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: 811-22004

 

Voya Asia Pacific High Dividend Equity Income Fund

(Exact name of registrant as specified in charter)

 

7337 E. Doubletree Ranch Rd. Suite 100, Scottsdale, AZ   85258
(Address of principal executive offices)   (Zip code)

 

Huey P. Falgout, Jr., 7337 Doubletree Ranch Rd.

Scottsdale, AZ 85258

(Name and address of agent for service)

 

Registrant’s telephone number, including area code: 1-800-992-0180

 

Date of fiscal year end: February 28

 

Date of reporting period: February 29, 2016

 

 

 

 

 

Item 1.Reports to Stockholders.

 

The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1):

 

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Annual Report
February 29, 2016
Voya Asia Pacific High Dividend Equity Income Fund
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E-Delivery Sign-up – details inside
This report is intended for existing current holders. It is not a prospectus. This information should be read carefully.
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Go Paperless with E-Delivery!
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Sign up now for on-line prospectuses, fund reports, and proxy statements. In less than five minutes, you can help reduce paper mail and lower fund costs.
Just go to www.voyainvestments.com, click on the E-Delivery icon from the home page, follow the directions and complete the quick 5 Steps to Enroll.
You will be notified by e-mail when these communications become available on the internet. Documents that are not available on the internet will continue to be sent by mail.
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at (800) 992-0180; (2) on the Fund’s website at www.voyainvestments.com and (3) on the U.S. Securities and Exchange Commission’s (“SEC’s”) website at www.sec.gov. Information regarding how the Fund voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Fund’s website at www.voyainvestments.com and on the SEC’s website at www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
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. This report contains a summary portfolio of investments for the Fund. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Fund’s Forms N-Q, as well as a complete portfolio of investments, are available without charge upon request from the Fund by calling Shareholder Services toll-free at (800) 992-0180.

