# Aberdeen Asia-Pacific Income Investment Company Limited
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At close Sep, 29 2014


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Aberdeen Asia-Pacific Income Investment Company Limited (TSX: FAP)

Investment Objective

The investment objective of the Company is to obtain current income and achieve incidental capital appreciation from investment in long-term debt securities. The Company may invest up to 80% of total assets in securities issued by Asian entities.

Adam McCabe

Fund Manager Interview

Adam McCabe, Head of Asian Fixed Income, discusses why we believe Asia’s fundamentals remain robust, with rising incomes and an expanding middle class underpinning domestic demand.

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Manager's Monthly Report

July 2014

  • Asian fixed income markets were resilient in July despite geopolitical flashpoints in Ukraine and the Middle East. Financial contagion fears resurfaced in Europe after missed debt payments by a company linked to Portugal’s second-largest lender. All this was set against an improving global growth backdrop, with positive data from China and the U.S. Philippine policymakers raised the benchmark interest rate to stave off elevated inflation, while Malaysia’s central bank tightened policy to address financial imbalances.
  • In politics, Joko Widodo was declared the seventh president of Indonesia. In India, the Modi government unveiled its first budget, reflecting its commitment towards fiscal consolidation.
  • Indian bonds were bolstered by better-than-expected inflation data and a prudent budget. In addition, the central bank raised the ceiling for foreign institutional investors by US$5 billion to US$25 billion but kept the overall limit unchanged by lowering the level for long-term foreign investors such as sovereign wealth funds.
  • Short-term bonds weakened in Indonesia, as investors were cautious ahead of the election results towards the end of the month. There was also short-end selling in the Philippines, given expectations that the central bank would tighten policy at its July 31 meeting. As anticipated, policymakers raised the benchmark interest rate by 25 basis points from a record low of 3.5%.
  • Australian bond yields were volatile, with the sell-off in the latter part of the month most pronounced for short-dated bonds. Conversely, 10-year yields ended slightly lower, resulting in a curve flattening. Economic data suggested that growth was moderate, while various core Consumer Price Index1 measures indicated that underlying inflation was close to the upper end of the central bank’s target of 2-3%. Policymakers kept the cash rate unchanged and confirmed their neutral stance.

1 The Consumer Price Index is a measure of the change in the weighted average prices of a basket of consumer goods and services, such as transportation, food and medical care.


Investment Policies

In order to achieve its investment objective, the Company may invest up to 80% of its total assets in "Asian-Pacific debt securities", and may be denominated in an Asian-Pacific Country currency or in Australian, New Zealand or U.S. dollars. At least 20% of the Company's total assets will be invested in "Australian debt securities".

The information contained above provides only a brief summary description of the Company's investment objective and investment policies. Please contact Investor Relations should you wish to receive more detailed information regarding the Company.


Shareholders should consult with their tax advisors regarding the taxation of dividends received on shares of the Company and any disposition of shares of the Company. In general, dividends received by a Canadian resident holder of shares of the Company (including dividends reinvested in shares of the Company) must be included in computing the income of the holder for Canadian tax purposes. The gross-up and dividend tax credit rules applicable to dividends received from taxable Canadian corporations will not be applicable, as the Company is not a Canadian corporation.


The Fund pays dividends monthly out of net investment income and realized capital gains, and to the extent necessary, paid in capital.

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