectors most sensitive to interest rate changes. New issuance slowed initially but rose sharply later in the reporting period, given the desire of corporate bonds to lock in long-term funding in anticipation of rising U.S. Treasury yields. The Chinese property sector accounted for the bulk of high-yield supply, while solid Korean names comprised a major part of investment-grade issuers.

Fund Performance Review

Fund performance for the reporting period was enhanced by contributions from the Asian local currency bond and Australian bond holdings; however, this was offset by the drag on performance from the allocation to U.S. dollar-denominated Asian credit.

Within the Fund’s Australian holdings, duration and currency strategies were the primary contributors to performance. Regarding Asian local currency bonds, the shorter-duration position in Indonesia, as well as the overweight and duration exposure in the Philippines, bolstered performance, along with the overweight to the higher-yielding Indian market. The gains were pared by the overweight to the Indian Rupee, which detracted significantly.

In U.S.-dollar denominated Asian credit, the underweight to high-yield industrials, as well as security selection in investment-grade oil and gas credits, were the most notable detractors from performance for the annual period. We maintain a more conservative position in the high-yield sector, particularly in Chinese industrials.

The Fund’s use of currency forwards had a negative impact on performance primarily due to the negative carry2 associated with hedging the Indian Rupee, Malaysian Ringgit and Thai Baht. The Fund can and does use U.S. Treasury futures and interest rate swaps to manage the interest-rate sensitivity of the U.S. dollar-denominated assets and leverage, respectively, held in the Fund. During the course of the reporting period, the investment team took steps in an effort to protect the Fund from the risk of higher U.S. interest rates through the use of interest rate swaps and through measures such as the issuance of fixed rate private placement debt. Given the subsequent increase in U.S. interest rates over the period, these measures had a positive impact in Fund performance.

Outlook

We believe there will be continued improvement in the U.S. labor and housing markets, which could bring forward a tapering of Fed

 

 

 

1   Sovereign bonds are debt securities issued by a national government within a given country and denominated in a foreign currency. Quasi-sovereign bonds are debt securities issued by an agency of a national government.
2   “Negative carry” occurs when the cost of holding a security exceeds the yield earned.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

3


Report of the Investment Manager (unaudited) (continued)

 

 

 

bond purchases to the first quarter of 2014. With that in mind, we intend to maintain a bias towards a cautious stance, holding a long-U.S. dollar position as we approach the year-end. Concerns about the peripheral economies3 in the Eurozone4 have eased, but we think that signs of deflation in Europe most likely will keep monetary policy accommodative for an extended period. In Asia, economic data appear to be stabilizing, while inflation has been benign for most of the region. While we anticipate that Asian currencies may come under pressure against the U.S. Dollar in the near term, we think that they are likely to outperform higher-volatility G-105 currencies, such as the Euro and Sterling. Nevertheless, over the medium to longer term, Asian currencies remain appealing, in our view, especially as policymakers continue to pursue a more balanced economic growth model.

In Australia, we believe that for conditions in the business sector to continue improving, the household sector will need to start growing more quickly. Evidence of this happening is still lacking, with retail sales growth remaining subdued even as consumer confidence and home prices continue to rise. Ultimately, though, we believe that the household sector will grow more quickly in the coming months, with the response to easier financial conditions likely to manifest, even if on a delayed basis relative to historical easing cycles. Therefore, we believe that the central bank’s monetary policy will remain on hold in the coming months.

Loan Facilities and the Use of Leverage

The amounts borrowed under the Revolving Loan Facility, the Term Loan Facility and the Notes and other funds obtained through various forms of leverage, including the Series A MRPS, may be invested to return higher rates than the rates pursuant to which interests or dividends are paid under such forms of leverage. However, the cost of leverage could exceed the income earned by the Fund on the proceeds of such leverage. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Fund’s common stock will decrease. In addition, in the event of a general market decline in the value of assets in which the Fund invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage.

The Fund obtained leverage via bank borrowing and other forms of leverage during the reporting period. On April 10, 2013, the Fund entered into a 364-day $600 million revolving credit loan facility with a syndicate led by Bank of America Merrill Lynch (the “Revolving Loan Facility”). Prior to April 10, 2013, the Fund was party to a $600 million credit loan facility with a syndicate led by The Bank of Nova Scotia. On June 12, 2013, the Fund entered into a note purchase agreement with institutional investors relating to the private placement of $200 million of senior secured notes rated `AAA’ by Fitch Ratings, $100 million due June 12, 2020 and $100 million due June 12, 2023 (the “Notes”). On the same day, the Fund also entered into a term loan agreement providing for $200 million in secured term loans from Bank of America, N.A., $100 million due June 12, 2016 and $100 million due June 12, 2018 (the “Term Loan Facility”). On June 27, 2013, the Fund issued a private offering of 2 million shares of Series A Mandatory Redeemable Preferred Shares due June 25, 2023 (the “Series A MRPS”). The Series A MRPS have a liquidation value of $50 million and are rated “AA” by Fitch Ratings. Net proceeds from (i) the senior secured notes and term loans, and (ii) the Series A MRPS were used to refinance $400 million and $50 million of the Fund’s Revolving Loan Facility on June 12, 2013 and June 27, 2013, respectively. The Fund’s outstanding balance as of October 31, 2013 was $150 million on the Revolving Loan Facility.

The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. The funds borrowed pursuant to the Revolving Loan Facility, the Term Loan Facility and the Notes may constitute a substantial lien and burden by reason of their prior claim against the income of the Fund and against the net assets of the Fund in liquidation. The Fund is limited in its ability to declare dividends or other distributions under the terms of the various forms of leverage. In the event of an event of default under either the Revolving Loan Facility or Term Loan Facility, the lenders have the right to cause a liquidation of the collateral (i.e., sell portfolio securities and other assets of the Fund) and, if any such default is not cured, the lenders may be able to control the liquidation as well. In the event of an event of default under the Note Purchase Agreement, the Noteholders have the right to cause a liquidation of the collateral (i.e., sell portfolio securities and other assets of the Fund).

 
3   The peripheral Eurozone countries include Greece, Portugal, Ireland, Spain and Italy.

 

4   The Eurozone includes the 17 European Union countries which have adopted the euro as their currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
5   The G-10 is a group of the 10 major industrialized countries whose mission is to create a more stable world economic trading environment through monetary and fiscal policies: Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the UK and the U.S.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

4


Report of the Investment Manager (unaudited) (concluded)

 

 

 

Each of the Revolving Loan Agreement, the Term Loan Agreement, the Note Purchase Agreement relating to the Notes, or the Securities Purchase Agreement relating to the Series A MRPS, includes usual and customary covenants for the applicable type of transaction. These covenants impose on the Fund asset coverage requirements, Fund composition requirements and limits on certain investments, such as illiquid investments, which are more stringent than those imposed on the Fund by the 1940 Act. The covenants or guidelines could impede the Fund’s investment manager, investment adviser, or sub-adviser from fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. Furthermore, non-compliance with such covenants or the occurrence of other events could lead to the cancellation of any and/or all of the forms of leverage. As of October 31, 2013, the Fund was in compliance with all covenants under the agreements relating to the various forms of leverage.

Interest Rate Swaps

The Fund may enter into interest rate swaps to efficiently gain or hedge interest rate or currency risk. On June 11, 2013, the Fund exited $450 million in notional value of the outstanding swaps in connection with the Fund’s refinancing of its leverage from floating interest rate (via the 364-day Revolving Credit Loan Facility) to fixed

rate forms of leverage. As of October 31, 2013, the Fund held interest rate swap agreements with an aggregate notional amount of $150 million, which represented 100% of the Fund’s Revolving Loan Facility borrowings. Under the terms of the agreements currently in effect, the Fund receives a floating rate of interest (three month USD-LIBOR BBA rate) and pays fixed rates of interest for the terms and based upon the notional amounts set forth below:

 

Remaining
Term as of
October 31, 2013
   Amount
(in millions)
     Fixed Rate
Payable (%)
 

48 months

   $ 66.0         0.84   

36 months

     84.0         1.42   

A significant risk associated with interest rate swaps is the risk that the counterparty may default or file for bankruptcy, in which case the Fund would bear the risk of loss of the amount expected to be received under the swap agreements. There can be no assurance that the Fund will have an interest rate swap in place at any given time nor can there be any assurance that, if an interest rate swap is in place, it will be successful in hedging the Fund’s interest rate risk with respect to the loan facility. The implementation of this strategy is at the discretion of the Leverage Committee of the Board.

Aberdeen Asset Management Asia Limited

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

5


Total Investment Return (unaudited)

October 31, 2013

 

 

The following table summarizes Fund performance compared to the Fund’s blended benchmark consisting of 45% of the UBS Composite Index, 35.75% of the JP Morgan Asian Credit Index, and 19.25% of the IBOXX Asia ex Japan Government Bond Index for the 1-year, 3-year, 5-year and 10-year periods annualized as of October 31, 2013.

 

        1 Year        3 Years        5 Years        10 Years  

Net Asset Value (NAV)

       (5.8%        4.1%           14.3%           8.3%   

Market Value

       (13.4%        3.6%           16.5%           7.7%   

Blended Benchmark

       (3.2%        5.1%           12.8%           8.2%   

Returns represent past performance. Total investment return at net asset value (NAV) is based on changes in the NAV of Fund shares and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program sponsored by the Fund’s transfer agent. Total investment return at market value is based on changes in the market price at which the Fund’s shares traded on the NYSE MKT during the period and assumes reinvestment of dividends and distributions, if any, at market prices pursuant to the dividend reinvestment program sponsored by the Fund’s transfer agent. The Fund’s total return is based on the reported NAV on each annual period end. Because the Fund’s shares trade in the stock market based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on both market price and NAV. Past performance is no guarantee of future results. The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions received from the Fund. The current performance of the Fund may be lower or higher than the figures shown. The Fund’s yield, return, market price and NAV will fluctuate. Performance information current to the most recent month-end is available by calling 800-522-5465.

The net operating expense ratio is 1.50%. The net operating expense ratio, excluding interest expense, is 1.03%.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

6


Portfolio Composition (unaudited)

 

 

 

Quality of Investments

As of October 31, 2013, 69.9% of the Fund’s total investments were invested in securities where either the issue or the issuer was rated “A” or better by Standard & Poor’s or Moody’s Investors Service, Inc., or, if unrated, judged to be of equivalent quality by the Investment Manager. The table below shows the asset quality of the Fund’s portfolio as of October 31, 2013, compared with the previous six and twelve months:

 

Date      AAA/Aaa
%
       AA/Aa
%
       A
%
       BBB/Baa
%
       BB/Ba*
%
       B*
%
       NR**
%
 

October 31, 2013

       34.4           13.9           21.6           16.2           9.7           2.2           2.0   

April 30, 2013

       35.4           11.2           23.5           11.7           15.0           1.6           1.6   

October 31, 2012

       36.2           11.5           22.8           12.6           15.1           1.3           0.5   

 

*   Below investment grade
**   Not Rated

Geographic Composition

The table below shows the geographical composition (with U.S. Dollar-denominated bonds issued by foreign issuers allocated into country of issuance) of the Fund’s total investments as of October 31, 2013, compared with the previous six and twelve months:

 

Date      Australia
%
       Asia
(including NZ)
%
       Europe
%
       United
States
%
       Canada
%
 

October 31, 2013

       37.6           55.5           4.4           1.7           0.8   

April 30, 2013

       39.7           53.4           4.4           2.4           0.1   

October 31, 2012

       41.6           54.2           2.2           1.9           0.1   

Currency Composition

The table below shows the currency composition of the Fund’s total investments as of October 31, 2013, compared with the previous six and twelve months:

 

Date      Australian
Dollar
%
       Asian Currencies
(including NZ Dollar)
%
       US Dollar*
%
 

October 31, 2013

       41.4           19.8           38.8   

April 30, 2013

       43.7           19.4           36.9   

October 31, 2012

       43.9           19.7           36.4   

 

*   Includes U.S. Dollar-denominated bonds issued by foreign issuers: 37.1% of the Fund’s total investments on October 31, 2013, 36.9% of the Fund’s total investments on April 30, 2013, 36.0% of the Fund’s total investments on October 31, 2012.

Maturity Composition

As of October 31, 2013, the average maturity of the Fund’s total investments was 6.9 years, compared with 7.2 years at April 30, 2013, and 7.2 years at October 31, 2012. The following table shows the maturity composition of the Fund’s investments as of October 31, 2013, compared with the previous six and twelve months:

 

Date      Under 3 Years
%
       3 to 5 Years
%
       5 to 10 Years
%
       10 Years & Over
%
 

October 31, 2013

       18.9           25.0           46.8           9.3   

April 30, 2013

       18.8           26.9           43.1           11.2   

October 31, 2012

       20.4           23.7           42.3           13.6   

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

7


Summary of Key Rates (unaudited)

 

 

 

The following table summarizes the movements of key interest rates and currencies from October 31, 2013 and the previous six and twelve month periods.

 

        October 31, 2013        April 30, 2013        October 31, 2012  

Australia

              

90 day bank bills

       2.60%           2.91%           3.14%   

10 yr bond

       3.94%           3.09%           3.13%   

Australian Dollar

       $0.95           $1.04           $1.04   

Malaysia

              

3-month T-bills

       2.95%           3.00%           3.05%   

10 yr bond

       3.59%           3.36%           3.46%   

Malaysian Ringgit*

       R3.16           R3.04           R3.05   

New Zealand

              

90 day bank bills

       2.70%           2.67%           2.69%   

10 yr bond

       4.51%           3.17%           3.48%   

New Zealand Dollar

       $0.83           $0.86           $0.82   

Philippines

              

90 day T-bills

       0.25%           0.37%           0.73%   

10 yr bond

       3.63%           3.48%           5.11%   

Philippines Peso*

       P43.21           P41.16           P41.20   

Singapore

              

3-month T-bills

       0.29%           0.24%           0.24%   

10 yr bond

       2.15%           1.37%           1.34%   

Singapore Dollar*

       S$1.24           S$1.23           S$1.22   

South Korea

              

90 day commercial paper

       2.65%           2.81%           2.85%   

10 yr bond

       3.40%           2.77%           3.02%   

South Korean Won*

       W1,060.75           W1,101.30           W1,090.60   

Thailand

              

3 months deposit rate

       1.63%           1.63%           1.88%   

10 yr bond

       3.90%           3.39%           3.30%   

Thai Baht*

       B31.13           B29.35           B30.65   

US$ Bonds**

              

South Korea

       1.53%           1.21%           1.11%   

Malaysia

       3.60%           2.80%           2.74%   

Philippines

       2.66%           2.10%           2.10%   

Hong Kong

       0.86%           0.93%           1.16%   

 

*   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 Asia-Pacific Income Fund, Inc.