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President’s Letter
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Dear Shareholder,
Voya Asia Pacific High Dividend Equity Income Fund (the “Fund”) is a diversified, closed-end management investment company whose shares are traded on the New York Stock Exchange under the symbol “IAE.” The Fund’s investment objective is total return through a combination of current income, capital gains and capital appreciation.
The Fund seeks to achieve its investment objective by investing primarily in a portfolio of high dividend yielding equity securities of Asia Pacific companies. The Fund also seeks to enhance total returns over a market cycle by selling call options on selected Asia Pacific Indices and/or equity securities of Asia Pacific companies and/or exchange-traded funds.
For the year ended February 29, 2016, the Fund made quarterly distributions totaling $1.15 per share, which were characterized as $0.60 per share return of capital and $0.55 per share of net investment income.*
Based on net asset value (“NAV”), the Fund provided a total return of  -19.80% for the year ended February 29, 2016.(1)(2) This NAV return reflects a decrease in the Fund’s NAV from $13.10 on February 28, 2015 to $9.39 on February 29, 2016, after taking into account the quarterly distributions noted above. Based on its share price, the Fund provided a total return of  -23.19% for the year ended February 29, 2016.(2)(3) This share price return reflects a decrease in the Fund’s share price from $11.89 on February 28, 2015 to $8.16 on February 29, 2016, after taking into account the quarterly distributions noted above.
The global equity markets have witnessed a challenging and turbulent period. Please read the Market Perspective and Portfolio Managers’ Report for more information on the market and the Fund’s performance.
At Voya our mission is to help you grow and protect your wealth, by offering you and your financial advisor a range of global investment solutions. We invite you to visit our website at www.voyainvestments.com. Here you will find current information on our investment products and services, including our open- and closed-end funds and our retirement portfolios. You will see that Voya offers a broad range of equity, fixed income and multi-asset strategies that aim to fulfill a variety of investor needs.
Thank you for trusting Voya with your investment assets. We look forward to serving you in the months and years ahead.
Sincerely,
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Shaun Mathews
President and Chief Executive Officer
Voya Family of Funds
April 1, 2016
The views expressed in the President’s Letter reflect those of the President as of the date of the letter. Any such views are subject to change at any time based upon market or other conditions and the Voya mutual funds disclaim any responsibility to update such views. These views may not be relied on as investment advice and because investment decisions for a Voya mutual fund are based on numerous factors, may not be relied on as an indication of investment intent on behalf of any Voya mutual fund. Reference to specific company securities should not be construed as recommendations or investment advice. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic.
More complete information about the Fund, including the Fund’s daily New York Stock Exchange closing prices and net asset values per share, is available at www.voyainvestments.com or by calling the Fund’s Shareholder Service Department at (800) 992-0180. To obtain a prospectus for any Voya mutual fund, please call your financial advisor or a fund’s Shareholder Service Department at (800) 992-0180 or log on to www.voyainvestments.com. A prospectus should be read carefully before investing. Consider a fund’s investment objectives, risks, charges and expenses carefully before investing. A prospectus contains this information and other information about a fund. Check with your financial advisor to determine which Voya mutual funds are available for sale within their firm. Not all funds are available for sale at all firms.
*
The final tax composition of dividends and distributions will not be determined until after the Fund’s tax year-end.
(1)
Total investment return at net asset value has been calculated assuming a purchase at net asset value at the beginning of each period and a sale at net asset value at the end of each period and assumes reinvestment of dividends, capital gain distributions, and return of capital distributions/​allocations, if any, in accordance with the provisions of the Fund’s dividend reinvestment plan.
(2)
Total returns shown include, if applicable, the effect of fee waivers and/or expense reimbursements by the investment adviser. Had all fees and expenses been considered, the total returns would have been lower.
(3)
Total investment return at market value measures the change in the market value of your investment assuming reinvestment of dividends, capital gain distributions, and return of capital distributions/allocations, if any, in accordance with the provisions of the Fund’s dividend reinvestment plan.
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Market Perspective: Year Ended February 29, 2016
In our semi-annual report, we described how global equities, in the form of the MSCI World IndexSM (the “Index”) measured in local currencies, including net reinvested dividends, had been shaken when China announced a 2% devaluation of the yuan. The Index staged a strong recovery in October, which stalled in November and unraveled in December. Concerns intensified in 2016 and by the end of February, the Index was down 9.73% for the fiscal year. (The Index returned -11.00% for the one year ended February 29, 2016, measured in U.S. dollars.)
U.S. economic data blew hot and cold. Employment showed the most consistent strength. By the end of February, 231,000 new jobs were being created monthly, on average. The unemployment rate fell to 4.9%, the lowest since February 2008. Sluggish annual wage growth improved to 2.5%, which doesn’t sound like much, but it was the best since 2009. Gross domestic product (“GDP”) was 3.9% annualized in the second quarter of 2015, after another harsh winter, before an inventory downturn and waning demand pegged it back to 2.0% in the third quarter and 1.0% in the fourth quarter. Industrial production was uneven, while purchasing managers’ indices in manufacturing indicated contraction in the last five months of the period. Retail sales were still showing no real acceleration despite lower gasoline prices.
Superimposed on this was the prospect of rising U.S. interest rates. On December 16, the Federal Open Market Committee of the U.S. Federal Reserve Board finally announced a 0.25% increase in the federal funds interest rate as a first step in normalizing policy. Further increases would be data driven. There was a substantial body of opinion that felt the increase was unwarranted, not least because all other major central banks were far from considering rate increases.
China’s unexpected 2% devaluation of the yuan in August caused such market turmoil because it was handled so poorly and because it suggested that the Chinese economy, the largest single contributor to global growth in recent years, was weaker than had previously been admitted. China’s own market, represented by the Shanghai Stock Exchange Composite Index (“Shanghai Composite”), was already in retreat. By August 26 the Shanghai Composite was down 43% from its June 12 peak. Global equities fell sharply and had fallen 5.39% by the end of our fiscal half year.
Yet in the fourth quarter the feeling grew that concerns had been overdone. The Bank of China lowered interest rates, eased bank reserve requirements and by early November, the Shanghai Composite had recouped over a quarter of its losses. The price of oil had fallen to a new multi-year low near the end of August, but rebounded sharply and edged further ahead in October. Global equities responded with an 11% bounce between late September and early November.
But it was not to last. Chinese authorities had clearly been rattled by the violent reaction to the devaluation and as they tried to keep the yuan steady, China’s foreign exchange reserves were falling by about $100bn per month as the period ended. In early January a new bout of panic sent the Shanghai Composite down nearly 7% triggering a recently introduced circuit-breaker, which having seemed to make things worse, was soon abandoned. Again the authorities had created a perception of incompetence. Fourth quarter growth in China was reported at 6.8%, the weakest since 2009. The yuan and the Shanghai Composite were falling again.
The oil price and global equities soon followed. Concerns re-emerged about the various areas of instability in global economies and markets, including the already hard-hit energy sector, the vast investment it creates and was postponing because of falling energy prices amid faltering demand and uncontrollable supply. Inflation was nowhere to be seen and to create it, increasingly commonplace negative bond yields were being encouraged by central banks, which, to many commentators, had lost their power to improve economic conditions.
In U.S. fixed income markets, the Barclays U.S. Aggregate Bond Index (“Barclays Aggregate”) gained 1.50% in the fiscal year, while the Barclays U.S. Treasury Bond sub-index added 2.88%. Indices of riskier classes fared worse. The Barclays U.S. Corporate Investment Grade Bond sub-index fell 1.49%; the Barclays High Yield Bond — 2% Issuer Constrained Composite Index (not a part of the Barclays Aggregate) fell 8.26%. According to Bloomberg in February, some 29% by value of world government bonds outstanding had negative yields.
U.S. equities, represented by the S&P 500® Index including dividends, dropped 6.19% in the year through February. The defensive telecommunications sector did best, returning 7.56%. The worst performing sector was understandably energy, slumping 24.21%. S&P 500® earnings per share fell year-over-year in each of the last three quarters of 2015 and were set to fall again in the first quarter of 2016.
In currencies, the dollar added 2.94% against the euro after that currency dipped in February in anticipation of further monetary easing in March. The dollar gained 9.05% on the pound, accelerating late in the period as concerns grew over Britain’s possible exit from the European Union. The dollar lost 5.22% to the yen, again after a late move in response to market instability.
In international markets, the MSCI Japan® Index dropped 14.93%, all in 2016, on renewed concern over China’s slowdown and a rising yen. The MSCI Europe ex UK® Index sagged 12.03%, all in the last three months. The financial sector was particularly hard hit by low (and in some cases negative) interest rates and deteriorating loan losses. The MSCI UK® Index fell 9.22%, a decline that was much more evenly spread throughout the year and mostly concentrated in a dozen or so multinationals in the financials, materials and energy sectors such as HSBC (financials), Glencore (materials) and Royal Dutch Shell (energy).
Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Fund’s performance is subject to change since the period’s end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.voyainvestments.com to obtain performance data current to the most recent month end.
Market Perspective reflects the views of Voya Investment Management’s Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.
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Benchmark Descriptions
Index
Description
Barclays High Yield Bond — 2% Issuer Constrained Composite Index An unmanaged index that includes all fixed-income securities having a maximum quality rating of Ba1, a minimum amount outstanding of  $150 million, and at least one year to maturity.
Barclays U.S. Aggregate Bond Index An unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.
Barclays U.S. Corporate Investment Grade Bond Index An unmanaged index consisting of publicly issued, fixed rate, nonconvertible, investment grade debt securities.
Barclays U.S. Treasury Bond Index A market capitalization-weighted index that measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of one year or more.
MSCI All Country Asia Pacific ex-Japan® Index A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of Asia, excluding Japan.
MSCI Europe ex UK® Index A free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.
MSCI Japan® Index A free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.
MSCI UK® Index A free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.
MSCI World IndexSM An unmanaged index that measures the performance of over 1,400 securities listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the Far East.
S&P 500® Index An unmanaged index that measures the performance of securities of approximately 500 large-capitalization companies whose securities are traded on major U.S. stock markets.
Shanghai Stock Exchange Composite Index A capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100.
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Voya Asia Pacific High Dividend Equity Income Fund Portfolio Managers’ Report
Geographic Diversification
as of February 29, 2016
(as a percentage of net assets)
China
25.5%​
Australia
18.8%​
South Korea
13.3%​
India
10.5%​
Taiwan
8.9%​
Hong Kong
8.0%​
Malaysia
3.7%​
United Kingdom
2.7%​
Indonesia
1.7%​
Macau
1.4%​
Countries between 1.1% – 1.3%^
2.4%​
Assets in Excess of Other Liabilities
3.1%​
Net Assets
100.0%​
^
Includes 2 countries, which each represents 1.1% – 1.3% of net assets.
Portfolio holdings are subject to change daily.
Voya Asia Pacific High Dividend Equity Income Fund (the “Fund”) is a diversified, closed-end fund with the investment objective of total return through a combination of current income, capital gains and capital appreciation.
The Fund seeks to achieve its investment objective by investing primarily in a portfolio of dividend yielding equity securities of Asia Pacific companies. For purposes of the Fund’s investments, Asia Pacific companies are those that meet one or more of the following factors: (i) whose principal securities trading markets are in Asia Pacific countries; (ii) that derive at least 50% of their total revenue or profit from either goods produced or sold, investments made or services performed in Asia Pacific countries; (iii) that have at least 50% of their assets in Asia Pacific countries; or (iv) that are organized under the laws of, or with principal offices in, Asia Pacific countries.
The Fund also seeks to enhance returns over a market cycle by selling call options on selected Asia Pacific Indices and/or equity securities of Asia Pacific companies and/or exchange-traded funds (“ETFs”).
Portfolio Management: The Fund is managed by Manu Vandenbulck, Robert Davis, Nicolas Simar and Willem van Dommelen, Portfolio Managers of NNIP Advisors B.V. — the Sub-Adviser.*
Equity Portfolio Construction and Option Strategy: Under normal market conditions, the Fund will seek to achieve its investment objective by investing at least 80% of its managed assets in dividend-producing equity securities of, or derivatives having economic characteristics similar to the equity securities of, Asia Pacific companies that are listed and traded principally on Asia Pacific exchanges. The Sub-Adviser seeks to construct a portfolio with a weighted average gross dividend yield that exceeds the dividend yield of the MSCI All Country Asia Pacific ex-Japan® Index.
The Fund will invest in approximately 60 to 120 equity securities and will select securities through a bottom-up process that is based upon
Top Ten Holdings
as of February 29, 2016
(as a percentage of net assets)
Taiwan Semiconductor Manufacturing Co., Ltd.
3.7%​
AIA Group Ltd.
3.1%​
Samsung Electronics Co., Ltd.
2.8%​
Westpac Banking Corp.
2.3%​
Industrial & Commercial Bank of China
2.3%​
China Construction Bank
2.1%​
China Life Insurance Co., Ltd.
1.7%​
China Mobile Ltd.
1.7%​
China Overseas Land & Investment Ltd.
1.7%​
Rio Tinto Ltd.
1.6%​
Portfolio holdings are subject to change daily.
quantitative screening and fundamental analysis. Quantitative screening narrows the investable universe by focusing on primarily two criteria, liquidity and dividend yield. Screens are employed based on market capitalization, dividend yield and average daily volumes thresholds. The screening process reduces the number of names that undergo further bottom-up analysis. Fundamental factors are then used to evaluate dividend sustainability, valuation and growth prospects in order to identify the highest conviction stocks from the investable universe. During this process, stocks are reviewed in detail for cash flow strength, capital structure, capital expenditures and operating margins.
The Fund also employs a strategy of writing call options on selected Asia Pacific indices and/or equity securities of Asia Pacific companies and/or ETFs, with the underlying value of such calls generally representing 0% to 50% of the value of its holdings in equity securities. The Fund seeks to generate gains from the call writing strategy over a market cycle to supplement the dividend yield of its underlying portfolio. Call options will be written (sold) usually at-the money, out-of-the-money or near-the-money and can be written both in exchange-listed option markets and over-the-counter markets with major international banks, broker-dealers and financial institutions. The Fund seeks to maintain written call options positions on selected international, regional or country indices and/or equity securities of Asia Pacific companies and/or ETFs whose price movements, taken in the aggregate, are correlated with the price movements of the Fund’s portfolio.
Performance: Based on net asset value (“NAV”), the Fund provided a total return of  -19.80% for the year ended February 29, 2016(1). This NAV return reflects a decrease in its NAV from $13.10 on February 28, 2015, to $9.39 on February 29, 2016, after taking into account quarterly distributions. Based on its share price as of February 29, 2016, the Fund provided a total return of  -23.19% for the period(1). This share price return reflects a decrease in its share price from $11.89 on February 28, 2015 to $8.16 on February 29, 2016, after taking into account quarterly distributions. To reflect the strategic emphasis of the Fund, the equity portfolio uses the MSCI All Country Asia Pacific ex-Japan® Index as a reference index. The MSCI All Country Asia Pacific ex-Japan® Index (a market weighted equity index without
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Portfolio Managers’ Report Voya Asia Pacific High Dividend Equity Income Fund
any style tilt and without call option writing) returned -20.95% for the reporting period. During the year, the Fund made quarterly distributions totaling $1.15 per share, which were characterized as $0.60 per share return of capital and $0.55 per share of net investment income(2). As of February 29, 2016, the Fund had 12,651,007 shares outstanding.
Portfolio Specifics: Equity Portfolio: Our equity dividend strategy lagged the MSCI All Country Asia Pacific ex-Japan® Index net of fees and expenses, but outperformed before the deduction of fees and expenses over the reporting period. The underperformance was largely due to value-style headwinds during the period. Our stock selection contributed negatively mainly in China, Taiwan and India. In China, the worst active contribution came from our underweight in Tencent Holdings Limited, a popular Internet media stock that we do not hold owing to its low dividend and — in our opinion — expensive valuation. Stock picking was also weak in Taiwan, with TPK Holding Co Ltd. detracting the most value due to lower-than-expected iPhone shipments. In India, banking stocks were weak and detracted from performance.
The countries where we had the best stock-picking results were South Korea and Singapore. SK Innovation Co., Ltd. was our best stock pick in South Korea; and First Resources Limited was the best name in Singapore. Our country positioning contributed positively to performance: Our overweights to India and South Korea were the main contributors, and more than offset a negative contribution from our underweight in Taiwan.
Option Portfolio: During the reporting period call options were written against Asian/Pacific indices (ASX, KOSPI 200, TWSE and Hang Seng). The option portfolio consists of a basket of short-dated index options with a low tracking error to the shared reference index of the MSCI All Country Asia Pacific ex-Japan® Index. The actual composition of the option basket may be adjusted to capitalize on the relative attractiveness of volatility premiums and market trading opportunities.
The options were generally sold having a maturity in the range of four to five weeks. The coverage ratio for the Fund was 25% of the Fund’s assets. Options were sold generally at-the-money and implemented in the over-the-counter market to enable the Fund managers to profit from its flexibility, liquidity and opportunities.
During the reporting period all relevant markets were down in local currency terms. Overall, the option portfolio had a positive impact on overall return during the period.
Current Strategy and Outlook: We continue to like China, which we perceive against the consensus as inexpensive, reforming and growing. At a minimum, we think it has the policy headroom to avoid the crisis which is increasingly being reflected in valuations. Against that, we are cautious on South-East Asian markets that are priced more aggressively for growth expectations, which may disappoint. Our positioning in Australia and New Zealand is fairly neutral, with most of the Fund risk taken at the security level. By applying our discipline and process as dividend investors, and owning cash-generating companies that demonstrate the discipline to pay a proportion of their earnings back to shareholders, we believe our high dividend strategy offers an attractive route for those seeking to profit from attractive valuation opportunities and the long term potential of the region.
*
Prior to April 7, 2015, NNIP Advisors B.V. was known as ING Investment Management Advisors B.V.
(1)
Total returns shown include, if applicable, the effect of fee waivers and/or expense reimbursements by the investment adviser. Had all fees and expenses been considered, the total returns would have been lower.
(2)
The final tax composition of dividends and distributions will not be determined until after the Fund’s tax year-end.
Portfolio holdings and characteristics are subject to change and may not be representative of current holdings and characteristics. Fund holdings are subject to change daily. The outlook for this Fund may differ from that presented for other Voya mutual funds. The Fund’s performance returns shown reflect applicable fee waivers and/or expense limits in effect during this period. Absent such fee waivers/expense limitations, if any, performance would have been lower. Performance for the different classes of shares will vary based on differences in fees associated with each class.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Trustees
Voya Asia Pacific High Dividend Equity Income Fund
We have audited the accompanying statement of assets and liabilities, including the summary portfolio of investments, of Voya Asia Pacific High Dividend Equity Income Fund, as of February 29, 2016, and the related statement of operations for the year then ended, the statements 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 or periods in the nine-year period then ended. These financial statements and financial highlights are the responsibility of 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 and portfolio of investments. Our procedures included confirmation of securities owned as of February 29, 2016, by correspondence with the custodian, transfer agent, and brokers, or by other appropriate auditing procedures when replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Voya Asia Pacific High Dividend Equity Income Fund as of February 29, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years or periods in the nine-year period then ended, in conformity with U.S. generally accepted accounting principles.
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Boston, Massachusetts
April 25, 2016
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STATEMENT OF ASSETS AND LIABILITIES as of February 29, 2016
ASSETS:
Investments in securities at fair value* $ 115,144,393
Cash 2,714,208
Foreign currencies at value** 243,535
Receivables:
Dividends
694,343
Foreign currency settlement (Note 10)
604,529
Prepaid expenses 461
Other assets 3,984
Total assets
119,405,453
LIABILITIES:
Payable for investment management fees 107,566
Payable to trustees under the deferred compensation plan (Note 6) 3,984
Payable for trustee fees 716
Other accrued expenses and liabilities 72,297
Written options, at fair value^ 389,673
Total liabilities
574,236
NET ASSETS
$
118,831,217
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 179,254,781
Distributions in excess of net investment income (21,826)
Accumulated net realized loss (17,916,426)
Net unrealized depreciation (42,485,312)
NET ASSETS
$
118,831,217
*
Cost of investments in securities
$ 157,814,639
**
Cost of foreign currencies
$ 245,645
^
Premiums received on written options
$ 598,753
Net assets $ 118,831,217
Shares authorized unlimited
Par value $ 0.010
Shares outstanding 12,651,007
Net asset value $ 9.39
See Accompanying Notes to Financial Statements
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STATEMENT OF OPERATIONS for the year ended February 29, 2016
INVESTMENT INCOME:
Dividends, net of foreign taxes withheld* $ 5,611,314
Total investment income
5,611,314
EXPENSES:
Investment management fees(1) 1,620,566
Transfer agent fees 21,338
Administrative service fees(1) 27,332
Shareholder reporting expense 29,280
Professional fees 47,580
Custody and accounting expense 104,876
Trustee fees 4,299
Miscellaneous expense 34,080
Total expenses
1,889,351
Net investment income 3,721,963
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (net of Indian capital gains tax withheld^)
(1,573,322)
Foreign currency related transactions
488,992
Written options
2,698,477
Net realized gain
1,614,147
Net change in unrealized appreciation (depreciation) on:
Investments
(37,952,297)
Foreign currency related transactions
(21,298)
Written options
260,515
Net change in unrealized appreciation (depreciation)
(37,713,080)
Net realized and unrealized loss (36,098,933)
Decrease in net assets resulting from operations
$
(32,376,970)
*
Foreign taxes withheld
$ 386,265
^
Foreign taxes on sale of Indian investments
$ 39,821
(1)
Effective May 1, 2015, the investment management fee and administration fee were combined under a single amended and restated investment management agreement. Please see Note 4 for further information.
See Accompanying Notes to Financial Statements
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STATEMENTS OF CHANGES IN NET ASSETS
Year Ended
February 29,
2016
Year Ended
February 28,
2015
FROM OPERATIONS:
Net investment income $ 3,721,963 $ 3,437,124
Net realized gain (loss) 1,614,147 (241,022)
Net change in unrealized appreciation (depreciation) (37,713,080) 9,993,706
Increase (decrease) in net assets resulting from operations (32,376,970) 13,189,808
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (7,014,786) (4,386,120)
Return of capital (7,533,873) (11,807,169)
Total distributions (14,548,659) (16,193,289)
Net decrease in net assets (46,925,629) (3,003,481)
NET ASSETS:
Beginning of year or period 165,756,846 168,760,327
End of year or period $ 118,831,217 $ 165,756,846
Distributions in excess of net investment income at end of year or period $ (21,826) $ (321,523)
See Accompanying Notes to Financial Statements
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Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each year or period.
Per Share Operating Performance
Ratios and
Supplemental Data
Income
(loss) from
investment
operations
Less
Distributions
Ratios to average
net assets
Net asset value, begin­ning of year
or period
Net invest­ment income (loss) Net real­ized and unre­al­ized
gain (loss)
Total from invest­ment oper­a­tions From net invest­ment income From net real­ized gains From return of cap­ital Total dis­tri­bu­tions Net asset value, end of year
or period
Market value, end of year
or period
Total invest­ment return
at net asset value(1)
Total invest­ment return
at market value(2)
Net assets, end of year
or period
Gross expenses prior to
expense waiver(3)
Net expenses after
expense waiver(3)(4)
Net invest­ment income
after expense waiver(3)(4)
Port­folio turnover rate
Year or
period ended
($)
($)
($)
($)
($)
($)
($)
($)
($)
($)
(%)
(%)
($000’s)
(%)
(%)
(%)
(%)
02-29-16 13.10 0.29 (2.85) (2.56) 0.55 0.60 1.15 9.39 8.16
(19.80) (5)
(23.19)
118,831 1.32 1.32 2.60 41
02-28-15 13.34 0.27 0.77 1.04 0.35 0.93 1.28 13.10 11.89
8.84
6.53
165,757 1.40 1.40 1.99 28
02-28-14 15.93 0.35 (1.59) (1.24) 1.35 1.35 13.34 12.37
(7.51)
(14.02)
168,760 1.47 1.47 2.44 64
02-28-13 16.51 0.29 0.63 0.92 0.55 0.95 1.50 15.93 15.89
6.32
2.04
201,491 1.42 1.42 1.90 130
02-29-12 18.16 0.38 (0.35) 0.03 0.98 0.70 1.68 16.51 17.16
0.63
0.92
207,419 1.49 1.49 2.35 123
02-28-11 17.02 0.33 2.54 2.87 1.73 1.73 18.16 18.82
17.31
14.64
225,975 1.42 1.42 1.86 112
02-28-10 11.34 0.32 7.30 7.62 0.34 1.60 1.94 17.02 18.05
69.95
100.78
208,611 1.41 1.41 1.98 31
02-28-09 22.99 0.64 (10.30) (9.66) 0.64 1.35 1.99 11.34 10.18
(43.57)
(43.61)
138,220 1.45 1.45 3.61 55
03-30-07(6) -
02-29-08
23.83(7) 0.72 0.13 0.85 0.77 0.92 1.69 22.99 20.65
3.61
(11.31)
281,759 1.42 1.40 3.11 121
(1)
Total investment return at net asset value has been calculated assuming a purchase at net asset value at the beginning of each period and a sale at net asset value at the end of each period and assumes reinvestment of dividends, capital gain distributions and return of capital distributions/​allocations, if any, in accordance with the provisions of the dividend reinvestment plan. Total investment return at net asset value is not annualized for periods less than one year.
(2)
Total investment return at market value measures the change in the market value of your investment assuming reinvestment of dividends, capital gain distributions and return of capital distributions/allocations, if any, in accordance with the provisions of the Fund’s dividend reinvestment plan. Total investment return at market value is not annualized for periods less than one year.
(3)
Annualized for periods less than one year.
(4)
The Investment Adviser has entered into a written expense limitation agreement with the Fund under which it will limit the expenses of the Fund (excluding interest, taxes, investment-related costs, leverage expenses, extraordinary expenses and acquired fund fees and expenses) subject to possible recoupment by the Investment Adviser within three years of being incurred.
(5)
Excluding amounts related to a foreign currency settlement recorded in the fiscal year ended February 29, 2016, the Fund’s total return would have been (20.14)%.
(6)
Commencement of operations.
(7)
Net asset value at beginning of period reflects the deduction of the sales load of  $1.125 per share and the offering costs of  $0.05 per share paid by the shareholder from the $25.00 offering price.

Calculated using average number of shares outstanding throughout the period.
See Accompanying Notes to Financial Statements
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TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016
NOTE 1 — ORGANIZATION
Voya Asia Pacific High Dividend Equity Income Fund (the “Fund”) is a diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is organized as a Delaware statutory trust.
Voya Investments, LLC (“Voya Investments” or the “Investment Adviser”), an Arizona limited liability company, serves as the Investment Adviser to the Fund. Voya Investments oversees all investment advisory and portfolio management services for the Fund and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services. The Investment Adviser has retained Voya Investment Management Co. LLC (“Voya IM”), a Delaware limited liability company, to provide certain consulting services for the Investment Adviser. The Investment Adviser has engaged NNIP Advisors B.V. (“NNIP Advisors”), a subsidiary of NN Group N.V. (“NN Group”), domiciled in The Hague, The Netherlands and Voya IM to serve as sub-advisers to the Fund. Prior to April 7, 2015, NNIP Advisors was known as ING Investment Management Advisors B.V.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by the Fund in the preparation of its financial statements. The Fund is considered an investment company under U.S. generally accepted accounting principles (“GAAP”) and follows the accounting and reporting guidance applicable to investment companies.
A. Security Valuation. The Fund is open for business every day the New York Stock Exchange (“NYSE”) opens for regular trading (each such day, a “Business Day”). The net asset value (“NAV”) per share of the Fund is determined each Business Day as of the close of the regular trading session (“Market Close”), as determined by the Consolidated Tape Association (“CTA”), the central distributor of transaction prices for exchange-traded securities (normally 4:00 p.m. Eastern time unless otherwise designated by the CTA). The NAV per share of the Fund is calculated by taking the value of the Fund’s assets, subtracting the Fund’s liabilities, and dividing by the number of shares that are outstanding. On days when the Fund is closed for business, Fund shares will not be priced and the Fund does not transact purchase and redemption orders. To the extent the Fund’s assets are traded in other markets on days when the Fund does not price its shares, the value of the Fund’s assets will likely change and you will not be able to purchase or redeem shares of the Fund.
Assets for which market quotations are readily available are valued at market value. A security listed or traded on an exchange is valued at its last sales price or official closing price as of the close of the regular trading session on the exchange where the security is principally traded or, if such price is not available, at the last sale price as of the Market Close for such security provided by the CTA. Bank loans are valued at the average of the averages of the bid and ask prices provided to an independent loan pricing service by brokers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Investments in open-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the regular trading session on the exchange where the security is principally traded.
When a market quotation is not readily available or is deemed unreliable, the Fund will determine a fair value for the relevant asset in accordance with procedures adopted by the Board of Trustees (“Board”). Such procedures provide, for example, that: (a) Exchange-traded securities are valued at the mean of the closing bid and ask; (b) Debt obligations are valued using an evaluated price provided by an independent pricing service. Evaluated prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect factors such as institution-size trading in similar groups of securities, developments related to specific securities, benchmark yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data; (c) Securities traded in the over-the-counter market are valued based on prices provided by independent pricing services or market makers; (d) Options not listed on an exchange are valued by an independent source using an industry accepted model, such as Black-Scholes; (e) Centrally cleared swap agreements are valued using a price provided by the central counterparty clearinghouse; (f) Over-the-counter swap agreements are valued using a price provided by an independent pricing service; (g) Forward foreign currency contracts are valued utilizing current and forward rates obtained from an independent pricing service. Such prices from the third party pricing service are for specific settlement periods and the Fund’s forward foreign currency contracts are valued at an interpolated rate between the closest preceding and subsequent period reported by the independent pricing service and (h) Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by brokers.
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TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
The prospectuses of the open-end registered investment companies in which the Fund may invest explain the circumstances under which they will use fair value pricing and the effects of using fair value pricing.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of Market Close. If market quotations are available and believed to be reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before Market Close, closing market quotations may become unreliable. An independent pricing service determines the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of Market Close. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be valued by the independent pricing service using pricing models designed to estimate likely changes in the values of those securities between the times in which the trading in those securities is substantially completed and Market Close. Multiple factors may be considered by the independent pricing service in determining the value of such securities and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures.
All other assets for which market quotations are not readily available or became unreliable (or if the above fair valuation methods are unavailable or determined to be unreliable) are valued at fair value as determined in good faith by or under the supervision of the Board following procedures approved by the Board. The Board has delegated to the Investment Adviser responsibility for overseeing the implementation of the Fund’s valuation procedures; a “Pricing Committee” comprised of employees of the Investment Adviser or its affiliates has responsibility for applying the fair valuation methods set forth in the procedures and, if a fair valuation cannot be determined pursuant to the fair valuation methods, determining the fair value of assets held by the Fund. Issuer specific events, transaction price, position size, nature and duration of restrictions on disposition of the security, market trends, bid/ask quotes of brokers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of fair valuation, the values used to determine the Fund’s NAV may materially
differ from the value received upon actual sale of those investments. Thus, fair valuation may have an unintended dilutive or accretive effect on the value of shareholders’ investments in the Fund.
Each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than quoted prices for an asset or liability that are observable are classified as “Level 2” and unobservable inputs, including each sub-adviser’s or Pricing Committee’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3.” The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Short-term securities of sufficient credit quality are generally considered to be Level 2 securities under applicable accounting rules. A table summarizing the Fund’s investments under these levels of classification is included following the Summary Portfolio of Investments.
U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. The beginning of period timing recognition is used for the transfers between Levels of the Fund’s assets and liabilities. A reconciliation of Level 3 investments is presented only when the Fund has a significant amount of Level 3 investments.
For the year ended February 29, 2016, there have been no significant changes to the fair valuation methodologies.
B. Security Transactions and Revenue Recognition. Security transactions are recorded on the trade date. Realized gains or losses on sales of investments are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Premium amortization and discount accretion are determined using the effective yield method. Dividend income is recorded on the ex-dividend date, or in the case of some foreign dividends, when the information becomes available to the Fund.
C. Foreign Currency Translation. The books and records of the Fund are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
(1)
Market value of investment securities, other assets and liabilities — at the exchange rates prevailing at Market Close.
(2)
Purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.
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TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
Although the net assets and the market values are presented at the foreign exchange rates at Market Close, the Fund does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities, which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities’ current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax.
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. government securities. The foregoing risks are even greater with respect to securities of issuers in emerging markets.
D. Distributions to Shareholders. The Fund intends to make quarterly distributions from its cash available for distribution, which consists of the Fund’s dividends and interest income after payment of Fund expenses, net option premiums and net realized and unrealized gains on investments. Such quarterly distributions may also consist of a return of capital. At least annually, the Fund intends to distribute all or substantially all of its net realized capital gains. Distributions are recorded on the ex-dividend date. Distributions are determined annually in accordance with federal tax principles, which may differ from U.S. GAAP for investment companies.
The tax treatment and characterization of the Fund’s distributions may vary significantly from time to time
depending on whether the Fund has gains or losses on the call options written on its portfolio versus gains or losses on the equity securities in the portfolio. Each quarter, the Fund will provide disclosures with distribution payments made that estimate the percentages of that distribution that represent net investment income, other income or capital gains, and return of capital, if any. The final composition of the tax characteristics of the distributions cannot be determined with certainty until after the end of the Fund’s tax year, and will be reported to shareholders at that time. A significant portion of the Fund’s distributions may constitute a return of capital. The amount of quarterly distributions will vary, depending on a number of factors. As portfolio and market conditions change, the rate of dividends on the common shares will change. There can be no assurance that the Fund will be able to declare a dividend in each period.
E. Federal Income Taxes. It is the policy of the Fund to comply with the requirements of subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized capital gains to its shareholders. Therefore, a federal income tax or excise tax provision is not required. Management has considered the sustainability of the Fund’s tax positions taken on federal income tax returns for all open tax years in making this determination.
The Fund may utilize equalization accounting for tax purposes, whereby a portion of redemption payments are treated as distributions of income or gain.
F. Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
G. Risk Exposures and the Use of Derivative Instruments. The Fund’s investment objectives permit the Fund to enter into various types of derivatives contracts, including, but not limited to, forward foreign currency exchange contracts and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase or decrease the level of risk, or change the level or types of exposure to market risk factors. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of affecting a similar response to market factors.
13

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
Market Risk Factors. In pursuit of its investment objectives, the Fund may seek to use derivatives to increase or decrease its exposure to the following market risk factors:
Credit Risk. The price of a bond or other debt instrument is likely to fall if the issuer’s actual or perceived financial health deteriorates, whether because of broad economic or issuer-specific reasons. In certain cases, the issuer could be late in paying interest or principal, or could fail to pay its financial obligations altogether.
Equity Risk. Stock prices may be volatile or have reduced liquidity in response to real or perceived impacts of factors including, but not limited to, economic conditions, changes in market interest rates, and political events. Stock markets tend to be cyclical, with periods when stock prices generally rise and periods when stock prices generally decline. Any given stock market segment may remain out of favor with investors for a short or long period of time, and stocks as an asset class may underperform bonds or other asset classes during some periods. Additionally, legislative, regulatory or tax policies or developments in these areas may adversely impact the investment techniques available to a manager, add to costs and impair the ability of the Fund to achieve its investment objectives.
Foreign Exchange Rate Risk. To the extent that the Fund invests directly in foreign (non-U.S.) currencies or in securities denominated in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those foreign (non-U.S.) currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged by the Fund through foreign currency exchange transactions.
Currency rates may fluctuate significantly over short periods of time. Currency rates may be affected by changes in market interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, by the imposition of currency controls, or other political or economic developments in the United States or abroad.
Interest Rate Risk. Changes in short-term market interest rates will directly affect the yield on Common Shares. If short-term market interest rates fall, the yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease.
Conversely, when short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the interest rate paid by such securities generally will decrease when the market rate of interest to which the inverse security is indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally causes values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive to changes in market interest rates.
As of the date of this report, market interest rates in the United States are at or near historic lows, which may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility which could reduce liquidity for certain investments, adversely affect values, and increase costs. If dealer capacity in fixed-income and related markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the fixed-income and related markets.
Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.
Derivative instruments are subject to a number of risks, including the risk of changes in the market price of the underlying securities, credit risk with respect to the counterparty, risk of loss due to changes in market interest rates and liquidity and volatility risk. The amounts required to purchase certain derivatives may be small relative to the magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change in value of a derivative may not correlate as expected with the currency, security or other risk being hedged. When used as an alternative or substitute for direct cash investments, the return provided by the derivative may not provide the same return as direct cash investment. In addition, given their complexity, derivatives expose the Fund to the risk of improper valuation.
14

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
Generally, derivatives are sophisticated financial instruments whose performance is derived, at least in part, from the performance of an underlying asset or assets. Derivatives include, among other things, swap agreements, options, forwards and futures. Investments in derivatives are generally negotiated over-the-counter with a single counterparty and as a result are subject to credit risks related to the counterparty’s ability or willingness to perform its obligations; any deterioration in the counterparty’s creditworthiness could adversely affect the value of the derivative. In addition, derivatives and their underlying securities may experience periods of illiquidity which could cause the Fund to hold a security it might otherwise sell, or to sell a security it otherwise might hold at inopportune times or at an unanticipated price. A manager might imperfectly judge the direction of the market. For instance, if a derivative is used as a hedge to offset investment risk in another security, the hedge might not correlate to the market’s movements and may have unexpected or undesired results such as a loss or a reduction in gains.
The U.S. government has enacted legislation that provides for new regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The European Union (and other countries outside of the European Union) is implementing similar requirements, which will affect the Fund when it enters into a derivatives transaction with a counterparty organized in that country or otherwise subject to that country’s derivatives regulations. Because these requirements are new and evolving (and some of the rules are not yet final), their ultimate impact remains unclear. Central clearing is expected to reduce counterparty risk and increase liquidity, however, there is no assurance that it will achieve that result, and in the meantime, central clearing and related requirements expose the Fund to new kinds of costs and risks.
Counterparty Credit Risk and Credit Related Contingent Features. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that it believes to be creditworthy at the time of the transaction. To reduce this risk, the Fund generally enters into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) Master Agreements (“Master Agreements”). These agreements are with select counterparties and they govern transactions, including certain over-the-counter (“OTC”)
derivative and forward foreign currency contracts, entered into by the Fund and the counterparty. The 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 Master Agreement.
The Fund may also enter into collateral agreements with certain counterparties to further mitigate counterparty credit risk associated with OTC derivative and forward foreign currency contracts. Subject to established minimum levels, collateral is generally determined based on the net aggregate unrealized gain or loss on contracts with a certain counterparty. Collateral pledged to the Fund is held in a segregated account by a third-party agent and can be in the form of cash or debt securities issued by the U.S. government or related agencies.
The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain in excess of any collateral pledged by the counterparty to the Fund. For purchased OTC options, the Fund bears the risk of loss in the amount of the premiums paid and the change in market value of the options should the counterparty not perform under the contracts. The Fund did not enter into any purchased OTC options during the year ended February 29, 2016.
The Fund’s master agreements with derivative counterparties have credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s NAV, which could cause the Fund to accelerate payment of any net liability owed to the counterparty. The contingent features are established within the Fund’s Master Agreements.
Written options by the Fund do not give rise to counterparty credit risk, as written options obligate the Fund to perform and not the counterparty. As of February 29, 2016, the total value of written OTC call options subject to Master Agreements in a liability position was $389,673. If a contingent feature had been triggered, the Fund could have been required to pay this amount in cash to its counterparties. The Fund did not hold or post collateral for its open written OTC call options at period end. There were
15

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
no credit events during the year ended February 29, 2016 that triggered any credit related contingent features.
H. Options Contracts. The Fund may purchase put and call options and may write (sell) put options and covered call options. The premium received by the Fund upon the writing of a put or call option is included in the Statement of Assets and Liabilities as a liability which is subsequently marked-to-market until it is exercised or closed, or it expires. The Fund will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option or purchased put option or the purchase cost of the security for a written put option or a purchased call option is adjusted by the amount of premium received or paid. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract.
The Fund seeks to generate gains from the call options writing strategy over a market cycle to supplement the dividend yield of its underlying portfolio of high dividend yield equity securities. Please refer to Note 8 for the volume of written OTC call option activity during the year ended February 29, 2016.
I. Indemnifications. In the normal course of business, the Fund may enter into contracts that provide certain indemnifications. 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, management considers the risk of loss from such claims remote.
NOTE 3 — INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments for the year ended February 29, 2016, excluding short-term securities, were $56,945,876 and $64,714,293, respectively.
NOTE 4 — INVESTMENT MANAGEMENT FEES
Prior to May 1, 2015, the Fund had entered into an investment management agreement (“Management Agreement”) with the Investment Adviser. The Management Agreement compensated the Investment Adviser with a management fee, payable monthly, based on an annual rate of 1.05% of the Fund’s average daily
managed assets. For purposes of the Management Agreement, managed assets are defined as the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares). As of February 29, 2016, there were no preferred shares outstanding. Amounts paid to the Investment Adviser through April 30, 2015 are reflected as investment management fees on the accompanying Statement of Operations.
Also, prior to May 1, 2015, the Fund had entered into an administrative agreement (“Administrative Agreement”) with Voya Funds Services, LLC (the “Administrator”), a Delaware limited liability company. The Administrator provided certain administrative and shareholder services necessary for Fund operations and was responsible for the supervision of other service providers. For its services, the Administrator was entitled to receive from the Fund a fee at an annual rate of 0.10% of the Fund’s average daily managed assets. Amounts paid to the Administrator through April 30, 2015 are reflected as administrative service fees on the accompanying Statement of Operations.
Effective May 1, 2015, the terms of the Fund’s Management Agreement and Administrative Agreement were combined under a single Amended and Restated Investment Management Agreement with a single management fee. The single management fee rate under the Fund’s Amended and Restated Investment Management Agreement does not exceed the former combined investment management and administrative services fee rates for the Fund and there is no change to the investment management or administrative services provided.
The Amended and Restated Investment Management Agreement compensates the Investment Adviser with a management fee, payable monthly, based on an annual rate of 1.15% of the Fund’s average daily managed assets. Single management fee amounts paid to the Investment Adviser from May 1, 2015 through February 29, 2016 are reflected as investment management fees on the accompanying Statement of Operations.
The Investment Adviser has entered into a consulting agreement with Voya IM (the “Consultant”). For its services, the Consultant will receive a consultancy fee from the Investment Adviser. No fee will be paid by the Fund directly to the Consultant. These services include, among other things, furnishing statistical and other factual information; providing advice with respect to potential
16