 

8


Portfolio of Investments

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

COMMERCIAL MORTGAGE BACKED SECURITY—0.4%

  

AUSTRALIA—0.4%

  

AUD

    6,600      

ALE Finance Co. Pty Ltd., 4.78%, 05/20/2020 (a)

  $ 6,275,044   
            

Total Commercial Mortgage Backed Securities—0.4% (cost $7,090,713)

    6,275,044   

CORPORATE BONDS—60.7%

  

AUSTRALIA—10.7%

  

AUD

    1,800      

AMP Group Finance Services Ltd., 7.00%, 03/02/2015

    1,771,645   

AUD

    2,500      

APT Pipelines Ltd., 7.75%, 07/22/2020

    2,574,802   

AUD

    5,300      

Australia & New Zealand Banking Group Ltd., 6.75%, 11/10/2014

    5,203,907   

AUD

    10,400      

Barclays Bank PLC, 6.75%, 02/24/2014

    9,931,946   

AUD

    9,000      

BP Capital Markets PLC, 4.50%, 09/05/2017

    8,569,553   

AUD

    4,000      

CFS Retail Property Trust, 6.25%, 12/22/2014

    3,897,421   

AUD

    4,300      

CFS Retail Property Trust, 7.25%, 05/02/2016

    4,369,769   

AUD

    8,200      

Coca-Cola Amatil Ltd., 4.25%, 11/13/2019

    7,579,028   

AUD

    5,300      

DnB NOR Boligkreditt, 6.25%, 06/08/2016

    5,305,796   

AUD

    18,200      

ING Bank Australia Ltd., 5.75%, 03/03/2015

    17,833,724   

AUD

    10,600      

KfW, 6.25%, 02/23/2018

    10,976,569   

AUD

    10,500      

KfW, 6.25%, 12/04/2019

    10,953,500   

AUD

    15,000      

KfW, 6.25%, 05/19/2021

    15,650,693   

AUD

    3,300      

Kommunalbanken AS, 6.00%, 10/21/2014

    3,213,033   

AUD

    9,788      

Kommunalbanken AS, 6.50%, 04/12/2021

    10,265,978   

AUD

    17,600      

National Australia Bank Ltd., 6.75%, 09/16/2014

    17,187,078   

AUD

    2,900      

National Capital Trust III, 3.55%, 09/30/2016 (a)(b)(c)

    2,565,104   

AUD

    2,500      

National Wealth Management Holdings Ltd., 6.75%, 06/16/2016 (a)(c)

    2,448,435   

AUD

    4,800      

New Zealand Milk Australia Pty Ltd., 6.25%, 07/11/2016

    4,801,483   

AUD

    10,100      

QIC Finance Shopping Center Fund Pty Ltd., 6.75%, 07/07/2014

    9,752,115   

AUD

    4,000      

Rabobank Capital Funding Trust V, 3.27%, 12/31/2014 (a)(b)(c)(d)

    3,658,827   

AUD

    4,800      

Royal Womens Hospital Finance Pty Ltd., 6.20%, 03/26/2017 (a)(c)(i)

    4,409,919   

AUD

    6,000      

SPI Australia Assets Pty Ltd., 7.25%, 08/12/2015

    5,983,991   

AUD

    2,000      

Telstra Corp. Ltd., 8.75%, 01/20/2015

    2,007,140   

AUD

    3,000      

Transurban Finance Co. Pty Ltd., 7.25%, 03/24/2014

    2,879,315   

AUD

    5,000      

Vero Insurance Ltd., 6.75%, 09/23/2014 (a)(c)

    4,808,829   

AUD

    3,000      

Vero Insurance Ltd., 6.75%, 10/06/2016 (a)(c)

    2,939,653   

AUD

    8,900      

Wesfarmers Ltd., 8.25%, 09/11/2014

    8,769,339   

AUD

    4,000      

Westpac Banking Corp., 7.25%, 11/18/2016

    4,159,152   

AUD

    3,600      

Woolworths Ltd., 6.75%, 03/22/2016

    3,641,909   
                   198,109,653   

CHINA—9.9%

 

USD

    9,900      

Amber Circle Funding Ltd., 3.25%, 12/04/2022 (d)

    9,195,714   

USD

    10,000      

Central China Real Estate Ltd., 6.50%, 06/04/2016 (c)(d)

    9,750,000   

USD

    8,450      

China Overseas Finance Cayman Island II Ltd., 5.50%, 11/10/2020 (d)

    8,930,856   

CNY

    16,721      

China Petroleum & Chemical Corp., 0.80%, 02/20/2014 (e)

    2,709,326   

USD

    4,250      

China Resources Gas Group Ltd., 4.50%, 04/05/2022 (d)

    4,249,915   

USD

    8,150      

China Resources Gas Group Ltd., 4.50%, 04/05/2022 (d)

    8,149,837   

USD

    5,600      

CNOOC Finance 2011 Ltd., 4.25%, 01/26/2021 (d)

    5,760,031   

USD

    13,300      

CNOOC Finance 2012 Ltd., 3.88%, 05/02/2022 (d)

    13,126,701   

USD

    6,000      

CNOOC Finance 2013 Ltd., 3.00%, 05/09/2023

    5,465,250   

USD

    18,900      

COSL Finance BVI Ltd., 3.25%, 09/06/2022 (d)

    17,357,041   

USD

    9,200      

Country Garden Holdings Co., 7.50%, 01/10/2018 (c)(d)

    9,165,500   

USD

    4,000      

Country Garden Holdings Co., 10.50%, 08/11/2015

    4,410,000   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

9


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

CORPORATE BONDS (continued)

  

CHINA (continued)

 

USD

    4,200      

Country Garden Holdings Co., 11.13%, 02/23/2015 (c)(d)

  $ 4,688,040   

USD

    1,900      

Country Garden Holdings Co., 11.75%, 09/10/2014 (d)

    2,028,250   

USD

    7,750      

ENN Energy Holdings Ltd., 6.00%, 05/13/2021 (d)

    8,314,471   

USD

    6,000      

Franshion Investment Ltd., 4.70%, 10/26/2017 (d)

    5,977,200   

USD

    16,400      

Golden Eagle Retail Group Ltd., 4.63%, 05/21/2023 (d)

    14,643,215   

USD

    3,500      

KWG Property Holding Ltd., 12.50%, 08/18/2014 (c)(d)

    3,876,250   

USD

    800      

KWG Property Holding Ltd., 12.75%, 03/30/2014 (c)(d)

    874,000   

USD

    1,244      

KWG Property Holding Ltd., 13.25%, 03/22/2017 (d)

    1,443,040   

CNH

    18,000      

Sinochem Offshore Capital Co. Ltd., 1.80%, 01/18/2014

    2,945,368   

USD

    10,200      

Sinopec Capital 2013 Ltd., 3.13%, 04/24/2023 (d)

    9,355,481   

USD

    1,600      

Sinopec Group Overseas Development 2012 Ltd., 3.90%, 05/17/2022 (d)

    1,581,298   

USD

    6,100      

Sinopec Group Overseas Development 2012 Ltd., 4.88%, 05/17/2042 (d)

    5,924,863   

USD

    4,200      

Sinopec Group Overseas Development 2013 Ltd., 5.38%, 10/17/2043 (d)

    4,287,499   

USD

    6,750      

Talent Yield Investments Ltd., 4.50%, 04/25/2022 (d)

    6,790,912   

USD

    9,649      

Yanlord Land Group Ltd., 10.63%, 03/29/2015 (c)(d)

    10,565,655   
                   181,565,713   

HONG KONG—7.9%

  

USD

    17,725      

AIA Group Ltd., 3.13%, 03/13/2023 (d)

    16,656,360   

USD

    21,000      

Champion MTN Ltd., 3.75%, 01/17/2023 (d)

    18,382,287   

USD

    11,400      

HLP Finance Ltd., 4.75%, 06/25/2022 (d)

    11,309,119   

USD

    17,550      

Hongkong Land Finance (Cayman Island) Co. Ltd., 4.50%, 10/07/2025

    17,384,486   

USD

    1,600      

Hutchison Whampoa International Ltd., 4.63%, 09/11/2015 (d)

    1,701,854   

USD

    1,900      

Hutchison Whampoa International Ltd., 7.45%, 11/24/2033 (d)

    2,451,891   

USD

    22,550      

Hutchison Whampoa International Ltd., 7.63%, 04/09/2019 (d)

    27,458,571   

USD

    9,000      

Metropolitan Light International Ltd., 5.25%, 01/17/2015 (c)(d)

    8,989,200   

USD

    14,745      

Standard Chartered PLC, 3.95%, 01/11/2023 (d)

    14,146,869   

USD

    1,800      

Swire Pacific MTN Financing Ltd., 6.25%, 04/18/2018

    2,076,073   

USD

    17,300      

Swire Properties MTN Financing Ltd., 4.38%, 06/18/2022 (d)

    17,499,729   

USD

    6,491      

Yingde Gases Investment Ltd., 8.13%, 04/22/2016 (c)(d)

    6,637,048   
                   144,693,487   

INDIA—3.6%

  

USD

    11,300      

Axis Bank Ltd., 5.25%, 09/30/2015

    11,776,860   

USD

    3,050      

Bank of Baroda, 5.00%, 08/24/2016 (d)

    3,164,863   

USD

    14,369      

Bharti Airtel International Netherlands BV, 5.13%, 03/11/2023 (d)

    13,470,938   

USD

    7,000      

HDFC Bank Ltd., 3.00%, 03/06/2018 (d)

    6,768,370   

USD

    2,400      

ICICI Bank Ltd., 4.75%, 11/25/2016 (d)

    2,496,974   

USD

    8,700      

ICICI Bank Ltd., 6.38%, 04/30/2017 (a)(c)(d)

    8,265,000   

USD

    4,400      

NTPC Ltd., 4.75%, 10/03/2022 (d)

    4,150,049   

USD

    12,500      

NTPC Ltd., 5.63%, 07/14/2021 (d)

    12,721,050   

INR

    270,000      

Rural Electrification Corp. Ltd., 9.35%, 06/15/2022

    4,335,597   
                   67,149,701   

INDONESIA—4.2%

  

USD

    10,050      

Adaro Indonesia PT, 7.63%, 10/22/2014 (c)(d)

    10,627,875   

IDR

    24,000,000      

Bank OCBC Nisp Tbk PT, 6.90%, 02/19/2015

    2,107,784   

USD

    7,600      

Indo Energy Finance BV, 7.00%, 05/05/2015 (c)(d)

    7,970,500   

USD

    9,600      

Indo Energy Finance II BV, 6.38%, 01/24/2018 (c)(d)

    8,424,000   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

10


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

CORPORATE BONDS (continued)

  

INDONESIA (continued)

 

USD

    50      

Indosat Palapa Co. BV, 7.38%, 07/29/2015 (c)(d)

  $ 53,813   

USD

    7,150      

Majapahit Holding BV, 7.88%, 06/29/2037 (d)

    7,972,250   

USD

    8,900      

Majapahit Holding BV, 8.00%, 08/07/2019 (d)

    10,312,875   

USD

    14,300      

Pertamina Persero PT, 5.63%, 05/20/2043 (d)

    12,012,000   

USD

    10,100      

Pertamina Persero PT, 6.00%, 05/03/2042 (d)

    8,938,500   

USD

    10,609      

Perusahaan Listrik Negara PT, 5.25%, 10/24/2042 (d)

    8,540,245   
                   76,959,842   

MALAYSIA—3.0%

  

USD

    11,700      

AMBB Capital (L) Ltd., 6.77%, 01/27/2016 (a)(b)(c)

    11,612,377   

CNH

    10,000      

Danga Capital Bhd, 2.90%, 10/20/2014 (d)

    1,632,514   

USD

    900      

Petroliam Nasional Bhd, 7.63%, 10/15/2026 (d)

    1,174,335   

USD

    50      

PETRONAS Capital Ltd., 5.25%, 08/12/2019 (d)

    56,252   

USD

    10,291      

PETRONAS Capital Ltd., 7.88%, 05/22/2022 (d)

    13,315,206   

USD

    13,050      

PETRONAS Global Sukuk Ltd., 4.25%, 08/12/2014 (d)

    13,381,548   

USD

    2,650      

Public Bank Bhd, 6.84%, 08/22/2016 (a)(c)

    2,742,525   

USD

    11,550      

SBB Capital Corp., 6.62%, 11/02/2015 (a)(b)(c)(d)

    11,663,017   
                   55,577,774   

PHILIPPINES—3.1%

  

USD

    5,300      

Alliance Global Group Inc., 6.50%, 08/18/2017

    5,565,000   

USD

    3,700      

Energy Development Corp., 6.50%, 01/20/2021 (d)

    3,885,000   

USD

    6,100      

Philippine Long Distance Telephone Co., 8.35%, 03/06/2017

    6,984,500   

USD

    7,400      

Power Sector Assets & Liabilities Management Corp., 6.88%, 11/02/2016 (d)(f)

    8,343,500   

USD

    19,200      

Power Sector Assets & Liabilities Management Corp., 7.25%, 05/27/2019 (d)(f)

    23,232,000   

USD

    8,000      

Power Sector Assets & Liabilities Management Corp., 7.39%, 12/02/2024 (d)(f)

    10,060,000   
                   58,070,000   

REPUBLIC OF SOUTH KOREA—7.3%

  

USD

    3,000      

Export-Import Bank of Korea, 5.13%, 03/16/2015

    3,159,732   

USD

    4,300      

Export-Import Bank of Korea, 5.88%, 01/14/2015

    4,556,800   

USD

    3,200      

Export-Import Bank of Korea, 8.13%, 01/21/2014

    3,250,275   

USD

    10,000      

Korea Development Bank (The), 3.00%, 03/17/2019

    10,138,260   

USD

    2,050      

Korea Expressway Corp., 1.88%, 10/22/2017 (d)

    2,018,623   

USD

    12,750      

Korea Expressway Corp., 4.50%, 03/23/2015 (d)

    13,306,117   

USD

    17,500      

Korea Finance Corp., 3.25%, 09/20/2016

    18,239,095   

USD

    10,350      

Korea Finance Corp., 4.63%, 11/16/2021

    11,163,945   

USD

    2,300      

Korea Gas Corp., 2.25%, 07/25/2017 (d)

    2,307,252   

USD

    1,400      

Korea Gas Corp., 2.88%, 07/29/2018 (d)

    1,415,702   

USD

    17,600      

Korea Hydro & Nuclear Power Co. Ltd., 3.00%, 09/19/2022 (d)

    16,492,625   

USD

    3,000      

Korea South-East Power Co. Ltd., 3.63%, 01/29/2017 (d)

    3,125,871   

USD

    12,470      

Korea South-East Power Co. Ltd., 6.00%, 05/25/2016 (d)

    13,674,677   

USD

    11,000      

Korea Western Power Co. Ltd., 2.88%, 10/10/2018 (d)

    11,042,174   

USD

    4,200      

Shinhan Bank, 1.88%, 07/30/2018 (d)

    4,061,245   

USD

    5,880      

Shinhan Bank, 5.66%, 03/02/2015 (a)(c)(d)

    6,056,400   

USD

    7,100      

Standard Chartered Bank Korea Ltd., 7.27%, 03/03/2014 (a)(c)(d)

    7,162,125   

USD

    3,950      

Standard Chartered First Bank Korea Ltd., 7.27%, 03/03/2014 (a)(c)(d)

    3,984,563   
                   135,155,481   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

11


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

CORPORATE BONDS (continued)

  

SINGAPORE—2.4%

  

SGD

    2,750      

CapitaMalls Asia Treasury Ltd., 3.95%, 08/24/2017

  $ 2,312,843   

SGD

    3,000      

CMT MTN Pte. Ltd., 2.85%, 09/01/2014

    2,451,195   

USD

    8,600      

CMT MTN Pte. Ltd., 4.32%, 04/08/2015 (d)

    8,917,056   

USD

    8,900      

Oversea-Chinese Banking Corp. Ltd., 3.15%, 03/11/2018 (a)(c)(d)

    8,978,863   

USD

    7,450      

Oversea-Chinese Banking Corp. Ltd., 3.75%, 11/15/2017 (a)(c)(d)

    7,698,919   

USD

    9,200      

STATS ChipPAC Ltd., 4.50%, 03/20/2016 (c)(d)

    9,188,960   

USD

    4,000      

United Overseas Bank Ltd., 2.88%, 10/17/2017 (a)(c)(d)

    4,012,800   
                   43,560,636   

SUPRANATIONAL—5.6%

  