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 4 — INVESTMENT MANAGEMENT FEES (continued)
investment strategies that may be employed for the Fund, including, but not limited to, potential options strategies; developing economic models of the anticipated investment performance and yield for the Fund; and providing advice to the Investment Adviser and/or sub-advisers with respect to the Fund’s level and/or managed distribution policy.
The Investment Adviser has entered into sub-advisory agreements with NNIP Advisors and Voya IM. Subject to policies as the Board or the Investment Adviser may determine, NNIP Advisors currently manages the Fund’s assets in accordance with the Fund’s investment objectives, policies and limitations. However, in the future, the Investment Adviser may allocate the Fund’s assets to Voya IM for management, and may change the allocation of the Fund’s assets among the two sub-advisers in its discretion, to pursue the Fund’s investment objective. Each sub-adviser would make investment decisions for the assets it is allocated to manage.
NOTE 5 — EXPENSE LIMITATION AGREEMENT
The Investment Adviser has entered into a written expense limitation agreement (“Expense Limitation Agreement”) with the Fund under which it will limit the expenses of the Fund, excluding interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and acquired fund fees and expenses to 1.50% of average daily managed assets.
The Investment Adviser may at a later date recoup from the Fund for fees waived and other expenses assumed by the Investment Adviser during the previous 36 months, but only if, after such recoupment, the Fund’s expense ratio does not exceed the percentage described above. Waived and reimbursed fees net of any recoupment by the Investment Adviser of such waived and reimbursed fees are reflected on the accompanying Statement of Operations. Amounts payable by the Investment Adviser are reflected on the accompanying Statement of Assets and Liabilities.
As of February 29, 2016, there are no amounts of waived and/or reimbursed fees that are subject to possible recoupment by the Investment Adviser.
The Expense Limitation Agreement is contractual through March 1, 2017 and shall renew automatically for one-year terms. Termination or modification of this obligation requires approval by the Board.
NOTE 6 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The Fund has adopted a deferred compensation plan (the “Plan”), which allows eligible independent trustees, as
described in the Plan, to defer the receipt of all or a portion of the trustees’ fees that they are entitled to receive from the Fund. For purposes of determining the amount owed to the trustee under the Plan, the amounts deferred are invested in shares of the funds selected by the trustee (the “Notional Funds”). The Fund purchases shares of the Notional Funds, which are all advised by Voya Investments, in amounts equal to the trustees’ deferred fees, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of  “Other assets” on the accompanying Statement of Assets and Liabilities. Deferral of trustees’ fees under the Plan will not affect net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the Plan.
NOTE 7 — OTHER ACCRUED EXPENSES AND LIABILITIES
At February 29, 2016, the Fund had the following payables included in Other Accrued Expenses and Liabilities on the Statement of Assets and Liabilities that exceeded 5% of total liabilities:
Accrued Expense
Amount
Audit $ 32,742
NOTE 8 — TRANSACTIONS IN WRITTEN OPTIONS
Transactions in written OTC call options on equity indices were as follows:
Number of
Contracts
Premiums
Received
Balance at 02/28/2015 37,030,800 $ 564,236
Options Written 422,832,000 7,858,231
Options Expired (176,954,400) (3,538,403)
Options Terminated in Closing Purchase
Transactions
(250,080,100) (4,285,311)
Balance at 02/29/2016 32,828,300 $ 598,753
NOTE 9 — CAPITAL SHARES
There was no capital share activity during the years ended February 29, 2016 and February 28, 2015.
NOTE 10 — FOREIGN CURRENCY SETTLEMENT
In March 2015, The Bank of New York Mellon (“BNY”), the Fund’s custodian, announced it had agreed to settle various lawsuits (the “Settlement”) involving its standing instruction foreign exchange services. The Fund was named member of the Settlement class. On September 24, 2015, the United States District Court, Southern District of New York approved (the “Approval”) the plan of allocation related to the Settlement. After the announcement of the Approval, the Fund recorded a receivable in the amount of  $604,529 representing the
17

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 10 — FOREIGN CURRENCY SETTLEMENT (continued)
Fund’s estimated share of the net recovery associated with the Settlement. The Settlement amount for the Fund is included in Net Realized Gain/(Loss) on Foreign Currency Related Transactions in the accompanying Statement of Operations.
NOTE 11 — FEDERAL INCOME TAXES
The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP for investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, income from passive foreign investment companies (PFICs), and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as return of capital.
The following permanent tax differences have been reclassified as of the Fund’s tax year ended December 31, 2015:
Paid-in
Capital
Undistributed
Net Investment
Income
Accumulated
Net Realized
Gains/(Losses)
$(2,930,996)
$ 3,592,520 $ (661,524)
Dividends paid by the Fund from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. The tax composition of dividends and distributions in the current period will not be determined until after the Fund’s tax year-end of December 31, 2016. The tax composition of dividends and distributions as of the Fund’s most recent tax year-ends was as follows:
Tax Year Ended
December 31, 2015
Tax Year Ended
December 31, 2014
Ordinary
Income
Return of
Capital
Ordinary
Income
Return of
Capital
$7,014,786
$ 7,533,873 $ 4,386,120 $ 11,807,169
The tax-basis components of distributable earnings and the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes as of December 31, 2015 are detailed below. The Regulated Investment Company Modernization Act of 2010 (the “Act”) provides an unlimited carryforward period for newly generated capital losses. Under the Act, there
may be a greater likelihood that all or a portion of the Fund’s pre-enactment capital loss carryforwards may expire without being utilized due to the fact that post-enactment capital losses are required to be utilized before pre-enactment capital loss carryforwards.
Late Year
Ordinary
Losses
Deferred
Post-
October
Capital
Losses
Deferred
Unrealized
Appreciation/​
(Depreciation)
Short-term
Capital Loss
Carryforwards
Expiration
$(10,665)
$ (1,643,432) $ (34,606,827) $ (13,616,883) 2017
The Fund’s major tax jurisdictions are U.S. federal and Arizona state.
As of February 29, 2016, no provision for income tax is required in the Fund’s financial statements as a result of tax positions taken on federal and state income tax returns for open tax years. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state department of revenue. The earliest tax year that remains subject to examination by these jurisdictions is 2011.
NOTE 12 — RESTRUCTURING PLAN
NNIP Advisors is an indirect, wholly-owned subsidiary of NN Group.
Prior to July 2014, NN Group was a wholly-owned subsidiary of ING Groep N.V. (“ING Groep”). In October 2009, ING Groep submitted a restructuring plan (the “Restructuring Plan”) to the European Commission in order to receive approval for state aid granted to ING Groep by the Kingdom of the Netherlands in November 2008 and March 2009. To receive approval for this state aid, ING Groep was required to divest its insurance and investment management businesses before the end of 2013. In November 2012, the Restructuring Plan was amended to permit ING Groep additional time to complete the divestment. In connection with the amended Restructuring Plan, ING Groep was required to divest more than 50% of its shares in NN Group before December 31, 2015 and is required to divest the remaining interest before December 31, 2016. In July 2014, ING Groep settled the initial public offering of NN Group. ING Groep has stated its intention to divest its remaining stake in NN Group in an orderly manner and ultimately by the end of 2016. On the 14th of April 2016, ING Groep announced that it will sell its remaining stake in NN Group.
In 2014 in order to ensure that the existing sub-advisory services could continue uninterrupted in case a change of control situation under the 1940 Act would occur related to the divestment of NN Group by ING Groep, the Board
18

TABLE OF CONTENTS
NOTES TO FINANCIAL STATEMENTS as of February 29, 2016 (continued)
NOTE 12 — RESTRUCTURING PLAN (continued)
approved new sub-advisory agreements for the Funds. Shareholders of the Funds for which NNIP Advisors serves as a sub-adviser approved these new investment sub-advisory agreements. This approval also included approval of any future sub-advisory agreements prompted by the divestment of NN Group that are approved by the Board and whose terms are not materially different from the current agreements. This means that shareholders of the Fund would not have another opportunity to vote on a new agreement with NNIP Advisors even if NNIP Advisors undergoes a change of control pursuant to ING Groep’s divestment of NN Group, as long as no single person or group of persons acting together gains “control” (as defined in the 1940 Act) of NN Group.
On November 19, 2015, in anticipation of a change of control that would occur when the ownership interest of ING Groep in NN Group would drop below 25%, the Board, at an in-person meeting, approved new sub-advisory agreements. In January 2016, ING Group further reduced its interest in NN Group below 25% to approximately 16.2% (the “November Offering”). The November Offering was deemed by the Adviser and NNIP Advisors to be a change of control (the “Change of Control”). The new sub-advisory agreements, based on the Board approval of November 2015 and in connection with the Change of Control, became effective on January 8, 2016. At that time, NNIP Advisors represented that no single person or group of persons acting together was expected to gain “control” (as defined in the 1940 Act) of NN Group. The terms of the new sub-advisory agreements are not materially different from the prior agreements. As a result, shareholders of the Fund have not been asked to vote again on the new agreements with NNIP Advisors.
NOTE 13 — SUBSEQUENT EVENTS
Dividends: Subsequent to February 29, 2016, the Fund made a distribution of:
Per Share
Amount
Declaration
Date
Payable
Date
Record
Date
$ 0.255
3/15/2016 4/15/2016 4/5/2016
Each quarter, the Fund will provide disclosures with distribution payments made that estimate the percentages of that distribution that represent net investment income, capital gains, and return of capital, if any. A significant portion of the quarterly distribution payments made by the Fund may constitute a return of capital.
Share Repurchase Program: Effective March 18, 2016, the Board authorized an open-market share repurchase program pursuant to which the Fund may purchase, over the period ending March 18, 2017, up to 10% of its stock in open market transactions. The amount and timing of the repurchases will be at the discretion of the Fund’s management, subject to market conditions and investment considerations. There is no assurance that the Fund will purchase shares at any particular discount level or in any particular amounts. Any repurchases made under this program would be made on a national securities exchange at the prevailing market price, subject to exchange requirements and volume, timing and other limitations under federal securities laws. The share repurchase program seeks to enhance shareholder value by purchasing shares trading at a discount from its NAV per share.
The Fund has evaluated events occurring after the Statement of Assets and Liabilities date (“subsequent events”) to determine whether any subsequent events necessitated adjustment to or disclosure in the financial statements. Other than the above, no such subsequent events were identified.
19

TABLE OF CONTENTS
Voya Asia Pacific High Dividend SUMMARY PORTFOLIO OF INVESTMENTS
Equity Income Fund as of February 29, 2016
Shares
Value
Percentage
of Net
Assets
COMMON STOCK: 94.7%
Australia: 18.8%
80,874 Australia & New Zealand
Banking Group Ltd.
$ 1,290,208 1.1
242,511 Coca-Cola Amatil Ltd. 1,468,675 1.2
343,735 Goodman Group 1,585,967 1.3
445,532 Insurance Australia Group
Ltd.
1,638,555 1.4
68,017 National Australia Bank Ltd. 1,169,910 1.0
1,098,531 Nine Entertainment Co.
Holdings Ltd.
1,168,467 1.0
1,089,205 Spark Infrastructure
Group-Stapled Security
1,620,532 1.4
543,187 Stockland 1,612,049 1.4
188,745 Suncorp Group Ltd. 1,504,192 1.3
740,913 Vicinity Centres 1,640,352 1.4
135,933 Westpac Banking Corp. 2,780,206 2.3
3,544,618 Other Securities 4,857,248 4.0
22,336,361 18.8
China: 25.5%
250,000 Beijing Enterprises
Holdings Ltd.
1,163,146 1.0
450,000 BOC Hong Kong
Holdings Ltd.
1,169,190 1.0
4,218,960 China Construction Bank 2,465,345 2.1
930,000 China Life Insurance Co.,
Ltd.
2,026,563 1.7
188,000 China Mobile Ltd. 2,005,865 1.7
664,000 China Overseas Land &
Investment Ltd.
1,970,832 1.7
2,163,800 China Petroleum &
Chemical Corp.
1,227,592 1.0
588,000 China Resources Land Ltd. 1,402,324 1.2
1,148,000 China Unicom Hong Kong
Ltd.
1,319,464 1.1
1,422,000 COSCO Pacific Ltd. 1,486,766 1.2
151,500 Hengan International
Group Co., Ltd.
1,200,237 1.0
5,566,379 Industrial & Commercial
Bank of China
2,753,569 2.3
545,000 Shanghai Industrial
Holdings Ltd.
1,172,644 1.0
684,600 Shanghai Pharmaceuticals
Holding Co. Ltd.
1,230,192 1.0
16,702,000 Other Securities 7,757,711 6.5
30,351,440 25.5
Shares
Value
Percentage
of Net
Assets
COMMON STOCK: (continued)
Hong Kong: 8.0%
711,334 AIA Group Ltd. $ 3,631,586 3.1
174,807 CLP Holdings Ltd. 1,523,876 1.3
4,076,000 Hutchison
Telecommunications Hong
Kong Holdings Ltd.
1,372,606 1.1
302,500 MTR Corp. 1,396,459 1.2
319,100 Television Broadcasts Ltd. 1,255,170 1.1
13,570,000 Other Securities 264,250 0.2
9,443,947 8.0
India: 10.5%
299,625 Coal India Ltd. 1,362,511 1.1
254,407 GAIL India Ltd. 1,134,849 1.0
110,833 HCL Technologies Ltd. 1,315,026 1.1
36,458 Hero Motocorp Ltd. 1,332,631 1.1
458,985 ICICI Bank Ltd. 1,298,902 1.1
303,909 ITC Ltd. 1,313,668 1.1
789,507 NTPC Ltd. 1,377,882 1.2
92,557 Reliance Industries Ltd. 1,304,666 1.1
375,400 Tata Steel Ltd. 1,368,119 1.2
627,310 Other Securities 650,838 0.5
12,459,092 10.5
Indonesia: 1.7%
2,750,700 Indofood Sukses Makmur
Tbk PT
1,448,624 1.2
1,204,800 Other Securities 608,071 0.5
2,056,695 1.7
Macau: 1.4%
465,252 Sands China Ltd.
1,649,859
1.4
Malaysia: 3.7%
1,635,613 Berjaya Sports Toto BHD 1,244,699 1.0
1,990,800 IJM Corp. Bhd 1,623,505 1.4
757,500 Malayan Banking BHD 1,532,571 1.3
4,400,775 3.7
Singapore: 1.3%
1,139,500 First Resources Ltd.
1,543,428
1.3
South Korea: 11.1%
183,652 DGB Financial Group, Inc. 1,233,560 1.0
62,092 Hite Jinro Co. Ltd. 1,479,022 1.2
50,561 Hyundai Marine & Fire
Insurance Co., Ltd.
1,258,138 1.1
49,111 KB Financial Group, Inc. 1,175,847 1.0
58,923 KT Corp. 1,375,527 1.2
See Accompanying Notes to Financial Statements
20