AUD

    14,000      

Asian Development Bank, 5.00%, 03/09/2022

    13,578,121   

AUD

    13,800      

Asian Development Bank, 5.50%, 02/15/2016

    13,726,150   

AUD

    16,800      

Asian Development Bank, 6.25%, 03/05/2020

    17,601,024   

AUD

    13,000      

European Investment Bank, 6.13%, 01/23/2017

    13,242,802   

AUD

    10,000      

Inter-American Development Bank, 6.00%, 05/25/2016

    10,098,267   

AUD

    11,200      

Inter-American Development Bank, 6.50%, 08/20/2019

    11,828,049   

AUD

    8,900      

International Bank for Reconstruction & Development, 5.75%, 10/21/2019

    9,111,701   

AUD

    10,300      

International Bank for Reconstruction & Development, 6.00%, 11/09/2016

    10,484,839   

AUD

    2,600      

International Finance Corp., 5.75%, 07/28/2020

    2,657,274   
                   102,328,227   

THAILAND—3.0%

  

USD

    5,000      

Bangkok Bank PCL, 3.88%, 09/27/2022 (d)

    4,825,010   

USD

    2,400      

Bangkok Bank PCL, 4.80%, 10/18/2020 (d)

    2,538,883   

USD

    4,200      

Bangkok Bank PCL, 5.00%, 10/03/2023 (d)

    4,361,406   

USD

    4,800      

Bangkok Bank PCL, 9.03%, 03/15/2029 (d)

    5,973,326   

USD

    11,330      

PTT Global Chemical PCL, 4.25%, 09/19/2022 (d)

    11,048,654   

USD

    50      

PTTEP Australia International Finance Pty Ltd., 4.15%, 07/19/2015 (d)

    51,914   

USD

    16,300      

PTTEP Canada International Finance Ltd., 5.69%, 04/05/2021 (d)

    17,875,362   

USD

    4,500      

Siam Commercial Bank Ltd., 3.38%, 09/19/2017 (d)

    4,625,753   

USD

    4,000      

Thai Oil PCL, 3.63%, 01/23/2023 (d)

    3,711,408   
                   55,011,716   
            

Total Corporate Bonds—60.7% (cost $1,129,427,617)

    1,118,182,230   

GOVERNMENT BONDS—67.1%

  

AUSTRALIA—36.8%

  

AUD

    7,000      

Australia Government Bond, 3.25%, 04/21/2029 (d)

    5,744,982   

AUD

    21,000      

Australia Government Bond, 4.50%, 10/21/2014

    20,221,297   

AUD

    101,400      

Australia Government Bond, 5.50%, 01/21/2018

    104,420,533   

AUD

    44,550      

Australia Government Bond, 5.50%, 04/21/2023

    47,239,212   

AUD

    65,000      

Australia Government Bond, 5.75%, 05/15/2021

    69,363,527   

AUD

    35,300      

Australia Government Bond, 5.75%, 07/15/2022

    37,927,633   

AUD

    25,000      

Australia Government Bond, 6.00%, 02/15/2017

    25,825,281   

AUD

    5,950      

Queensland Treasury Corp., 6.00%, 10/14/2015 (f)

    5,960,556   

AUD

    27,100      

Queensland Treasury Corp., 6.00%, 04/21/2016

    27,372,964   

AUD

    22,850      

Queensland Treasury Corp., 6.00%, 02/21/2018

    23,574,806   

AUD

    31,190      

Queensland Treasury Corp., 6.00%, 06/14/2021 (f)

    32,927,712   

AUD

    47,100      

Queensland Treasury Corp., 6.25%, 06/14/2019 (f)

    49,897,288   

AUD

    24,330      

Queensland Treasury Corp., 6.25%, 02/21/2020

    25,592,154   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

12


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

GOVERNMENT BONDS (continued)

  

AUSTRALIA (continued)

  

AUD

    131,500      

Treasury Corp. of Victoria, 5.75%, 11/15/2016

  $ 133,370,150   

AUD

    14,250      

Treasury Corp. of Victoria, 6.00%, 06/15/2020

    14,957,319   

AUD

    35,350      

Treasury Corp. of Victoria, 6.00%, 10/17/2022

    37,216,241   

AUD

    15,000      

Western Australian Treasury Corp., 7.00%, 07/15/2021

    16,517,916   
                   678,129,571   

CHINA—3.3%

  

CNY

    15,000      

China Government Bond, 0.00%, 08/22/2033 (e)(g)

    2,423,726   

CNH

    32,500      

China Government Bond, 1.40%, 08/18/2016 (d)

    5,115,913   

CNH

    10,000      

China Government Bond, 1.80%, 12/01/2015

    1,611,289   

CNH

    18,000      

China Government Bond, 2.48%, 12/01/2020

    2,755,368   

CNY

    15,000      

China Government Bond, 3.26%, 06/02/2014 (e)

    2,451,423   

CNY

    50,000      

China Government Bond, 3.28%, 08/05/2020 (e)

    7,781,508   

CNY

    50,000      

China Government Bond, 3.36%, 05/24/2022 (e)

    7,712,856   

CNY

    70,000      

China Government Bond, 3.41%, 06/24/2020 (e)

    10,987,766   

CNY

    20,000      

China Government Bond, 3.46%, 07/11/2020 (e)

    3,179,161   

CNY

    18,000      

China Government Bond, 3.55%, 10/20/2016 (e)

    2,911,841   

CNY

    2,000      

China Government Bond, 3.57%, 11/17/2021 (e)

    314,244   

CNY

    40,000      

China Government Bond, 3.60%, 02/17/2016 (e)

    6,497,977   

CNY

    20,000      

China Government Bond, 3.83%, 01/27/2018 (e)

    3,249,865   

CNY

    30,000      

China Government Bond, 4.10%, 09/27/2032 (e)

    4,589,299   
                   61,582,236   

INDIA—1.9%

  

INR

    1,338,700      

India Government Bond, 7.02%, 08/17/2016

    21,054,371   

INR

    600,000      

India Government Bond, 7.49%, 04/16/2017

    9,482,295   

INR

    125,000      

India Government Bond, 8.30%, 07/02/2040

    1,881,592   

INR

    16,000      

India Government Bond, 8.33%, 06/07/2036

    241,099   

INR

    150,000      

India Government Bond, 8.83%, 12/12/2041

    2,374,330   
                   35,033,687   

INDONESIA—3.7%

  

IDR

    167,000,000      

Barclays Indonesia Government Bond Credit Linked Note, 9.50%, 06/17/2015

    15,496,296   

USD

    3,500      

Indonesia Government International Bond, 5.25%, 01/17/2042 (d)

    3,237,500   

USD

    7,400      

Indonesia Government International Bond, 5.88%, 03/13/2020 (d)

    8,103,000   

USD

    6,900      

Indonesia Government International Bond, 6.63%, 02/17/2037 (d)

    7,521,000   

IDR

    30,000,000      

Indonesia Treasury Bond, 6.13%, 05/15/2028

    2,254,797   

IDR

    47,000,000      

Indonesia Treasury Bond, 8.25%, 06/15/2032

    4,211,133   

IDR

    114,100,000      

Indonesia Treasury Bond, 8.38%, 03/15/2024

    10,725,349   

IDR

    80,000,000      

Indonesia Treasury Bond, 8.38%, 03/15/2034

    7,275,973   

IDR

    21,000,000      

Indonesia Treasury Bond, 9.50%, 07/15/2031

    2,102,813   

USD

    7,050      

Perusahaan Penerbit SBSN, 4.00%, 11/21/2018 (d)

    7,032,375   

USD

    50      

Perusahaan Penerbit SBSN, 8.80%, 04/23/2014 (d)

    51,563   
                   68,011,799   

MALAYSIA—4.2%

  

MYR

    37,800      

Malaysia Government Bond, 3.31%, 10/31/2017

    11,961,549   

MYR

    12,600      

Malaysia Government Bond, 3.49%, 03/31/2020

    3,974,334   

MYR

    98,400      

Malaysia Government Bond, 3.58%, 09/28/2018

    31,427,286   

MYR

    29,500      

Malaysia Government Bond, 4.01%, 09/15/2017

    9,581,005   

MYR

    20,400      

Malaysia Government Bond, 4.16%, 07/15/2021

    6,681,856   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

13


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

GOVERNMENT BONDS (continued)

  

MALAYSIA (continued)

  

MYR

    14,163      

Malaysia Government Bond, 4.26%, 09/15/2016

  $ 4,626,252   

MYR

    13,900      

Malaysia Government Bond, 4.38%, 11/29/2019

    4,603,943   

MYR

    13,500      

Malaysia Government Bond, Series 0113, 3.17%, 07/15/2016

    4,282,536   
                   77,138,761   

NEW ZEALAND—0.2%

  

NZD

    2,150      

New Zealand Government Bond, 6.00%, 04/15/2015

    1,849,670   

NZD

    1,500      

Province of Quebec, 6.75%, 11/09/2015

    1,305,274   
                   3,154,944   

PHILIPPINES—3.5%

  

PHP

    715,000      

Philippine Government Bond, 5.75%, 11/24/2021

    19,403,389   

PHP

    5,544      

Philippine Government Bond, 6.38%, 01/19/2022

    156,482   

PHP

    44,000      

Philippine Government Bond, 8.00%, 07/19/2031

    1,487,853   

PHP

    94,000      

Philippine Government Bond, 8.75%, 05/27/2030

    3,324,028   

PHP

    331,030      

Philippine Government Bond, 9.13%, 09/04/2016

    9,120,616   

USD

    8,300      

Philippine Government International Bond, 6.50%, 01/20/2020

    9,960,000   

USD

    7,050      

Philippine Government International Bond, 7.75%, 01/14/2031

    9,482,250   

USD

    7,970      

Philippine Government International Bond, 9.88%, 01/15/2019

    10,709,687   
                   63,644,305   

REPUBLIC OF SOUTH KOREA—6.8%

  

KRW

    7,000,000      

Korea Monetary Stabilization Bond, 2.47%, 04/02/2015

    6,574,839   

KRW

    30,000,000      

Korea Monetary Stabilization Bond, 2.76%, 06/02/2015

    28,280,490   

KRW

    17,253,225      

Korea Treasury Bond, 1.50%, 06/10/2021 (h)

    16,193,569   

KRW

    9,500,000      

Korea Treasury Bond, 2.75%, 09/10/2017

    8,875,378   

KRW

    7,500,000      

Korea Treasury Bond, 3.25%, 09/10/2018

    7,135,461   

KRW

    22,000,000      

Korea Treasury Bond, 3.38%, 09/10/2023

    20,699,413   

KRW

    20,280,000      

Korea Treasury Bond, 3.50%, 03/10/2017

    19,456,583   

KRW

    13,300,000      

Korea Treasury Bond, 3.75%, 06/10/2022

    12,918,447   

KRW

    5,000,000      

Korea Treasury Bond, 4.25%, 06/10/2021

    5,014,952   
                   125,149,132   

SINGAPORE—1.9%

  

SGD

    3,000      

Housing & Development Board, 1.01%, 09/19/2016

    2,404,632   

SGD

    3,000      

Housing & Development Board, 1.83%, 11/21/2018 (d)

    2,390,992   

SGD

    750      

Housing & Development Board, 2.02%, 02/22/2016

    617,954   

SGD

    2,000      

Housing & Development Board, 3.14%, 03/18/2021

    1,653,904   

SGD

    15,700      

Singapore Government Bond, 2.25%, 06/01/2021

    13,009,754   

SGD

    3,300      

Singapore Government Bond, 2.75%, 07/01/2023

    2,805,499   

SGD

    5,120      

Singapore Government Bond, 3.00%, 09/01/2024

    4,374,822   

SGD

    3,140      

Singapore Government Bond, 3.13%, 09/01/2022

    2,755,657   

SGD

    1,800      

Singapore Government Bond, 3.50%, 03/01/2027

    1,594,362   

SGD

    4,290      

Singapore Government Bond, 4.00%, 09/01/2018

    3,957,368   
                   35,564,944   

SRI LANKA—0.5%

  

LKR

    151,000      

Sri Lanka Government Bonds, 8.00%, 11/15/2018

    1,026,612   

LKR

    230,000      

Sri Lanka Government Bonds, 8.50%, 04/01/2018

    1,611,107   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

14


Portfolio of Investments (continued)

As of October 31, 2013

 

 

Principal
Amount
(000)
     Description   Value
(US$)
 
      

GOVERNMENT BONDS (continued)

  

SRI LANKA (continued)

  

LKR

    388,000      

Sri Lanka Government Bonds, 8.50%, 07/15/2018

  $ 2,684,152   

USD

    4,450      

Sri Lanka Government International Bond, 6.25%, 07/27/2021 (d)

    4,472,250   
                   9,794,121   

THAILAND—4.3%

  

THB

    11,074      

Bank of Thailand, 3.33%, 05/12/2014

    357,171   

THB

    550,260      

Thailand Government Bond, 1.20%, 07/14/2021 (d)(h)

    17,521,628   

THB

    407,000      

Thailand Government Bond, 2.80%, 10/10/2017

    12,879,677   

THB

    407,200      

Thailand Government Bond, 3.25%, 06/16/2017

    13,124,033   

THB

    321,000      

Thailand Government Bond, 3.45%, 03/08/2019

    10,290,223   

THB

    18,600      

Thailand Government Bond, 3.63%, 05/22/2015

    605,609   

THB

    175,200      

Thailand Government Bond, 3.63%, 06/16/2023

    5,511,739   

THB

    516,300      

Thailand Government Bond, 3.65%, 12/17/2021

    16,460,507   

THB

    76,100      

Thailand Government Bond, 3.88%, 06/13/2019

    2,494,933   
                   79,245,520   
            

Total Government Bonds—67.1% (cost $1,264,117,664)

    1,236,449,020   

RESIDENTIAL MORTGAGE BACKED SECURITIES—0.2%

  

AUSTRALIA—0.2%

  

AUD

    2,488      

Progress Trust, 2.92%, 08/25/2036 (a)(d)

    2,350,487   

AUD

    2,053      

Westpac Securitisation Trust, 2.72%, 05/21/2038 (a)(c)(d)

    1,938,120   
                   4,288,607   
            

Total Residential Mortgage Backed Securities—0.2% (cost $3,770,975)

    4,288,607   

SHORT-TERM INVESTMENT—2.3%

  

UNITED STATES—2.3%

  

USD

    42,924      

Repurchase Agreement, State Street Bank & Trust Co.,
0.00% dated 10/31/2013, due 11/01/2013 in the amount of $42,924,000
(collateralized by $46,400,000 U.S. Treasury Notes, 1.63% due 11/15/2022;
value of $43,790,000)

    42,924,000   
            

Total Short-Term Investment—2.3% (cost $42,924,000)

    42,924,000   
            

Total Investments—130.7% (cost $2,447,330,969)

    2,408,118,901   
            

Liabilities in Excess of Other Assets—(30.7)%

    (565,648,895
            

Net Assets—100.0%

  $ 1,842,470,006   

 

AUD—Australian Dollar   INR—Indian Rupee   PHP—Philippine Peso
CNH—Chinese Yuan Renminbi Offshore   KRW—South Korean Won   SGD—Singapore Dollar
CNY—Chinese Yuan Renminbi   LKR—Sri Lanka Rupee   THB—Thai Baht
HKD—Hong Kong Dollar   MYR—Malaysian Ringgit   USD—U.S. Dollar
IDR—Indonesian Rupiah   NZD—New Zealand Dollar  

 

(a)   Indicates a variable rate security. The maturity date presented for these instruments is the later of the next date on which the security can be redeemed at par or the next date on which the rate of interest is adjusted. The interest rate shown reflects the rate in effect at October 31, 2013.
(b)   Perpetual bond. This is a bond that has no maturity date, is redeemable and pays a steady stream of interest indefinitely.

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

15


Portfolio of Investments (continued)

As of October 31, 2013

 

 

(c)   The maturity date presented for these instruments represents the next call/put date.
(d)   Denotes a restricted security, see Note 2(c).
(e)   China A shares. These shares are issued in local currency, traded in the local stock markets and are held through a qualified foreign institutional investor license.
(f)   This security is government guaranteed.
(g)   Issued with a zero coupon.
(h)   Inflation linked security.
(i)   Illiquid security.