TABLE OF CONTENTS
Voya Asia Pacific High Dividend SUMMARY PORTFOLIO OF INVESTMENTS
Equity Income Fund as of February 29, 2016 (continued)
Shares
Value
Percentage
of Net
Assets
COMMON STOCK: (continued)
South Korea (continued)
7,887 POSCO $ 1,271,883 1.1
3,494 Samsung Electronics
Co., Ltd.
3,330,891 2.8
43,652 Shinhan Financial Group
Co., Ltd.
1,345,680 1.1
35,185 Other Securities 702,384 0.6
13,172,932 11.1
Taiwan: 8.9%
1,070,000 Cathay Financial Holding
Co., Ltd.
1,191,567 1.0
2,467,319 CTBC Financial Holding
Co. Ltd.
1,194,908 1.0
987,167  @ Taiwan Semiconductor
Manufacturing Co., Ltd.
4,416,525 3.7
1,249,827 Other Securities 3,741,434 3.2
10,544,434 8.9
Thailand: 1.1%
175,900 PTT PCL-Foreign
1,277,588
1.1
United Kingdom: 2.7%
206,400 HSBC Holdings PLC 1,307,553 1.1
67,571 Rio Tinto Ltd. 1,938,731 1.6
3,246,284 2.7
Total Common Stock
(Cost $155,446,212)
112,482,835
94.7
PREFERRED STOCK: 2.2%
South Korea: 2.2%
4,238 Hyundai Motor Co. 348,011 0.3
10,406 Hyundai Motor Co.-
Series 2
867,208 0.7
1,811 Samsung Electronics Co.,
Ltd.-Pref
1,446,339 1.2
Total Preferred Stock
(Cost $2,368,427)
2,661,558
2.2
Total Investments in
Securities
(Cost $157,814,639)
$ 115,144,393 96.9
Assets in Excess of
Other Liabilities
3,686,824 3.1
Net Assets $ 118,831,217 100.0
“Other Securities” represents issues not identified as the top 50 holdings in terms of market value and issues or issuers not exceeding 1% of net assets individually or in aggregate respectively as of February 29, 2016.
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
@
Non-income producing security.
Cost for federal income tax purposes is $157,836,327.
Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 2,999,605
Gross Unrealized Depreciation (45,691,539)
Net Unrealized Depreciation $ (42,691,934)
Sector Diversification
Percentage
of Net Assets
Financials 35.9%
Information Technology 13.4
Consumer Staples 8.7
Consumer Discretionary 7.1
Utilities 6.6
Industrials 6.4
Energy 6.2
Materials 5.7
Telecommunication Services 5.1
Health Care 1.8
Assets in Excess of Other Liabilities 3.1
Net Assets 100.0%
See Accompanying Notes to Financial Statements
21

TABLE OF CONTENTS
Voya Asia Pacific High Dividend SUMMARY PORTFOLIO OF INVESTMENTS
Equity Income Fund as of February 29, 2016 (continued)
Fair Value Measurements^
The following is a summary of the fair valuations according to the inputs used as of February 29, 2016 in valuing the assets and liabilities:
Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
Significant
Other
Observable
Inputs#
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
at
February 29, 2016
Asset Table
Investments, at fair value
Common Stock
Australia
$ $ 22,336,361 $ $ 22,336,361
China
30,351,440 30,351,440
Hong Kong
9,443,947 9,443,947
India
12,459,092 12,459,092
Indonesia
2,056,695 2,056,695
Macau
1,649,859 1,649,859
Malaysia
1,244,699 3,156,076 4,400,775
Singapore
1,543,428 1,543,428
South Korea
13,172,932 13,172,932
Taiwan
10,544,434 10,544,434
Thailand
1,277,588 1,277,588
United Kingdom
3,246,284 3,246,284
Total Common Stock 1,244,699 111,238,136 112,482,835
Preferred Stock 2,661,558 2,661,558
Total Investments, at fair value $ 1,244,699 $ 113,899,694 $ $ 115,144,393
Liabilities Table
Other Financial Instruments+
Written Options $ $ (389,673) $ $ (389,673)
Total Liabilities $ $ (389,673) $    — $ (389,673)
^
See Note 2, “Significant Accounting Policies” in the Notes to Financial Statements for additional information.
+
Other Financial Instruments are derivatives not reflected in the portfolio of investments and may include open forward foreign currency contracts, futures, centrally cleared swaps, OTC swaps and written options. Forward foreign currency contracts, futures and centrally cleared swaps are valued at the unrealized gain (loss) on the instrument. OTC swaps and written options are valued at the fair value of the instrument.
#
The earlier close of the foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. Accordingly, a portion of the Fund’s investments are categorized as Level 2 investments.
At February 29, 2016, the following over-the-counter written options were outstanding for Voya Asia Pacific High Dividend Equity Income Fund:
Counterparty
Description
Exercise Price
Expiration
Date
Premiums
Received
Fair Value
Options on Indices
3,200​
Goldman Sachs & Co.
Call on S&P/ASX 200 Index
4,935.110 AUD​
03/03/16 $ 241,307 $ (41,604)
2,800​
Deutsche Bank AG Call on Hang Seng Index
19,285.890 HKD​
03/03/16 180,661 (40,577)
32,800,000​
Societe Generale
Call on Korea Stock Exchange KOSPI 200 Index
233.350 KRW​
03/03/16 91,266 (60,719)
22,300​
Deutsche Bank AG
Call on Taiwan Stock Exchange Weighted Index
8,043.054 TWD​
03/03/16 85,519 (246,773)
Total Written OTC Options
$ 598,753 $ (389,673)
See Accompanying Notes to Financial Statements
22

TABLE OF CONTENTS
Voya Asia Pacific High Dividend SUMMARY PORTFOLIO OF INVESTMENTS
Equity Income Fund as of February 29, 2016 (continued)
A summary of derivative instruments by primary risk exposure is outlined in the following tables.
The fair value of derivative instruments as of February 29, 2016 was as follows:
Derivatives not accounted for as hedging instruments
Location on Statement
of Assets and Liabilities
Fair Value
Liability Derivatives
Equity contracts
Written options, at fair value
$ 389,673
Total Liability Derivatives
$
389,673
The effect of derivative instruments on the Fund’s Statement of Operations for the year ended February 29, 2016 was as follows:
Amount of Realized Gain or (Loss) on
Derivatives Recognized in Income
Derivatives not accounted for as hedging instruments
Written options
Equity contracts $ 2,698,477
Total
$
2,698,477
Change in Unrealized Appreciation or
Depreciation on Derivatives
Recognized in Income
Derivatives not accounted for as hedging instruments
Written options
Equity contracts $ 260,515
Total
$
260,515
The following is a summary by counterparty of the fair value of OTC derivative instruments subject to Master Netting Agreements and collateral pledged (received), if any, at February 29, 2016:
Deutsche
Bank AG
Goldman
Sachs & Co.
Societe
Generale
Totals
Liabilities:
Written options $ 287,350 $ 41,604 $ 60,719 $ 389,673
Total Liabilities
$ 287,350 $ 41,604 $ 60,719 $ 389,673
Net OTC derivative instruments by counterparty, at fair value
$ (287,350) $ (41,604) $ (60,719) $ (389,673)
Total collateral pledged by the Fund/(Received from counterparty)
$ $ $ $
Net Exposure(1)
$ (287,350) $ (41,604) $ (60,719) $ (389,673)
(1)
Positive net exposure represents amounts due from each respective counterparty. Negative exposure represents amounts due from the Fund. Please refer to Note 2 for additional details regarding counterparty credit risk and credit related contingent features.
See Accompanying Notes to Financial Statements
23

TABLE OF CONTENTS
Voya Asia Pacific High Dividend SUMMARY PORTFOLIO OF INVESTMENTS
Equity Income Fund as of February 29, 2016 (continued)
Supplemental Option Information (Unaudited)
Supplemental Call Option Statistics as of February 29, 2016:
% of Total Net Assets against which calls written
25.48%​
Average Days to Expiration at time written 28 days
Average Call Moneyness* at time written ATM
Premiums received for calls $ 598,753
Value of calls $ (389,673)
*
“Moneyness” is the term used to describe the relationship between the price of the underlying asset and the option’s exercise or strike price. For example, a call (buy) option is considered “in-the-money” when the value of the underlying asset exceeds the strike price. Conversely, a put (sell) option is considered “in-the-money” when its strike price exceeds the value of the underlying asset. Options are characterized for the purpose of Moneyness as, “in-the-money” (“ITM”), “out-of-the-money” (“OTM”) or “at-the-money” (“ATM”), where the underlying asset value equals the strike price.
See Accompanying Notes to Financial Statements
24

TABLE OF CONTENTS
TAX INFORMATION (Unaudited)
Dividends and distributions paid during the tax year ended December 31, 2015 were as follows:
Fund Name
Type
Per Share Amount
Voya Asia Pacific High Dividend Equity Income Fund
NII
$ 0.5546
ROC
$ 0.5954
NII - Net investment income
ROC - Return of capital
For the tax year ended December 31, 2015, 70.77% of ordinary income dividends paid by the Fund (including creditable foreign taxes paid) are designated as qualifying dividend income (QDI) subject to reduced income tax rates for individuals.
Pursuant to Section 853 of the Internal Revenue Code, the Fund designates the following amounts as foreign taxes paid for the tax year ended December 31, 2015:
Creditable
Foreign
Taxes Paid
Per Share
Amount
Portion of Ordinary
Income Distribution
Derived from Foreign
Sourced Income*
$302,885
$ 0.0239 90.59%
*
None of the Fund’s income was derived from ineligible foreign sources as defined under Section 901(j) of the Internal Revenue Code.
Foreign taxes paid or withheld should be included in taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments. Shareholders are strongly advised to consult their own tax advisors regarding the appropriate treatment of foreign taxes paid.
Above figures may differ from those cited elsewhere in this report due to differences in the calculation of income and gains under U.S. generally accepted accounting principles (book) purposes and Internal Revenue Service (tax) purposes.
Shareholders are strongly advised to consult their own tax advisers with respect to the tax consequences of their investments in the Fund. In January, shareholders, excluding corporate shareholders, receive an IRS 1099-DIV regarding the federal tax status of the dividends and distributions they received in the calendar year.
25

TABLE OF CONTENTS
SHAREHOLDER MEETING INFORMATION (Unaudited)
Proposal:
1
To elect four nominees to the Board of Trustees of Voya Asia Pacific High Dividend Equity Income Fund.
An annual shareholder meeting of Voya Asia Pacific High Dividend Equity Income Fund was held July 1, 2015, at the offices of Voya Investment Management, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.
Proposal
Shares voted
for
Shares voted
against or
withheld
Shares
abstained
Broker
non-vote
Total Shares
Voted
Voya Asia Pacific High Dividend Equity Income Fund
Colleen D. Baldwin
1*
10,470,043.954 646,277.200 0.000 0.000 11,116,321.154
Peter S. Drotch
1*
10,488,250.954 628,070.200 0.000 0.000 11,116,321.154
Russell H. Jones
1*
10,488,032.954 628,288.200 0.000 0.000 11,116,321.154
Joseph E. Obermeyer
1*
10,491,489.954 624,831.200 0.000 0.000 11,116,321.154
*
Proposal Passed
26

TABLE OF CONTENTS
TRUSTEE AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Trust are managed under the direction of the Board. A Trustee, who is not an interested person of the Trust, as defined in the 1940 Act, is an independent trustee (“Independent Trustee”). The Trustees and Officers of the Trust are listed below.
Name, Address and Age
Position(s)
Held with the
Trust
Term of Office and
Length of Time
Served(1)
Principal
Occupation(s) -
During the Past 5 Years
Number of
funds
in Fund
Complex
Overseen by
Trustee(2)
Other Board Positions
Held by Trustee
Independent Trustees:
Colleen D. Baldwin
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 55
Trustee October 2007 - Present President, Glantuam Partners, LLC, a business consulting firm (January 2009 - Present).
151
DSM/Dentaquest, Boston, MA (February 2014 - Present).
John V. Boyer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 62
Chairperson
   
Trustee
January 2014 - Present
January 2007 - Present
President and Chief Executive Officer, Bechtler Arts Foundation, an arts and education foundation (January 2008 - Present).
151
None.
Patricia W. Chadwick
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 67
Trustee January 2007 - Present Consultant and President, Ravengate Partners LLC, a consulting firm that provides advice regarding financial markets and the global economy (January 2000 - Present).
151
Wisconsin Energy Corporation (June 2006 - Present); The Royce Funds (35 funds) (December 2009 - Present); and AMICA Mutual Insurance Company (1992 - Present).
Peter S. Drotch
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 74
Trustee October 2007 - Present Retired.
151
First Marblehead Corporation (September 2003 - Present).
Martin J. Gavin
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, AZ 85258-2034
Age: 66
Trustee August 2015 - Present Retired. Formerly, President and Chief Executive Officer, Connecticut Children’s Medical Center (May 2006 - November 2015).
151
None.
Russell H. Jones
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 71
Trustee
May 2013 - Present
Retired.
151
None.
Patrick W. Kenny
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 73
Trustee January 2007 - Present Retired.
151
Assured Guaranty Ltd. (April 2004 - Present).
Joseph E. Obermeyer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 58
Trustee
May 2013 - Present
President, Obermeyer & Associates, Inc., a provider of financial and economic consulting services (November 1999 - Present).
151
None.
27