At October 31, 2013, the Fund held the following futures contracts:

 

Futures Contracts      Counterparty        Number of
Contracts
Long (Short)
       Expiration
Date
       Unrealized
Appreciation/
(Depreciation)
 

United States Treasury Note 6%—2 year

       UBS           62           12/31/2013         $ 49,261   

United States Treasury Note 6%—5 year

       UBS           922           12/31/2013           2,151,567   

United States Treasury Note 6%—10 year

       UBS           (1,272        12/19/2013           (3,483,059

United States Treasury Bond 6%—30 year

       UBS           93           12/19/2013           408,063   
                                        $ (874,168

At October 31, 2013, the Fund’s open forward foreign currency exchange contracts were as follows:

 

Purchase Contracts
Settlement Date*
   Counterparty    Amount
Purchased
     Amount Sold      Fair Value      Unrealized
Appreciation/
(Depreciation)
 

Chinese Yuan Renminbi Offshore/United States Dollar

  

  
03/27/2014   

Standard Chartered Bank

     CNH63,489,200         USD10,300,000       $ 10,371,640       $ 71,640   

Hong Kong Dollar/United States Dollar

  

  
11/21/2013   

UBS

     HKD99,218,611         USD12,800,000         12,798,102         (1,898

Indian Rupee/United States Dollar

  

11/21/2013   

Standard Chartered Bank

     INR166,481,600         USD2,680,000         2,699,162         19,162   

Malaysian Ringgit/United States Dollar

  

11/12/2013   

Standard Chartered Bank

     MYR131,012,250         USD40,500,000         41,494,896         994,896   
11/12/2013   

UBS

     MYR24,311,250         USD7,500,000         7,699,988         199,988   

Philippine Peso/United States Dollar

  

11/12/2013   

Goldman Sachs

     PHP1,189,168,660         USD27,300,000         27,529,176         229,176   

Singapore Dollar/United States Dollar

  

11/12/2013   

Royal Bank of Canada

     SGD33,572,534         USD26,590,000         27,026,848         436,848   
11/12/2013   

State Street

     SGD13,344,579         USD10,730,000         10,742,767         12,767   
11/12/2013   

UBS

     SGD3,577,375         USD2,830,000         2,879,889         49,889   

South Korean Won/United States Dollar

  

11/12/2013   

Standard Chartered Bank

     KRW3,360,900,000         USD3,000,000         3,167,423         167,423   
11/12/2013   

State Street

     KRW12,381,752,700         USD11,170,000         11,668,973         498,973   

Thai Baht/United States Dollar

  

11/14/2013   

Standard Chartered Bank

     THB369,982,900         USD11,900,000         11,879,685         (20,315
11/14/2013   

UBS

     THB381,012,000         USD12,000,000         12,233,816         233,816   
                            $ 182,192,365       $ 2,892,365   

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

16


Portfolio of Investments (concluded)

As of October 31, 2013

 

 

Sale Contracts
Settlement Date*
   Counterparty    Amount
Purchased
     Amount Sold      Fair Value      Unrealized
Appreciation/
(Depreciation)
 

United States Dollar/Chinese Yuan Renminbi Offshore

  

01/16/2014   

HSBC

     USD23,820,000         CNH145,099,530       $ 23,758,799       $ 61,201   

United States Dollar/Hong Kong Dollar

  

11/21/2013   

Standard Chartered Bank

     USD12,400,000         HKD96,176,880         12,405,753         (5,753

United States Dollar/Indian Rupee

  

11/21/2013   

Standard Chartered Bank

     USD14,100,000         INR882,251,100         14,303,914         (203,914

United States Dollar/Malaysian Ringgit

  

11/12/2013   

State Street

     USD61,020,000         MYR199,822,194         63,288,747         (2,268,747

United States Dollar/Philippine Peso

  

11/12/2013   

Deutsche Bank

     USD1,800,000         PHP79,650,000         1,843,892         (43,892
11/12/2013   

UBS

     USD13,200,000         PHP591,756,000         13,699,113         (499,113

United States Dollar/Singapore Dollar

  

11/12/2013   

Royal Bank of Canada

     USD2,800,000         SGD3,580,662         2,882,535         (82,535

United States Dollar/South Korean Won

  

11/12/2013   

State Street

     USD38,270,000         KRW42,410,402,000         39,968,964         (1,698,964

United States Dollar/Thai Baht

  

11/14/2013   

Credit Suisse

     USD2,300,000         THB72,634,000         2,332,186         (32,186
11/14/2013   

UBS

     USD51,400,000         THB1,616,273,000         51,896,492         (496,492
                            $ 226,380,395       $ (5,270,395

 

*   Certain contracts with different trade dates and like characteristics have been shown net.

At October 31, 2013, the Fund’s interest rate swaps were as follows:

 

Currency    Notional
Amount
     Expiration
Date
     Counterparty    Receive (Pay)
Floating Rate
   Floating Rate Index    Fixed
Rate
     Unrealized
Appreciation/
(Depreciation)
 

USD

     84,000,000         10/31/2016      

Barclays Bank

   Receive   

3-month LIBOR Index

     1.42%       $ (1,849,150

USD

     66,000,000         11/01/2017      

Barclays Bank

   Receive   

3-month LIBOR Index

     0.84%         341,954   
                                               $ (1,507,196

 

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

17


Statement of Assets and Liabilities

As of October 31, 2013

 

 

Assets

        

Investments, at value (cost $2,404,406,969)

   $ 2,365,194,901   

Repurchase agreement, at value (cost $42,924,000)

     42,924,000   

Foreign currency, at value (cost $28,169,550)

     27,940,641   

Cash at broker for futures contracts

     3,048,295   

Cash at broker for interest rate swaps

     1,050,000   

Cash at broker for China A shares

     74,764   

Cash

     2,173   

Interest receivable

     30,558,150   

Receivable for investments sold

     3,738,872   

Prepaid expenses in connection with revolving credit facility, senior secured notes, term loans and Series A Mandatory Redeemable Preferred Shares

     3,471,312   

Unrealized appreciation on forward foreign currency exchange contracts

     2,975,779   

Variation margin receivable for futures contracts

     2,608,891   

Unrealized appreciation on swap contracts

     341,954   

Prepaid expenses

     220,150   

Prepaid expenses in connection with the at-the-market stock offering

     219,465   

Total assets

     2,484,369,347   

Liabilities

  

Senior secured notes payable (Note 8)

     200,000,000   

Revolving credit facility payable (Note 9)

     150,000,000   

3-year term loan payable (Note 9)

     100,000,000   

5-year term loan payable (Note 9)

     100,000,000   

Series A Mandatory Redeemable Preferred Shares ($25.00 liquidation value per share; 2,000,000 shares outstanding) (Note 7)

     50,000,000   

Payable for investments purchased

     15,968,893   

Dividends payable to common shareholders

     9,364,717   

Unrealized depreciation on forward foreign currency exchange contracts

     5,353,809   

Variation margin payable for futures contracts

     3,483,059   

Interest payable on revolving credit facility, senior secured notes and term loans

     3,171,566   

Unrealized depreciation on swap contracts

     1,849,150   

Investment management fees payable (Note 3)

     1,178,566   

Deferred foreign capital gains tax

     385,301   

Administration fees payable (Note 3)

     240,286   

Dividend payable on Series A Mandatory Redeemable Preferred Shares

     183,334   

Investor relations fees payable (Note 3)

     113,474   

Director fees payable

     34,583   

Accrued expenses

     572,603   

Total liabilities

     641,899,341   
          

Net Assets Applicable to Common Shareholders

   $ 1,842,470,006   

Composition of Net Assets:

  

Common stock (par value $.01 per share)

   $ 2,674,079   

Paid-in capital in excess of par

     1,672,620,496   

Distributions in excess of net investment income

     (9,758,172

Accumulated net realized loss from investments, interest rate swaps and futures contracts

     (142,947,841

Net unrealized appreciation on investments, futures contracts and interest rate swaps

     30,159,052   

Accumulated net realized foreign exchange gains

     364,306,880   

Net unrealized foreign exchange and forward foreign currency contract loss

     (74,584,488

Net Assets Applicable to Common Shareholders

   $ 1,842,470,006   

Net asset value per common share based on 267,407,928 shares issued and outstanding

   $ 6.89   

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

18


Statement of Operations

For the Year Ended October 31, 2013

 

 

Net Investment Income

        

Income

  

Interest and amortization of discount and premium (net of foreign withholding taxes of $1,313,290)

   $ 109,519,050   

Other income

     4,635   
       109,523,685   

Expenses

  

Investment management fee (Note 3)

     13,165,345   

Administration fee (Note 3)

     2,665,057   

Custodian’s fees and expenses

     934,005   

Revolving credit facility, senior secured notes, term loans and Series A Mandatory Redeemable Preferred Shares fees and expenses

     892,842   

Investor relations fees and expenses (Note 3)

     542,773   

Reports to shareholders and proxy solicitation

     416,773   

Insurance expense

     408,809   

Directors’ fees and expenses

     290,070   

Legal fees and expenses

     151,185   

Transfer agent’s fees and expenses

     149,828   

Independent auditors’ fees and expenses

     135,770   

Miscellaneous

     294,350   

Total operating expenses, excluding interest expense

     20,046,807   

Interest expense (Notes 8 & 9)

     9,319,477   

Total operating expenses

     29,366,284   
          

Net Investment Income

     80,157,401   

Distributions to Series A Mandatory Redeemable Preferred Shares

     (721,875

Net investment income applicable to common shareholders

     79,435,526   

Realized and Unrealized Gains/(Losses) on Investments, Interest Rate Swaps, Futures Contracts and Foreign Currencies

  

Net realized gain/(loss) from:

  

Investment transactions (including $67,020 capital gains tax)

     44,263,526   

Interest rate swaps

     (7,296,374

Futures contracts

     472,826   

Forward and spot foreign currency exchange contracts

     (1,316,784

Foreign currency transactions

     (2,376,530
       33,746,664   

Net change in unrealized appreciation/(depreciation) on:

  

Investments (including $38,326 change in deferred capital gains tax)

     (131,803,030

Interest rate swaps

     7,997,494   

Futures contracts

     (824,129

Forward foreign currency exchange contracts

     255,999   

Foreign currency translation

     (113,914,708
       (238,288,374

Net loss from investments, interest rate swaps, futures contracts and foreign currencies

     (204,541,710

Net Decrease in Net Assets Applicable to Common Shareholders Resulting from Operations

   $ (125,106,184

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

19


Statements of Changes in Net Assets

 

 

 

      For the
Year Ended
October 31, 2013
     For the
Year Ended
October 31, 2012
 

Increase/(Decrease) in Net Assets Applicable to Common Shareholders

     

Operations:

     

Net investment income

   $ 79,435,526       $ 95,277,886   

Net realized gain from investments, interest rate swaps and futures contracts

     37,439,978         17,311,251   

Net realized gain/(loss) from foreign currency transactions

     (3,693,314      21,540,102   

Net change in unrealized appreciation/depreciation on investments, interest rate swaps and futures contracts

     (124,629,665      94,102,577   

Net change in unrealized appreciation/depreciation on foreign currency translation

     (113,658,709      (40,727,393

Net increase/(decrease) in net assets applicable to common shareholders resulting from operations

     (125,106,184      187,504,423   

Distributions to Common Shareholders from:

     

Net investment income

     (111,875,139      (109,721,108

Net decrease in net assets applicable to common shareholders from distributions

     (111,875,139      (109,721,108

Common Stock Transactions:

     

Proceeds from the at-the-market stock offering (Note 5)

     37,174,650         12,830,315   

Expenses in connection with the at-the-market stock offering (Note 5)

     (59,829      (16,197

Change in net assets from common stock transactions

     37,114,821         12,814,118   

Change in net assets applicable to common shareholders resulting from operations

     (199,866,502      90,597,433   

Net Assets Applicable to Common Shareholders:

     

Beginning of year

     2,042,336,508         1,951,739,075   

End of year (including distributions in excess of net investment income of ($9,758,172) and ($5,423,924), respectively)

   $ 1,842,470,006       $ 2,042,336,508   

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

20


Statement of Cash Flows

For the Year Ended October 31, 2013

 

 

Increase/(Decrease) in Cash (Including Foreign Currency)

  

Cash flows provided from (used for) operating activities:

  

Interest received (excluding discount and premium amortization of $16,427,975)

   $ 127,258,762   

Operating expenses paid

     (25,840,569

Dividends paid to Series A Mandatory Redeemable Preferred Shares

     (538,541

Payments received from broker for collateral on interest rate swaps

     3,270,058   

Purchases and sales of short-term portfolio investments, net

     (5,910,000

Purchases of long-term portfolio investments

     (1,054,417,243

Proceeds from sales of long-term portfolio investments

     1,041,424,249   

Realized losses on forward foreign currency exchange contracts closed

     (1,613,464

Realized losses on interest rate swap transactions

     (7,296,374

Purchases and sales of interest rate swaps, net

     (1,938,640

Payments paid to broker for futures contracts

     (1,177,333

Increase in cash collateral held at broker for China A shares

     (74,100

Decrease in prepaid expenses and other assets

     226,512   

Net cash provided from operating activities

     73,373,317   

Cash flows provided from (used for) financing activities

  

Decrease in bank loan

     (450,000,000

Issuance of senior secured notes and term loans

     400,000,000   

Issuance of Series A Mandatory Redeemable Preferred Shares

     50,000,000   

Issuance of common stock

     37,130,755   

Dividends paid to common shareholders

     (111,704,934

Expense associated with issuance of senior secured notes, term loans and Series A Mandatory Redeemable Preferred Shares

     (4,125,431

Net cash used for financing activities

     (78,699,610

Effect of exchange rate on cash

     (6,555,816

Net decrease in cash

     (11,882,109

Cash at beginning of year

     39,824,923   

Cash at end of year

   $ 27,942,814   

Reconciliation of Net Increase in Net Assets from Operations to Net Cash (Including Foreign Currency) Provided from (Used for) Operating Activities

  

Net decrease in total net assets resulting from operations

   $ (125,106,184

Increase in investments

     (10,158,527

Net realized gain on investment transactions

     (44,263,526

Net realized loss on interest rate swap transactions

     7,296,374   

Net realized gain on futures contracts

     (472,826

Net realized foreign exchange losses

     3,693,314   

Net change in unrealized appreciation/depreciation on investments, futures contracts and interest rate swaps

     124,629,665   

Net change in unrealized foreign exchange gains/losses

     113,658,709   

Decrease in interest receivable

     1,307,102   

Increase in receivable for investments sold

     (3,738,872

Increase in interest payable on bank loan, senior secured notes and term loans

     2,760,900   

Increase in dividend payable to preferred shares

     183,334   

Net change in variation margin on future contracts

     824,129   

Net decrease in other assets

     226,512   

Increase in payable for investments purchased

     2,985,368   

Payments received from broker for interest rate swaps

     3,270,058   

Change in payable/receivable for interest rate swap transactions

     (1,938,640

Payments made to broker for futures contracts

     (2,474,288

Increase in cash collateral at broker for China A shares

     (74,100

Decrease in prepaid expenses in connection with revolving credit facility, senior secured notes, term loans and Series A     Preferred Shares

     654,119   

Increase in accrued expenses and other liabilities

     110,696   

Total adjustments

     198,479,501   

Net cash provided from operating activities

   $ 73,373,317   

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

21


Financial Highlights

 

 

 

     For the Year Ended October 31,  
     2013     2012     2011     2010     2009  

Per Share Operating Performance:(a)