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TRUSTEE AND OFFICER INFORMATION (Unaudited) (continued)
Name, Address and Age
Position(s)
Held with the
Trust
Term of Office and
Length of Time
Served(1)
Principal
Occupation(s) -
During the Past 5 Years
Number of
funds
in Fund
Complex
Overseen by
Trustee(2)
Other Board Positions
Held by Trustee
Sheryl K. Pressler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 65
Trustee January 2007 - Present Consultant (May 2001 - Present).
151
None.
Christopher P. Sullivan
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 62
Trustee October 2015 - Present Retired. Formerly, President, Bond Division, Fidelity Management and Research (June 2009 - September 2012).
151
None.
Roger B. Vincent
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 70
Trustee January 2007 - Present Retired. Formerly, President, Springwell Corporation, a corporate finance firm (March 1989 - August 2011).
151
UGI Corporation (February 2006 - Present) and UGI Utilities, Inc. (February 2006 - Present).
Trustee who is an “interested person”:
Shaun P. Mathews(3)
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60
Trustee January 2007 - Present President and Chief Executive Officer, Voya Investments, LLC (December 2006 - Present).
151
Voya Capital Corporation, LLC and Voya Investments Distributor, LLC (December 2005 - Present); Voya Funds Services, LLC, Voya Investments, LLC and Voya Investment Management (March 2006 - Present); and Voya Investment Trust Co. (April 2009 - Present).
(1)
Trustees serve until their successors are duly elected and qualified. The tenure of each Trustee who is not an “interested person” as defined in the 1940 Act, of each Fund (“Independent Trustee”) is subject to the Board’s retirement policy which states that each duly elected or appointed Independent Trustee shall retire from and cease to be a member of the Board of Trustees at the close of business on December 31 of the calendar year in which the Independent Trustee attains the age of 75. A majority vote of the Board’s other Independent Trustees may extend the retirement date of an Independent Trustee if the retirement would trigger a requirement to hold a meeting of shareholders of the Trust under applicable law, whether for the purposes of appointing a successor to the Independent Trustee or otherwise comply under applicable law, in which case the extension would apply until such time as the shareholder meeting can be held or is no longer required (as determined by a vote of a majority of the other Independent Trustees).
(2)
For the purposes of this table, “Fund Complex” means the Voya family of funds including the following investment companies: Voya Asia Pacific High Dividend Equity Income Fund; Voya Balanced Portfolio, Inc.; Voya Emerging Markets High Dividend Equity Fund; Voya Equity Trust; Voya Funds Trust; Voya Global Advantage and Premium Opportunity Fund; Voya Global Equity Dividend and Premium Opportunity Fund; Voya Infrastructure, Industrials and Materials Fund; Voya Intermediate Bond Portfolio; Voya International High Dividend Equity Income Fund; Voya Investors Trust; Voya Money Market Portfolio; Voya Mutual Funds; Voya Natural Resources Equity Income Fund; Voya Partners, Inc.; Voya Prime Rate Trust; Voya Senior Income Fund; Voya Separate Portfolios Trust; Voya Series Fund, Inc.; Voya Strategic Allocation Portfolios, Inc.; Voya Variable Funds; Voya Variable Insurance Trust; Voya Variable Portfolios, Inc.; and Voya Variable Products Trust. The number of funds in the Fund Complex is as of March 31, 2016.
(3)
Mr. Mathews is deemed to be an “interested person” of the Trust as defined in the 1940 Act, because of his current affiliation with the Voya funds, Voya Financial, Inc. or Voya Financial, Inc.’s affiliates.
28

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TRUSTEE AND OFFICER INFORMATION (Unaudited) (continued)
Name, Address and Age
Position(s) Held
With the Trust
Term of Office and
Length of Time Served(1)
Principal Occupation(s) -
During the Past 5 Years
Shaun P. Mathews
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 60
President and Chief Executive Officer January 2007 - Present President and Chief Executive Officer, Voya Investments, LLC (December 2006 - Present).
Michael J. Roland
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 57
Executive Vice President January 2007 - Present Managing Director and Chief Operating Officer, Voya Investments, LLC and Voya Funds Services, LLC (March 2012 - Present). Formerly, Chief Compliance Officer, Directed Services LLC and Voya Investments, LLC (March 2011 - December 2013); Executive Vice President and Chief Operating Officer, Voya Investments, LLC and Voya Funds Services, LLC (January 2007 - April 2012) and Chief Compliance Officer, Voya Family of Funds (March 2011 - February 2012).
Stanley D. Vyner
230 Park Avenue
New York, New York 10169
Age: 65
Executive Vice President
Chief Investment Risk Officer
January 2007 - Present
   
September 2009 - Present
Executive Vice President, Voya Investments, LLC (July 2000 - Present) and Chief Investment Risk Officer, Voya Investments, LLC (January 2003 - Present).
Kevin M. Gleason
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 49
Chief Compliance Officer February 2012 - Present Senior Vice President, Voya Investment Management and Chief Compliance Officer, Voya Family of Funds (February 2012 - Present). Formerly, Assistant General Counsel and Assistant Secretary, The Northwestern Mutual Life Insurance Company (June 2004 - January 2012).
Todd Modic
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 48
Senior Vice President, Chief/​Principal Financial Officer and Assistant Secretary January 2007 - Present Senior Vice President, Voya Investments, LLC and Voya Funds Services, LLC (April 2005 - Present).
Kimberly A. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 51
Senior Vice President
January 2007 - Present Senior Vice President, Voya Investments, LLC (September 2003 - Present).
Julius A. Drelick, III
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 49
Senior Vice President
July 2012 - Present Senior Vice President - Fund Compliance, Voya Investments, LLC (June 2012 - Present); and Chief Compliance Officer of Directed Services LLC and Voya Investments, LLC (January 2014 - Present). Formerly, Vice President - Platform Product Management & Project Management, Voya Investments, LLC (April 2007 - June 2012).
Robert Terris
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 45
Senior Vice President
January 2007 - Present Senior Vice President, Head of Division Operations, Voya Investments, LLC (October 2015 - Present) and Voya Funds Services, LLC (March 2006 - Present).
Fred Bedoya
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 43
Vice President and Treasurer
September 2012 - Present
Vice President, Voya Investments, LLC (October 2015 - Present) and Voya Funds Services, LLC (July 2012 - Present). Formerly, Assistant Vice President - Director, Voya Funds Services, LLC (March 2003 - March 2012).
Maria M. Anderson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 57
Vice President January 2007 - Present Vice President, Voya Investments, LLC (October 2015 - Present) and Voya Funds Services, LLC (September 2004 - Present).
29

TABLE OF CONTENTS
TRUSTEE AND OFFICER INFORMATION (Unaudited) (continued)
Name, Address and Age
Position(s) Held
With the Trust
Term of Office and
Length of Time Served(1)
Principal Occupation(s) -
During the Past 5 Years
Lauren D. Bensinger
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 62
Vice President January 2007 - Present Vice President, Voya Funds Services, LLC (February 1996 - Present) and Voya Investments, LLC (October 2004 - Present); Vice President and Money Laundering Reporting Officer, Voya Investments Distributor, LLC (April 2010 - Present); Anti-Money Laundering Compliance Officer, Voya Financial, Inc. (January 2013 - Present); and Money Laundering Reporting Officer, Voya Investment Management Trust Co. (October 2012 - Present).
Sara M. Donaldson
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 56
Vice President
September 2014 - Present
Vice President, Voya Investments, LLC (October 2015 - Present). Formerly Vice President, Voya Funds Services, LLC (April 2014 - October 2015). Formerly, Director, Compliance, AXA Rosenberg Global Services, LLC (September 1997 - March 2014).
Robyn L. Ichilov
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 48
Vice President January 2007 - Present Vice President, Voya Funds Services, LLC (November 1995 - Present) and Voya Investments, LLC (August 1997 - Present). Formerly, Treasurer, Voya Family of Funds (November 1999 - February 2012).
Jason Kadavy
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 40
Vice President
September 2012 - Present
Vice President, Voya Investments, LLC (October 2015 - Present) and Voya Funds Services, LLC (July 2007 - Present).
Kimberly K. Springer
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 58
Vice President January 2007 - Present Vice President - Mutual Fund Product Development, Voya Investments, LLC (July 2012 - Present); Vice President, Voya Family of Funds (March 2010 - Present) and Vice President, Voya Funds Services, LLC (March 2006 - Present). Formerly Managing Paralegal, Registration Statements (June 2003 - July 2012).
Craig Wheeler
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 47
Vice President May 2013 - Present Vice President - Director of Tax, Voya Investments, LLC (October 2015 - Present). Formerly, Vice President - Director of Tax, Voya Funds Services, LLC (March 2013 - October 2015). Formerly, Assistant Vice President - Director of Tax, Voya Funds Services, LLC (March 2008 - February 2013).
Huey P. Falgout, Jr.
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 52
Secretary January 2007 - Present Senior Vice President and Chief Counsel, Voya Investment Management - Mutual Fund Legal Department (March 2010 - Present).
Paul A. Caldarelli
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 64
Assistant Secretary June 2010 - Present Vice President and Senior Counsel, Voya Investment Management - Mutual Fund Legal Department (March 2010 -Present).
Theresa K. Kelety
7337 East Doubletree Ranch Rd.
Suite 100
Scottsdale, Arizona 85258
Age: 53
Assistant Secretary January 2007 - Present Vice President and Senior Counsel, Voya Investment Management - Mutual Fund Legal Department (March 2010 - Present).
(1)
The Officers hold office until the next annual meeting of the Board of Trustees and until their successors shall have been elected and qualified.
30