                                        
Net asset value per common share, beginning of year      $7.78        $7.48        $7.27        $6.53        $4.91   
Net investment income      0.30        0.36        0.39        0.37        0.35   
Net realized and unrealized gains/(losses) on investments, interest rate swaps, futures contracts and foreign currency transactions      (0.77     0.36        0.24        0.79        1.73   
Total from investment operations applicable to common shareholders      (0.47     0.72        0.63        1.16        2.08   
Distributions to Series A Mandatory Redeemable Preferred Shares:           
Net investment income                                    
Distributions to common shareholders from:           
Net investment income      (0.42     (0.42     (0.42     (0.42     (0.38
Tax return of capital                                  (0.09
Total distributions to common shareholders      (0.42     (0.42     (0.42     (0.42     (0.47
Offering cost on common stock                                    
Impact of shelf offering                                    
Effect of Fund shares repurchased                                  0.01   
Net asset value per common share, end of year      $6.89        $7.78        $7.48        $7.27        $6.53   
Market value, end of year      $6.44        $7.90        $6.93        $6.90        $6.04   
Total Investment Return Based on:(b)         
Market value      (13.37 )%      20.47%        6.59%        21.73%        58.26%   
Net asset value      (5.89 )%(c)      9.92% (c)      9.20%        18.63%        45.66%   
Ratio to Average Net Assets Applicable to Common Shareholders/Supplementary Data:(d)           
Net assets applicable to common shareholders, end of year (000 omitted)      $1,842,470        $2,042,337        $1,951,739        $1,897,181        $1,703,352   
Average net assets applicable to common shareholders (000 omitted)      $1,953,410        $1,965,038        $1,937,986        $1,753,665        $1,457,521   
Net operating expenses      1.50%        1.38%        1.49%        1.89%        2.20%   
Net operating expenses without reimbursement      1.50%        1.38%        1.49%        1.89%        2.22% (e) 
Net operating expenses, excluding interest expense      1.03%        1.01%        1.05%        1.19%        1.37%   
Net investment income      4.07%        4.85%        5.30%        5.44%        6.40%   
Portfolio turnover      42%        38%        72%        67%        68%   
Leverage (senior securities) outstanding (000 omitted)      $550,000        $600,000        $600,000        $600,000        $600,000   
Leverage (preferred stock) outstanding (000 omitted)      $50,000        $–        $–        $–        $–   
Asset coverage ratio on long-term debt obligations at year end(f)      444%        440%        425%        416%        384%   
Asset coverage per $1,000 on long-term debt obligations at year end      $4,441        $4,404        $4,253        $4,162        $3,839   
Asset coverage ratio on total leverage at year end(g)      407%                               
Asset coverage per share on total leverage at year end      $4,071        $–        $–        $–        $–   

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

22


Financial Highlights (concluded)

 

 

 

 

(a)   Based on average shares outstanding.
(b)   Total investment return based on market value is calculated assuming that shares of the Fund’s common stock were purchased at the closing market price as of the beginning of the period, dividends, capital gains and other distributions were reinvested as provided for in the Fund’s dividend reinvestment plan and then sold at the closing market price per share on the last day of the period. The computation does not reflect any sales commission investors may incur in purchasing or selling shares of the Fund. The total investment return based on the net asset value is similarly computed except that the Fund’s net asset value is substituted for the closing market value.
(c)   The total return shown above includes the impact of financial statement rounding of the NAV per share and/or financial statement adjustments.
(d)   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. For each of the years ended October 31, 2013, 2012, 2011, 2010, and 2009 the ratios of net investment income before preferred stock dividends to average net assets of common shareholders were 4.10%, 4.85%, 5.30%, 5.44% and 6.40%, respectively.
(e)   In 2009, the Fund filed a non-routine proxy to consider the approval of a new sub-advisory agreement among the Fund, Investment Manager, and Sub-Adviser. The Fund and the Investment Manager agreed to each bear equal responsibility with respect to the costs of soliciting proxies associated with the non-routine item.
(f)   Asset coverage ratio is calculated by dividing net assets plus the amount of any borrowings, including Series A Mandatory Redeemable Preferred Shares, for investment purposes by the amount of any long-term debt obligations, which includes the senior secured notes, revolving credit facility and term loans.
(g)   Asset coverage ratio is calculated by dividing net assets plus the amount of any borrowings, including Series A Mandatory Redeemable Preferred Shares, for investment purposes by the amount of any borrowings.

Amounts listed as “—” are $0 or round to $0.

See Notes to Financial Statements.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

23


Notes to Financial Statements

October 31, 2013

 

 

1. Organization

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 principal investment objective is to seek current income. The Fund may also achieve incidental capital appreciation. To achieve its investment objectives, the Fund normally invests 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 Fund’s Board of Directors (the “Board”) upon 60 days’ prior written notice to shareholders. There can be no assurance that the Fund will achieve its investment 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.

2. Summary of Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The accounting records of the Fund are maintained in U.S. Dollars and the U.S. Dollar is used as both the functional and reporting currency. However, the Australian Dollar is the functional currency for U.S. federal tax purposes.

(a) Security Valuation:

The Fund is required to value its securities at fair market value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Long-term debt and other fixed-income securities are valued at the last quoted or evaluated bid price on the valuation date provided by an independent pricing service provider. If there are no current day bids, the security is valued at the previously applied bid. Short-term debt securities (such as commercial paper, and U.S. treasury bills)

having a remaining maturity of 60 days or less are valued at amortized cost, which approximates fair value. Debt and other fixed-income securities are generally considered to be Level 2 investments.

Exchange traded derivatives are generally considered to be Level 1 investments and over-the-counter derivatives are generally considered to be Level 2 investments.

In the event that a security’s market quotations are not readily available or are deemed unreliable, the security is valued at fair value as determined by the Fund’s Pricing Committee, taking into account the relevant factors and surrounding circumstances using valuation policies and procedures approved by the Board. A security that has been fair valued by the Pricing Committee may be classified as Level 2 or 3 depending on the nature of the inputs.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Fund discloses the fair value of its investments using a three-level hierarchy that classifies the inputs to valuation techniques used to measure the fair value. The hierarchy assigns Level 1 measurements to valuations based upon unadjusted quoted prices in active markets for identical assets, Level 2 measurements to valuations based upon other significant observable inputs, including adjusted quoted prices in active markets for identical assets, and Level 3 measurements to valuations based upon unobservable inputs that are significant to the valuation. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, which are based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The three-tier hierarchy of inputs is summarized below:

Level 1 – quoted prices in active markets for identical investments;

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk); or

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

24


Notes to Financial Statements (continued)

October 31, 2013

 

 

A summary of standard inputs is listed below:

 

Security Type    Standard Inputs
   

Debt and other fixed-income securities

   Reported trade data, broker-dealer price quotations, benchmark yields, issuer spreads on comparable securities, credit quality, yield, and maturity
   

Forward foreign currency contracts

   Forward exchange rate quotations
   

Swap agreements

   Market information pertaining to the underlying reference assets, i.e., credit spreads, credit event probabilities, fair values, forward rates, and volatility measures

The following is a summary of the inputs used as of October 31, 2013 in valuing the Fund’s investments at fair value. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Please refer to the Portfolio of Investments for a detailed breakout of the security types:

 

Assets      Level 1        Level 2        Level 3  

Fixed Income Investments

                

Commercial Mortgage Backed Security

     $         $ 6,275,044         $   

Corporate Bonds

                 1,118,182,230             

Government Bonds

                 1,236,449,020             

Residential Mortgage Backed Securities

                 4,288,607             

Total Fixed Income Investments

                 2,365,194,901             

Short-Term Investment

                 42,924,000             

Total Investments

     $         $ 2,408,118,901         $   

Other Financial Instruments

                

Futures Contracts

     $ 2,608,891         $         $   

Forward Foreign Currency Exchange Contracts

                 2,975,779             

Interest Rate Swap Agreements

                 341,954             

Total Other Financial Instruments

     $ 2,608,891         $ 3,317,733         $   

Total Assets

     $ 2,608,891         $ 2,411,436,634         $   –   

Liabilities

                

Other Financial Instruments

                

Futures Contracts

     $ (3,483,059      $         $   

Forward Foreign Currency Exchange Contracts

                 (5,353,809          

Interest Rate Swap Agreements

                 (1,849,150          

Total Liabilities – Other Financial Instruments

     $ (3,483,059      $ (7,202,959      $   –   

 

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing transfers at the end of each period. During the year ended October 31, 2013, there were no transfers between Levels 1, 2 or 3. For the year ended October 31, 2013, there have been no significant changes to the fair valuation methodologies.

(b) Repurchase Agreements:

The Fund may enter into repurchase agreements under the terms of a Master Repurchase Agreement. It is the Fund’s policy that its custodian/counterparty segregate the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates. To the extent that any repurchase transaction exceeds one business day, the collateral is

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

25


Notes to Financial Statements (continued)

October 31, 2013

 

 

valued on a daily basis to determine its adequacy. Under the Master Repurchase Agreement, if the counterparty defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the counterparty of the security, realization of the collateral by the Fund may be delayed or limited. The Fund held a repurchase agreement of $42,924,000 as of October 31, 2013. The value of the related collateral exceeded the value of the repurchase agreement at period end.

(c) Restricted Securities:

Restricted securities are privately-placed securities whose resale is restricted under U.S. securities laws. The Fund may invest in restricted securities, including unregistered securities eligible for resale without registration pursuant to Rule 144A and privately-placed securities of U.S. and non-U.S. issuers offered outside the U.S. without registration pursuant to Regulation S under the Securities Act of 1933, as amended (the “1933 Act”). Rule 144A securities may be freely traded among certain qualified institutional investors, such as the Fund, but resale of such securities in the U.S. is permitted only in limited circumstances.

(d) Foreign Currency Translation:

Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the exchange rate of said currencies against the U.S. Dollar, as of the “Valuation Time,” as provided by an independent pricing service approved by the Board. The Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Time).

Foreign currency amounts are translated into U.S. Dollars on the following basis:

 

(i)   market value of investment securities, other assets and liabilities – at the exchange rates at the current daily rates of exchange; and

 

(ii)   purchases and sales of investment securities, income and expenses – at the rate of exchange prevailing on the respective dates of such transactions.

The Fund isolates that portion of the results of operations arising from changes in the foreign exchange rates due to the fluctuations in the market prices of the securities held at the end of the reporting period. 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 period.

Net exchange gain/(loss) is realized from sales and maturities of portfolio securities, sales of foreign currencies, settlement of

securities transactions, dividends, interest and foreign withholding taxes recorded on the Fund’s books. Net unrealized foreign exchange appreciation/(depreciation) includes changes in the value of portfolio securities and other assets and liabilities arising as a result of changes in the exchange rate. The net realized and unrealized foreign exchange gain/(loss) shown in the composition of net assets represents foreign exchange gain/(loss) for book purposes that may not have 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. Generally, when the U.S. Dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer U.S. Dollars; the opposite effect occurs if the U.S. Dollar falls in relative value.

(e) Derivative Financial Instruments:

The Fund is authorized to use derivatives to manage currency, interest rate and credit risk and as a substitute for physical securities. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. The use of derivative instruments involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities.

Forward Foreign Currency Exchange Contracts:

A forward foreign currency exchange contract (“forward contract”) involves an obligation to purchase and sell a specific currency at a future date at a price set at the time of the contract. Forward contracts are used to manage the Fund’s currency exposure in an efficient manner. They are used to sell unwanted currency exposure that comes with holding securities in a market, or to buy currency exposure where the exposure from holding securities is insufficient to give the desired currency exposure either in absolute terms or relative to the benchmark. The use of forward contracts allows the separation of decision-making between markets and their currencies. The forward contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized appreciation or depreciation. Forward contracts’ prices are received daily from an independent pricing provider. When the forward contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. These realized and unrealized gains and losses are reported on the Statement of Operations. During the year ended October 31, 2013, the Fund used forward contracts to hedge positions in the Chinese Yuan Renminbi, Chinese Yuan Renminbi

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

26


Notes to Financial Statements (continued)

October 31, 2013

 

 

Offshore, Hong Kong Dollar, Indian Rupee, Malaysian Ringgit, South Korean Won and the Thai Baht.

While the Fund may enter into forward contracts to seek to reduce currency exchange rate risks, transactions in such contracts involve certain risks. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in exchange rates. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions. Moreover, there may be imperfect correlation between the Fund’s portfolio holdings or securities quoted or denominated in a particular currency and forward contracts entered into by the Fund. Such imperfect correlation may prevent the Fund from achieving a complete hedge, which will expose the Fund to the risk of foreign exchange loss.

Forward contracts are subject to the risks that the counterparts to such contract will default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an exchange or clearing house, a default on the contract would deprive the Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the current market price.

Futures Contracts:

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes; however, in those instances, the aggregate initial margin and premiums required to establish the Fund’s positions may not exceed 5% of the Fund’s net asset value after taking into account unrealized profits and unrealized losses on any such contract it has entered.

Upon entering into a 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 payment is known as “initial margin”. Subsequent payments, known as “variation margin,” are calculated each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. An unrealized gain/(loss) equal to the variation margin is recognized on a daily basis. When the contract expires or is closed, the gain/(loss) is realized and is presented in the Statement of Operations as a net realized gain/(loss) on futures contracts.

Futures contracts are valued daily at their last quoted sale price on the exchange on which they are traded.

A “sale” of a futures contract means a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future. During the year ended October 31, 2013, the use of bond futures contracts was primarily to hedge and manage the interest rate exposure of the U.S. Dollar-denominated securities.

There are significant risks associated with the Fund’s use of futures contracts, including the following: (1) the success of a hedging strategy may depend on the Investment Manager’s, the Investment Adviser’s and the Sub-adviser’s ability to predict movements in the prices of individual securities, fluctuations in markets and movements in interest rates; (2) there may be an imperfect or no correlation between the movement in the price of futures contracts, interest rates and the value/market value of the securities held by the Fund; (3) there may not be a liquid secondary market for a futures contract; (4) trading restrictions or limitations may be imposed by an exchange; and (5) government regulations may restrict trading in futures contracts. In addition, should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss.

Swaps:

A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset or notional principal amount. The Fund will enter into swaps only on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the difference between the two payments. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Fund, and/or the termination value at the end of the contract. Therefore, the Fund considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying reference asset or index. The Fund records unrealized gains/(losses) on a daily basis representing the value and the current net receivable or payable relating to open swap contracts. Net amounts received or paid on the swap contract are recorded as realized gains/(losses). Fluctuations in the value of swap contracts are recorded for financial statement purposes as unrealized appreciation or depreciation of swap contracts. Realized gains/(losses) from terminated swaps are

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

27


Notes to Financial Statements (continued)

October 31, 2013

 

 

included in net realized gains/(losses) on swap contracts transactions. During the year ended October 31, 2013, the Fund used interest rate swaps as a tool to hedge the Revolving Loan Facility borrowings of the Fund.

The Fund is a party to International Swap Dealers Association, Inc. Master Agreements (“ISDA Master Agreements”). These agreements are with select counterparties and they govern transactions, including certain over-the-counter derivative and foreign exchange contracts, entered into by the Fund and the counterparty. The ISDA Master Agreements maintain provisions for general obligations, representations, agreements, collateral, and events of default or

termination. The occurrence of a specified event of termination may give a counterparty the right to terminate all of its contracts and affect settlement of all outstanding transactions under the applicable ISDA Master Agreement.

Effective June 10, 2013, certain swaps, including interest rate swaps, must be cleared pursuant to U.S. Commodity Futures Trading Commission (“CFTC”) regulations. As a result, interest rate swaps entered into by the Fund after June 10, 2013 can no longer be traded over the counter and become subject to various regulations and rules of the CFTC. The Fund did not enter into any new swaps subject to clearing during the reporting period.

 

 

Summary of Derivative Instruments:

The Fund may use derivatives for various purposes as noted above. The following is a summary of the fair value of Derivative Instruments, not accounted for as hedging instruments, as of October 31, 2013:

 

     Asset Derivatives      Liability Derivatives  
     Year Ended October 31, 2013      Year Ended October 31, 2013  
Derivatives not accounted for
as hedging instruments
and risk exposure
   Statement of Assets
and Liabilities Location
   Fair Value      Statement of Assets
and Liabilities Location
   Fair Value  

Interest rate swaps
(interest rate risk)

   Unrealized appreciation on interest rate swaps contracts    $ 341,954       Unrealized depreciation on interest rate swaps contracts    $ 1,849,150   

Forward foreign exchange contracts (foreign exchange risk)

   Unrealized appreciation on forward foreign currency exchange contracts    $ 2,975,779       Unrealized depreciation on forward foreign currency exchange contracts    $ 5,353,809   

Futures contracts (interest rate risk)*

  

Variation margin receivable for future contracts

   $ 2,608,891      

Variation margin payable for future contracts

   $ 3,483,059   

Total

        $ 5,926,624            $ 10,686,018   

 

*   Includes cumulative appreciation/depreciation on futures contracts as reported in the Portfolio of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

28


Notes to Financial Statements (continued)

October 31, 2013

 

 

The Effect of Derivative Instruments on the Statement of Operations

for the Year Ended October 31, 2013

 

Derivatives Not Accounted for as
Hedging instruments Under
Statement 133(a)
     Location of Gain or (Loss)
on Derivatives
     Realized
Gain or
(Loss) on
Derivatives
       Change in
Unrealized
Appreciation/
Depreciation
on Derivatives
 
     Realized/Unrealized Gain/(Loss) from Investments, Interest Rate Swaps, Futures Contracts and Foreign Currencies          

Interest rate swaps (interest rate risk)

          $ (7,296,374      $ 7,997,494   

Forward foreign exchange contracts (foreign exchange risk)

          $ (1,613,464      $ 255,999   

Futures contracts (interest rate risk)

            $ 472,826         $ (824,129

Total

            $ (8,437,012      $ 7,429,364   

 

Information about futures contracts reflected as of the date of this report is generally indicative of the type and volume of activity for the quarter ended October 31, 2013. In February 2013, the Fund sold out of all 3Yr Korea Treasury Bond futures contracts. The quarterly weighted average of contracts and notional values for the Fund’s future positions were as follows:

 

Quarter     

Weighted Average

Contracts

      

Weighted Average

Notional Value

 

1st Quarter

       130         $ 19,239,758   

2nd Quarter

       73           27,100,000   

3rd Quarter

       391           54,666,667   

4th Quarter

       104           16,633,333   

Information about forward currency contracts reflected as of the date of this report is generally indicative of the type of activity for the month ended October 31, 2013. In prior months the Fund also held positions in Chinese Yuan Renminbi, Indonesian Rupiah and Taiwan Dollar forward contracts. The volume of forward contracts was relatively unvaried throughout the year with an average notional value of $467,312,282. The quarterly average notional values for the Fund’s forward contracts were as follows:

 

Quarter     

Average

Notional Value

 

1st Quarter

     $ 431,820,000   

2nd Quarter

       500,739,127   

3rd Quarter

       481,666,667   

4th Quarter

       455,023,333   

Information about interest rate swaps reflected as of the date of this report is generally indicative of the type and volume of activity for the last five months of the year ended October 31, 2013. In June 2013, the Fund terminated $450,000,000 in notional value of the outstanding swaps in connection with the Fund’s refinancing of its leverage. The quarterly average notional values for the Fund’s interest rate swaps were as follows:

 

Quarter     

Average

Notional Value

 

1st Quarter

     $ 600,000,000   

2nd Quarter

       600,000,000   

3rd Quarter

       300,000,000   

4th Quarter

       150,000,000   

The Fund values derivatives at fair value, as described in this note, and recognizes changes in fair value currently in the results of operations. Accordingly, the Fund does not follow hedge accounting even for derivatives employed as economic hedges.

(f) Credit-Linked Notes:

The Fund invests in credit-linked securities, which are unstructured, unleveraged pass-through vehicles to an underlying security denominated in a local currency, used for the purposes of efficiently managing access to the market and interest rate risk. For instance, the Fund may invest in credit-linked securities as a cash management tool in order to gain exposure to a certain market and/or to remain fully invested when more traditional income producing securities are not available. Like an investment in a bond, investments in credit-linked securities represent the right to receive

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

29


Notes to Financial Statements (continued)

October 31, 2013

 

 

periodic income payments (in the form of distributions) and payment of principal at the end of the term of the security. However, these payments are conditioned on the issuer’s receipt of payments from, and the issuer’s potential obligations to, the counterparties to the derivative instruments and other securities in which the issuer invests. For instance, the issuer may sell one or more credit default swaps, under which the issuer would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default occurs, the stream of payments may stop and the issuer would be obligated to pay the counterparty the par value (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund would receive. The Fund’s investments in these instruments are indirectly subject to the risks associated with derivative instruments, including, among others, credit risk, default or similar event risk, counterparty risk, interest rate risk, leverage risk and management risk. It is also expected that the securities will be exempt from registration under the 1933 Act. Accordingly, there may be no established trading market for the securities and they may constitute illiquid investments.

(g) Security Transactions, Investment Income and Expenses:

Security transactions are recorded on the trade date. Realized and unrealized gains/(losses) from security and currency transactions are calculated on the identified cost basis. Interest income and expenses are 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 accrued on a daily basis.

(h) Distributions:

The Fund has a managed distribution policy to pay distributions 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 managed distribution policy is subject to regular review by the Board. 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 shareholders are recorded on the ex-dividend date.

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments for foreign currencies, loss deferrals and recognition of market discount and premium.

Distributions to Series A Mandatory Redeemable Preferred Shares (the “Series A MRPS”) shareholders are accrued daily and paid quarterly based on an annual rate of 4.125%. The Fund may not pay distributions to its preferred shareholders unless (i) the pro forma asset coverage ratios for the Series A MRPS, as calculated in accordance with the Fitch Ratings total and net overcollateralization tests per the ‘AA’ rating guidelines outlined in Fitch Rating’s closed-end fund criteria, is in excess of 100%, and (ii) the Fund’s asset coverage ratios for the Series A MRPS, as calculated in accordance with the 1940 Act, is in excess of 225%.The character of distributions to Series A MRPS shareholders made during the year may differ from their ultimate characterization for federal income tax purposes. For tax purposes, the Fund’s distributions to Series A MRPS shareholders for the year ended October 31, 2013 were 100% net investment income. For book purposes, the source of the Fund’s distributions to Series A MRPS shareholders for the year ended October 31, 2013 was 100% net investment income.

(i) Federal Income Taxes:

For federal income and excise tax purposes, substantially all of the Fund’s transactions are accounted for using the Australian Dollar as the functional currency. Accordingly, realized currency gains/(losses) are realized from changes in the foreign exchange rates against the Australian Dollar or are a result from the repatriation of Australian Dollars into U.S. Dollars. This may differ substantially from the realized currency gains recognized under GAAP within the financial statements. Furthermore, the Fund’s distribution requirements are calculated on a federal tax basis whereby currency gains/(losses) are considered income and distributed out as such.

The Fund intends to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in Subchapter M of the Internal Revenue Code of 1986, as amended, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes. Therefore, no federal income tax provision is required. Since tax authorities can examine previously filed tax returns, the Fund’s U.S. federal and state tax returns for each of the four fiscal years up to the most recent fiscal year ended October 31 are subject to such review.

(j) Cash Flow Information:

The Fund invests in securities and distributes dividends from net investment income and net realized gains on investment and currency transactions which are paid in cash or are reinvested at the discretion of shareholders. These activities are reported in the Statements of Changes in Net Assets and additional information on

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

30


Notes to Financial Statements (continued)

October 31, 2013

 

 

cash receipts and cash payments is presented in the Statement of Cash Flows. Cash includes domestic and foreign currency but does not include cash at brokers in segregated accounts for financial futures contracts because it is designated as collateral.

3. Agreements and Transactions with Affiliates

(a) Investment Manager, Investment Adviser, and Investment Sub-Adviser:

Aberdeen Asset Management Asia Limited (the “Investment Manager”) serves as investment manager to the Fund, pursuant to a management agreement (the “Management Agreement”). Aberdeen Asset Management Limited (the “Investment Adviser”) serves as the investment adviser and Aberdeen Asset Managers Limited (“AAML” or the “Sub-Adviser”) serves as the sub-adviser, pursuant to an advisory agreement and a sub-advisory agreement (the “Sub-Advisory Agreement”), respectively. The Investment Manager, the Investment Adviser and the Sub-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 Sub-Adviser manages the portion of the Fund’s assets that the Investment Manager allocates to it.

The Management Agreement provides the Investment Manager with a fee, payable monthly by the Fund, at the following annual rates: 0.65% of the Fund’s average weekly Managed Assets up to $200 million, 0.60% of Managed Assets between $200 million and $500 million, 0.55% of Managed Assets between $500 million and $900 million, 0.50% of Managed Assets between $900 million and $1.75 billion and 0.45% of Managed Assets in excess of $1.75 billion. Managed Assets is defined in the Management Agreement to mean total assets of the Fund, including any form of investment leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund’s investment objectives and policies, and/or (iv) any other means.

The Investment Manager pays fees to the Investment Adviser for its services rendered. The Investment Manager informed the Fund that it paid $2,479,172 to the Investment Adviser, with respect to the Fund,

during the fiscal year ended October 31, 2013. As compensation for its services under the Sub-Advisory Agreement, the Sub-Adviser receives an annual fee paid by the Investment Manager in the amount of $100,000, to be paid in monthly increments.

(b) Fund Administration:

Aberdeen Asset Management Inc. (“AAMI”), an affiliate of the Investment Manager, Investment Adviser and Sub-Adviser, is the Fund’s Administrator, pursuant to an agreement under which AAMI receives a fee, payable monthly by the Fund, at an annual fee rate of 0.125% of the Fund’s average weekly Managed Assets up to $1 billion, 0.10% of the Fund’s average weekly Managed Assets between $1 billion and $2 billion, and 0.075% of the Fund’s average weekly Managed Assets in excess of $2 billion. For the year ended October 31, 2013, AAMI earned $2,665,057 from the Fund for administration fees.

(c) Investor Relations:

Under the terms of an Investor Relations Services Agreement, AAMI serves as the Fund’s investor relations services provider.

Pursuant to the terms of the Investor Relations Services Agreement, AAMI provides, among other things, objective and timely information to shareholders based on publicly-available information; provides information efficiently through the use of technology while offering shareholders immediate access to knowledgeable investor relations representatives; develops and maintains effective communications with investment professionals from a wide variety of firms; creates and maintains investor relations communication materials such as fund manager interviews, films and webcasts, published white papers, magazine and articles and other relevant materials discussing the Fund’s investment results, portfolio positioning and outlook; develops and maintains effective communications with large institutional shareholders; responds to specific shareholder questions; and reports activities and results to the Board and management detailing insight into general shareholder sentiment.

For the year ended October 31, 2013, the Fund paid fees of approximately $521,398 for investor relations services. Investor relations fees and expenses in the Statement of Operations include certain out-of-pocket expenses.

4. Investment Transactions

Purchases and sales of investment securities (excluding short-term securities) for the fiscal year ended October 31, 2013, were $1,045,573,858 and $1,034,160,677, respectively.

5. Capital

The authorized capital of the Fund is 400 million shares of $0.01 par value common stock. As of October 31, 2013, there were 267,407,928 shares of common stock issued and outstanding.

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

31


Notes to Financial Statements (continued)

October 31, 2013

 

 

The Fund has filed a “shelf” registration statement with the SEC, which became effective on August 17, 2012 and permits the Fund to issue up to $375,000,000 in shares of common stock through one or more public offerings including at-the-market offerings (“ATM offerings”). Shares are only offered through ATM offerings when the premium to net asset value is greater than the costs associated with the transaction. Any proceeds raised are used for investment purposes. The Fund has entered into a sales agreement with JonesTrading Institutional Services LLC (“JonesTrading”) pursuant to which the Fund may offer and sell up to 25,000,000 of its shares of its common stock through one of more ATM offerings from time to time through JonesTrading as its agent for the offer and sale of the shares. Through the year ended October 31, 2013, there were 4,790,583 shares sold through ATM offerings made pursuant to the sales agreement. Offering costs were previously capitalized as a prepaid expense. When shares of common stock are sold, a portion of the cost attributable to those shares will be charged to paid-in capital. For the year ended October 31, 2013, these costs were $59,829. These costs are noted on the Statements of Changes in Net Assets.

6. Open Market Repurchase Program

On March 1, 2001, the Board approved a stock repurchase program. The Board amended the program on December 12, 2007. 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 NAV is at least 8%. For the fiscal year ended October 31, 2013 and fiscal year ended October 31, 2012, the Fund did not repurchase any shares through this program.

7. Preferred Shares

At October 31, 2013 the Fund has 2,000,000 shares of Series A Mandatory Redeemable Preferred Stock outstanding with an aggregate liquidation preference of $50,000,000 ($25.00 per share) (the “Series A MRPS”) The following table shows the mandatory redemption date, annual fixed rate, aggregate liquidation preference and estimated fair value of the Series A MRPS at October 31, 2013.

 

Mandatory
Redemption
Date
     Annual Fixed
Rate
    Aggregate
Liquidation
Preference
     Estimated Fair
Value
 
  June 27, 2023         4.125   $ 50,000,000       $ 48,212,761   

Holders of the Series A MRPS are entitled to receive quarterly cumulative cash dividend payments on the first business day following each calendar quarter at an annual fixed rate of 4.125% until maturity. The Series A MRPS were issued in private placement offerings to institutional investors and are not listed on any

exchange or automated quotation system. Distributions are accrued daily and paid quarterly and are presented in the Statement of Assets and Liabilities as a dividend payable to preferred shareholders. As of October 31, 2013 the Fund incurred $721,875 in distributions to preferred shareholders.

The Series A MRPS rank senior to all of the Fund’s outstanding shares of common stock and on a parity with shares of any other series of preferred stock as to the payment of dividends to which the shares are entitled and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund.

The estimated fair value of Series A MRPS was calculated, for disclosure purposes, by discounting future cash flows by a rate equal to the current U.S. Treasury rate with an equivalent maturity date, plus the spread between the U.S. insurance and financial debt rate and the U.S. Treasury rate plus a market spread for the issuance of preferred shares.

The Series A MRPS are redeemable in certain circumstances at the option of the Fund. The Series A MRPS are also subject to mandatory redemption, unless otherwise prohibited by the 1940 Act, if the Fund fails to maintain (1) asset coverage, as determined in accordance with Section 18(h) of the 1940 Act, of at least 225%, with respect to all outstanding preferred stock, as of the last day of any month or (2) eligible assets with an aggregate agency discounted value at least equal to the basic maintenance amount as provided in the Fund’s rating agency guidelines. At October 31, 2013, the Fund was in compliance with the asset coverage and basic maintenance requirements of the Series A MRPS.

Except for matters which do not require the vote of the holders of the Series A MRPS under the 1940 Act and except as otherwise provided in the Fund’s Charter or Bylaws, or as otherwise required by applicable law, holders of the Series A MRPS have one vote per share and generally vote together with holders of common stock as a single class on all matters submitted to the Fund’s stockholders. The holders of the Series A MRPS, voting separately as a single class, have the right to elect at least two directors of the Fund.

8. Senior Secured Notes

At October 31, 2013, the Fund had $200,000,000 in aggregate principal amount of senior secured notes rated ‘AAA’ by Fitch Ratings outstanding ($100,000,000 in 3.05% Series A Senior Secured Notes due June 12, 2020 and $100,000,000 in 3.69% Series B Senior Secured Notes due June 12, 2023) (collectively, the “Notes”). The Notes are secured obligations of the Fund and, upon liquidation, dissolution or winding up of the Fund, will rank senior to all unsecured and unsubordinated Indebtedness and senior to any common or preferred stock pari passu in priority and security with all

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

32


Notes to Financial Statements (continued)

October 31, 2013

 

 

other secured Indebtedness. Noteholders are entitled to receive cash interest payments semi-annually until maturity. The Series A Notes and the Series B Notes accrue interest at annual fixed rates of 3.05% and 3.69% respectively.