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ADVISORY CONTRACT APPROVAL DISCUSSION (Unaudited)
Board Consideration and Approval of Sub-Advisory Contract for Voya Asia Pacific HIgh Dividend Equity Income Fund
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), to which Voya Asia Pacific High Dividend Equity Income Fund (the “Fund”) is subject, makes it unlawful for any registered fund having a board of trustees to enter into any new advisory agreement, including any sub-advisory agreement, unless the agreement has been approved by a vote of a majority of the trustees who have no direct or indirect interest in the agreement and who are not “interested persons” of the fund. At its November 19, 2015 meeting, the Board of Trustees of the Fund (the “Board”), including a majority of the Board members who have no direct or indirect interest in the advisory and sub-advisory contracts, and who are not “interested persons” of the Fund, as such persons are defined under the 1940 Act (the “Independent Trustees”), considered a proposal by Voya Investments, LLC (“Adviser”), the adviser to the Fund, to enter into a new sub-advisory contract with NNIP Advisors B.V. (the “Sub-Adviser” or “NNIP”) for the Fund (the “Sub-Advisory Contract”). The Board was asked to approve the Sub-Advisory Contract because it was advised by the Adviser that the existing sub-advisory contract (the “Prior Contract”) between the Adviser and the Sub-Adviser was expected to terminate in the near future due to a change of control of the Sub-Adviser.
In addition to the Board meeting on November 19, 2015, the Independent Trustees held separate meetings on October 1, 2015 and November 17, 2015, to review and evaluate the Sub-Adviser’s services to the Fund. As a result, subsequent references herein to factors considered and determinations made by the Board include, as applicable, factors considered and determinations made on those earlier dates by the Independent Trustees.
At its November 19, 2015 meeting, the Board, including a majority of the Independent Trustees, voted to approve the Sub-Advisory Contract for the Fund. In reaching its decision, the Board took into account information furnished to it throughout the year at meetings of the Board and the Board’s committees, as well as information prepared specifically in connection with the annual review process. Determinations by the Independent Trustees also took into account various factors that they believed, in light of the legal advice furnished to them by K&L Gates LLP (“K&L Gates”), their independent legal counsel, and their own business judgment, to be relevant. Further, while the Board reviewed at the same meeting the sub-advisory contracts for other Voya funds, the Board considered each Voya fund’s sub-advisory relationship separately.
Provided below is a general overview of the Board’s review and evaluation process with respect to the Sub-Adviser, as
well as a discussion of certain specific factors that the Board considered at its review and approval meetings. While the Board considered all of the information it deemed relevant, discussed below are some of the primary factors relevant to the Board’s consideration as to whether to approve the Sub-Advisory Contract. Each Board member may have accorded different weight to the various factors in reaching his or her conclusion with respect to the Sub-Advisory Contract.
Overview of the Contract Review and Approval Process
The Board followed a structured process (the “Contract Review Process”) pursuant to which it requested and considered relevant information when it decided whether to approve the Sub-Advisory Contract. Among other actions, the Independent Trustees previously retained an independent consultant with experience in the registered fund industry to assist them in working with personnel employed by the Adviser or its affiliates who administer the Fund (“Management”) to: identify the types of information presented to the Board to inform its deliberations with respect to sub-advisory relationships and to help evaluate that information; evaluate industry best practices in regard to the consideration of sub-advisory contracts; establish a specific format in which certain requested information was provided to the Board; and determine the process for the Board’s review of such information.
The Board has established (among other committees) three Investment Review Committees (each, an “IRC”) and a Contracts Committee. Among other matters, the Contracts Committee provides oversight with respect to the Contract Review Process, and the Fund is assigned to an IRC, which provides oversight regarding, among other matters, the investment performance of the Sub-Adviser, as well as oversight by the Adviser of the performance of the Sub-Adviser. The IRCs may apply a heightened level of scrutiny in cases where performance was below the Fund’s relevant benchmark, and/or a selected peer group of investment companies (“Selected Peer Group”), and/or Lipper Inc. (“Lipper”) category median, and/or Morningstar, Inc. (“Morningstar”) category median, as applicable.
The type and format of the information provided to the Board or to legal counsel for the Independent Trustees in connection with the Contract Review Process has been codified in a 15(c) methodology guide for the Voya funds (“15(c) Methodology Guide”). This 15(c) Methodology Guide was developed under the direction of the Independent Trustees and sets out a blueprint pursuant to which they request certain information in connection with their review of advisory and sub-advisory contracts.
Management provided certain of the information requested by the 15(c) Methodology Guide in Fund
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ADVISORY CONTRACT APPROVAL DISCUSSION (Unaudited) (continued)
Analysis and Comparison Tables (“FACT sheet”). The Independent Trustees periodically have retained, including most recently in 2015, an independent firm to test and verify the accuracy of certain FACT sheet data for a representative sample of the Voya funds. In addition, the Contracts Committee has routinely employed an independent consultant to assist in its review and analysis of, among other matters, the 15(c) Methodology Guide, the content and format of the FACT sheet, and the Selected Peer Group to be used by the Fund for certain comparison purposes during the review process.
Set forth below is a discussion of many of the Board’s primary considerations and conclusions in connection with its decision to approve the Fund’s Sub-Advisory Contract.
Nature, Extent and Quality of Service
The Independent Trustees received and evaluated such information as they deemed necessary regarding the nature, extent and quality of services provided to the Fund by the Sub-Adviser. This included information regarding the Sub-Adviser provided throughout the year at regular meetings of the Board and its committees, as well as information furnished in connection with the contract review meetings.
The materials requested by the Independent Trustees and provided to the Board, K&L Gates and/or independent consultants that assisted the Independent Trustees prior to the November 19, 2015 Board meeting included, among other information, the following items: (1) the FACT sheet that provided information regarding the performance and expenses of the Fund and other similarly managed funds in its Selected Peer Group, as well as information regarding the Fund’s investment portfolio, objective and strategies; (2) reports providing risk and attribution analyses of the Fund; (3) the 15(c) Methodology Guide, which describes how the FACT sheet was prepared, including the manner in which the Fund’s benchmark and Selected Peer Group were selected and how profitability was determined; (4) responses from the Sub-Adviser to the Fund to a series of questions posed by K&L Gates dated June 12, 2015, and November 7, 2015, on behalf of the Independent Trustees; (5) a copy of the form of Sub-Advisory Contract; (6) a copy of the Form ADV for the Sub-Adviser; (7) financial statements for the Sub-Adviser; (8) independent analyses of Fund performance by the Fund’s Chief Investment Risk Officer; (9) a report by the Fund’s Chief Compliance Officer (“CCO”); and (10) other information relevant to the Board’s evaluations.
The Board was advised by the Adviser that pursuant to an agreement with the European Commission, ING Groep, N.V. (“ING Groep”) is required to divest its entire interest in NN Group N.V. (“NN Group”) into an independent,
standalone company by the end of 2016 (the “Separation Plan”). NN Group previously was a wholly-owned, indirect subsidiary of ING Groep and is a parent company of the Sub-Adviser. The Board was advised that the Separation Plan contemplates one or more public offerings and each may be deemed to be a change of control.
The Board considered the potential effects of the Separation Plan on the Fund and the Sub-Adviser, including the Sub-Adviser’s ability during and after the separation to perform the same level of service to the Fund as the Sub-Adviser currently provides. The Board was advised that the Sub-Adviser anticipated that the Separation Plan would have no material adverse impact on the Fund or its operations and administration.
The Fund is subject to the 1940 Act, which provides that any investment advisory agreement, including any sub-advisory agreement, must terminate automatically upon its “assignment.” As used in the 1940 Act, the term assignment includes any transfer of a controlling block of outstanding voting securities of an adviser or the parent company of an adviser. Such a transfer is referred to herein as a “Change of Control Event.” ING Groep’s base case to achieve the Separation Plan was through an initial public offering of NN Group (the “IPO”) followed by the divestment of ING Groep’s remaining ownership interest over time through one or more additional public offerings of NN Group stock. The Board recognized that the Separation Plan contemplates several public offerings and each may be deemed to be a Change of Control Event, triggering the necessity for a new agreement, which would require the approval of the Board. The Board concluded that the shareholders’ approval of a new agreement that would become effective upon one or more Change of Control Events would permit the Fund to benefit from the continuation of services by the Sub-Adviser throughout the Separation Plan without the need for multiple shareholder meetings. The Board was informed by the Adviser that the Sub-Adviser was relying on regulatory assurances from the staff of the U.S. Securities and Exchange Commission in March 2013 that they would not object to approval of future agreements by shareholders at a single shareholder meeting. Fund shareholders approved the future agreements in February 2015.
The Board noted that the IPO was completed in July 2014, and ING Groep has divested additional shares of NN Group through four subsequent public offerings since July 2014, including a secondary common stock offering that settled on October 5, 2015, which further reduced ING Groep’s stake in NN Group to 25.8% of outstanding shares. NN Group did not receive any proceeds from these offerings. Upon the completion of the next transaction, ING Groep’s ownership in NN Group is expected to be reduced
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ADVISORY CONTRACT APPROVAL DISCUSSION (Unaudited) (continued)
to less than 25%, which the Board was advised by the Adviser will be deemed to be a Change of Control Event that would result in the termination of the Prior Contract.
In arriving at its conclusions with respect to the Sub-Advisory Contract, the Board recognized that the Adviser is responsible for monitoring the investment program, performance, and developments and ongoing operations of the Sub-Adviser under its manager-of-managers arrangement.
The Board also received periodic reports showing that the investment policies and restrictions for the Fund were consistently complied with and other periodic reports covering matters such as compliance with codes of ethics by personnel of the Sub-Adviser. The Board considered reports from the Fund’s CCO evaluating whether the regulatory compliance systems and procedures of the Sub-Adviser are reasonably designed to assure compliance with the federal securities laws, including those related to, among others, late trading and market timing, best execution, fair value pricing, proxy voting and trade allocation practices. The Board also took into account the CCO’s annual and periodic reports and recommendations with respect to service provider compliance programs. In this regard, the Board also considered the policies and procedures developed by the CCO in consultation with the Board’s Compliance Committee that guide the CCO’s compliance oversight function.
The Board requested and, as applicable, considered information regarding the level of staffing, quality and experience of the Fund’s portfolio management team, the resources and reputation of the Sub-Adviser, and the ability of the Sub-Adviser to attract and retain qualified investment advisory personnel, as well as the adequacy of the resources committed to the Fund by the Sub-Adviser, whether those resources are commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. Additionally, the Board considered the financial stability of the Sub-Adviser.
Based on their deliberations and the materials presented to them, the Board concluded that the sub-advisory and related services provided by the Sub-Adviser are appropriate in light of the Fund’s operations, the competitive landscape of the investment company business, and investor needs, and that the nature, extent and quality of the overall services provided by the Sub-Adviser are appropriate.
Fund Performance
In assessing the sub-advisory relationship, the Board placed emphasis on the investment returns of the Fund.
The Board considered the performance reports and analyses from MR&S and IRMD and discussions with portfolio managers at Board and committee meetings during the year. The Board also paid particular attention in assessing performance information provided on the FACT sheet furnished in connection with the review and approval process. The FACT sheet prepared for the Fund included its investment performance compared to the Fund’s Morningstar category median and/or Lipper category median, Selected Peer Group and primary benchmark. The FACT sheet performance data was as of March 31, 2015. In addition, the Board also received and considered updated performance information for the Fund against its Morningstar category median and/or Lipper category median and primary benchmark as of October 31, 2015.
Economies of Scale
When evaluating the reasonableness of advisory fee rates, the Board also considered whether economies of scale likely will be realized by the Sub-Adviser as the Fund grows larger and the extent to which any such economies are reflected in contractual fee rates. The Board noted that the Fund, as a closed-end fund, generally does not issue new shares and is less likely to realize economies of scale from additional share purchases. The Board also noted that any breakpoints in the Sub-Adviser’s fee schedule for the Fund would inure to the benefit of the Adviser, except to the extent that there are corresponding advisory fee rate breakpoints or waivers. The Independent Trustees also considered prior periodic management reports, industry information on this topic, fee rates at projected levels of growth versus peers and the Fund’s investment performance.
Information Regarding Services to Other Clients
The Board requested and, as applicable, considered information regarding the nature of services and fee rates offered by the Sub-Adviser to other clients, including other registered investment companies and relevant institutional accounts.
Fee Rates and Profitability
The Board reviewed and considered the contractual sub-advisory fee rate payable by the Adviser to the Sub-Adviser for sub-advisory services for the Fund, including the portion of the contractual advisory fees that are paid to the Sub-Adviser, as compared to the portion retained by the Adviser.
The Board requested information regarding and, as applicable, considered: (1) the fee rate structure of the Fund as it relates to the services provided under the Sub-Advisory Contract; and (2) the potential fall-out
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ADVISORY CONTRACT APPROVAL DISCUSSION (Unaudited) (continued)
benefits to the Sub-Adviser from its association with the Fund. For the Fund, the Board determined that the fee rate payable to the Sub-Adviser is reasonable for the services that it performs, which were considered in light of the nature, extent and quality of the services that it has performed and is expected to perform.
The Board did not request profitability data from the Sub-Adviser because the Board did not view this data as relevant to its deliberations, given the arm’s-length nature of the relationship between the Adviser and the Sub-Adviser with respect to the negotiation of sub-advisory fee rates. In this regard, the Board also considered that the Adviser (and not the Fund) pays the sub-advisory fees earned by the Sub-Adviser.
Conclusions
In light of the foregoing, on November 19, 2015 the Board, at an in-person meeting, approved the Sub-Advisory Contract for the Fund to replace the Prior Contract upon such Change of Control Event as described above. The Sub-Adviser represented that the agreements approved by the Board were not materially different from the agreements approved by shareholders of the Fund in February 2015 and no single person or group of persons acting together is expected to gain “control” (as defined in the 1940 Act) of NN Group. As a result, shareholders of the Fund will not be asked to vote again on this new agreement with the Sub-Adviser.
The decision by the Board, including a majority of the Independent Trustees, to approve the Sub-Advisory Contract was based on a determination by the Board that it would be in the best interests of the shareholders of the Fund for the Sub-Adviser to continue providing sub-advisory and related services for the Fund, without interruption, after the Change of Control Event.
In light of all factors it considered in its review of the Sub-Advisory Contract, the Board concluded that the fee rates set forth in the Sub-Advisory Contract were fair and reasonable. Among other factors, the Board considered: (1) the nature, extent and quality of services provided and to be provided under the Sub-Advisory Contract; (2) the extent to which economies of scale are reflected in fee rate schedules under the Sub-Advisory Contract; (3) the existence of any “fall-out” benefits to the Sub-Adviser; and (4) a comparison of fee rates, expense ratios, and investment performance to those of similar funds.
In connection with its approval of the Sub-Advisory Contract, on November 19, 2015, the Board considered a representation from the Sub-Adviser that there were no additional developments not already disclosed to the Board in the prior response provided to the Board in connection
with their annual review of the Prior Contract, that would be a material consideration to the Board in connection with its consideration of the Sub-Advisory Contract. Additionally, the Board took into account, among other factors, the considerations set out below.
1)
The Independent Trustees solicited and received ongoing advice regarding the Board’s legal duties when approving the Sub-Advisory Contract from K&L Gates, their independent legal counsel, which law firm has extensive experience regarding such matters.
2)
The Board considered the Sub-Adviser’s representations regarding its commitment to maintain appropriate levels of overall staffing, ongoing resources and service quality through the transactions under the Separation Plan and after the Change of Control Event. The Board noted that such services include, but are not limited to, investment management and research services. In this regard, the Board considered representations by the Sub-Adviser that its separation from ING Groep, as contemplated by the Separation Plan, will not lead to a reduction in the quality or scope of these and other services provided by those firms to the funds in the Voya funds complex, including the Fund.
3)
The Board considered representations by the Sub-Adviser that approval of the Sub-Advisory Contract would be necessary for the Fund to continue receiving sub-advisory services from the Sub-Adviser following the Change of Control Event. In addition, the Board considered representations by the Sub-Adviser, as well as related supporting documentation, indicating that the Sub-Advisory Contract, including the fees payable thereunder, are substantially similar to and, in any event, are no less favorable to the Fund than, the terms of the Prior Contract.
4)
The Board considered representations by the Sub-Adviser indicating that: (a) the Sub-Adviser can be expected to provide services of the same nature, extent and quality under the Sub-Advisory Contract as were provided thereby under the Prior Contract; and (b) the Change of Control Event is not expected to result in any changes to: (i) the management of the Fund, including the continuity of the Fund’s portfolio managers and other personnel responsible for the management operations of the Fund; or (ii) the investment objective of or the principal investment strategies used to manage the Fund.
Based on the foregoing and other relevant considerations, at a meeting of the Board held on November 19, 2015, the Board, including a majority of the Independent Trustees, voted to approve the Sub-Advisory Contract. In this
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ADVISORY CONTRACT APPROVAL DISCUSSION (Unaudited) (continued)
connection, the Board concluded that, in light of all factors considered, the terms of the Sub-Advisory Contract, including fee rates, were fair and reasonable, and the Sub-Advisory Contract should be approved so as to enable a continuation without interruption of the services being provided by the Sub-Adviser pursuant to the Prior Contract.
The Board noted that no one factor was determinative of its decisions which, instead, were premised upon the totality of factors considered. The Board also noted that different Board members likely placed emphasis on different factors in reaching their individual conclusions to vote in favor of the Sub-Advisory Contract.
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ADDITIONAL INFORMATION (Unaudited)
During the period, there were no material changes in the Fund’s investment objective or policies that were not approved by the shareholders or the Fund’s charter or by-laws or in the principal risk factors associated with investment in the Fund. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Fund’s portfolio.
The Fund was granted exemptive relief by the SEC (the “Order”), which under the 1940 Act, would permit the Fund, subject to Board approval, to include realized long-term capital gains as a part of its regular distributions to Common Shareholders more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year) (“Managed Distribution Policy”). The Fund may in the future adopt a Managed Distribution Policy.
Dividend Reinvestment Plan
Unless the registered owner of Common Shares elects to receive cash by contacting Computershare Shareowner Services LLC (the “Plan Agent”), all dividends declared on Common Shares of the Fund will be automatically reinvested by the Plan Agent for shareholders in additional Common Shares of the Fund through the Fund’s Dividend Reinvestment Plan (the “Plan”). Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Agent prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional Common Shares of the Fund for you. If you wish for all dividends declared on your Common Shares of the Fund to be automatically reinvested pursuant to the Plan, please contact your broker.
The Plan Agent will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a “Dividend”) payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Agent for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized Common
Shares from the Fund (“Newly Issued Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. Open-market purchases and sales are usually made through a broker affiliated with the Plan Agent.
If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions per Common Share is equal to or greater than the NAV per Common Share, the Plan Agent will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the NAV per Common Share on the payment date; provided that, if the NAV is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the NAV per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Agent will invest the Dividend amount in Common Shares acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan Agent will have until the last business day before the next date on which the Common Shares trade on an “ex-dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases.
The Fund pays quarterly Dividends. Therefore, the period during which Open-Market Purchases can be made will exist only from the payment date of each Dividend through the date before the next “ex-dividend” date, which typically will be approximately ten days.
If, before the Plan Agent has completed its Open-Market Purchases, the market price per common share exceeds the NAV per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the NAV of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open-Market Purchases, the Plan provides that if the Plan Agent is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent will cease making Open-Market Purchases and will invest the un-invested portion of the Dividend amount in Newly Issued Common Shares at the NAV per common share at the close of business on the Last Purchase Date provided
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ADDITIONAL INFORMATION (Unaudited) (continued)
that, if the NAV is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.
The Plan Agent maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a partial or full sale of shares through the Plan Agent are subject to a $15.00 sales fee and a $0.10 per share brokerage commission on purchases or sales, and may be subject to certain other service charges.
The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.
All questions concerning the Plan or a request to terminate participation should be directed to the Fund’s Shareholder Service Department at (800) 992-0180.
KEY FINANCIAL DATES — CALENDAR 2016 DISTRIBUTIONS:
Declaration
Date
Ex Date
Record Date
Payable Date
16-Mar-15 1-Apr-15 6-Apr-15 15-Apr-15
15-Jun-15 1-Jul-15 6-Jul-15 15-Jul-15
15-Sep-15 1-Oct-15 5-Oct-15 15-Oct-15
15-Dec-15 29-Dec-15 31-Dec-15 15-Jan-16
Record date will be two business days after each Ex-Dividend Date. These dates are subject to change.
Stock Data
The Fund’s common shares are traded on the NYSE (Symbol: IAE).
Repurchase of Securities by Closed-End Companies
In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940 Act the Fund may from time to time purchase shares of beneficial interest of the Fund in the open market, in privately negotiated transactions and/or purchase shares to correct erroneous transactions.
Number of Shareholders
The number of record holders of Common Stock as of February 29, 2016 was 11, which does not include approximately 5,892 beneficial owners of shares held in the name of brokers of other nominees.
Certifications
In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Fund’s CEO submitted the Annual CEO Certification on July 31, 2015 certifying that he was not aware, as of that date, of any violation by the Fund of the NYSE’s Corporate governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and financial officers have made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Fund’s disclosure controls and procedures and internal controls over financial reporting.
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Investment Adviser
Voya Investments, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Transfer Agent
Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900
Independent Registered Public Accounting Firm
KPMG LLP
Two Financial Center
60 South Street
Boston, Massachusetts 02111
Custodian
The Bank of New York Mellon
One Wall Street
New York, New York 10286
Legal Counsel
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199
Toll-Free Shareholder Information
Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at (800) 992-0180
RETIREMENT | INVESTMENTS | INSURANCE
voyainvestments.com
[MISSING IMAGE: lg_voya-r.jpg]
AR-IAE          (0216-042216)​