The Notes were issued in private placement offerings to institutional investors and are not listed on any exchange or automated quotation system.

The Notes may be prepaid in certain limited circumstances at the option of the Fund. The Notes are also subject to optional prepayment to the extent needed to satisfy certain requirements if the Fund fails to meet an asset coverage ratio required by the terms of the Notes and is not able to cure the coverage deficiency by the applicable deadline

The estimated fair value of each series of fixed-rate Notes was calculated, for disclosure purposes, by discounting future cash flows by a rate equal to the current U.S. Treasury rate with an equivalent maturity date, plus the spread between the U.S. insurance and financial debt rate and the U.S. Treasury rate. The following table shows the maturity date, interest rate, notional/carrying amount and estimated fair value for each series of Notes outstanding at October 31, 2013.

 

Series     Maturity
Date
    Interest
Rate
    Notional/
Carrying
Amount
    Estimated
Fair Value
 
  Series A        June 12, 2020        3.05   $ 100,000,000      $ 98,046,053   
  Series B        June 12, 2023        3.69   $ 100,000,000      $ 96,877,726   

9. Credit Facilities

On April 10, 2013, the Fund entered into a credit agreement (the “Revolving Loan Agreement”) providing for a $600,000,000 senior secured revolving credit loan facility (the “Revolving Loan Facility”) with a syndicate led by Bank of America Merrill Lynch, N.A., as administrative agent. On June 12, 2013 the Fund entered into a term loan agreement (the “Term Loan Agreement”) providing for $200,000,000 of senior secured term loans (the “Term Loan Facility”) from Bank of America, N.A. The borrowings under the Term Loan Facility were made in a single draw. Net proceeds from the Notes, the Term Loan Facility, and the Series A MRPS were used to prepay $450,000,000 of the Revolving Loan Facility. At October 31, 2013, the Fund had $150,000,000 outstanding under the Revolving Loan Facility and $200,000,000 outstanding under the Term Loan Facility. Under the terms of the Revolving Loan Agreement and the Term Loan Agreement and applicable regulations, the Fund is required to maintain certain asset coverage ratios for the amount of its outstanding borrowings.

For the fiscal year ended October 31, 2013, the average interest rate on the Revolving Loan Facility was 1.072% and the average balance of the Revolving Loan Facility was $427,123,288. Pursuant to the Term Loan Agreement, there is a $100,000,000 term loan facility which accrues interest at 2.80% per annum (the “Term A Facility”) and a $100,000,000 term loan facility which accrues interest at 2.16% per annum (the “Term B Facility”; the Term A Facility and the Term B Facility constitute the “Term Loan Facility” as defined previously). For the fiscal year ended October 31, 2013, the average interest rate on the Term Loan Facility was 2.48% and the average balance of the Term Loan Facility was $200,000,000. The interest expense is accrued on a daily basis and is payable on a monthly basis or on the last date of the respective LIBOR period, as applicable, for the Revolving Loan Facility, and payable on the last business day of each March, June, September, December and the maturity date for the Term Loan Facility.

The estimated fair value of each Term Loan Facility was calculated, for disclosure purposes, by discounting future cash flows by a rate equal to the current U.S. Treasury rate with an equivalent maturity date, plus the spread between the U.S. insurance and financial debt rate and the U.S. Treasury rate. The following table shows the maturity date, interest rate, notional/carrying amount and estimated fair value for each Term Loan Facility outstanding at October 31, 2013.

 

Series     Maturity
Date
    Interest
Rate
    Notional/
Carrying
Amount
    Estimated
Fair Value
 
 

 

Term A

Facility

  

  

    June 12, 2018        2.80   $ 100,000,000      $ 100,413,992   
 
 
Term B
Facility
  
  
    June 12, 2016        2.16   $ 100,000,000      $ 100,507,368   

The Revolving Loan Facility has a term of 364 days and is not a perpetual form of leverage; there can be no assurance that the Revolving Loan Facility will be available for renewal on acceptable terms, if at all. The Term A Facility and the Term B Facility have 5- and 3-year terms, respectively. Bank loan fees and expenses included in the Statement of Operations include fees for the renewal of the Revolving Loan Facility as well as commitment fees for any portion of the loan facility not drawn upon at any time during the period.

10. Risks of Leveraged Capital Structure

The amounts borrowed under the Revolving Loan Facility, the Term Loan Facility and the Notes and other funds obtained through various forms of leverage, including the Series A MRPS, may be invested to return higher rates than the rates pursuant to which interests or dividends are paid under such forms of leverage.

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

33


Notes to Financial Statements (continued)

October 31, 2013

 

 

However, the cost of leverage could exceed the income earned by the Fund on the proceeds of such leverage. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Fund’s common stock will decrease. In addition, in the event of a general market decline in the value of assets in which the Fund invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage.

The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. The funds borrowed pursuant to the Revolving Loan Facility, the Term Loan Facility and the Notes may constitute a substantial lien and burden by reason of their prior claim against the income of the Fund and against the net assets of the Fund in liquidation. The Fund is limited in its ability to declare dividends or other distributions under the terms of the various forms of leverage. In the event of an event of default under either the Revolving Loan Facility or Term Loan Facility, the lenders have the right to cause a liquidation of the collateral (i.e., sell portfolio securities and other assets of the Fund) and, if any such default is not cured, the lenders may be able to control the liquidation as well. In the event of an event of default under the Note Purchase Agreement, the Noteholders have the right to cause a liquidation of the collateral (i.e., sell portfolio securities and other assets of the Fund).

Each of the Revolving Loan Agreement, the Term Loan Agreement, the Note Purchase Agreement relating to the Notes, or the Securities Purchase Agreement relating to the Series A MRPS, includes usual and customary covenants for the applicable type of transaction. These covenants impose on the Fund asset coverage requirements, Fund composition requirements and limits on certain investments, such as illiquid investments, which are more stringent than those imposed on the Fund by the 1940 Act. The covenants or guidelines could impede the Investment Manager, Investment Adviser, or Sub-Adviser from fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. Furthermore, non-compliance with such covenants or the occurrence of other events could lead to the cancellation of any and/or all of the forms of leverage. As of October 31, 2013, the Fund was in compliance with all covenants under the agreements relating to the various forms of leverage.

During the year ended October 31, 2013, the Fund incurred fees of approximately $867,684 for the Revolving Loan Facility, Term Loan Facility and Notes.

11. Portfolio Investment Risks

(a) Credit and Market Risk:

A debt instrument’s price depends, in part, on the credit quality of the issuer, borrower, counterparty, or underlying collateral and can decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral, or changes in specific or general market, economic, industry, political, regulatory, geopolitical, or other conditions. Funds that invest in high yield and emerging market instruments are subject to certain additional credit and market risks. The yields of high yield and emerging market debt obligations reflect, among other things, perceived credit risk. The Fund’s investments in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading.

(b) Interest Rate Risk:

The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to perceptions about the creditworthiness of individual issuers, including governments. Generally, the Fund’s fixed income securities will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated securities is even greater than that of higher-rated securities. Also, longer-term securities are generally more volatile, so the average maturity or duration of these securities affects risk.

(c) Risks Associated with Foreign Securities and Currencies:

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, and political or social instability or diplomatic developments, which could adversely affect investments in those countries.

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries. Foreign securities may also be harder to price than U.S. securities.

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

34


Notes to Financial Statements (continued)

October 31, 2013

 

 

(d) Focus Risk:

The Fund may have elements of risk not typically associated with investments in the United States due to focused investments in a limited number of countries or regions subject to foreign securities or currencies risks. Such focused investments may subject the Fund to additional risks resulting from political or economic conditions in such countries or regions and the possible imposition of adverse governmental laws or currency exchange restrictions could cause the securities and their markets to be less liquid and their prices to be more volatile than those of comparable U.S. securities.

(e) Risks Associated with European Markets:

A number of countries in Europe have experienced and may continue to experience severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread within and outside of Europe. Whether or not the Fund invests in securities of issuers located in Europe or with significant exposure to European issuers or countries,

these events could negatively affect the value and liquidity of the Fund’s investments.

(f) Risks Associated with Mortgage-backed Securities:

The value of mortgage-backed securities can fall if the owners of the underlying mortgages default or pay off their mortgages sooner than expected, which could happen when interest rates fall.

12. Contingencies

In the normal course of business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund, and therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote.

13. Tax Information

The U.S. federal income tax basis of the Fund’s investments and the net unrealized appreciation as of October 31, 2013 were as follows:

 

Tax Basis of
Investments
     Appreciation      Depreciation    

Net

Unrealized

Depreciation

 
  $2,393,886,442       $ 51,430,134       $ (37,197,675   $ 14,232,459   
 

 

The tax character of distributions paid during the fiscal years ended October 31, 2013 and October 31, 2012 was as follows:

 

      October 31,
2013
    October 31,
2012
 

Distributions paid from:

    

Ordinary Income

   $ 111,875,139      $ 109,721,108   

Net long-term capital gains

              

Total tax character of distributions

   $ 111,875,139      $ 109,721,108   

As of October 31, 2013, the components of accumulated earnings on a tax basis were as follows:

 

Undistributed ordinary income – net

   $   

Undistributed long-term capital gains – net

       

Total undistributed earnings

   $   

Capital loss carryforward

     (121,122,131 )* 

Other currency gains

     364,306,880   

Other Temporary Differences

     (18,103,995

Unrealized appreciation/(depreciation) – securities

     14,232,459 ** 

Unrealized appreciation/(depreciation) – currency

     (72,137,782 )** 

Total accumulated earnings/(losses) – net

   $ 167,175,431   

 

*   On October 31, 2013, the Fund had a net capital loss carryforward of $(121,122,131) which will be available to offset like amounts of any future taxable gains. Under the Regulated Investment Company Modernization Act of 2010, the Fund will be permitted to carry forward

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

35


Notes to Financial Statements (concluded)

October 31, 2013

 

 

  capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short term as under previous law. Capital loss carryforwards expire as follows:

 

Amounts    Expires

$3,585,797

   2015 (Short-Term)

$38,887,790

   2016 (Short-Term)

$17,991,164

   2017 (Short-Term)

$60,657,380

   2019 (Short-Term)

 

**   The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable to the difference between book and tax amortization methods for premiums and discounts on fixed income securities, differing treatments for foreign currencies, the tax deferral of wash sales and straddles, the realization of unrealized gains on certain futures and forward contracts, and other timing differences.

 

GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, during the current year, $15,244,674 has been reclassified to distributions in excess of net investment income from accumulated net realized gain from investments, interest rate swaps and futures contracts, $1,212,529 has been reclassified from distributions in excess of net investment income to accumulated net realized foreign exchange gains, $10,223,970 from accumulated net realized foreign exchange gains to accumulated net realized gain on investments and $14,073,220 paid-in capital to distributions in excess of net investment income. These reclassifications have no effect on net assets or net asset values per share.

Accumulated net realized foreign exchange gains/losses will be recognized for Federal income tax purposes upon repatriation of Australian Dollars to U.S. Dollars.

14. Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”), Disclosures about Offsetting Assets and Liabilities. The amendments in this update require an entity to disclose both gross and net information for derivatives and other financial instruments that are

either offset in the statement of assets and liabilities or subject to an enforceable master netting arrangement or similar agreement. The ASU is effective for annual reporting periods beginning on or after January 1, 2013 (and interim periods within those annual periods). Reporting entities will be required to provide both net amounts (those that are offset) and gross information (as if amounts are not offset) in the notes to the financial statements for relevant assets and liabilities. Management is currently evaluating the implications of this ASU and its impact on the financial statements has not been determined.

15. Subsequent Events

Management has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the Financial Statements were issued. Based on this evaluation, no disclosures or adjustments were required to the Financial Statements as of October 31, 2013.

On November 12, 2013 and December 10, 2013, the Fund announced that it will pay, on December 13, 2013 and January 17, 2014, a distribution of $0.035 per share to all shareholders of record as of November 29, 2013 and December 31, 2013, respectively.

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

36


Report of Independent Registered Public Accounting Firm

 

 

 

Board of Directors and Shareholders of

Aberdeen Asia-Pacific Income Fund, Inc.

 

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Aberdeen Asia-Pacific Income Fund, Inc. (the “Fund”), as of October 31, 2013, and the related statement of operations and cash flows for the year then ended, and the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included

confirmation of securities owned as of October 31, 2013, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights of the Aberdeen Asia-Pacific Income Fund, Inc. present fairly, in all material respects, the financial position of the Fund as of October 31, 2013, and the results of its operations and cash flows for the year then ended, and its changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

 

LOGO

Philadelphia, Pennsylvania

December 23, 2013

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

37


Federal Tax Information: Dividends and Distributions (unaudited)

 

 

 

The following information is provided with respect to the distributions paid by the Aberdeen Asia-Pacific Income Fund, Inc. during the fiscal year ended October 31, 2013:

Common Shareholders

 

Payable Date    Foreign Taxes Paid†*      Foreign Source Income**  

11/16/12 - 10/18/13

     1.501%         50.80%   

 

  Expressed as a percentage of the distributions paid.
*   The foreign taxes paid represent taxes incurred by the Fund on interest received from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid.
**   Expressed as a percentage of ordinary distributions paid grossed-up for foreign taxes paid.

Supplemental Information (unaudited)

October 31, 2013

 

 

BOARD OF DIRECTORS’ CONSIDERATION OF ADVISORY AND SUB-ADVISORY AGREEMENTS

At an in-person meeting of the Board of Directors (the “Board”) of Aberdeen Asia-Pacific Fund, Inc. (“FAX” or the “Fund”) held on September 3, 2013, the Board, including a majority of the Directors who are not considered to be “interested persons” of the Fund (the “Independent Directors”) under the Investment Company Act of 1940, as amended (the “1940 Act”), approved for an annual period the continuation of the Fund’s management agreement with Aberdeen Asset Management Asia Limited (the “Investment Manager”), the investment advisory agreement among the Fund, the Investment Manager and Aberdeen Asset Management Limited (the “Investment Adviser”), and the investment sub-advisory agreement among the Fund, the Investment Manager and Aberdeen Asset Managers Limited (the “Sub-Adviser”). Collectively, the Investment Manager, the Investment Adviser and the Sub-Adviser are referred to herein as the “Advisers” and the aforementioned agreements with the Advisers are referred to as the “Advisory Agreements.” The Investment Adviser and the Sub-Adviser are affiliates of the Investment Manager.

In considering whether to approve the renewal of the Fund’s Advisory Agreements, the Board reviews a variety of information provided by the Advisers relating to FAX, the Advisory Agreements and the Advisers, including comparative performance, fee and expense information and other information regarding the nature, extent and quality of services provided by the Advisers under their respective Advisory Agreements. The materials provided to the Board generally include, among other items: (i) information on the investment performance of the Fund and the performance of peer

groups of funds and the Fund’s performance benchmarks; (ii) information on the Fund’s advisory fees and other expenses, including information comparing the Fund’s expenses to those of a peer group of funds and information about any applicable expense limitations and fee “breakpoints”; (iii) information about the profitability of the Advisory Agreements to the Advisers; (iv) a report prepared by the Advisers in response to a request submitted by the Independent Directors’ independent legal counsel on behalf of such Directors; and (v) a memorandum from the Independent Directors’ independent legal counsel on the responsibilities of the Board in considering for approval the investment advisory and investment sub-advisory arrangements under the 1940 Act and Maryland law. The Board, including the Fund’s Independent Directors, also considered other matters such as: (i) the Advisers’ financial results and financial condition; (ii) the Fund’s investment objective and strategies; (iii) the Advisers’ investment personnel and operations; (iv) the procedures employed to determine the value of the Fund’s assets; (v) the allocation of the Fund’s brokerage, if any, including, if applicable, allocations to brokers affiliated with the Advisers and the use, if any, of “soft” commission dollars to pay Fund expenses and to pay for research and other similar services; (vi) the resources devoted to, and the record of compliance with, the Fund’s investment policies and restrictions, policies on personal securities transactions and other compliance policies; and (vii) possible conflicts of interest. Throughout the process, the Board was afforded the opportunity to ask questions of and request additional materials from the Advisers.

In addition to the materials requested by the Directors in connection with their annual consideration of the continuation of the Advisory Agreements, the Directors received materials in advance of each

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

38


Supplemental Information (unaudited) (continued)

 

 

 

regular quarterly meeting of the Board that provided information relating to the services provided by the Advisers.

The Independent Directors were advised by separate independent legal counsel throughout the process. The Independent Directors also consulted in executive sessions with counsel to the Independent Directors regarding consideration of the renewal of the Advisory Agreements. The Directors also considered the recommendation of the Board’s Contract Review Committee, consisting solely of the Board’s Independent Directors, that the Advisory Agreements be renewed. In considering whether to approve the continuation of the Advisory Agreements, the Board, including the Independent Directors, did not identify any single factor as determinative. Individual Directors may have evaluated the information presented differently from one another, giving different weights to various factors. Matters considered by the Board, including the Independent Directors, in connection with its approval of the continuation of the Advisory Agreements included the factors listed below.

The nature, extent and quality of the services provided to the Fund under the Advisory Agreements. The Directors considered the nature, extent and quality of the services provided by the Advisers to the Fund and the resources dedicated to the applicable Fund by the Advisers. The Board considered, among other things, the Advisers’ investment experience. The Board received information regarding the Advisers’ compliance with applicable laws and SEC and other regulatory inquiries or audits of the Fund and the Advisers. The Board also considered the background and experience of the Advisers’ senior management personnel and the qualifications, background and responsibilities of the portfolio managers primarily responsible for the day-to-day portfolio management services for the Fund. The Board also considered the allocation of responsibilities among the Advisers. The Board also considered that they receive information on a regular basis from the Fund’s Chief Compliance Officer regarding the Advisers’ compliance policies and procedures. The Board also considered the Advisers’ risk management processes. The Board considered the Advisers’ brokerage policies and practices. Management reported to the Board on, among other things, its business plans and organizational changes. The Board also took into account their knowledge of management and the quality of the performance of management’s duties through Board meetings, discussion and reports during the preceding year.

After reviewing these and related factors, the Board concluded that they were satisfied with the nature, extent and quality of the services provided and supported the renewal of the applicable Advisory Agreements.

Investment performance of the Fund and the Advisers. The Board received and reviewed with management, among other performance

data, information compiled by Strategic Insight Mutual Fund Research and Consulting, LLC (“SI”), an independent third-party provider of investment company data as to the Fund’s total return, as compared to the funds in the Fund’s Morningstar category (the “Morningstar Group”). The Board also received performance information from management that compared the Fund’s return to comparable non-U.S. investment companies in its Lipper category.

The Board received and considered information for each of the last five fiscal years regarding the Fund’s total return on a gross and net basis and relative to the Fund’s benchmark, the Fund’s share performance and premium/discount information and the impact of foreign currency movements on the Fund’s performance. The Board also received and reviewed information as to the Fund’s total return for each of the last five fiscal years as compared with the total returns of its respective Morningstar Group average, and other comparable Aberdeen-managed funds and segregated accounts. The Board considered management’s discussion of the factors contributing to differences in performance, including differences in the investment strategies of each of these other funds and accounts. The Board also reviewed information as to the Fund’s discount/premium ranking relative to its Morningstar Group. The Board took into account management’s discussion of the Fund’s performance.

Specifically, the Board received and reviewed, among other performance data, information compiled by SI as to the Fund’s total return, as compared to the funds in the Fund’s Morningstar Group. The SI report indicated that the Fund’s annualized net total return was below the median for the one- and three- year periods ended April 30, 2013, was at the median for the five- year period ended April 30, 2013 and was above the median for the ten-year period ended April 30, 2013. The Board also received performance information from management that compared the Fund’s return to comparable non-U.S. investment companies in its Lipper category.

The Board received and considered information for each of the last five fiscal years regarding the Fund’s total return on a gross and net basis and relative to the Fund’s benchmark, the Fund’s share performance and premium/discount information and the impact of foreign currency movements on the Fund’s performance. The Board also received and reviewed information as to the Fund’s total return for the last ten fiscal years as compared with the total returns of the Morningstar Group, and for the last five fiscal years as compared with other Aberdeen-managed clients with sufficiently similar investment portfolios to those of the Fund. The Board considered management’s discussion of the factors contributing to differences in performance, including differences in the investment strategies of each of these other funds and the account. The Board also reviewed information as to the Fund’s discount/premium ranking relative to the Morningstar Group. The Board also noted the Fund’s annualized

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

39


Supplemental Information (unaudited) (concluded)

 

 

 

net total returns for various periods compared to its composite benchmark, and took into account management’s discussion of the Fund’s performance. The Board concluded that overall performance results were satisfactory and supported continuance of the Advisory Agreements.

Fees and expenses. The Board reviewed with management the effective annual management fee rate paid by the Fund to the Investment Manager for investment management services. Additionally, the Board received and considered information compiled at the request of the Fund by SI, comparing the Fund’s effective annual management fee rate with the fees paid by a peer group consisting of other comparable closed-end funds (each such group, a “Peer Group”). The Board also took into account the management fee structure, including that management fees for the Fund were based on the Fund’s total managed assets, whether attributable to common stock or borrowings, if any. The Board also considered that the compensation paid to the Investment Adviser and Sub-Adviser is paid by the Investment Manager, and, accordingly that the retention of the Investment Adviser and Sub-Adviser does not increase the fees or expenses otherwise incurred by the Fund’s shareholders. The Board also considered information about the Investment Adviser’s and Investment Sub-Adviser’s fees, including the amount of the management fees retained by the Investment Manager after payment of the advisory and sub-advisory fees. The Board also received information from management regarding the fees charged by the Advisers to other U.S. and non-U.S. clients investing primarily in an asset class similar to that of the Fund. The Board considered the fee comparisons in light of the differences in resources and costs required to manage the different types of accounts.

The Board also took into account management’s discussion of the Fund’s expenses, including the factors that impacted the Fund’s expenses.

Specifically, SI data indicated that: the Fund’s effective management fee rate (computed based on average managed assets for the six months ended April 30, 2013, and which reflects both the advisory fee and the administration fee) was the lowest in its Peer Group, consisting of closed-end funds in the “World Bond” Morningstar category as compiled by SI; the Fund’s annualized net total expense ratio based on average managed assets, which includes the Fund’s assets attributable to its common stock plus borrowings for investment purposes, including leverage, for the six months ended April 30, 2013 was the lowest in its Peer Group; and the Fund’s annualized net total expense ratio based on average net assets, excluding the principal amount of borrowings, for the six months ended April 30, 2013 was the lowest in its Peer Group. The Board also took into account the impact of leverage on Fund expenses,

information from management regarding profitability and ancillary benefits and the fees charged by the Advisers to other clients with sufficiently similar investment portfolios and investment management services to those of the Fund.

Economies of Scale. The Board took into account management’s discussion of the Fund’s management fee structure. The Board determined that the management fee structure was reasonable and reflects economies of scale being shared between the Fund and the Advisers. This determination was based on various factors, including that the Fund’s management fee schedule provides breakpoints at higher asset levels and how the Fund’s management fee compares relative to its Peer Group at higher asset levels.

After reviewing these and related factors, the Board concluded that the advisory fee, and as applicable, sub-advisory fee structures were reasonable, and supported the renewal of the Advisory Agreements.

The Directors also considered other factors, which included but were not limited to the following:

 

 

the effect of any market and economic volatility on the performance, asset levels and expense ratios of the Fund.

 

 

whether the Fund has operated in accordance with its investment objectives and the Fund’s record of compliance with its investment restrictions, and the compliance programs of the Advisers. The Directors also considered the compliance-related resources the Advisers and their affiliates were providing to the Fund.

 

 

so-called “fallout benefits” to the Advisers and their affiliates, such as reputational and other indirect benefits. The Directors considered any possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other processes in place to disclose and monitor such possible conflicts of interest.

*  *  *

Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Directors, including the Independent Directors, concluded that renewal of the Advisory Agreements would be in the best interest of each of the Fund and its shareholders. Accordingly, the Board, including the Board’s Independent Directors voting separately, approved the Fund’s Advisory Agreements for an additional one-year period.

 

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

40


Management of the Fund (unaudited)

 

 

 

The names of the Directors and Officers of the Fund, their addresses, years of birth, 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 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.”

As of October 31, 2013

 

Name, Address and Year of Birth   Position(s) Held
With the Fund
  Term of Office
and Length of
Time Served
  Principal Occupation(s)
During Past Five Years
  Number of
Funds in
Fund Complex*
Overseen by
Director
  Other
Directorships
Held by Director

Interested Director

         

Martin J. Gilbert**

Aberdeen Asset

Management PLC

10 Queen’s Terrace

Aberdeen, Scotland

AB10 1YG

 

Year of Birth: 1955

 

Class III Director;

Vice President

  Term as Director expires 2015; Director since 2001   Mr. Gilbert is a founding director and shareholder, and Chief Executive of Aberdeen Asset Management PLC, the holding company of the management group that was established in 1983. He was President of the Fund, of Aberdeen Global Income Fund, Inc. and Aberdeen Australia Equity Fund, Inc. from February 2004 to March 2008. He was Chairman of the Board of the Fund and of Aberdeen Global Income Fund, Inc. from 2001 to September 2005. He has been a Director of Aberdeen Asset Management Asia Limited, the Fund’s Investment Manager, since 1991, a Director of Aberdeen Asset Management Limited, the Fund’s Investment Adviser, since 2000, and a Director of Aberdeen Asset Managers (C.I.) Limited, the Fund’s former investment manager, from 2000 to 2005. He has been a Director since 1995, and has been President since September 2006 of Aberdeen Asset Management Inc., the Fund’s Administrator.   29   None

Independent Directors

         

P. Gerald Malone

48 Barmouth Road

London SW18 2DP

United Kingdom

 

Year of Birth: 1950

  Chairman of the Board; Class II Director   Term expires 2014; Director since 2001   Mr. Malone is, by profession, a solicitor of some 38 years standing. He has served as a Minister of State in the United Kingdom Government. Mr. Malone currently serves as Independent Chairman of one London AIM-listed company (healthcare software) in addition to a privately owned pharmaceutical company. He is Chairman of the Board of Trustees of Aberdeen Funds and Chairman of the Board of Directors of Aberdeen Global Income Fund, Inc.   28   None

Neville J. Miles

142 Martins Lane

Knockrow NSW 2479

Australia

 

Year of Birth: 1946

  Class I Director   Term expires 2016; Director since 1996   Mr. Miles is, and has been for a period in excess of ten years, Chairman of Ballyshaw Pty. Ltd. (share trading, real estate development and investment). He is Chairman of the Board of Aberdeen Australia Equity Fund, Inc. He also is a non-executive director of a number of Australian companies.   28   None

William J. Potter

c/o Aberdeen Asset Management Asia Limited

21 Church Street #01-01

Capital Square Two

Singapore 049480

 

Year of Birth: 1948

  Preferred Share Director   Term expires 2015; Director since 1986   Mr. Potter has been Chairman of Meredith Financial Group (investment management) since 2004, a Director of Alexandria Bancorp (international banking and trustee services) since 1989, and a Director of National Foreign Trade Council (international trade) since 1983.   3   None

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

41


Management of the Fund (unaudited) (continued)

 

 

 

Name, Address and Year of Birth   Position(s) Held
With the Fund
  Term of Office
and Length of
Time Served
  Principal Occupation(s)
During Past Five Years
  Number of
Funds in
Fund Complex*
Overseen by
Director
  Other
Directorships
Held by Director

Peter D. Sacks

c/o Aberdeen Asset

Management Inc.,

1735 Market Street,

32nd Floor

Philadelphia, PA 19103

 

Year of Birth: 1945

  Preferred Share Director   Term expires 2014; Director since 1993   Mr. Sacks has been Founding Partner of Toron Capital Markets, Inc. (investment management) since 1988. He is also a Director and Investment Advisory Committee member of several private and public sector funds in Canada.   28   None

John T. Sheehy

B.V. Murray and Company

666 Goodwin Avenue

Suite 300

Midland Park, NJ 07432

 

Year of Birth: 1942

  Class I Director   Term expires 2016; Director since 1986   Mr. Sheehy has been a Senior Managing Director of B.V. Murray and Company (investment banking) since 2001 and Director of Macquarie AIR-serv Holding, Inc. (automotive services) from 2006 to June 2013. He was a Managing Member of Pristina Capital Partners, LLC (water purification technology development) from 2007 to 2011, a Director of Smarte Carte, Inc. (airport services) from 2007 until 2010, and Managing Member of The Value Group LLC (venture capital) from 1997 to 2009.   28   None

 

*   Aberdeen Australia Equity Fund, Inc., Aberdeen Global Income Fund, Inc., Aberdeen Chile Fund, Inc., Aberdeen Israel Fund, Inc., Aberdeen Indonesia Fund, Inc., Aberdeen Latin America Equity Fund, Inc., Aberdeen Emerging Markets Smaller Company Opportunities Fund, Inc., the Aberdeen Funds, Aberdeen Singapore Fund, Inc., The Asia-Tigers Fund, Inc., The India Fund, Inc., and Aberdeen Greater China Fund, Inc. have the same Investment Manager and Investment Adviser as the Fund, or an investment adviser that is affiliated with the Investment Manager and Investment Adviser and may thus be deemed to be part of the same “Fund Complex” as the Fund.
**   Mr. Gilbert is deemed to be an interested person because of his affiliation with the Fund’s Investment Manager. Mr. Gilbert serves as a Director of several Funds in the Fund Complex.
-   Further information about the Fund’s Directors is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling 1-800-522-5465.

 

Aberdeen Asia-Pacific Income Fund, Inc.

 

42


Management of the Fund (unaudited) (continued)

 

 

 

Information Regarding Officers who are not Directors

 

Name, Address and Year of Birth   Position(s) Held
With the Fund
  Term of Office*
and Length of
Time Served
  Principal Occupation(s) During Past Five Years

Jeffrey Cotton**

Aberdeen Asset Management Inc.

1735 Market St. 32nd Floor

Philadelphia, PA 19103

 

Year of Birth: 1977

  Chief Compliance Officer; and Vice President, Compliance   Since 2011   Currently, Vice President and Head of Compliance – Americas for Aberdeen Asset Management Inc. Mr. Cotton joined Aberdeen in 2010. Prior to joining Aberdeen, Mr. Cotton was a Senior Compliance Officer at Old Mutual Asset Management (2009-2010) supporting its affiliated investment advisers and mutual fund platform. Mr. Cotton was also a VP, Senior Compliance Manager at Bank of America/Columbia Management (2006-2009).

Sharon Ferrari**

Aberdeen Asset Management Inc.

1735 Market St. 32nd Floor

Philadelphia, PA 19103

 

Year of Birth: 1977

  Assistant Treasurer   Since 2009   Currently, Senior Fund Administration Manager for Aberdeen Asset Management Inc. Ms. Ferrari joined Aberdeen Asset Management Inc. as a Senior Fund Administrator in 2008. Prior to joining Aberdeen Asset Management Inc., Ms. Ferrari was an Accounting Analyst at Delaware Investments.