 

 

 

 

Item 2.Code of Ethics.

 

As of the end of the period covered by this report, Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to the Registrant’s principal executive officer and principal financial officer. There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code during the period covered by this report. The code of ethics is filed herewith pursuant to Item 10 (a)(1), Exhibit 99.CODE ETH.

 

Item 3.Audit Committee Financial Expert.

 

The Board of Trustees has determined that Colleen D. Baldwin, Peter S. Drotch, Patrick W. Kenny, Joseph E. Obermeyer, and Roger B. Vincent are audit committee financial experts, as defined in Item 3 of Form N-CSR. Ms. Baldwin, Mr. Drotch, Mr. Kenny, Mr. Obermeyer and Mr. Vincent are “independent” for purposes of Item 3 of Form N-CSR.

 

Item 4.Principal Accountant Fees and Services.

 

(a)Audit Fees: The aggregate fees billed for professional services rendered by KPMG LLP (“KPMG”), the principal accountant for the audit of the registrant’s annual financial statements, for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, was $26,600 for the year ended February 29, 2016 and $26,600 for the year ended February 28, 2015.

 

(b)Audit-Related Fees: The aggregate fees billed in each of the last two fiscal years for assurance and related services by KPMG that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this item were $2,525 for the year ended February 29, 2016 and $2,525 for the year ended February 28, 2015.

 

(c)Tax Fees: The aggregate fees billed for professional services rendered by KPMG for tax compliance, tax advice, and tax planning was $10,517 in the year ended February 29, 2016 and $10,210 in the year ended February 28, 2015. Such services include review of excise distribution calculations (if applicable), preparation of the Fund’s federal, state and excise tax returns, tax services related to mergers and routine consulting.

 

(d)All Other Fees: The aggregate fees billed in each of the last two fiscal years for products and services provided by KPMG, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the year ended February 29, 2016 and $387 for the year ended February 28, 2015.

 

(e)(1)Audit Committee Pre-Approval Policies and Procedures

  

 

AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY

 

I.Statement of Principles

 

Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Directors or Trustees (the “Committee”) of the Voya funds (each a “Fund,” collectively, the “Funds”) set out on Exhibit A to this Audit and Non-Audit Services Pre-Approval Policy (“Policy”) is responsible for the oversight of the work of the Funds’ independent auditors. As part of its responsibilities, the Committee must pre-approve the audit and non-audit services performed by the auditors in order to assure that the provision of these services does not impair the auditors’ independence from the Funds. The Committee has adopted, and the Board has ratified, this Policy, which sets out the procedures and conditions under which the services of the independent auditors may be pre-approved.

 

Under Securities and Exchange Commission (“SEC”) rules promulgated in accordance with the Act, the Funds may establish two different approaches to pre-approving audit and non-audit services. The Committee may approve services without consideration of specific case-by-case services (“general pre-approval”) or it may pre-approve specific services (“specific pre-approval”). The Committee believes that the combination of these approaches contemplated in this Policy results in an effective and efficient method for pre-approving audit and non-audit services to be performed by the Funds’ independent auditors. Under this Policy, services that are not of a type that may receive general pre-approval require specific pre-approval by the Committee. Any proposed services that exceed pre-approved cost levels or budgeted amounts will also require the Committee’s specific pre-approval.

 

For both types of approval, the Committee considers whether the subject services are consistent with the SEC’s rules on auditor independence and that such services are compatible with maintaining the auditors independence. The Committee also considers whether a particular audit firm is in the best position to provide effective and efficient services to the Funds. Reasons that the auditors are in the best position include the auditors’ familiarity with the Funds’ business, personnel, culture, accounting systems, risk profile, and other factors, and whether the services will enhance the Funds’ ability to manage and control risk or improve audit quality. Such factors will be considered as a whole, with no one factor being determinative.

 

The appendices attached to this Policy describe the audit, audit-related, tax-related, and other services that have the Committee’s general pre-approval. For any service that has been approved through general pre-approval, the general pre-approval will remain in place for a period 12 months from the date of pre-approval, unless the Committee determines that a different period is appropriate. The Committee will annually review and pre-approve the services that may be provided by the independent auditors without specific pre-approval. The Committee will revise the list of services subject to general pre-approval as appropriate. This Policy does not serve as a delegation to Fund management of the Committee’s duty to pre-approve services performed by the Funds’ independent auditors.

 

   

 

 

II.Audit Services

 

The annual audit services engagement terms and fees are subject to the Committee’s specific pre-approval. Audit services are those services that are normally provided by auditors in connection with statutory and regulatory filings or engagements or those that generally only independent auditors can reasonably provide. They include the Funds’ annual financial statement audit and procedures that the independent auditors must perform in order to form an opinion on the Funds’ financial statements (e.g., information systems and procedural reviews and testing). The Committee will monitor the audit services engagement and approve any changes in terms, conditions or fees deemed by the Committee to be necessary or appropriate.

 

The Committee may grant general pre-approval to other audit services, such as statutory audits and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or issued in connection with securities offerings.

 

The Committee has pre-approved the audit services listed on Appendix A. The Committee must specifically approve all audit services not listed on Appendix A.

 

III.Audit-related Services

 

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or the review of the Funds’ financial statements or are traditionally performed by the independent auditors. The Committee believes that the provision of audit-related services will not impair the independent auditors’ independence, and therefore may grant pre-approval to audit-related services. Audit-related services include accounting consultations related to accounting, financial reporting or disclosure matters not classified as “audit services;” assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures relating to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Form N-SAR or Form N-CSR.

 

The Committee has pre-approved the audit-related services listed on Appendix B. The Committee must specifically approve all audit-related services not listed on Appendix B.

 

IV.Tax Services

 

The Committee believes the independent auditors can provide tax services to the Funds, including tax compliance, tax planning, and tax advice, without compromising the auditors’ independence. Therefore, the Committee may grant general pre-approval with respect to tax services historically provided by the Funds’ independent auditors that do not, in the Committee’s view, impair auditor independence and that are consistent with the SEC’s rules on auditor independence.

 

The Committee will not grant pre-approval if the independent auditors initially recommends a transaction the sole business purpose of which is tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Committee may consult outside counsel to determine that tax planning and reporting positions are consistent with this Policy.

 

The Committee has pre-approved the tax-related services listed on Appendix C. The Committee must specifically approve all tax-related services not listed on Appendix C.

 

   

 

 

V.Other Services

 

The Committee believes it may grant approval of non-audit services that are permissible services for independent auditors to a Fund. The Committee has determined to grant general pre-approval to other services that it believes are routine and recurring, do not impair auditor independence, and are consistent with SEC rules on auditor independence.

 

The Committee has pre-approved the non-audit services listed on Appendix D. The Committee must specifically approve all non-audit services not listed on Appendix D.

 

A list of the SEC’s prohibited non-audit services is attached to this Policy as Appendix E. The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of these impermissible services and the applicability of exceptions to certain of the SEC’s prohibitions.

 

VI.Pre-approval of Fee levels and Budgeted Amounts

 

The Committee will annually establish pre-approval fee levels or budgeted amounts for audit, audit-related, tax and non-audit services to be provided to the Funds by the independent auditors. Any proposed services exceeding these levels or amounts require the Committee’s specific pre-approval. The Committee considers fees for audit and non-audit services when deciding whether to pre-approve services. The Committee may determine, for a pre-approval period of 12 months, the appropriate ratio between the total amount of fees for the Fund’s audit, audit-related, and tax services (including fees for services provided to Fund affiliates that are subject to pre-approval), and the total amount of fees for certain permissible non-audit services for the Fund classified as other services (including any such services provided to Fund affiliates that are subject to pre-approval).

 

VII.Procedures

 

Requests or applications for services to be provided by the independent auditors will be submitted to management. If management determines that the services do not fall within those services generally pre-approved by the Committee and set out in the appendices to these procedures, management will submit the services to the Committee or its delagee. Any such submission will include a detailed description of the services to be rendered. Notwithstanding this paragraph, the Committee will, on a quarterly basis, receive from the independent auditors a list of services provided for the previous calendar quarter on a cumulative basis by the auditors during the Pre-Approval Period.

 

   

 

 

VIII.Delegation

 

The Committee may delegate pre-approval authority to one or more of the Committee’s members. Any member or members to whom such pre-approval authority is delegated must report any pre-approval decisions, including any pre-approved services, to the Committee at its next scheduled meeting. The Committee will identify any member to whom pre-approval authority is delegated in writing. The member will retain such authority for a period of 12 months from the date of pre-approval unless the Committee determines that a different period is appropriate. The period of delegated authority may be terminated by the Committee or at the option of the member.

 

IX.Additional Requirements

 

The Committee will take any measures the Committee deems necessary or appropriate to oversee the work of the independent auditors and to assure the auditors’ independence from the Funds. This may include reviewing a formal written statement from the independent auditors delineating all relationships between the auditors and the Funds, consistent with Independence Standards Board No. 1, and discussing with the auditors their methods and procedures for ensuring independence.

 

Part of KPMG’s performance of an audit in accordance with standards of the Public Company Accounting Oversight Board (US) includes their responsibility to maintain and monitor auditor independence with respect to the Voya funds. Using a proprietary system called Sentinel, the audit team is able to identify and manage potential conflicts of interest across the member firms of the KPMG International Network and prevent the provision of prohibited services to the Voya entities that would impair KPMG independence with the respect to the Voya funds. KPMG requests pre-approval from the Voya funds Audit Committee for services provided to the Voya funds and for services to affiliated entities that relate to the financial reporting or nature of operations of the Voya Funds. Additionally, KPMG provides an annual summary of the fees for services that have commenced for Voya funds and Affiliates.

 

Last Approved: November 19, 2015

 

   

 

 

Appendix A
Pre-Approved Audit Services for the Pre-Approval Period January 1, 2016 through December 31, 2016

 

Service
  The Fund(s) Fee Range
Statutory audits or financial audits (including tax services associated with audit services) As presented to Audit Committee1
Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., consents), and assistance in responding to SEC comment letters. Not to exceed $9,750 per filing
Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies. Not to exceed $8,000 during the Pre-Approval Period
Seed capital audit and related review and issuance of consent on the N-2 registration statement Not to exceed $13,750 per audit
Audit of summary portfolio of investments Not to exceed $525 per fund

 

 
1For new Funds launched during the Pre-Approval Period, the fee ranges pre-approved will be the same as those for existing Funds, pro-rated in accordance with inception dates as provided in the auditors’ Proposal or any Engagement Letter covering the period at issue. Fees in the Engagement Letter will be controlling.

 

   

 

 

Appendix B
Pre-Approved Audit-Related Services for the Pre-Approval Period January 1, 2016 through December 31, 2016

 

Service
  The Fund(s) Fund Affiliates Fee Range
Services related to Fund mergers (Excludes tax services  - See Appendix C for tax services associated with Fund mergers) Not to exceed $10,000 per merger
Consultations by Fund management with respect to accounting or disclosure treatment of transactions or events and/or the actual or potential effect of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board, or other regulatory or standard setting bodies.  [Note:  Under SEC rules some consultations may be “audit” services and others may be “audit-related” services.]   Not to exceed $5,000 per occurrence during the Pre-Approval Period
Review of the Funds’ semi-annual and quarterly financial statements   Not to exceed $2,525 per set of financial statements per fund
Reports to regulatory or government agencies related to the annual engagement   Up to $5,000 per occurrence during the Pre-Approval Period
Regulatory compliance assistance Not to exceed $5,000 per quarter
Training courses   Not to exceed $5,000 per course
For Prime Rate Trust, agreed upon procedures for quarterly reports to rating agencies   Not to exceed $9,450 per quarter